Thursday, June 16, 2011

A banker's take on marriages, arranged

Long time, no see. Missed me?
Limits. You could have said yes just for the heck of it. I don’t bore you that much, do I?

Anyways, I wasn’t able to think of a suitable topic for the blog. And this time around, I wanted to write a happy one. Enough of the sarcasm already. And the happy blog would also go well with the way I am feeling these days (dunno how many days this is gonna last, I want to feel alive every moment. Wait, did I just do a Pritam and steal lines right out of ‘Kal ho naa ho’?)

Why the happiness? Well, last couple of months have been quite happening. It seems I am gonna get reasonably close to my professional aspirations. And I can, without much ado, visualize a period where I would not be planning my next move, not trying to prove myself, just focus on doing my job well, and chill out. OK, at least to the extent my job permits me. So obviously, given the labyrinth of a mind that I have, and the serious problem I have with sitting idle and purposeless, I started thinking, what is the next thing I should be worried about? There must be something I can ponder over. Ramdev can go to hell, India WI series I don’t give a damn about.......tik tok......tik tok.......bang! The answer was right here. The big BIG task at hand. Arranged marriage! Om mangalam mangalam! Yes, that.

So I had kind of promised my parents, as soon as I get a check mark on my job stability front, I will enter ‘The Market’. Yes, the market is what I would like to call it. I wonder why people laugh when I quote it like that. Especially coming from the environment I grew up in. To give you a background, I am a Marwari baniya, coming from Uttar Pradesh. You know what that means. If you don’t, well, let me try and provide you some more color.

In our part of the world, the discussion around a marriage does not start with compatibility, liking, families, or even horoscope for that matter. It starts with a very basic question, “Kitne ka rishta hai”? Does that sound alien to you? Strange.  Because for us, it’s so much like a cultural heritage. To put it in simple terms, it is an innocuous attempt to arrive at the valuation of the groom. This is of prime importance, as it determines the access to cash flows the bride would have after the marriage! A perfect way to ensure that only families at the same societal and economic level get into a relationship. Flawless, only until that devil came into the picture. And provided a loophole. Yes, that idiotic, stupid thing called love. What farce!

So coming back to valuation, for the uninformed, I am a finance aficionado, and I was very curious to understand the dynamics of these groom valuations (augurs well for me as well :B ).Hence, I did some primary research, ran some numbers, made a couple of calls, and all that. The results were quite flattering, and I am presenting them below free of cost for now, as this is a PR exercise. Please refer me to your friends for a 16.67% discount on your next lesson. For anyone who wants to understand basics of valuation, I doubt there will be better study material available in the market. Money back guarantee.

Chapter 1: Applied valuation

There are two types of valuation: absolute valuation, and relative valuation. We will cover both one by one.
Absolute valuation: Arriving at the ‘intrinsic’ value of a product by discounting the future cash flows which are available from that product. I had earlier worked with a simple case. But realization of a calculation fallacy and voices raised from some of my female friends about missing luxury elements made me re-work the whole thing and make it complex (why do they want everything so complex?)

Let’s consider the case of a male, non-smoker, healthy MBA grad from a top-tier institute in India (Do not mistake me for an insurance sales man, we need these assumptions, sach me!). It has been 2 years since he has been earning, has accumulated approx. 5.5 lacs in his account (if you don't have this much, maybe you should hold back your marriage a bit. Bas thoda aur intezaar. Warning you, else liquidity crunch ho jayega). Marrying a girl who does absolutely nothing. Nothing at all. Just sits at home and lazes around. How some of you female readers would want to be that, right!

Cash inflows:

1.     Current salary = INR 15 LPA. (Not applicable for 2009 passouts- Sorry)
2.     10% increment every year till the age of 45, with two big promotions where the increment is  30%. Wish the real world was this smooth! But after you become the big boss, the increment is only 5% per annum. (Usse zyada company afford nahi kar payegi). Do not worry, you retire at 55 with a package of INR 1.8 crores...which seems good enough (unless you think of yourself as no less than Premji in the world of mortals)!

