IIPM ARTICLE AND EDITORIAL: IIPM New Delhi

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Friday, May 10, 2013

Who Says Modi Bhai and Rahul Baba are the only choices for Prime Minister?

Congress leaders were triumphant after results of the Gujarat assembly elections were announced. Senior leader P. Chidambaram said in virtually as many words that Congress had won because it had restricted Modi and BJP to barely 115 out of 182 seats. For Modi fans, the script was entirely different. His third successive election victory made him a strong contender to be the BJP candidate for Prime Minister. In Jaipur recently, nervous Congressmen heaved a sigh of relief and shed tears of joy when Rahul Baba finally agreed to lead the Congress in the 2014 Lok Sabha elections. Since then, we have seen an overdose of articles and columns comparing the two as potential prime ministers. If you go by excitable media reports, 2014 could well be an American Presidential style election where voters will have to choose between Modi Bhai and Rahul Baba.

But I most humbly disagree. If you look deep and hard, India has literally a wild variety of choices when it comes to who should be the Prime Minister. Come on, if Deve Gowda, the late I. K. Gujral and Manmohan Singh can become Prime Minister, surely almost anybody can. And I am not talking about the likes of Mulayam Singh Yadav, Nitish Kumar and Jayalalitha as strong contenders. In the true spirit of democracy, I cast my net wide and far and came up with a very rich catch of choices. Here is a not so comprehensive list of gifted, talented, visionary and messianic Indians who have superb qualifications to be the next Prime Minister of India:

Asaram Bapu: Who better than this fountain of Vedic Wisdom and champion of gender equality and female empowerment. I am not so sure about what his domestic and economic policy agenda would be. But I am absolutely convinced this great man will do a superb job of making all our borders safe and secure. You see, almost all his female devotees will be dispatched to our borders. Dancing to the tunes of devotional songs, they will all keep asking real and alleged enemies to treat them like sisters. The Pakistani soldiers will be so inspired that they will start beheading themselves. The Chinese would be so shell shocked that they would promptly give up all claims on Tibet. And there will commence a citizen movement in Bangladesh that will demand the return of all illegal migrants from India. Each cabinet meeting will be a Satsang where Asaram Babu will drop further pearls of wisdom.

Akbaruddin Owaisi: This mind blowing orator and contender for the Nobel Peace Prize will firmly have a simple domestic agenda. His first decision as Prime Minister will be to declare the birth anniversary of the last Nizam of Hyderabad as a national holiday. His second decision would be even more historic. He will decree that all police stations in India be shut down for 15 minutes once every week. That will enable the 25 crore Muslims of India to show the 100 crore Hindus of India who the real Boss is. Even as Hindus and Muslims indulge in a new national pastime and sport called This Week in Riots, the new age Nizam will go to London as a medical tourist. This will greatly improve relations between the former Imperial Power and the new Caliphate. Owaisi will also announce a weekly award worth Rs.100 million for a slogan writing contest where you will be encouraged to denigrate Hinduism. Hordes of media celebrities and secular activists and academicians will literally kill each other to become participants

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Saturday, May 04, 2013

2 minutes of despair?

In the light of its harmful properties, the widespread use of maida in India must be banned at the earliest

It is almost impossible to find any eating joint in India that doesn’t use maida, which is the starchy white part of the wheat grain, as an ingredient in its kitchen. Maida is also been consumed directly or indirectly in Indian households. But the lesser known fact is that it is identified as a major source of diabetes & related diseases.

Maida causes blood sugar imbalance and has a negative effect on insulin. Besides, it contains anti-nutrients, which can affect the digestive process and make people more prone to heart and kidney diseases. Surprisingly, not many people know that maida is originally yellow in color and the hazardous benzoyl peroxide is added to turn it into white. This additive has already been banned in China and EU. But in India, maida – with benzoyl peroxide as an additive – is still one of the most highly consumed food products.

