Showing posts with label IIPM Think Tank. Show all posts
Showing posts with label IIPM Think Tank. Show all posts

Wednesday, June 05, 2013

Countering terror with sticks

Questionable decisions by para-military bosses in Kashmir have endangered jawans' lives, says Mayank singh

While India’s chattering classes wage a seemingly endless battle against corruption and its elite celebrate the country’s growth trajectory popping champagne on ice, out on the frontiers its brave men from the para-military forces are putting their lives on line in what is turning out to be a campaign which is both brave and foolhardy. Brave because they are willing to do whatever is expected from them unmindful of the costs involved, their lives included, and foolhardy because they are being asked to accomplish a job that seems impossible – countering highly motivated, trained and armed terrorists with wooden sticks that would come handier walking pets than defending the country’s sovereignty!

“Mismanagement by senior officers, an utter lack of foresight and blatant violation of standard operating procedures (SOP) is why jawans are getting martyred in the line of duty on a daily basis in Jammu and Kashmir,’’ confides a senior officer.

Two recent incidents typify this callous neglect in the Kashmir valley. On March 13 this year fidayeens or suicide bombers entered the Bamina area of Srinagar and mowed at will CRPF jawans who had been ordered by the state police to report in riot control gear – which constitutes essentially of a wooden stick or a lathi and a padding to cover their bodies.

Naturally, questions are being asked. In a situation as volatile as the Kashmir valley, who in the Jammu and Kashmir police, as well as the CRPF, thought it prudent and conducive to let their men get into riot gear? What good is a riot gear when confronted with sophisticated assault rifles and improved explosive devices (IEDs)? Classified documents in possession of TSI reveal that against well laid down SOP, it is the local police which is ordering central paramilitary forces. The SOP lays down the bottom line: no operational strategy can be dictated by the local police and has to be made necessarily in consultation with the Inspector General of CRPF and the other paramilitary forces deployed in the region. The documents clearly establish this breach of protocol coupled with a deeply flawed analysis, essential to counter terror. Two orders were issued by the IGP Kashmir (IGPK) on February 9 and February 11 this year. In the February 9 order addressed to CRPF, the IGPK directed the induction of five CRPF counter-insurgency (CI) operation companies and five training companies at Baramulla.

It read: “These companies shall be fully equipped with riot control gear, no personnel should carry any weapon.” Why should an IGP ask for specialist CI platoon to be armed with wooden sticks?

More to the point, on what basis are riots in Jammu and Kashmir equated with similar disturbances in other parts of the country where the Rapid Action Force (RAF) model of deployment is in force: one third of the company in lathi, one third with tear gas shells and one third equipped with rifles?

In the February 11 order, IGP Srinagar sent a signal to all paramilitary head quarters of the Srinagar Area, CRPF, BSF and ITBP to, “make sure that no fire arm is carried on by any law and order component.”

The situation reports accessed by TSI and the Incident Note of the BSF makes it clear that terrorists camouflage themselves with locals and take advantage of such orders at all available instances. Not surprisingly, they successfully struck twice within a span of eight days. The life of a jawan, apparently, is so cheap that an experienced commander can take arbitrary decisions and throw SOP to the winds. The situation report and incident notes – preceded by many such earlier observations - have said that terrorists are frequently using the civil population as shield to fire on para-military forces. Says one such assessment sent by CRPF on March 29, “After completion of law and order duty at about 1915 hours left for battalion head quarters. When our troops were crossing from Macchuwa bridge towards Karawalpora, all of a sudden few people started pelting stones at our vehicle from the right side and after few seconds a round was fired from the left side. So, while stone pelters engaged the troops from the right side, terrorists used rifles from the left.’’ It  adds: “Two of our constables saw a person who waved his AK 47 rifle at a group of five to six people running from the spot.’’ The BSF has a similar tale to narrate. On the March 29 incident, “at about 0730 hrs, while the vehicle in front moved closer to the Nowgam crossing, Srinagar, suspected militants suddenly opened fire on the 5-ton vehicle moving in the rear. By the time they (troops) could take position, the vehicle had moved in front of the Ahmad Hospital and militants had by then disappeared into the by lanes of thickly populated Nowgam area.’’

