IIPM ARTICLE AND EDITORIAL

Saturday, August 07, 2010

The page 3 of the BPO industry’s here

One could clearly see a sudden increase in the number of M&As in the Indian BPO industry over the last year. What is it that is actually prompting players to go for a kill? by Ashutosh Harbola

While 2008 was a great year for mergers and acquisitions (M&As) within the Indian BPO industry (the industry witnessed 13 M&As including Citigroup Global Services’ acquisition by TCS for $505 million, Quattro’ takeover of RSM McGladrey and Babel Media for $50 million & $125 million respectively, WNS buying Aviva Global Service for $230 million, et al), uncertain economic conditions across the globe perhaps forced several companies to hold on to their cash last year (M&A activity within the industry reduced by 55% in 2009). But the year still saw players like EXL Service Holdings acquiring Schneider National (for $40 million), Cognizant buying UBS BPO Unit (for $75 million), EXL Service Holdings purchasing Am-Ex Travel Services Captive India for $30 million and Infosys BPO taking over McCamish Systems for $38 million.

FY2010 has just started and players like Genpact and Aegis have already announced one acquisition each. While Aegis, the back office company promoted by the Essar Group, has agreed to acquire US-based education and financial service provider Sallie Mae’s customer service centre, India’s largest back-office firm Genpact is taking over US-based analytics and data management services provider Symphony Marketing Solutions. CBay Systems India and Avantha Group too have announced the acquisition of Spheris India and US-based Pyramid Healthcare Solutions respectively. So what is it that has prompted Indian BPO players to go in for the M&A option, one that comes with a huge amount of operational and value destruction risk?

The expectably positive sounding Nasscom-McKinsey report has projected the BPO space to be a $360 billion market opportunity across the globe by 2020. This is one reason why the industry continues to remain a favourite with VC & PE players who accounted for almost over 20% of all deals in 2009. Not to forget, their total investment portfolio for this industry has grown 16 times in the past eight years, at a CAGR of 42%. Even in a year weakened by recession, there has been no let-up in their interest in the BPO sector in India, with a 9% increase in total investment portfolio over 2008. And with the overall global economy recovering in 2010, that concentration is only poised to augment further.

Another thing which has prompted the shift is the fact that the Indian BPO sector has evolved significantly over the last decade, and has matured beyond the pioneer phase to enter the ‘emerging rapid growth’ phase. Players in the BPO industry can now be seen foraying into areas such as business analytics, knowledge-based services apart from transforming clients businesses through a mix of re-engineering skills, technology enabled platforms, new operating models and increased depth of services.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

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

For More IIPM Info, Visit below mentioned IIPM articles.
“We will change your outlook” - The Sunday Indian on B-SCHOOL RANKING SCAMSTERS EXPOSED! A must read...
The Sunday Indian:-
B-SCHOOL RANKING SCAMSTERS EXPOSED!
For Exclusive Footage by Sunday Indian Click Here

Outlook Magazine's B School Ranking Scam Exposed
Business Standard Exposes the Outlook Magazine Money Editor
Don't trust the Indian Media!

IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM: An intriguing story of growth and envy
Prof Arindam Chaudhuri of IIPM on MF HUSAIN‎

Friday, August 06, 2010

Your butt is my smokin’ problem

Smoking regulation has achieved some success; but it is pathetic that governments don’t have the honesty and sincerity to completely ban cigarette production globally – it’s clear how well money and lobbying works

It is appalling that despite all the medical advances mankind has made, the twenty first century still grapples with diseases that are perhaps even deadlier than those in the dark ages and have killed millions. The least we can do is to not add to the already depressing statistics through a social ill like smoking.

Innumerable researches have concluded that cigarettes contain 11 different known compounds that cause cancer. And almost everyone in any corner of the world – smoker or a non-smoker – is quite convinced that there are enough reasons to quit smoking irrespective of age, wealth, colour of skin or region where they live. Nearly every nation on this earth has realized the need for policy interventions and have gone some distance as well. They have achieved some success too, especially in the developed part of the world. As per data provided in Tobacco Yearbooks by Economic Research Service, US Department of Agriculture, during the 17 years between 1990 and 2007, while production and export of cigarettes in the US dropped by about 34%, consumption decreased by 31%. In 1990, cigarette production was 709.7 billion units, which came down to 471.6 billion in 2007. While the consumption was around 487 billion units per year in 1990, it came down to 360 billion in 2007 in the US. The picture is pretty similar in other developed nations of the world.

