Politics - KANIMOZHI: NO BAIL

The refusal of bail to DMK leader Kanimozhi and others accused in the 2G scam by a CBI court has evoked reactions from legal eagles on whether the order violates the judicial norm of according bail to accused, once investigations are complete and trial is set to begin.

The reactions to the judgement have been mixed. President of the Janata Party Subramanian Swamy, who is also pursuing a private complaint in the 2G scam, feels the court’s decision to deny bail to the accused has set an example for future cases. Speaking exclusively to B&E, Swamy said, “The judgement will help reinforce the belief that the rule of law prevails in India even after all other agencies go soft.” A section of legal luminaries, however, feel differently. There have been some sharp reactions to the judgement, which is said to smack of judicial activism. Senior advocate Ram Jethmalani termed the judgement as ‘a destruction of the whole criminal jurisprudence’. “These judges don’t want to grant bail themselves. Possibly, they want everything to be done by the Supreme Court,” he said. Critics of the judgement maintain that there were no grounds for keeping the accused in jail as even the investigating agency CBI had not opposed the bail. Swamy, however, offers a different take. “It is unfortunate that the CBI succumbed to petty political pressures and slowly put the lid on the entire case. The judiciary has set an example with this judgement that justice can be upheld even in circumstances when all other agencies of governance fail to deliver.” According to him, given the pro-Centre functioning of the central agency, the very fact that the CBI had ‘gone soft’ after preparing a strong case suggested that the Congress was not keen in keeping the accused behind bars anymore.

According to Supreme Court advocate Kamini Jaiswal, the court judgement denying bail to Kanimozhi and the others accused in the 2G case is unfortunate. “The rule is bail and not jail. Once the charge sheet has been filed, and given that the entire case is based on documentary evidence, what is the point keeping them in jail?” Jaiswal disagrees with the court’s contention that as Kanimozhi and others accused are influential people, granting them bail might result in manipulation of witnesses and tampering of evidence. “If they are influential people, they can very well manipulate things from inside the prison,” she contends. Many others in the legal fraternity too feel that withholding bail at this stage when all documentary evidence have already been placed before the court is being unduly harsh on the defendants. These experts say that going by the law of jurispudence, which has been cited while deciding on many bail pleas, the usually expected move is bail. In this case, however, the judiciary seems to have tried to score one over the government. “It is in continuation of a trend that the SC has set for taking on the government on many issues,” says a senior lawyer on the condition of anonymity, adding that the tone of the CBI court clearly revealed that the SC was monitoring the case and the rejection of the bail plea by the trial court was in line with the earlier apex court’s decision not to grant bail to Kanimozhi and four others accused.

The judiciary has taken a particularly tough stand in this case and opinions differ on the reasons behind such a stance. However, taking a cue from the tone and tenor of the court while dealing with serious economic offences, any positive results seem unlikely for Kanimozhi, even though her defence counsel has now moved a petition in the Delhi High Court for seeking bail. The enormity of the scam is huge, and this has formed one of the major grounds for the trial court’s rejection of Kanimozhi’s bail plea so far. The higher courts may overturn Judge Saini’s order, but no one can say he did not do his best on behalf of those whose evidence will be crucial to nail the accused in the greatest financial scam in Indian history

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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

Withdrawing AFSPA: Political demagoguery or public opinion?

Chief Minister Omar Abdullah’s call for revocation of the special powers vested in the Army in J&K has its pros and cons, but any decision to this effect must come through only after a careful study of the ground reality

When Omar Abdullah took oath as the eleventh chief minister of Jammu & Kashmir on January 5, 2009, the people of the state looked up to him as someone who would steer the state away from its years of insurgency, strife and political brinkmanship. But after being in office for almost three years now, Omar seems to have developed a penchant for landing himself into heavy political weather. His latest salvo, calling for a partial revocation of the Armed Forces (Special Powers) Act in J&K, seems to have caught everyone off guard besides causing a flutter among the political dovecotes. Thanks to some hectic lobbying by Omar to have AFSPA repealed from some areas of the state, political polarity over the issue has ratcheted up both inside J&K and elsewhere in the country.