Cash outflows:
3.     Taxes = 30% flat. Do not cringe. You have already exploited enough of all those tax saving options. Desh ki sadkein kaise banengi?
4.    Roof on your head– Rents at INR 35,000 per month (Mumbai), escalating at 10% every two years. Life was smooth and Mumbai was slowly sucking you dry, till the point at age of 39 when you start disliking your accumulating bank balance. You choose to buy a house, that too for INR 2 crores with a 20% down payment, rest coming at an 8% interest rate (oops, apologies for calling it a house, when it should be pigeon hole of a house- all that you can afford in Mumbai with that sort of money 10 years from now)
5.     Misc. domestic expenses – Adding up to approx. INR 25,000 per month, escalating at an inflation rate of 5%, 4%, and then 3.5%. Wish this were it! Add annual travelling expenses to shaadis, maykas, sasurals, mausis, buas and all which is another 40 grands, escalating at 3% each year.
6.     Main nikla, ho gaddi leke...yes sire, we need a car. You buy a Hatch in the first year, a City in 5 years, a Civic in another 5, and finally, an Audi at 45, when you become the big shot DGM/ CXO of the company (only due to reputational risk- won’t look nice if you travel in a lower range car na...and of course, the bliss of travelling in an Audi :P)
7.     What about the fun part ya? Obviously we would have to keep aside INR 120,000 per annum for movies (4 a month), dining (5 times a month), clubbing (twice a month) et al. Zyada ho gaya kya? But I believe in the rule ‘work hard, and party harder’ J
8.     Come age 32, and here comes the new money sucking machine (read baby). With him comes child maintenance of INR 100k per annum which goes upto 150k later. And no, we are too poor to afford two babies. Then, he would want a car at age 18. Bloody show off in front of the girls! His father was known to be so shareef, aur ise dekho!
9.     As if this were not enough, your dear wife comes up with her unique set of demands. And she uses all kinds of techniques that ultimate cause you to concede. M sure you have seen PKP! Her demands include one international holiday (2 lacs ka fatka, ouch!) every 4 years, one domestic and 2-3 weekend getaways every year. And for all the parties she would be attending, she also wants new jewellery to the tune of 2 lacs (ouch, ouch- fainting) on an average every 2 years, again escalating. (My reco: buy gold futures now. Or marry a gold tycoon’s daughter). If you still think you can escape this, all I can say is, ‘May the force be with you, other than a belan-proof jacket!
10.   Last but not the least, save appropriately for the child’s education, his marriage, and your retirement. Make some short-term investments also. Get your life and health insured. (So that you don’t end up saying ‘Ohh teri!!’ in Aamir Khan style at some point in life)

Other assumptions:
11.   Retirement at the age of 55. Death at age of 80 for the couple. Bahut jee liye. Ab kat lo! And time to live up to the saath jiyenge saath marenge promise.
12.   Other expenses assumed constant from the age of 60 till 80. 60 ke baad kya hi kar loge life me, uncle! Please don’t do a ‘Buddha hoga tera baap’. Entertainment expenses die out at 70. Uske baad sirf tragedy ka scope bachta hai. Entertainment ke liye kuch bhi karna, risky ho jayega. Time for the ‘Sugar Free and ‘Lauki ka juice’. Though you can own a car till 78..a vintage one..I grant you that one.
13.   Spare balance in bank called upon whenever required. Especially during old age, to add to the returns from pension fund, when you are a non-performing, forget performing- non-moving asset. Weighted rate of return on bank funds assumed at 8%.
14.   Expected rate of return: 10%. Just because I like the song ’10 bahane kar ke le gayi dil..le gayi dil’

So whatever is left of the inflows after meeting the outflows, is all discounted back to the present time, to assess what is the kind of money the groom is sitting on (I always wanted to be able to not only sit, but swim in money like Uncle Scrooge). That, ladies and gentlemen, is the number you have been searching for, which in the above case is resulting in a valuation of INR 60,10,625 only. That’s the upside the lucky bride is getting over the dream lifestyle highlighted above. So even if her parents pay out this amount, the girl is in a profitable position, the envy of her friends’ eyes. The dulha is at a bargain! Mr. Buffet would have been so proud.