Today, maida constitutes a major chunk of the Rs.85 billion Indian bakery market, which is growing at 12-15% annually and is a cheap ingredient in breads and other eatables. Even popular FMCG companies use the ingredient. A case in point is the instant noodles category. Even though atta variant noodle categories are becoming prevalent, the consumer demand for the original maida noodles still persists. Not only do companies refrain from educating their consumers about maida’s ill effects, even the government strangely is ignorant. The government must urgently take steps to ban white maida and products that contain it.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

BBA Management Education

Saturday, April 27, 2013

B&E Infographics

Annual results: India inc.

India Inc. report card FY 2012

Events in the global arena kept india inc. in distress throughout the year. Gloomy macroeconomic conditions on the domestic front further added to their woes. though corporate India managed to save their topline during the past financial year, increased input costs played spoilsport for them as the bottomline shrank by over 8%, as suggested by the aggregate financials of 275 BSE 500 companies, which announced results by May 18, 2012.

Tough year on all fronts

Aggregate yoy revenue growth for BSE 500 companies (275 companies that announced their results by May 18) in FY 2012 remained at a healthy 23.9% with a marginal improvement over last year’s 23.03%. However, increased input costs have hit margins. Aggregate net profit after tax shrank by 8.79% for the above-mentioned period as compared to a superb growth of 24.39% in the previous year. With global markets still under pressure and the European epidemic getting worse by the day, the current fiscal, too, looks quite challenging and the key issue for India Inc. would be to keep their costs under check to safeguard their margins. Nevertheless, corporate India may soon get a breather from raw material costs as analysts expect commodity prices to settle down in the near future.

Banks post strong growth

The banking sector managed to achieve a 34.4% growth in revenues yoy, the highest among the sectors picked. Revenues for BSE IT companies increased by 25.58% yoy as compared to 19.73% recorded in the previous fiscal. However, a look at public sector companies shows a starkly contrasting picture. The aggregate revenues of all PSUs, which are part of the BSE PSU index, grew by 22.92% yoy in FY 2012 as compared to a growth of 25.87% in FY 2010-11. Both Banking and IT sectors surpassed the aggregate of Sensex constituents, which posted a revenue growth of 23.8% for the last fiscal. Going forward, considering the demand situation in India, analysts expect the situation with revenues to remain optimistic, but margins may continue to be stressed.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

Friday, April 26, 2013

International

facebook: ipo debacle

The sizzle and fizzle of the most hyped IPO

Apple’s co-founder Steve Wozniak had reportedly warned Mark Zuckerberg about the glitches he might face on taking Facebook public. But when the hottest and most awaited IPO finally made it to Nasdaq on Friday, May 18, the mood was ebullient. Facebook’s public debut seemed like the greatest coming-out party in Wall Street’s history. Nobody thought that the euphoria would come crashing down barely hours later. For all the frenzy and ecstasy that went into the making of the Facebook IPO, the stock’s performance on the bourse has been quite anticlimactic. In a portentous sign of all that could go wrong and take the whoop out of investors’ joy, the IPO’s execution of trade was delayed by nearly 30 minutes on the first day itself. And things have gone from bad to worse thereafter. The share price tanked by nearly 13.1% by day five of trading. Even earlier, by day three itself, it had become clear that the breathlessly hyped $16-billion IPO would face difficulty in living up to its giddy expectations. The fall in the stock’s value and the accompanying embarrassment turned decidedly disconcerting after news emerged that Morgan Stanley, the lead underwriter of the Facebook IPO, had played some hokey-pokey by not fully disclosing the company’s revenue forecast in the run-up to the IPO. As a result of these avoidable shenanigans, not only is the stock still trading well below its initial offering price of $38 over a week after listing, the company is also now having to contend with shareholder lawsuits and government investigations. The IPO, which was universally touted as the poster child of the business of social media, could well become the new whipping boy for more Wall Street reform. However, not all investors have lost hope. Many believe that the IPO can still take Facebook’s valuation to nearly $104 billion and churn out money in the long run. But the ranks of believers are fast diminishing.

Nokia: Troubled business

Can Nokia pull itself up again?