However, this does not mean that the job is done. Data on a global scale presents a horrifying picture today – more than ever before. There are 1.1 billion smokers in the world, and if current trends continue, the number is expected to reach 1.6 billion by 2025. More horrifyingly, of these, about 80% live in the low or middle-income countries. There are over 300 million smokers in China itself; consuming over 1.7 trillion cigarettes a year, which means 3 million cigarettes a minute. Researches further show that approximately 10 million cigarettes are purchased every minute; 15 billion are sold each day, and over 5 trillion are produced and used annually.

The true return of this booming business is evident in the fact that in every eight seconds, tobacco use claims a victim in some part of the world. That means around 5 million deaths annually. Moreover, trillions of filters, filled with toxic chemicals from tobacco smoke, pollute the environment as discarded waste every year. Realizing the importance of controlling this menace, many countries have laws in place to ban advertising and any kind of promotional activities related to smoking. Despite this, a 1998 survey found that tobacco companies were among the top 10 advertisers in 18 out of 66 countries surveyed.

Thus anti-smoking policies have worked to reduce tobacco consumption; but it is still a serious issue that needs to be brought under control. In such a situation, it is often debated whether banning the tobacco production itself as a policy decision would deliver the desired results. There are complications on this front. Chinese counterfeit cigarette production reached an unprecedented 400 billion cigarettes a year, enough to supply every US smoker with 460 packs a year in just one decade since 1997; making Yunxiao the “illegal cigarette manufacturing capital of the world.” Also, there is a case of a conflict of interest, since the tobacco industry funds government treasuries massively every year.

To ban cigarette production will not only need strong political will, but as the 2005 movie Thank You For Smoking clearly showed, will need a lot of honesty – with the Tobacco Master Settlement Agreement between four largest US tobacco companies and 46 US states, which freed the companies of liability due to harm caused by tobacco use – being a shocking example.

Akram Hoque

Thursday, August 05, 2010

Living up to their name finally?

From a regional player that faced the ire of debtors in 2003 to a company that is aiming to be one of the leading cement players in India in the coming times, India Cements is planning a paradigm transformation. Can it go the distance? by Virat Bahri

Besides being dependent on the vagaries of one market, India Cements also faces the issue of high dependence on coal imports, where fluctuations in coal prices and exchange rates affect it in a big way. Naturally, as the company goes about with its capex plans, it would be more difficult to sustain margins if they don’t take steps to reduce costs related to coal as well as other inputs for its operations. The company is planning two 50MW plants and has also completed the formalities for a coal mine acquisition in Indonesia for the same, according to Srinivasan.

Then there is the lurking question of its continuing debt obligations, which are an outcome of the CDRM mechanism; and stood at Rs.1.02 billion as on September 2009. Furthermore it has $75 million worth of FCCBs due for redemption in 2012, which has been speculated as the major reason for the recent QIP issuance. Jinal Joshi, cement analyst, Jaypee Capital Services Limited, comments to B&E, “I’m bearish on the stock due to exposure towards FCCBs (which are likely to come for the redemption/conversion in FY’12) and higher depreciation and interest costs due to completion of capex in FY’11.” While the situation of debt is not as bad as it was in 2003, it is definitely a detriment to the company’s capex plans; whether they be for greenfield expansions or for acquisitions. In a sector where current installed capacity is 252 mtpa and 76 mtpa is expected to be added in the next two years, fast-paced capacity expansions are critical to gain a lead over the competition; and unless that happens, the CSK edge will have little meaning for India Cements. Adds Rakesh Singh, “The aim (of our expansions) is that we should be able to move at the same pace as the market if not faster.” He also tells us that the company cites service to be the key differentiator as they move from state to state. For instance, the company has mandated that its plant or branding unit should not be at a distance farther than 300 km. from its customers or dealers.