In both instances, troops did not fire as the collateral damage would have been heavy and would have proved advantageous to separatists groups in rallying people to their cause. In such dangerous situations, the use of lathi or wooden sticks is nothing short of harakiri and officers on ground stand accused of blatantly jeopardising the life of ill-equipped jawans by not allotting sophisticated weapons to them. After all it in on the directives of field commanders that the fighters are willing to take huge risks and the latest orders and its subsequent impact is certain to hit the morale of troops present there.

The Union government's Group of Ministers (GoM) on Internal Security has clearly laid down that “in operations against insurgency, militancy and terrorism, arrangements for coordination of operational planning, deployment etc., should be evolved by the senior most officers representing the central armed forces, in close consultation with the state police chief and officers of other concerned agencies.’’ In reality, it looks the other way round.

“If the situation has really improved, then why is a highly trained force with modern weaponry being wasted in Srinagar for law and order duties which could otherwise be dealt or ought to be dealt by local police? We need officers who not just appreciate the complexities but also have the gumption to take courageous decisions. Otherwise, counter terrorism and counter insurgency will always be fought as per the whims and fancies of officers without foresight, leading to continuous loss of lives,’’ says one reliable source, who adds that in the absence of accountability, really nothing will work.


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

Friday, May 31, 2013

Movie Review: Kai Po Che

A cut above

When the script is the undisputed star of a cinematic project, a film like Kai Po Che is bound to be the result. The principal pivots of the plot are predictable – cricket, religion, kite flying, male bonding and entrepreneurial ambition. But there is nothing remotely fusty in the efficient manner in which they are woven into the film’s engaging and heart-warming tapestry.

Kai Po Che is in the main faithful to the source material – Chetan Bhagat’s The 3 Mistakes of My Life – and turns the written text into a well-crafted film that thrives on restraint amid all the dramatic flashpoints at its heart.

Three buddies, Ishaan, Govind and Omi, want to set up a sports goods shop and a cricket training academy. Ishaan is a district-level cricketer-turned-coach while Govind is a man adept at playing with numbers. A property owned by a temple trust is acquired, thanks to the good offices of Omi’s maternal uncle, a rightwing political activist. The threesome’s bonding is also severely tested by two cataclysmic events – the devastating earthquake of 2001 and the post-Godhra riots of 2002.    

  
Director Abhishek Kapoor, who is also the co-writer of the screenplay with Pubali Chaudhuri, Supratik Sen and Chetan Bhagat, does not resort to the kind of melodrama usually associated with stories of buddies caught in the emotional eddies of life. Especially impressive is the unfussy way in which Kapoor rings the curtains down on his story of love, humanity and hope.

The performances of the lead actors exude an air of naturalness that adds to the film’s appeal. Sushant Singh Rajput, in his first role on the big screen, makes a deep impression as the no-nonsense Ishaan. Amit Sadh, playing the impressionable Omi, articulates the confusion of a man torn between his commitment to his pals and his rising allegiance to a seductive new cause with minimal effort and maximum conviction. But the actor to watch in this film is Raj Kumar Yadav. As the calm and focussed Govind, he traverses an entire gamut of emotions with the ease and confidence of a seasoned screen performer.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
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 25, 2013

The new fleet of x-men!

China's current eugenics movement has the potential of rewriting history

Conventionally, the concept of eugenics seems to be a plot straight out of Idiocracy or the imagination of Frank Herbert. Eugenics is actually an applied science of the biosocial movement which advocates the use of practices aimed at improving the genetic composition of a population, usually a human population. Contrary to expectations, it is being practiced behind closed doors in various countries since centuries. For the uninitiated, China has been operating the world's largest and most successful eugenics program since the last 32 years.

The then reformist leader of the Communist Party of China, Deng Xiaoping, who came to the power after Mao’s death, had figured out that China’s success was critically dependent on population demographics apart from economic policies. Consequently, he drafted the ‘one-child policy’ to restrain China’s population. However, one of his most renowned strategies, “Comprehensive National Power”, was intended to create China as the global human capital hub. In order to materialise his ambition, the 1995 Maternal and Infant Health Law (also known as the Eugenic Law) was implemented to enforce prospective brides and grooms to undergo rigorous physical examinations to determine their fitness for reproduction. China has also implemented laws that restrict people with IQs lower than a defined standard, from having children.