It has been more than two years now since Finnish handset maker Nokia began losing steam to players like Apple and Samsung. The company has lost nearly 23.8% in global handset market share. Nokia’s handset shipments stood at 82.7 million units in the 1st quarter of 2012 (down from 108.5 million units in Q1, 2011). Analysts fear that considering the rate at which Nokia is burning its cash reserves, it may not be able to ward off the risk of debt default. Just five years ago, Nokia had piled up a whopping $12.54 billion in cash reserves, but over the past five quarters, it has used up $2.7 billion to prop up its faltering business. And there could be another outgo of $2.51 billion in the next quarter. The company’s short-term bonds for 2014 have already been rated as junk by Standard & Poor’s and Fitch.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Wednesday, April 24, 2013

“Regulatory processes are complex & non-transparent”

Dr. Gopichand Katragadda, Managing Director, GE India Technology Center talks to B&E about how India can build a world class ecosystem for itself

B&E: What is your view on the ecosystem in India with respect to the R&D outcomes that GE seeks?
Gopichand Katragadda (GK): A research ecosystem was one of the critical considerations for GE to set up the John F. Welch Technology Center in Bangalore. A good intellectual property culture and law, the presence of several successful R&D establishments, and a good pipeline of talent are amongst the things working for India.

B&E: How does GE perceive R&D ecosystems from a strategic perspective, and what initiatives are you taking to from your end?
GK: GE has contributed to the Indian innovation ecosystem in multiple ways – interacting with academia through funded projects; funding students research through GE fund scholarships; awarding best Ph.D thesis with an environmental impact; funding innovative student run programs such as fuel-efficient cars; conducting and participating in thought leadership symposiums with topics in innovation and intellectual property; participation in policy development and advocacy. Our team members have written extensively, in books and journals, on innovation in the context of India. Over the past three years, the team has also focused on product delivery to the India market with specific focus on energy, healthcare & locomotives.

B&E: What sort of efforts and stakeholder collaborations are required to bring R&D in India at par with global standards?
GK: Focussing on a few areas might actually make this a century of Indian innovation.
• There needs to be greater collaboration between industries & universities. Today, there is enormous government support for research at some universities. However, it is now time for the government to mandate university-industry collaborations as a criteria to access some of these funds and then use strategic intellectual property as a metric of success on these projects. A good model to look at in this context is the Semiconductor Research Corporation (SRC). It was originally setup in 1981 in response to the US steadily losing integrated circuit market share to Japan. SRC’s charter was to provide a competitive edge to its member companies by sponsoring cutting edge university research. Over the past 24 years, SRC has channeled $854 million in cutting-edge semi-conductor research. Today, through the efforts of SRC & others, the market trend in the semiconductor industry is now in favour of the US.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Tuesday, April 16, 2013

Mindful leadership – When east meets west

In an exclusive B&E feature, Prof. William George, Professor of Management Practice at Harvard Business School, talks to sean silverthorne, editor-in-chief of hbs working knowledge, about how He looks to the East as a model for developing strong business leaders and how Leaders with low emotional intelligence (EQ), despite having a high IQ, often lack self-awareness and self-compassion, leading to a lack of self-regulation and loss of their very own jobs.

Prof. William George of Harvard Business School, an expert on leadership development, recently teamed with Tibetan Buddhist meditation master Yongey Mingyur Rinpoche to present a conference on “mindful leadership,” a secular process to explore the roles of self-awareness and self-compassion in developing strong and effective leaders. “To our knowledge, this is the first time that a Buddhist Rinpoche and a leadership professor have joined forces to explore this subject and see how Eastern teaching can inform our Western thinking about leadership and vice versa,” George says. For George, leaders who don’t develop self-awareness are subject to becoming seduced by external rewards, such as power, money, and recognition. They also have difficulty acknowledging mistakes, an Achilles’ heel that has crippled a number of CEOs who have appeared in the news recently. Excerpts from the interview:

Q: What is mindful leadership, and what are its benefits?
William George (WG): Mindfulness is a state of being fully present, aware of oneself and other people, and sensitive to one’s reactions to stressful situations. Leaders who are mindful tend to be more effective in understanding and relating to others, and motivating them toward shared goals. Hence, they become more effective in leadership roles.