Also, the situation of surplus supply in the South Indian market is expected to persist, which will continue to hamper realisations. There was some improvement in prices in the month of March, but that is expected to be short lived. Archna Khemka, Analyst, Edelweiss Securities, elaborates, “Prices are up to INR 210-225/bag in Hyderabad. Interestingly, prices in other states like Tamil Nadu have also shot up to ~INR 260/bag levels. Interaction with market participants reflect that current hikes are opportunistic and discipline is unlikely to last in monsoon.” According to Joshi, the company’s realisations are expected to fall by another 5% in 2011 due to its huge presence in the South Indian market. The situation is expected to stabilise in 1-2 years, since part of the new capacities have been absorbed and infrastructure investment is happening at a rapid pace. But till then, the Southern market will continue to face realisation issues. Rupesh Kumar, Analyst, Angel Broking, agrees, “Short term concerns on expected oversupply in next few months that will lead to a drop in realizations & rising cost pressures on account of higher coal prices as well as higher freight costs due to the issue of wagon unavailability.” On an overall basis, the demand is going to grow quite well for India. Amber Dubey, Director, KPMG Advisory, tells, “Over the next few years, demand from housing sector is expected to slow down but will be compensated by demand from infrastructure projects (roads, bridges, etc.) and overall cement industry is expected to grow with a CAGR of 7-8% over the next 5 years.” Naturally, one can expect more acquisitions, expansions and attempts by more other regional players to go national.

So ultimately, India Cements has two major contrasting obligations – to ensure smooth debt repayment on one hand and to expand pan-India footprint at a rapid pace on the other. Even though analysts may advise caution, market trends clearly call for upping the ante, while keeping their debt at manageable levels. It’s time for new ideas and for a more aggressive, risk taking Gen-Next, which is why the induction of Srinivasan’s daughter Rupa Gurunath into the board is a positive step. Holding on to their dominant South Indian market position is not a choice anymore, a fact they have realised.

With inputs provided by N. Asokan from Chennai

Virat Bahri

Wednesday, August 04, 2010

Desperately seeking Johnny

After having worked with some of the hottest men in Hollywood, JLo is desperate for more! Her quest won’t end until she works with Johnny Depp. The Monster in Law actress is even ready to go toothless, wear a pirate’s hat and an eye-patch if that meant she could work with Depp! We’re sure Depp must be floored!

Tuesday, August 03, 2010

J. Patrick Doyle, Global President & CEO, Domino’s Pizza

Global President and CEO, Domino’s Pizza,8 talks to b&e’s angshuman paul about the various peculiarities that personify the company’s India operations

B&E: Domino’s Pizza has been into this country for more than a decade. The initial years were slow growth years. Has there been any change in the growth momentum after that?
Doyle: Of course during the initial years, like any other MNC, we too had teething problems and it took us time to understand the Indian market. But that kind of a situation lasted just for two years after we entered India in 1997. Since the early 2000s, we have grown at a very fast rate.

B&E: So what potential do you see in the Indian market? Especially in terms of contribution to the global turnover of the company, where do you want to take the Indian venture?
Doyle: During the last two to three years, India has actually become the fastest growing market for us. India is the most important Asian market for us and Domino’s sees a huge opportunity in India for pizza and pasta. And in terms of contribution to the global turnover of the company, India is amongst the top 10 earners for Domino’s. Currently, India contributes to around 1.5-2% of Domino’s annual global sales – we expect to take it further to a double digit figure. By 2014, we expect India to be among the top five earners – and our concrete plans to achieve this goal are in action.

B&E: The quick service restaurant (QSR) market in India is growing at 25% by CII estimates, and categorically in pizzas, apparently 25,000 pizzas are sold per day in the various corners of the country. Where does Domino’s stand in this? And what strategy are you implementing to cash in on this fiercely growing market?
Doyle: We currently enjoy the leadership position in India in the home delivery segment and we’ve always believed in enhancing this too. This [home delivery] is the USP of our brand and we will retain this further. But yes, as I mentioned, in Indian market, there are lots of new opportunities to explore. For example in the tier II cities there are new markets and not many players are present there. Now, about 20-25% of the revenues for our company comes from tier II and III cities. In the future, therefore, we would be expanding more into such markets.

B&E: Are you referring to your retail presence in these cities? What are your actual retail penetration plans?
Doyle: We have 300 stores in India and in total 9000 stores across the world. In another three years, our target is to have 500 stores in India, apart from the aim of entering newer cities and markets. There is still a huge untapped market in the country to be exploited.

Monday, August 02, 2010

The gripes of rivalry!