Omar’s proposal, it is said, has found favour from the Home Minister P. Chidambaram, though New Delhi is loath to taking any decision on the issue in haste. But what’s perplexing is why Omar chose to stake his credibility on such a sensitive issue? In the days since he has been beating the AFSPA drum, Omar has invited a barrage of acerbic comments and now finds himself painted into a corner over an issue that excites the most extremes of political reactions. Instead of finding open sympathisers to his cause, there are more carping critics who have taken umbrage at the manner in which he has whipped up his latest political stunt. Eyebrows have been raised over Omar’s choice in barrelling ahead with his demands straight to the Home Minister in Delhi before even taking his own security agencies and the Army into confidence.

Subsequent to his meeting with Chidambaram, Omar has also met Prime Minister Manmohan Singh, Finance Minister Pranab Mukherjee, Congress President Sonia Gandhi, Defence Minister A.K. Antony and Army Chief V.K. Singh on the AFSPA issue. Though the Army has been tight-lipped over the meeting, sources tell B&E that the two discussed the J&K government’s demand for withdrawal of the special law from parts of the border state. The meeting is said to have been inconclusive.

Critics of J&K’s chief minister say that his raking up the AFSPA issue is a well-thought out diversionary tactic intended to deflect blame from his recent political troubles. Omar has been in the news for all the wrong reasons recently, the latest being the custodial death of a political worker from his party who was picked up by the police from his official residence. Omar, though, claims that his demand for the repeal of AFSPA reflects popular public opinion. Could he be right? After all, even the three-member panel of interlocutors appointed by the central government to engage political actors in Jammu and Kashmir has reportedly called for the roll back of laws giving the armed forces special powers. And human rights activists have all along described AFSPA, which has existed in the troubled state since July 1990, as ‘a draconian law’ that has resulted in abuse and violation of human rights by the security forces.

According to the provisions of AFSPA, army personnel on duty in J&K or in the Northeast can make arrests without a warrant, or search the premises of a person without following the established procedure. Prosecution can be launched against erring army personnel but only after getting the central government’s sanction, which is not easy. Under this Act, all security forces are given unrestricted and unaccounted power to carry out their operations, once an area is declared ‘disturbed’. Even a non-commissioned officer has the right to shoot to kill based on mere suspicion that it is necessary to do so in order to “maintain public order”.

The Army is opposed to any change in the law on the grounds that it needs the protection of special laws when its men are deployed in anti-terrorist or anti-insurgency operations. In its opinion, it is not easy to achieve success in the fight against an invisible enemy in a difficult terrain without the protection of special laws. According to Sena Medal awardee and senior defence analyst Lt. Gen. (retd.) Satbir Singh, “Terrorism in the J&K region needs to be dealt with forcefully.” The Army, on its part, maintains that it always has the highest regard for human life because it itself loses men everyday. “We (the Army) have always applied the principle of minimum force but sometimes, extraordinary situations call for extraordinary measures,” says Singh.

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. 

IIPM Best B School
IndiaManagement Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

Are we still in the Dark Ages?

FDI in retail has been stalled by allies and opposition parties alike. The critical view on this issue betrays a very myopic vision on India’s future

While we keep talking about a resurgent India that looks at new possibilities rather than one that intends to stick to a comforting yet illogical comfort zone, certain developments from time to time serve as grim reminders that this need not necessarily be true. By the time of this going to press, a lot had been spoken, written, declared and retracted about the proposed opening up of the multi-brand retail (51% of it, that is) in India for foreign players. The final word is that it is on the backburner now and Finance Minister Pranab Mukherjee has declared that the decision will only be taken after a consensus is reached among all stakeholders. Considering how consensus is typically reached in India, hope rests on a sticky wicket. Expectedly, India Inc. has described it as a setback in terms of both economic rationale and symbolism. On the day the decision was announced, the markets saw a precipitous decline in stock prices of listed retailers Pantaloon (by 12.86%) Koutons (by 6.49%) and Store One (by 2.49%). The reform, which was meant to kick-start approvals for a long queue of pending reforms and was termed as the initiation of a mini-liberalization has been gutted at the onset.