Q: How does one become mindfully aware?
WG: I would not claim to be an expert in this area. Our Mindful Leadership seminar focused on the practice of meditation as one of those ways, with a variety of meditation techniques taught by Rinpoche. This was strictly a secular teaching, not a Buddhist one. In my experience I have observed that people become more mindful through prayer, introspective discussions, therapy, & the use of reflective techniques & exercises.

Q: You have said that few leaders lose their jobs because of lack of intelligence, but many do so because of lack of emotional intelligence. Can you talk about this a little more and cite a few examples?
WG: Leaders with low emotional intelligence (EQ) often lack self-awareness and self-compassion, which can lead to a lack of self-regulation. This also makes it very difficult for them to feel compassion and empathy for others. Thus, they struggle to establish sustainable, authentic relationships. Leaders who do not take time for introspection and reflection may be vulnerable to being seduced by external rewards, such as power, money, and recognition. Or they may feel a need to appear so perfect to others that they cannot admit vulnerabilities and acknowledge mistakes. Some of the recent difficulties of Hewlett-Packard, British Petroleum, CEOs of failed Wall Street firms, and dozens of leaders who failed in the post-Enron era are examples of this.

Q: The two essential aspects of effective leaders, you explain, are self-awareness and self-compassion. Could you please elaborate?
WG: An essential aspect of all effective leaders is authenticity; that is, being genuine and true to one’s beliefs, values, and principles that make up what we call someone’s True North. Authenticity is developed by becoming more self-aware and having compassion for oneself, without which it is very difficult to feel genuine compassion for others. Self-awareness starts with understanding one’s life story and the impact of one’s crucibles, and reflecting on how these contribute to motivations and behaviours. As people come to accept the less-favoured parts of themselves that they do not like or have rejected, as well as learning from failures and negative experiences, they gain compassion for themselves and authenticity in relating to the world around them.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Friday, April 12, 2013

Global Development Horizons 2011

Amidst the transformative change that the global economy is witnessing, it is anticipated that within the next two decades the rise of emerging economies will inevitably have major implications for global economy and geopolitics. The world bank argues that a new world order with a more diffused distribution of economic power is emerging. B&E analyses the shift towards multipolarity.

The new Growth Poles

Over the course of two millennia, there have been several instances of shift in global economic powers. The period of China’s Tang dynasty to the Ming dynatsy (600-1600), saw to it that China was the dominant force in the global economy accounting for a quarter of the global growth. The Renaissance phase coupled with the advent of the industrial revolution saw the coming of age of the European economies (e.g. Italy, Spain, France , Great Britain). Post World War II, innovation and consumer demand propelled the United States to the position of world’s foremost economic power with Germany, Japan and the former Soviet Union playing pivotal roles. Post the financial crisis of 2008-09, the global economy is tilting towards new growth poles.

Dynamics of Growth Poles

In the wake of the financial crisis, the global macro-economy is apparently poised to follow a two-track course. Considering the baseline scenario, the World Bank estimates that the emerging economies’ share of global output will expand in real terms from 36.2% (in 2010) to 44.5% by 2025. A closer scrutiny reveals that China will lead this impressive rise in share of global output. What is interesting to note is the fact that despite the demography driven changes (the old age dependency ratio in China is expected to double between 2010 and 2025), China will be able to maintain its comparative advantage in manufacturing. Consistent with historical productivity trends, India’s annual growth in 2025 will be 5.4%.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 01, 2013

Do Outsider CEOs really Add Value?

Contemporary Evidence suggests that Outsiders may be likely to Excel and Outperform Insiders at Companies that are in crisis. But Historical and Empirical Research Suggests otherwise. Where does reality stand?

It was the spring of 1985, and the board of Apple Computer decided it no longer needed the services of one Steven P. Jobs. The main dramatis persona in the tech world’s biggest unfolding drama of a quarter-century ago was John Sculley, the Pepsi executive whom Apple’s board had brought in as CEO to oversee Jobs and grow the company — similar to Eric Schmidt’s role with Google founders Larry Page and Sergey Brin — in 1983.