The nation has been investing massively in genom research on human mental and physical traits. BGI-Shenzhen, one of the world’s premier genome sequencing centres, is sequencing more than 50,000 genomes per year. Evolutionary psychologist Geoffrey Miller’s report has highlighted that “the BGI Cognitive Genomics Project is currently doing whole-genome sequencing of 1,000 very-high-IQ people around the world, hunting for sets of IQ-predicting alleles. These IQ gene-sets will be found eventually – but will probably be used mostly in China, for China. Potentially, the results would allow all Chinese couples to maximise the intelligence of their offspring by selecting among their own fertilised eggs for the one or two that include the highest likelihood of the highest intelligence. Given the Mendelian genetic lottery, the kids produced by any one couple typically differ by 5 to 15 IQ points. So this method of ‘preimplantation embryo selection’ might allow IQ within every Chinese family to increase by 5 to 15 IQ points per generation.”

China is currently officially promoting eugenics but has a rather long history. Eugenics became a hysteria among not only scientists but also among physicians and lawmakers in US in 1900s. Additionally, Adolph Hittler attempted it more aggressively to create a 'pure line of Germans' in the 1930s. The eugenics movement had failed at the beginning as most of the traits studied by eugenicists had little genetic basis as it targeted for elimination of the 'unwanted' from the human population (complex and subjectively defined traits as "criminality," epilepsy and bipolar disorder) than inclusion of better programmed humans. However, scientists are more optimistic about the Chinese attempts; at the same time, China's recent radical sports achievements (especially at the Olympics) has also raised many eyebrows.


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

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


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

Wednesday, May 08, 2013

Productivity Unveiled – learning by doing

A look inside an auto plant reveals how learning by practically doing leads to higher productivity

For a period of 15 years beginning in the mid-1930s, the Horndal steelworks plant in central Sweden had been neglected. Except for minor repairs and replacement of broken equipment, no new investments were made to modernise the plant. Despite this apparent neglect, output per worker at the plant rose steadily at about 2% per year. Erik Lundberg, the Swedish economist who first observed the “Horndal effect” called it a case of “pure productivity.”

One oft-cited source of productivity is learning by doing, which is the ability of workers to raise productivity through experience. In fact, economists have credited the Horndal effect to learning by doing. The longer workers do the same type of job the better they get. The result is higher production without having to put in new machines or hire more workers.

Several studies have looked into the overall dynamics of the learning process - how fast productivity gains accrue, and whether knowledge acquired from experience can be forgotten over time and if it spills over to other areas of production. But partly because of lack of data, these studies reveal little about how learning occurs at a plant, making it seem as though productivity improvements from learning by doing arise spontaneously as production increases, without any scope for managers to affect outcomes.

To find out the specific mechanisms through which learning takes place, I along with Steven D. Levitt and John A. List, professors in the University of Chicago’s Department of Economics, analysed detailed production records from a major carmaker’s assembly plant. Beyond showing evidence of rapid learning by doing, our study, Toward an Understanding of Learning by Doing: Evidence from an Automobile Assembly Plant, provides insights into how workers’ experiences at a plant can lead to greater productivity.

The study finds that the knowledge individual workers gained while working at the plant was quickly incorporated into the production process. Workers, together with plant managers, made adjustments to the assembly line based on what they learned, changes that benefited the next batch of workers and boosted overall productivity. It’s instructive as to how piecemeal, even mundane changes can add up to substantial improvements in the production process.

LOOKING UNDER THE HOOD

We measured productivity increases from learning by doing by looking at the assembly plant’s defect rates over the course of a year. The plant assembled three variants of a model built on a common midsize-car platform. The shared platform means the three variants had similar body frames and powertrains but required different parts and assembly procedures. Immediately before we started our study, large changes were made at the assembly plant. The platform had just undergone a major redesign that included both mechanical and aesthetic changes. The automaker also altered the assembly line’s physical layout, brought in new machines and equipment, and modified the production process to emphasize that teams, rather than individual workers, would carry responsibility for a particular task in the line.
 