Currently, organised retail is expected to account for 6-7% of total retail in the country with a turnover of around $28 billion. It is expected to increase its share to around 20% by 2020, when the industry as a whole will reach a size of $1.25 trillion (BCG report), and FDI could in fact make even these predictions look pessimistic. Consider the case of the telecom sector in India. The increase in FDI beyond the 49% cap to 74% acted as a welcome catalyst for the industry. The sector has since been one of the largest recipients of FDI in India (contributing around 8% of the total FDI to the country) with $7.55 billion invested in FY 2010-11 and $12.34 billion received in FY 2009-10 as per data from Department of Industrial Policy & Promotion. It has been critical for the execution of the strategic plans of domestic players. The National Telecom Policy of 1999 projected a subscriber base of 500 million in India by 2010, while the actual number easily crossed 700 million in that year. Amit Bagaria, Founder Chairman & CEO, ASIPAC, asserts, “Telecom in India developed much faster after FDI was allowed and this helped bring down telephone call charges by 99% in 16 years.” FDI in retail, in turn, means a welcome overhaul of the supply chain in the country. Supply chain costs in India are 12-13% of GDP compared to around 8% in developed countries. A CII report in 2010 projects that supply chain inefficiencies in India cost the exchequer around $65 billion every year. With a $100 million minimum investment benchmark proposed by the government and at least 50% mandated for back end operations, a massive overhaul can be visualised. The setting up of cold storage in the nation shall help reduce the enormous 30% wastage of farm products. It may not be a mere coincidence that the call for FDI in retail saw some initial support from the Badal government of Punjab, where Wal-Mart set up shop with Bharti in a cash & carry format. Later on, of course, the Badal government had to succumb to the whims and fancies of its political ally BJP.

A major stumbling block in Indian back end operations is the large number of middlemen. Between the farmer and the consumer, the product goes through upto four intermediaries including the aggregator, the market trader, the wholesaler and the sub-wholesaler. In western countries, there is normally just one point of contact. These unnecessary levels can significantly increase the price of the commodity for the consumer by as much as 100% in some cases. According to a study by Boston Consulting Group, while a farmer in India gets at most 35% of the market price for his produce, the figure can rise as high as 65-70% for farmers in developed nations like Australia.

The prime reason cited for a rollback of the reform by the opposers is the possible closure of mom & pop stores and the huge unemployment it would result into. According to Tamil Nadu CM Jayalalitha, the move would lead to massive job losses among the 40 million employed in the trading sector in India. Factually though, as industry bodies argue, out of the 40 million employed in the trading industry in India, 35 million are employed in smaller cities where population is less than a million (the government has initially restricted the FDI leeway to 53 cities with 10 million plus population). So they would be largely unaffected by foreign multi-brand retail establishments. Furthermore, large retail setups require high quality labour and would need to make massive investments in hiring, training and development. In addition, the catch that 30% of the inventory has to be sourced from local SMEs also provides a wonderful opportunity for Indian companies to scale up and become more powerful brands, the way it’s been for counterparts in countries like China & South Korea. Consider, for instance, how Wal-mart stores in China sources over 95% of their merchandise locally.

Anand Sharma, Union minister of Commerce, claims that over 10 million jobs shall be created within three years post the implementation of the policy. According to a projection by ASIPAC, 4.35 million jobs will directly be generated from organised retail in another 4 years, assuming that this segment will occupy 783.63 million sq. ft. of retail space by that time. The report argues that organised retail will only affect around 19,850 businessman rather than the many millions that are talked about.

Leave alone the ministry and industry honchos, even some local retail associations feel that the reform is a step in the right direction. According to K. S. Khamba, President, Hauz Khas Market Association, which represents a number of mom & pop stores, the entry of foreign retailers shall instigate improvement in the retail industry with a shift towards service oriented retailing. The mom & pop stores, who thrive on strong personal relationships with customers and services like credit and home delivery have the ability to compete with organised retailers. Also, while it has been taken for granted that the cost of products sold by organised retailers will be lesser, it may not necessarily be true. A survey by Assocham claims that kirana stores provide price undercutting to the extent of 25% and also offer options for avoidance of payment of duties such as VAT & other local levies on articles sold by them.

Even the governments, at both the central and state level, are set to gain in the long run since FDI would bring into the tax net a huge section of daily sales which go unchecked at the moment. According to an ASIPAC study, a total of Rs.1.58 trillion shall be generated as additional tax if FDI is implemented by means of GST collections at various points that was previously unaccounted, corporate tax generated by these firms, and the personal income tax garnered due to the creation of new taxable labour.

With so many multiple benefits for the Indian economy, the entire hullabaloo about the perils of FDI is illogical. And so is the logic that Indian farmers and businesses are unprepared. We were not prepared in 1991 for liberalisation either. We always seem to put our house in order when a much debated change happens and presents real & present challenges along with opportunities. Stalling parliament and preventing FDI liberalisation in retail tantamount to preventing one very critical transformation. Only a very short sighted & ignorant vision on India’s future can be behind the backlash that the retail liberalisation agenda faces currently.