Was Apple’s board right in bringing outsider Sculley to revive the waning fortunes of the company? The truth is that, depending on the company and its situation, it can be just as important to bring in outsiders as it is to develop homegrown talent. Around the time Sculley came on board, Apple was struggling with low Macintosh sales and there was a need to bring some order to the creative chaos Jobs had unleashed. Sculley got Jobs out of his hair two years after taking over Apple. In the course of undertaking his major reorganisation, Sculley fired 1,200 employees (20% of the total workforce) and put the broken parts of the company together to form one unified Apple and delivered its biggest growth, percentage wise, in its history prior to the return of Steve Jobs in 1997.

Like Apple, there are many global companies that are famous for promoting talent and grooming leaders from within but have all brought in outsiders when they needed to. According to analysts, the health, stability and competitive position of the company at the time of transition are the critical factors in determining whether an insider or an outsider is the best choice. Experts contend that insiders perform more consistently when their companies are in a healthy state at the time of appointment, whereas outsiders perform better when the company is in some form of crisis.

Ford CEO Alan Mulally, a longtime former Boeing executive, transformed an iconic American company that was on the brink of bankruptcy. Under Mulally, decision-making became more transparent, once-fractious divisions began working together, and cars of better quality started rolling faster from design studio to showroom. Mulally may be getting the rewards and accolades now, but who remembers what Ford was like in ’06, ‘07 and ‘08 when bold and difficult decisions were being made and people wondered if the aerospace executive could cut it in the automotive world. “Many doubted Mulally’s ability when he first came to Ford. There are doubters no more. He has proved to be an outstanding leader, and helped the company reach new heights,” said Michelle Krebs, an automotive expert and Senior Analyst for auto experts Edmunds.com. To get a sense of Mulally’s contribution to Ford’s turnaround, take a look at the increase in the value of the company from 2008 to 2011 as measured by its market capitalisation. During the period there has been over 1000% increase or an increase of $51.26 billion. A 1% share of that would be $512 million. The share price of the company has soared from a low of $1.26 on November 19, 2008, to $18.97 on January 13, 2011 and is currently trading around the $15 mark.

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Thursday, March 28, 2013

Towards More Globalised Highways

The Booming Indian CV market has been Seeing a slew of MNCs Lining up to be Among The Numbers. Can they do an Encore of The Script that played out in The Passenger Vehicle Segment?

Just months after the world saw the banking sector in developed countries in a hell bound state, slowdown blues made their way into the Indian market. However, much before the cautionary signals were made public, the commercial vehicle (CV) segment was already feeling the heat and the months ahead took the sector deeper into the woods. This gave credence to a well accepted viewpoint in the industry; that commercial vehicle sales are a barometer of economic activity.

The industry showed a decline in sales by 21.69% yoy for FY 2008-09 with the so-called highly profitable M&HCV segment dipping by 37.01% to record sales of 1.48 lakh units as compared to the 2.35 lakh units sold in FY 2007-08. While Ashok Leyland managed to sell only 47,632 vehicles in the same period with a decline of 37.34%, market leader Tata Motors also felt the heat and its sales declined by 22% to 2,33,843 units.

However, to the respite of CV makers and supporters of the ‘barometer’ analogy, the market took little time in taking a U-turn, as the economy stabilised and started moving back on the growth charts; well in time before the economy also made a strong rebound.

“There is a lot of scope in the CV segment and the projected healthy GDP growth rates also suggest the same,” says Rakesh Kalra, CEO, Mahindra Navistar. The recent budget highlighted the strong investment push needed to develop infrastructure in India and this would boost the demand for M&HCVs (16T & above) & LCVs (less than 3.5T). Domestic sales figures show a yoy growth of 34.18% for M&HCVs and 24.08% for LCVs for the period of April 2010-February 2011 as per SIAM. Three wheelers displayed a rise of 19.96% yoy for the same period. By all counts, such numbers do not hurt! In addition, taxes have not been increased on CVs in this year’s budget. It is not surprising, therefore, that a number of global players have made their entry recently, or are looking for a foothold in this space. Over time, MNCs have virtually dominated the passenger vehicles segment in India. Will they be able to do an encore in the CV segment?