·     Moving on to the second method, this is the method of comparable valuation. It is much more straightforward in nature, and one only needs to look at the multiples of earnings other grooms with a similar profile (industry) have been traded at.  You take the median of some of the transactions in the same industry, multiply it with your own earnings, and you have your value. For reference sake, I am quoting the median multiples of some of the popular industries below. Note that I am being conservative and providing you a bear case scenario, pretty much like the stock analysts whose predictions go wrong every second day. I am sure that will give you the confidence enough to trust me!

1. Engineer: 3x salary. Key attribute: Stable but low income.
2. Doctor (MD): 4x salary. Key attribute: Blue-chip profession. Windfall gains expected (from critical illness patients- kya karein, life is unfair). 
3. MBA from Tier 1 institute: 4.5x salary. Key attribute: Stable and high income (which always looks like peanuts).
4. IAS: 10x salary (white). Key attribute: Upside potential from associate income, dominating market position (to be dominated however by Behenji).
5. Business: NA. The comparable method fails to explain the valuation ranges from 5 lacs to 5 crores.

Please note that if the dulha is a very docile one, or as some (SS) may like to put it as, bovine one, then the multiple goes up. This is on account of control premiums. There are other subtle considerations like caste, and sub-caste within that, that would also move the multiple (this is the point I feel proud to be a marwari baniya- as if I have earned it ). But the caveat is to make sure the sub-sub-sub-caste doesn't match exactly, otherwise the girl ends up being a sister :P (some gotra funda - following the same lineage of our great ancestors).

Using the above technique, the valuation that we get for our non-docile Tier-1 MBA grad comes out at INR 67,500,000. Reasonably close to our valuation from the earlier analysis. Which means our calculations are perfect! (Yes, speak a lie 100 times and that becomes truth!)

Note: Salary at all places indicates Cost-To-Company (CTC) due to lack of public information. No one quotes their in-hand these days.

So, that brings us to the end of the Chapter 1 of our Valuation Primer. For further details to confuse your mind, drop me an email at

That would have given you the logic behind me using the word ‘market’. So you see, there is a reason behind every word that I use. 1,522 words full of that. Clever. Ha!

As it appears, women stand to benefit much more from this transaction than men. They get this unrestricted access to a fantabulous life over and above the free cash flows, absolutely free! In exchange for their companionship, and love. As if we are not giving them that. But then, so is life. Unfair. You can’t live without one of them by your side. At a certain point you will be so much out of your senses that you would call it ‘worth it’. Wtf! 

Now, what was I saying? Yes, that I would have to enter the market eventually now. Feels weird. I always thought arranged marriages were stupid. I have no fishing idea of what is going to happen. Feels funny though, imagining the kind of experiences I would have. At least from the vicarious understanding I have got about the possibilities at such ‘encounters’ from the snippets of my dear friend Raam Pyari a.k.a. Ruchita Misra’s soon to be released book, ‘The (In)eligible bachelors’. Just hoping I do not turn out to be one. Another tension is the serious capacity crunch - of single, smart, and qualified Marwari girls in the system. Good I got my mom to approve any potential suitable match within the larger Hindu community- saying “Beta jaise tum khush raho” :P. She is a darling. OK, focus, focus. To start with, I think I should start thinking about the ‘About Me’ section. I really wish to write just one line: “Hum teen cheezon ko kabhi underestimate nahi karte- I, Me, Myself”. Lol. But don’t think the aspirants (or rather, destinations for us aspirants given the demand and supply imbalance) out there will understand my emotions. On second thoughts it would be better to let that one pass. I could think of an easier, more closer to mortal way. Waise, I am also open to suggestions. You would already noted down my email ID by now. So go ahead! Just don’t experiment guys, zindagi ka sawaal hai. Be serious. 

I won’t write anymore so as to avoid making the post girly. Either ways, all this melodrama was only for the sake of blog. There is still some free life remaining to be lived. I am sure I will be dancing on ‘Ek kunwara phir gaya maara’ in at least 4-5 more weddings to come before I give my friends a chance to derive the sadistic pleasure and avenge themselves. Acha hai, competition thoda kam hone do. Warna bekar me mujhe gaaliyan denge, unke options churane ke liye..:P

Disclaimer: All figures in this post are for reference only; they do not in any way indicate my tangential attempt to making a market (in layman terms, setting price expectation) for me. I am against dowry, an honest and righteous person, open only to whatever the girl’s parents provide to their daughter, with love, for her happy and comfortable life going forward, in some large sacks and cartons kept in her (ours) brand new Red VW Beetle, kept beside the gold bricks. I am serious. 