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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

“They can change the whole mining policy”

Prashant Bhushan, Lawyer & Activist

The Union Budget is an extremely important process for the country, as it not only decides who will be paying taxes and what kind of taxes; it also decides where this money from the government will be spent and the manner in which it will be spent. The budget sets the tone to the economic policies the government wants to follow.

Unfortunately, many things that should have been done through the budget are being done secretly in India. Take the example of the surreptitious tax holiday given to foreign companies by allowing them to deploy the Mauritus route. Strictly speaking, if the government wanted to exempt foreign companies from taxes, it should have been done by way of budget by providing for it in the Finance Act. The government, sadly, has chosen to do so surreptitiously by passing a CBDT circular. Of course, the government does not have the political consensus that is required to pass something of this kind, which is why they have chosen to do it secretly. This secrecy has also been observed to be encouraging many opaque financial transactions in the country in the sense that many countries come into India through the Mauritius route and there is a lot of black money generated through the Mauritius route. Unfortunately, the government is just not bothered; and in fact, seem to be encouraging it. Even in the case of Vodafone, where although the judgment was wrong and bad, it can be easily corrected by means of a legislation, which can be passed along with the budget. The Income Tax Act can be amended with retrospective effect to plug such a leak. Lack of political will on behalf of the government to ensure compliance of laws is one problem. The second problem is that enough money is not being allocated for critical sectors of the economy such as healthcare, judiciary & even education. Even the money allocated in programmes like MGNREGA is largely misappropriated due to lack of accountability and more importantly, lack of institutions to enforce accountability.

Unfortunately, for the past twenty years, most budgets that we have seen are geared towards what the Prime Minister calls GDP growth, even if it is achieved by breaking the backs of the poorest people in this country such as tribals, taking away their lands and livelihood and giving it to the richest corporations in the country essentially for plundering our natural resources. These budgets have also been totally unmindful of the environmental consequences of such growth. Growth for the sake of increasing profits of corporations, particularly foreign corporations, has been the philosophy.

The government can’t be talking policies like giving away your mineral resources to corporations for a pittance, where you get a royalty of 1%, you don’t charge anything by way of lease money and allow resources worth lakhs of crores to be extracted and exported out of the country on the basis of first come first serve, which is the policy being followed in giving out mining leases. In the same way, we have seen a totally dishonest, discriminatory and arbitrary policy by the government in the 2G case. There is much more money involved. There you have several lakh crores worth of natural resources of the country being looted, which should ideally be public resources and public assets. This policy has been unmindful of equity among the poorest people who live on that land and have been displaced, environmental consequences and also inter-generational equity. It is sad to see this government behaving unabashedly as an agent of these multinational corporations.

The budget itself cannot fix everything but it can fix some things plaguing this country in the current scenario. They can change the whole mining policy as there is huge revenue involved. Royalty could be 50% or even 75% of the market value of the minerals and you can have a policy of auctioning the mining leases, which is what the Supreme Court has also said. This auction of mineral resources could generate enormous amounts of money just as the 3G auction did.

The government should ideally have its task cut out for the budget if it wants to put an end to unbridled corruption and the huge financial scams breaking the backbone of this country. First, it must plug the Mauritius route. Then it should put an end to the manner in which mining leases are given out. There should be much lesser mining in India. In fact, mining should not be in the private domain at all. Also, the government should scrap the FCFS policy when it comes to allocation of natural resources. This would also ensure huge revenues, which could be put to good use for the public.

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. 

IIPM Best B School
IndiaManagement Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

Painful but cathartic verdict

By terminating all 122 licences issued by former telecom Minister A. Raja, the Supreme Court has shown its utter disgust and contempt for policies that smack of bias and are rigged to serve partisan interests. Will the government now come up with a transparent policy for allocating licences?

Much muck and dust has been flying around ever since the 2G scandal prised open yet another egregious instance of the unholy nexus between our crooked politicans, complicit bureaucrats and compromised businessmen. The landmark Supreme Court judgement early this month, cancelling all 122 2G licences issued by former telecom minister A Raja, brings to an end the kerfuffle that had been reverberating in the nation’s corridors of power and business. The SC verdict marks the opening of a new chapter in an otherwise so far sordid saga that has dogged India’s telecom sector in recent years. Immediately, following the verdict, telecom minister Kapil Sibal announced at a hurriedly called press conference that his government welcomed the SC ruling, which would help “remove the uncertainties clouding the telecom sector.”