When you look at the incumbents, it looks to be quite a daunting challenge, for the market is dominated by three large players. Tata Motors still holds the pole position with sales of 3,48,544 units and a growth of 22.36% during the April 2010-February 2011 period, followed by M&M that dispatched 92,768 vehicles towards Indian roads with a growth of 23.13%. So far, Tata Motors, M&M and Ashok Leyland account for more than 80% of the total market in India. When it comes to MNCs, the leading company is SML Isuzu (Swaraj Mazda’s alliance with Japanese player Isuzu) posted the best performance with sales of 10,444 followed by Piaggio with sales of 8,444 units. The Volvo-Eicher JV came next with 932 units, while Volvo Buses posted sales of 488 units.

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Monday, March 18, 2013

“Mismatch in Reforms is Causing Avoidable Adverse impact on Economy”

Ram V. Shahi, Former Power Secretary, Government of India, shares The Dynamics between Power and Coal

Ram V. Shahi, post his tenure as Power Secretary, has been associated with various organisations as head of their energy advisory boards. In an exclusive interview with B&E, he shares the interdependence of the coal and power sectors

B&E: How will the cess of Rs.50 per tonne levied on coal affect power tariffs in the short to medium term?
RVS: The cess of Rs.50 per tonne on coal will have an effect on the cost of power generated in coal based power stations in the range of 3 paise to 4 paise per KWhr. Its effect at the level of consumer tariff, however, will be of the order of 5 to 6 paise per KWhr in view of transmission and distribution loses. This cess, which will lead to revenue, on a national basis, of the order of Rs.30 billion per year, will go towards encouraging Green Energy. In this very budget, Service Tax on Transmission has been abolished. Therefore, positive impact of abolition of Service Tax would be about 5 paise per unit if we consider inter-regional transmission of power. Thus, additional burden on account of coal cess is more or less offset by the concession in Service Tax.

B&E: How will the move to allow open auctions for coal mining blocks affect fuel availability for power plants and what will be the effects on consumers?
RVS: The proposed initiative for coal mine development by allotting coal blocks on the basis of competitive bidding is a positive one. However, the criterion for evaluating bids should be the cost of producing coal rather than any premium that the mine developer may be asked to offer to the Government. Development of coal blocks through the process of competitive bidding should be on the same basis as the Scheme of Ultra Mega Power Projects. The objective should be low cost power by way of competitive bids for coal as well as power projects. Obviously, consumers will benefit from less expensive power supply.

B&E: If the pending Bill on Coal reforms which will allow private players to mine coal for non-captive usage is passed, will it bring about much needed power shortages under control?
RVS: While the power sector reform has moved forward, commencing from the historic legislation Electricity Act 2003, followed by several other policy initiatives, coal sector reform process has remained stagnant at the point when the Bill on coal was introduced in Parliament in 2001. Therefore, the present legislative initiative is a welcome move of the Ministry of Coal. The power industry is heavily dependent on coal just as coal industry has the largest consumers in the power sector, to the extent of 75% of its production. The present mismatches in reform initiatives are causing avoidable adverse impact not only on power sector but on economy as a whole. Therefore, coal sector reforms have to catch up fast with the actions that have happened, and will happen more rapidly, in the power sector.

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Tuesday, March 12, 2013

The Property Burst in the Wake of the 2008

Irish Economy was on a High Growth Trajectory for more than a Decade now. But the Property Burst in the Wake of the 2008 Financial Crisis sent Ireland into its Worst Sovereign Debt Crisis. Kenneth Thompson, The Irish Ambassador to India, In an Exclusive Interview, Shares the Larger Picture of the Ireland Economy

B&E: Do you believe that the Irish government can face the kind of backlash from government employees and unions as seen in Greece and Spain?
KT: The public servants in Ireland have had pay cuts since 2008 between 5 to 15%. Despite that, there have been no major protests as the people understand that we had a property bubble that burst and the second biggest problem is the deflation that Ireland is facing right now. Unemployment has risen sharply as many people have been laid off in the construction sector. The prices have sharply come down with electricity prices falling by 25% and gas prices by 23%. Housing prices have come down by 35-40% while office rents have fallen by 50%. So the positive side to all this has been that the average expenditures on an individual level have also come down.