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles

Thursday, May 02, 2013

“No pharma company is in favour of price control”

Shakti Chakraborty, Group President India Region Formulations, Lupin Ltd, on why pharma companies are not in favour of pricing control on drugs

B&E: The National List of Essential Medicines includes the reference molecules only and not their “me too” versions that can be made by making minor tweaks. Does it make the list meaningful?
Shakti Chakraborty (SC):
There is nothing like tweaking a molecule. So if you list Ibuprofen as a molecule under the NLEM then the molecule is covered. It doesn’t matter by which name it is sold in the market. Any new addition or subtraction to the formulation can be done by introducing a totally different molecule which may or may not be covered by the NLEM. By definition all the derivatives of a molecule are also covered under the list. For example, in Lupin’s case we have a molecule called doxophylline, which is quite different from theophylline (both are used for the treatment of respiratory diseases) Theophylline is listed under the NLEM but the department says that doxophylline is a derivative of theophylline and hence, is covered under the list.

B&E: The methodology to arrive at the price of a drug is by taking the weighted average of the prices of three top selling drugs in a particular category. What could be its implications on drug prices?
SC:
As of now nothing has been finalized on the methodology. The health ministry is proposing to take the weighted average of the lowest three priced brands instead the highest three. If you ask me, no company would like to have this kind of control. For a top class company with good R&D effort, manufacturing facilities etc., you need to incur significant costs. By putting a price ceiling, there will be no incentive for a company to do R&D and bring out quality products. The lack of clear policy is also hurting the strategic planning of the companies. I feel that the market is smart enough to decide the price of a drug.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 

Thursday, April 04, 2013

Will Indian Online travel Boom invite M&As?

The Indian Online Travel Industry has witnessed tremendous growth since 2004. Today, it’s the most Crowded space in The E-Commerce Segment with new players joining The Race every year. Question is – how will this Overcrowded space grow spacious?

As more and more Indians turn to the web for their travel needs, the online travel portal market in the country is gearing up for a bigger action in the coming days. With travel portals now offering a host of new services – putting forth their travel packages and providing safer mode of payments – booking travel online is no more confined to getting a low-cost airline ticket. In fact, these portals are now becoming travel guides rather than just ticketing stations. As per comScore’s data for April 2011, the number of visitors to travel sites in India increased 32% compared to last year. The study by the US-based digital market research company revealed that around 18.5 million visitors (age 15 or older visited) turned to the Internet for their travel needs in April 2011. While Indian Railways led the list of the top 10 visited sites, registering 8.4 million visitors this year (an increase of 8% from the previous year), Online Travel Agency sites (OTAs) secured the remainder of the four top spots in the category. MakeMyTrip reached nearly 3.9 million visitors (up 63%) followed by Yatra Online with 3.5 million visitors (up 82%) and ClearTrip.com with more than 2.1 million visitors (up 80%). Interestingly, the US-based Expedia Inc. secured the #5 position with 1.8 million visitors (up 12%).

This clearly indicates that there is a distinct shift in consumer preference as more and more people now prefer to plan and book their travel, and holiday needs online. According to travel industry research company PhoCusWright, India’s online travel market is the fastest-growing online travel market in the Asia Pacific region. What’s more? The company expects the Indian online travel industry to grow at a whopping 28% rate to top $7 billion by 2012. And it’s because of this reason that OTAs are now exploring newer avenues to generate revenues. In fact, revenue from advertising has already taken a backseat, and the focus now is more on cross selling of products, combination of products, et al. Further, with the rise in the sales of non-air products, industry players are confident that newer product categories will be explored in the travel and holiday space.

The increased pumping of money in the sector has also helped portals spend more to attract customers. In the last couple of years, most of the sites broke-even, securing a comfortable position. For instance, Nasdaq-listed MakeMyTrip registered a profit of $3.7 million in Q4 FY2011 as compared to a loss of $1.3 million in the same period last year. Even for the financial year ending March 2011, it had a profit of $4.8 million as against a loss of $6.2 million in FY 2010.


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

For More IIPM Info, Visit below mentioned IIPM articles

Tuesday, April 02, 2013

Direct Tax Code: A boon for IT Sleuths!

A Closer Look into The Provisions of The Proposed Direct Tax Code reveals India’s Digression from a Trust-Based system of Taxation to one which is Based more on The Element of distrust.