Meanwhile, in the aftermath of the apex court ruling, several telecom operations seem to be in a state of funk. Many of them snapped up licences thinking they were buying into India’s telecom success story. But the SC ruling, some people say, seems to have thrown out the baby with the bath water. Copping the blame on the telecom players for obtaining a licence given out by the government on the basis of a policy that the Supreme Court has now repudiated seems a tad rich. Unfortunately, in light of the cancellation of telecom licences, these operators now look like having become dupes of the con played out by Raja and his underlings. The court’s ruling also comes as a stinging excoriation of the UPA government which, despite being alerted by various quarters to the flimflam orchestrated and pulled off by Raja and his minions, chose to string along with the first-come-first-serve policy for granting 2G licences.

Some players are certain to bear the brunt of the SC judgement more than the others. Already, Bahrain Telecommunications Co (Batelco) has announced that it is pulling out of its joint venture with STel and exiting India. The C. Sivasankaran-owned STel was among the beneficiaries of Raja’s 2G spectrum allocation. United Arab Emirates operator Etisalat, Norway’s Telenor and Russian company Sistema are the other foreign firms affected most as they had bought shares in the Indian companies whose licences have been scrapped. The court has given these companies four months’ time to shut shop. With the cancellation of all its 22 licences, Uninor (Telenor’s JV with Unitech) is the worst affected by the judgement. Though the company has one of the lowest average revenue per user of Rs 98, Uninor has the highest number of subscribers (36 million) amongst the greenfield operators. It has a workforce of around 17,500 and is operational in 13 circles. Uninor has also made substantial investments of around Rs.140 billion in the market.

Not everybody stands to lose though. Older incumbents such as Airtel, Vodafone and Idea stand to gain a lot since they are the ones who have been in operation well before 2008 when Raja gave out the new 2G licences. Idea has not done too well in the new circles it had won and hence its loss of nine circles does not amount to much. These players will most likely bid for maximum circles when fresh auctions are held so as to expand their reach further. “The court has said the government must now get the market value of these licences,” said a visibly elated Subramanyam Swamy, who was one of the parties that challenged the 2G licence allocations in the court.

While the angst of players adversely affected by the judgement is understandable, the SC has, in one deft stroke, dispelled the fog and murkiness surrounding Raja’s 2G licence allocations. The court’s verdict has ensured that the law of the land prevails. It has sent out a strong message to both the industry and government that crony capitalism will not be tolerated and that corrupt business deals facilitated by a collusive government will be subjected to judicial scrutiny. Says Member of Parliament Rajeev Chandrashekhar, “This is the first time that there has been such a detailed judicial scrutiny of the licence issuing process. This judgment signals that the sector is finally open to only those investors and stakeholders who wish to invest, build and succeed by following the laid down rules and laws.” He adds that the judgement clarifies many policy confusions and also lays down the mammoth task of cleaning up and reorganising the sector over the next year or so. “This scrutiny and the judgement establishes the unambiguous basis for licence grants through auctions or market-based mechanism by the government today and in the future.”

In order to prepare the ground for a fresh round of 2G spectrum auction, the Telecom Regulatory Authority of India (TRAI) has come out with a pre-consultation paper. The regulator has also sought to allay fears of existing subscribers in circles where telecom licences of operators have been cancelled. According to TRAI, subscribers need not fear about their connections as they can port to other service providers in their respective circles. While the modalities for holding the auction are being worked out, the government expects the auction to fetch a revenue of about Rs 750 billion. However, following the cancellation of licences there is likely to be an overabundance of spectrum in the Indian market, which will ensure that prices remain low. Besides, incumbent operators have already paid through their noses for 3G and Broadband Wireless Access (BWA). These investments will take a long time to turn profitable. In such a scenario, it seems doubtful whether these service providers will warm up to participating in another round of auction. Moreover, the incumbents (whose licences have not been cancelled) have enough 3G spectrum which can be used to accommodate new subscribers. Says Rajan Mathews, Director General of the Cellular Operators Association of India (COAI), “I don’t think that kind of money is available with domestic players. That is why the government itself indicated that it will raise the FDI limit to 74%.” Just to ensure that his reasoning comes across more convincing, Mathews draws your attention to 12th Five Year Plan proposals for the telecom sector. “The preliminary numbers put out by the Planning Commission suggest Rs 6,500 billion as the outlay for rolling out various initiatives by government. They themselves admit that 80% of that would have to come from international sources.”