B&E: Ireland has one of the lowest tax rates in the world with the corporate tax rate at just 12.5%. How do you justify such low tax rates in the current situation of such high public debt?
KT: Ireland not just has a very low corporate tax rate but one of the lowest personal tax rates as well. Our basic personal tax rate is 20% while it is 41% at the higher end which is paid by a very small number of people. Such low tax rates give the government the flexibility to raise the tax rates in times of crisis. In terms of justifying such rates, the tax rate is uniform for every business be it your corner shop or for every individual. It is the same for foreign investors as well. So, it has helped in bringing huge foreign investment in Ireland over the years. In fact, according to a latest research, Ireland had the highest per capita investment in 2008 in the world. MNCs account for a huge proportion of jobs in Ireland and they also contribute to 80% of our exports. Hence, the people realize that the low corporate tax rates result in job creation and high overall tax revenues which the government then spends on welfare programs.

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Saturday, February 09, 2013

The market regarding the realty sector and companies

In the midst of the general concern and uncertainty in the market regarding the realty sector and companies like DLF, the company’s Group Executive Director Rajeev Talwar is optimistic of a more evolved market & consistent supply in the coming years. In this exclusive with virat bahri of B&E, Talwar talks about DLF’s downturn adjustments and future vision. Some excerpts

B&E: What potential does DLF see in middle income/affordable housing?
RT: Due to our legacy, it is high income, because our locations and plots are extremely valuable. We are taking projects and seeing to it that we launch at the most competitive levels in order to make them value for money housing. Revenue growth should come. Government talks about Rs.10 lakh and above as mid-income. In tier 1 and super metro cities, it should be probably above Rs.50 lakh. Land here is usually controlled by government or it becomes very valuable if it is in private hands too.

Therefore your cost of acquisition becomes high. It therefore becomes impossible to give you what is normally called affordable housing or middle income housing below Rs.20 lakh. But Rs.10-20 lakh homes, even below, will be available for the poor. If housing costs Rs.50-75 lakh as mid-income housing in the super metros; in a tier 1 city it will cost Rs.45-60 lakh and going down to a tier 3-4 cities, you will get good homes at even less than Rs.20 lakhs. Since we are not in those cities and towns, I don’t think it will be possible for DLF. Our value housing even below Rs.5 lakh and Rs.10 lakh will be adjunct to the service category of our mid-income and high income group housing in super metros & tier 1 towns. Due to our name, quality, & location in the heart of the town, we tend to be in the upper end, but certainly, we also provide housing for the economically weaker section. Those will also be coming & will be costing anywhere between Rs.5-20 lakh depending on their proximity to premium locations.

B&E: Downturn increased debt levels significantly. How have you managed them over the past year?
RT: Some time after 9/11 in the US, everyone thought there was no end to the upswing. When it did come, it caught everyone by surprise. They weren’t unmanageable levels of debt for us but the only concern was how do you reduce the rate and increase the tenure. There was so much commercial paper in the market prior to that. Anywhere from 120-180 days seemed to be a long cycle till the time we realized that a good long cycle commercial paper or debt is of a period from 3-5-7-9 years. The second lesson was to reduce the interest rate. Our debt from under 1 year has increased to 3-5 years in tenure and also has portions of 7-9 years. At the same time, from 11.98% interest level, we have already come down to 10.5%. In real estate, people ask whether your debt levels are high or going higher. The fact is that there is so much of embedded value in your assets that debt is not something that you are normally so worried about, till the time a company is so highly leveraged that it cannot meet its development requirements (front flow) or its overhead costs for its normal cash flow. For us, thanks to various policies before and therefore very far-sighted policies even to take care in a downturn where you have a steady rental inflow of income, we have been through that much more easily. It’s already established that whatever overhead developmental costs or interest costs we have are well met from our usual leasing and launch businesses; so DLF doesn’t face pressures that some other overleveraged companies may face.