The existing Income Tax Act, which came into legislation in 1961, has often been criticised for being economically inefficient and incompatible with the current requirements and inequitable to all tax payers. Thus, to avoid this criticism and to replace archaic rules, the Ministry of Finance finally came out with the draft of Direct Tax Code (DTC) Bill in August 2009. But, the draft Bill, after being introduced in public domain, received a lot of criticisms on certain amendments in relation to removal of existing tax subsidies, and modifications in the tax rate structure that it sought to introduce. So, in June 2010, the ministry again issued a new revised DTC Bill and presented the draft to the Union Cabinet.

In what the government has claimed to be an attempt towards bringing path breaking changes to the existing tax regime in India, the DTC Bill, which is proposed to be implemented from April 1, 2012, will replace the five decade old legislation. In fact, in the foreword to the Tax Code, Union Finance Minister Pranab Mukherjee said that “the aim is to eliminate distortions in the tax structure, introduce moderate levels of taxation, expand the tax base, improve tax compliance, simplify the language and lower tax litigations.” Meanwhile, the Bill is being scrutinised by the Yashwant Sinha-led Parliamentary Standing Committee on Finance.

Personal income tax, as almost all salaried persons will agree, in our country is one of the highest in the world. More open and honest an employer is in terms of disclosing remunerations, worse it is for the employees because taxable income goes up. There is no denying that the present system is outdated and rewards dishonesty and non-disclosure of income by way of lower tax. The rationale for introducing DTC, government says, is to increase the efficiency and equity of the tax system by eliminating the plethora of tax exemptions or subsidies that create distortions. Its major policies include replacement of profit-linked exemptions with investment linked incentives, particularly for export units, and reduction in the tax rates to bring more people and companies under the tax net. Even the government wants a modern tax code in step with the needs of an economy, which is now amongst the largest in Asia. “In India, tax reforms have lagged behind growth. It is a big challenge for politicians and policymakers to keep the pace of reforms with growth,” Jeffrey Owens, Director of the OECD Centre for Tax Policy and Administration, said during a recent visit to New Delhi, adding, “Indian economy has transformed in the last two decades. Along with high growth, it has increasingly become the importer and exporter of capital. But tax regulations have largely remained the same. You have to change with the changing environment.” While the rationale behind the government’s proposals with respect to the DTC has been largely accepted as a right step in the right direction, a closer look into the provisions of the proposed tax code reveals India’s digression from a trust-based system of taxation to one which is based more on the element of distrust.


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

Thursday, March 07, 2013

The Kid in Liz

One thing that Liz Hurley can’t sleep without is reading an Enid Blyton book! The English beauty revealed that her biggest literary influence were books by this children’s author. Liz still tucks up with Noddy and Big Ears, and has also converted her son into a fan. Liz was reading Famous Five en route to India and Tweeted regretfully about forgetting her book on the plane. Whether we’re reading Enid Blyton books at 45 or not, let’s hope we manage to look as glamorous as Liz does at 45!


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

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.


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

For More IIPM Info, Visit below mentioned IIPM articles.

Friday, February 08, 2013

3G in India

3G in India is clearly too expensive on a rational and logical basis

The impact of the prices paid in India will result in an increase of capital employed for Idea, Bharti and Reliance of roughly 3.0%, 3.4% and 10.4% compared to the 255% increase for Vodafone. The immediate impact on the ROCE is to reduce the returns in the range of 0.2% to 0.9% which is relatively benign compared to the damage inflicted in the UK. Furthermore, unlike the UK, the Indian operators will be able to deploy their networks more cheaply and achieve greater performance by jumping to 3.5G in the form of HSPA. The spectrum will be used immediately to relieve congestion on the 2G voice networks and India will quickly emerge as the centre of innovation for low cost smart phones, applications and new mobile business models. The auction winners will not have to wait 10 years before they can start earning a return. Indian 3G prices for Mumbai, Delhli and Kolkata were certainly high and above expectations but they were not anywhere near as exuberant as those of the UK or Germany.

As regards the business case for the 3G spectrum, the 3G spectrum in India is both about voice and mobile broadband. Accessing the Internet from handsets i.e. the small screen will be a much bigger phenomena in emerging markets compared to developed countries. This is already apparent in some markets such as Egypt, Morocco and the Philippines. What matters now in India is not how much was paid for 3G spectrum, and as a classic “sunk cost” it should have little bearing on future decision making, but how quickly can a more rational market structure be established. Greater certainty over the future regulatory environment, including 2G spectrum pricing, along with consolidation and an end to the brutal price war will have a far more pervasive impact on future returns than the prices paid for 3G spectrum.