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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

“There is no reason to believe that advertising does not plan successors”

How do you view the current state of succession planning in the ad industry?
It depends upon individual agencies so I don’t know what their plans are. But one must prepare some time in advance so that you can groom that person. One should try not to interfere too much in the process because you don’t want to leave a clone of yourself. So the head should always be involved in helping the person but not interfere to the extent of becoming a hindrance.

The quality of people coming in to the advertising industry is not as good as it used to be before. Is that true?
That is not true. Because we’ve seen people around for a long time, there is always a feeling that the present is always more stable than the future. But that is not the case. There are brilliant people in this industry. We groom them in the role of a captain and that’s how captains emerge. Succession planning is not done by hiring new talent out of a management institute. It is done from amongst the people who have been around for quite some time. So I would say that the second level of leadership is very much ready across the industry.

If we look at the corporate world, the CEO has a set of people who are groomed as future prospects. Given the fact that advertising is fundamentally a different kind of industry, do you think the same process applies here as well?
Of course it does. There are always three or four people and one of them ends up taking over the reins. And that doesn’t mean others have to go. They are given appropriate roles and responsibilities. It’s like cricket. When Dhoni becomes captain, Tendulkar shouldn’t say, “I’ll not play anymore”.

But don’t you think the Indian advertising industry is not as good when it comes to planning for a successor?
I’m not certain. I don’t think so. If you look at the sort of people who are heading agencies today, they are very good at their job. And there is no reason to believe that advertising does not plan successors as professionally as marketers do. We do it equally well.

During the 1970s and 80s, people used to come into advertising from totally unrelated backgrounds. But today, they are well trained, more focused and armed with management degrees. Do you think that the flair for creativity in the new blood is not as good as it was a decade or two back?
I can say it from Ogilvy’s point of view that we do not go by degrees. We go by attitudes and passion. Do we go on a hiring spree from management institutes? I don’t think so. And do we completely write off the management types? Again, I don’t think so. As far as your question pertaining to the creative flair is concerned, Ogilvy has been at the forefront of creativity for almost a decade now. And all the work isn’t done by me. You have to give them credit. So I think there are good people. And see for yourself. Look at the work that came out five years back and look at it now. Isn’t it better?

What is the state of talent retention? How does Ogilvy retain talent?
I think talent retention is a problem in the industry. We need to re-look at our business models. We need to remunerate our people slightly better. I think the biggest thing that people respect is the opportunity to express themselves. We do our best to give them independence. Let them own the campaign, let them own brands. We try to create an atmosphere that’s lovable. At the same time, we are doing our best to look at benchmarks in the industry and stay ahead of them.

For more articles, Click on IIPM Article


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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM in sync with the best of the business world.......
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS
Planman Technologies

Why doesn’t succession planning work in Ad agencies?

Critics have often lamented the lack of well defined succession planning in advertising agencies, a problem attributed to both intent & the dynamics specific to this industry. But not giving this strategic imperative its due could eventually hurt them badly in the long run

For those of us who did witness Subhas Ghosal reign over the advertising industry, it would be an understatement to describe him as the man who reinvented the very idea of creativity in India. Starting his career at HTA (Hindustan Thomson Associates, now known as JWT India) in 1944 under advertising legend Edward J. Fielden, Ghosal went on head HTA and was also the mastermind behind Contract Advertising (JWT’s sister concern). His rise to the top was pretty smooth. Given the kind of work he delivered, it just had to be that way. But before he took over as CEO, the board of HTA faced a dilemma. During the late 1970s, Ghosal was offered the job thrice and thrice he refused. An ad veteran who is well informed of the state of affairs at the agency in those days reveals to 4Ps B&M that top executives who were close to Ghosal had made it clear to the board that it had to be either him or one of them. When nothing worked out, HTA got hold of a person who was not an ad guy. He concludes, “Soon, there was a lot of confusion and Ghosal had to be finally persuaded to go to Mumbai and take over. This is an iconic case of succession planning going wrong. The agency thought that Ghosal was the right man. Ghosal said no. And suddenly, they were in the dark.”