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Friday, February 01, 2013

Then came competitors criticising their weaknesses

First came the slowdown avalanche, they continued climbing... Then came the storm, they climbed further... Then came competitors criticising their weaknesses; but they’d reached the summit by then! B&E’s manish k. pandey & deepak r. patra closely analyse how the ‘best’ got the better of the ‘worst weathers’, and a lesson for those with ‘weak feathers’...

B&E attempts to bring out some key facets of competition beating business strategy in a slowdown by analysing the strategies of Indian companies that are actually doing better than their competition in their respective industries. In selecting our elite list of companies, we have considered the all important benchmark of profitability, both in terms of absolute figures and yoy growth trends, for the nine months ending December 2008 (till figures are available). Apart from one exception in the real estate sector, we find that all these winning companies have posted double digit growth rates in profitability. Now let us analyse what these winners have done in their respective sectors to shine in the current not-so-bright times.

The telecom leader is clearly Bharti Airtel. TRAI may have given it a thumbs down on network congestion (read more about it in the Corporation on Tata Teleservices in this issue), but the company continues to rule the market in terms of subscriber base at 91.1 million (at the end of February 2009). Sunil Bharti Mittal, CMD, Bharti Airtel Limited, said on the performance, “Bharti Airtel continues to lead the telecom growth story, adding customer and revenue market share despite intense competition. Bharti’s strategy of extensive roll out ahead of competition, especially in new villages, has yielded rich dividends.” What also keeps Bharti in the black is the fact that it has leveraged its pioneering advantage to get the cream of customers, which helps it even as telecom ARPUs in general are going down. Dipesh Mehta, telecom analyst, Khandwala Securities, comments, “ARPUs for the company have fallen for the company like other telecom companies, but they have not fallen drastically.” Moreover, the perception of Bharti of being a quality service provider continues to go heavily in its favour. Years of brand building are now bearing fruit.

The automotive sector, on the other hand, has been decisively lead by two wheeler giant Hero Honda. Pawan Munjal, MD & CEO, Hero Honda Motors Ltd. proudly affirms, “An unprecedented share of over 57% in the domestic motorcycle market particularly when the industry has been witnessing a massive slowdown... is reflective of the strong fundamentals of this company.” Being the market leader in the executive segment definitely has its advantages; more so in the era of discretionary spending; and the company sports some best sellers in this segment like the Splendour and the Passion. New product launches like the 150cc Hunk Premium and variants of the Glamour and the CD Deluxe last year are also doing well for the company. Also, the rural push that the company has made over the years seems to be delivering results now. That’s why Hero Honda is gloating over a 10% increase in sales yoy in March, while key competitor Bajaj reported a decline of 14%.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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Thursday, January 10, 2013

Indian consumers were not ready for them

when they entered, indian consumers were not ready for them. but reebok began relentless expansion. the strategy has worked...

Didn’t over expansion result out in cannibalizing their own sales? For instance, in many localities (like South Ex in Delhi) they have two stores. Actually Reebok managed its retail strategy through product proliferation and brand extension strategies. Explains Subhinder, “In one store, the first floor has lifestyle products and on the second floor, we have sports goods. In the second store, the first floor has women’s apparel and the second floor, men’s... It might sound very simplistic, but this is indeed what helped us to run our stores in same locality phenomenally!” The company also rolled out its premium brand Rockport in India in 2000 and started creating brands for entering into new segments followed by opening new stores for the same. India insights worked well. For instance, Reebok launched shoes with broader forefoots, that suit the Indian customer, unlike the offerings of its international rivals (IBEF).

Finally today, these strategies have helped the company earn a turnover of Rs.14 billion for the year ended 2008. Their focus has also shifted now, since women’s apparel is contributing to 30% and Reebok Classic (the lifestyle venture) is contributing 10% of its Indian turnover. In fact, the women audience is being pampered with the recently launched Easy Tone shoes. By just walking in them, women can get a well toned butt. Irrespective of catering into so many segments, still the company wants to resist the temptation to create its own manufacturing hub in India and is cashing in on the sourcing hub of Adidas.

Read more.....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.