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

For More IIPM Info, Visit below mentioned IIPM articles.

Wednesday, February 06, 2013

TELECOM: APP STORES

Telecom players in India are flocking to the ‘app store’ band wagon. But it’s an idea much before its time, as masses don’t even know the ‘app’ from the ‘store’ says b&e’s Surbhi Chawla

Is it the latest outcome of the competitive dynamics in the sector? RCOM denies the same, and states that the reason for them to come out with an application store or RWorld 2.0 (as they refer it) is driven by 4 C’s – customer experiences based on smartphones, content localisation & SNS generated content, contextual search for content across all Voice, SMS & Data and lastly, clear and simple pricing. Though much of the details in regards to this particular endeavor are not available as of now, one is sure to hear from RCOM and the others (including Airtel) in the times to come. Already there is news that Vodafone is also planning to have its global application store available shortly, and the ones who have already taken giant leaps in this segment would be looking at newer means to create a buzz around their offering. But is this entire strategic exercise worth it at all? It’s noteworthy that even internationally, the likes of Verizon, AT&T, et al have launched application stores, but they have not been able to reap dividends for them. Traditionally those are the handset vendors such Apple and Research in Motion (of BlackBerry fame) who have managed successful tactical application of stores models. So why are Indian operators vying to make their mark in this sphere?

The reason behind this is quite simple. Call rates have been hitting rock bottom because of per second billings and most operators are finding it hard to defend their revenue share. The sector has been hammered badly in the first two quarters of 2009-10. Still, the optimism is back with the industry posting a 4% increase in the revenues making the total tally stand at Rs.397.56 billion for the quarter that ended on December 31, 2009. But the wireless segment could only manage a 0.7% increase (at Rs 265.64 billion) in revenues. Hence it would not be wrong to deduce that the overall outlook for the sector has not undergone a sea change as the worst is far from over for them. Telecom service operators also realize the same and to increase their revenues and more importantly their bottom lines, their strategy has been to aggressively push their Value Added services (VAS). The implicit assumption is that customers aren’t as conscious about pricing of VAS as they are with respect to call rates. 


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

For More IIPM Info, Visit below mentioned IIPM articles.

 

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%.

Read more......

Source : IIPM Editorial, 2012.
An Initiative of IIPMMalay 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
IIPM – FLP (Flexi Learning Program) 


 

Tuesday, January 22, 2013

Where's the money Mr. Ambani ?

Reliance Infrastructure's grand plans to expand massively seem to have forgotten a simple factor... Funding! Is this what was the nature of the beast? B&E's Ratan Lal Bhagat deeply questions the method in the madness

It would be foolhardy to imagine that the economic stimulus plans of a developing economy (India) and a developed economy (US) would have much in common, but then economic crises' can prove to be great levellers! One of US President Barack Obama's major bets on reviving the US economy is his proposed multi-billion dollar infrastructure plan (the largest since the 1950s, upward of $500 billion). India also recognises the criticality of fast-paced infrastructure development & has planned investments of about $410.61 billion ($1=Rs.48.76) in the 11th 5-year plan (again the largest since the 1950s, don't need to refer that!!!).

That's where the similarity ends, more or less. Obama's end game is that he has to generate millions of jobs from somewhere and has few options to do so. India needs to invest in infrastructure primarily because… errr… we need infrastructure… simple as that, and badly so! The infrastructural support systems like routes of transport (roads, railways & metro lines), power generation and its distribution, and development of Special Economic Zones (SEZs), are integral components in fuelling the growth of any economy. But Indian infrastructural development has been hinged by gross mismanagement of resources, superfluous project delays, and lethargic approach of public project contractors.

Thanks (but no thanks) to them, there is a massive opportunity in this sector for India Inc. now. Consistent underperformance has compelled the government to opt for a more fruitful public-private partnership (PPP) model. This brings into picture private players like Anil Dhirubhai Ambani Group's (ADAG) Reliance Infrastructure Limited (R-Infra). As expected, the company's aggressive business expansions in infrastructure have all the trappings of an ADAG group company, as the group has shown a considerable risk appetite for sunrise sectors.


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

For More IIPM Info, Visit below mentioned IIPM articles.