When Ghosal finally stepped down in 1984, he was succeeded by Mike Khanna, who had been with HTA for close to 18 years. Khanna presided for two decades before finally handing over the reigns to Colvyn Harris. However, what is interesting to note is the fact that months before this, Khanna was quoted as stating, “No decision has been taken yet (on succession planning). We have a big pool of talent to choose from. Succession planning at JWT is not very simple.” And he also denied speculations that Harris will take over as Chairman of JWT India. Given the scale and size of JWT, it does seem odd that the agency did not have a clear road map on the issue of succession. Although, on the face of it, a compromise on this important area might not appear to have any significant impact, the true story is starkly different if you dig below the surface. For example, during the Khanna-Harris transition, JWT India ended up losing Sunil Gupta, who was then the Senior VP & General Manager, HTA and was apparently in the race for the throne. (In fact, even when Khanna was promoted to CEO in 1984, Ahluwalia and Ram Ray – two of HTA’s key executives – had resigned).

If you thought that these are just isolated instances, look at ad land a little more closely and you’ll realise that the industry witnesses high profile exits and shifts quite regularly, and a dissatisfaction with the pecking order is often cited as the most ostensible reason. In 2001, Rajiv Agarwal resigned from Enterprise Nexus where he was serving as Managing Director. The development was totally unexpected, because Agarwal had been quite instrumental in ensuring the growth of the company. Similarly, in 2008, Agnello Dias and Santosh Padhi put in their papers at JWT and Leo Burnett respectively, and joined hands to start TapRoot. In 2010, Priti Nair quit BBH India and founded Curry Nation. In the case of Nair, BBH had to wait for quite some time before someone could fit into her shoes. Shedding light on the crunch for talent to fill in a position, Nair tells 4Ps B&M, “To narrow down on a successor takes time. It takes time to evaluate performance with a varied set of circumstances. Unfortunately in advertising, the turnover is very high and people don’t stick around long enough anymore as they used to.” Well, as is evident in organisations even outside the ad world, succession planning is not just important for the company but also for the people in race for the top job. As Arvind Wable, Executive Director and CEO of Draftfcb Ulka, puts it, “It is important because it helps the organisation grow beyond individuals. If an individual leaves, it shouldn’t impact the business of the agency. Further, succession planning also gives an assurance to people in the organisation that they have the opportunity to move up the ladder.” In fact, the people driven nature of the advertising business makes succession planning even more crucial for the industry. In their book titled ‘The advertising industry business’, authors Eugene J. Hameroff and Herbert S. Gardner write, “By its very nature, an agency is highly dependent on the talents of a small group of people. So a prolonged illness or death can play havoc with an agency that hasn’t foreseen these possibilities and made some advanced provisions to meet them.”


For more articles, Click on IIPM Article

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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM in sync with the best of the business world.......
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS
Planman Technologies

ONLINE GAMES, A PATH TO YOUNG CONSUMERS

Like many marketers, food companies are now using multimedia games, online quizzes and cellphone apps to build deep ties with young consumers.

Deep into one of her favourite computer games, Lesly Lopez, 10, moves her mouse to click on a cartoon bee. She drags and drops it into an empty panel, creating her own comic strip. Lesly likes this online game so much she plays twice a week, often emailing her creations to friends. “I always send them to my cousin in Los Angeles,” she said. But this is not just a game – it is also advertising. Create a Comic, as it is called, was created by General Mills to help it sell Honey Nut Cheerios to children.

Like many marketers, General Mills and other food companies are rewriting the rules for reaching children in the Internet age. These companies, often selling sugar cereals and junk food, are using multimedia games, online quizzes and cellphone apps to build deep ties with young consumers. And children like Lesly are sharing their messages through email and social networks, effectively acting as marketers.

When these tactics revolve around food, and blur the line between advertising and entertainment, they are a source of intensifying concern for nutrition experts and children’s advocates – and are attracting scrutiny from regulators. The Federal Trade Commission has undertaken a study of food marketing to children, due to be out this summer, while the White House Task Force on Childhood Obesity has said one reason why so many children are overweight is the way junk food is marketed.

Critics say the ads, from major companies like Unilever and Post Foods, let marketers engage children in a way they cannot on television, where rules limit commercial time during children’s programming. With hundreds of thousands of visits monthly to many of these sites, the ads are becoming part of children’s daily digital journeys, often flying under the radar of parents and policymakers, the critics argue. “Food marketers have tried to reach children since the age of the carnival barker, but they’ve never had so much access to them and never been able to bypass parents so successfully,” said Susan Linn, a psychiatry instructor at Harvard Medical School and Director of the Campaign for a Commercial-Free Childhood, an advocacy coalition.