  1. Fantastic post!! Was lmao on the valuation bit..
    Got a taste of what may come my way!!

  2. lols.. nice to see a funny post from you .. i thought u were all serious when comes to writing. All the best for the bride hunting process...

  3. Tagged as the "Eligible Bachelor", hope life churns out the best for you. May you get the gold brick you always wished for :P

  4. Your post just made me realise my "Love Marriage" has cost me a fortune :(

    Transaction comparables!

  5. Amazing post...As usual...Pretty close to being your most awesome post so far...:)

    And also goes to highlight my losses...If only this post would have come a few months back, I would have been richer by a few millions...:P

  6. Awesome.... U missed accounting in the crisis times though :P :))

  7. Thanks guys!
    Well, for the already married ones, what can I say! At least the ones not yet launched have some scope to make a prudent choice :P
    As for me, I dnt have any such xpectations :D

    @Ridhi: Interesting angle. I think due to the low liquidity and hence poor valuations, the no. of marriages wud also have gone down in the crisis period. Tht wud b prudent :)

  8. Also upload the excel of calculations... :-)

  9. Excellent evaluation of bridegrooms, almost coinciding with the kind of apprehensions I am having at the moment :P

  10. I am amazed to see almost all assumptions about expenses for your calculations are so accurate...

  11. Well that one was awesome!!! Impressed by the thinking style u have and pray to lord, may you be an overprice stock :)

    PS: Enjoyed every word of your writing except "I won’t write anymore so as to avoid making the post girly"... Lolz!!

  12. Red VV Beetle! Yaar intni achhi gadi ka koi achha rang chun lete...

    Btw when your prospective in-laws do a background check on the internet and stumble upon this blog it will be even more hilarious than this awesomely hilarious blog post! :P

    ok seriously, good one...humour suits you!

  13. Important notification: Due to a calculation fallacy and voices raised by some of my female friends about their needs not being addressed, I have reworked the whole model and made it super complex.
    Have modified the above post accordingly. If you have the patience, do read the valuation section :) Its supposed to be funnier. At least in attempt.

  14. ROFL !
    The bschool grad in me is itching to see the excel sheet of groom valuation :D

  15. Hey Nikhil, simply superb...didn't know you were a blogger.quite accidently stumbled on this..its an amazing piece you have written..hilarious and captivating

  16. My first visit to ur post :D

    liked it....

    About marrige.... ahhh.... u know na... there is already a decline in male vs female ratio and many guys r nt getting one suitable for themm
    better dont leave any option for others... ; )

  17. Hi,

    Came here through RP's blog..
    Its a hilarious post.. :)
    I am still ROFL!!


  18. @Chakoli: See, dats to add to the unfairness :(

  19. my first stumble into ur blog
    nice post..funny and a good read

  20. have u really wrote it???? i mean its fantastic!!!So chetan bhagat is having some competition!!

  21. OMG! That much research. Surely you can get some brownie points for all that work ;-)

    Btw, LOL at 'money sucking machine'.. that too, it is an investment with no scope for return!!

  22. Awesomeness!! Max respects! \m/

    Can you also upload the excel that you worked through to arrive at the valuation? Would be even more fun to see that!

  23. Excel is needed. Also I think you made a mistake in figures. By DCF you arrived at Rs 60,10,625 and by comparative valuation you arrived at Rs 67,500,000 which is around 10 times.

  24. Thanks Rohit :)
    Unfortunately cannot share the excel, proprietary issues you see ;) you can try and develop one using these assumptions though :)
    Utkarsh, thanks for pointing that's a comparative valuation it comes out to be 67.5's a straight multiplication..a valuation of 6.75 crores is something I can only hope for :P

  25. Hilarioussss... This is the best post...!!