Linn and others point to many studies that show the link between junk-food marketing and poor diets, which are implicated in childhood obesity.

Food industry representatives call the criticism unfair and say they have become less aggressive in marketing to children in the Internet era, not more so.

Since 2006, 17 major corporations – including General Mills, McDonald’s, Pepsi, Coca-Cola and Burger King – have taken a voluntary pledge to reduce marketing of their least nutritious brands to children, an effort they updated last year to include marketing on mobile devices.

The companies have good financial reason to pitch to children. James McNeal, a former marketing professor at Texas A&M University, estimates conservatively that children influence more than $100 billion in food and beverage purchases each year, and well, more than half of all cold cereal purchases. Children “have power over spending in the household, they have power over the grandparents, they have power over the babysitters, and on and on and on,” said McNeal, who has researched family behaviour for decades and consulted for major companies on marketing to children. “All of that is finally being recognised and acknowledged.”

Some parents, like Lesly Lopez’s mother, Toribia Huerta, 26, say the online marketing is subverting their efforts to improve their children’s diets. Huerta said Lesly and her younger siblings pester her for sugary cereals they see in the games and for snacks like Baby Bottle Pops, a candy with a game site that the girl also visits often. “They ask me for it constantly. They’re hard to resist when they whine,” Huerta said, speaking in Spanish through a translator.

For more articles, Click on IIPM Article

Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Proves Its Mettle Once Again.....
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS
Planman Technologies

“Four pillars of success”

Through a gamut of marketing strategies, Kamal Nandi is looking to build a strong recall for brand Godrej in the appliances space

When Kamal Nandi took up responsibility as VP Sales & Marketing, Godrej Appliances in 1997, its business was witnessing severe competition from South Korean majors LG and Samsung. His prime challenge was to rejuvenate Godrej into a youthful & contemporary brand. He talks to deepti singh on the progress so far:

Godrej has a vision to regain leadership in the durable space in India. For the same, how do you lead and motivate your team?
The biggest challenge has been to first create a good team and then build ownership amongst them of a shared dream. Talking of leadership style, I think I have a mix of a pragmatic and a democratic style of leadership. I have always focussed on four pillars for success – optimism, transparency, empathy and empowerment. We have built a homogenous and winning team by inducting professionals from diverse industries like advertising, retail, market research and consumer durables.

How do you compete with brands like Samsung and LG who have overtaken many successful brands in India? Who do you consider your immediate competitor?
When you are pitted against the multinational giants, your best armoury is to understand and connect better with the Indian consumers. Godrej has been pioneering technologies and features, which are relevant to Indian consumers, their habits and lifestyle. Our immediate competitor is Whirlpool, which operates in similar business spheres.

After the success of the LCD TV-cum-game console, what new innovations and portfolio expansions are you now planning?
Godrej’s appliances division is always looking for more innovations in our products. Smart appliances are in demand and seeing substantial growth as customers are seeking more convenience and control over their products. The television market in India is currently around 13 million units per annum. Our aim is to capture 5% of this market in the first year of operations. We are also expanding the portfolio to cooking ranges & water purifiers. Apart from building on our existing appliances range, this will help create synergy with group firms such as Godrej Interio, which makes modular kitchens.

How does the immediate marketing scenario look? How are you planning your growth amidst this scenario?
The current scenario is a bit depressing, given the global economic uncertainty and the Indian inflationary trend. Consumers are retreating to the recessionary mindset. Given their shrinking discretionary spends; consumers are postponing/curtailing their purchases and trying to conserve in this environment. Our strategy has been to aid consumers with better finance options to help them meet their aspirations. For example, for the festive season, offers like “Upto 100% Cash Back” on the appliances purchased have been launched. Going forward, in a stable economy, we will focus on launching revolutionary and convergent products across categories and services relevant to Indian sensibilities to drive preference for brand Godrej.

How do you manage your work and personal life and how critical do you consider this issue?
I think, it is critical to have a proper work-life balance to be professionally effective and efficient. I have always tried to give equal importance of time to both work and personal life and have not allowed one to interfere with the other.

For more articles, Click on IIPM Article

Source : IIPM Editorial, 2011.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Proves Its Mettle Once Again.....
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM RANKED NO.1 in MAIL TODAY B-SCHOOL RANKINGS
Planman Technologies