In short, can the Hero Honda-Bajaj Auto rivalry ever end up in a result where Bajaj becomes #1? Clearly, this story is as much about Bajaj as it is about Honda; for the historic gripes of rivalry, which had till now only included moves, counter moves, claims, counter claims, has now become a testy, take-no-prisoners war by Pawan Chabra

Once upon a time, the demand for Bajaj two-wheelers exceeded supply by 2600%. Once upon a time, Bajaj was proud to maintain that it had no need for a marketing department but only for a sales department. Once upon a time... was long back in the ‘80s.

Bajaj made its first mistake during that time in the ‘80s by reading the Indian two-wheeler market wrong. They never imagined that their ‘loyal’ Indian consumer base would fall for the spin being spun by a cycle company (Hero Cycles) who’d set up a JV with a Japanese company, peddling the tag line of filling it, shutting it, and forgetting it too! They were wrong – grandiosely. Hero Honda, banking on the latest technology, changed the equations in no time. In alliance with its Japanese partner, Honda Motor Company, it dethroned Bajaj Auto as the market leader in the late-1980s, a position that remains elusive for Bajaj even today.

Even in 2006, with increasing sales, when the shadow of leadership was quite visible around the corner for Bajaj one month (the company needed to sell just 30,000 units more that particular month), Bajaj mysteriously decided to ignore the entry-level segment and started focusing on the premium segment to grab higher margins. The move opened the gates for Hero Honda took a seemingly unassailable and massive lead. “The competition got it a little wrong, we got it a little right; that has empowered us to stay as market leaders despite high competition,” says to B&E Anil Dua, Senior Vice President – Marketing & Sales, Hero Honda Motors. And after that year, Hero Honda has been filing record sales in the two-wheeler market and has been the undisputed number one in the two-wheeler industry. Can Bajaj Auto change this podium call ever?

Truthfully, there’s no telling. Bajaj Auto has been regularly browbeaten by setbacks through their corporate history, and many of their own making – but Bajaj Auto isn’t exactly faltering either. Analysts are quite certain that his moves are paying off for the company. There obviously are a few ghosts to handle.

“Bajaj is still away from the #1 position in the two-wheeler segment; but has aggressive plans to increase its market share over the next couple of years. It has a better business strategy by diversifying business and product portfolio through the KTM acquisition and JV with Nissan for a small car, as it will de-risk Bajaj Auto’s business model in long run,” says Vaishali Jajoo, Auto analyst, Angel Broking, to B&E. Hero Honda, on the other end, has been able to crank up the cash registers by banking solely on the two-wheeler segment. However, it hasn’t been the ultimate benchmark in core focus either, as the Hero group is today present in sectors like auto ancillaries, consulting and financial services. But the company hasn’t really been able to make a mark beyond Hero Honda. Pawan Munjal, MD, Hero Honda Motors agrees while talking to B&E, “The Munjals have diversified in other areas, but they’ve not gotten there. We have Mindmine, automotive parts; in a small way even in financial services with FinLease. In the earlier days, we thought it best to remain in our core domain. But going forward, we will be looking to diversify into unrelated areas as well.” Irrespective of that, there’s no gainsaying the fact that Hero Honda will have a tough time defending its high volumes in the domestic two wheeler market, and most from the unrelenting Bajaj Auto.

Saturday, July 31, 2010

In Good Faith

Srinagar’s rich cultural heritage, unique antiquity and its colourful environment make it different from other cities of the world. The city’s blooming and well-maintained gardens, beautiful rivers and natural lakes, and green mountains with snow-capped peaks are like the shining jewels in the crown of this 2000-year-old human habitat at 1,730 m above sea level. The city has been home to many seers, saints, poets, thinkers and writers whose brilliance and contribution have accorded it much pride and distinction.

Srinagar’s dissimilarity also lies in its shrines, mosques, temples and other sacred religious places like Hazratbal, Khanqah-e-Molla, Dasgeer Sahib, Shankaracharya and Khir Bhawani temples and many other holy places. The historical and architectural significance of these places is also appealing to the visitors around the year.

On the western shore of famous Dal Lake stands Hazratbal (literally meaning the majestic place) shrine, a monument, which, vast majority of locals believe, houses a holy relic of Prophet Muhammad. The relic is known as Moi-e-Muqqadas or the sacred hair and was brought to Kashmir 300 years ago.

“The Moi-e-Muqqadas reached Kashmir in 1699. The relic was first brought to the Valley by Syed Abdullah, a saint who left Medina and settled in Bijapur, near Hyderabad in 1635. After his death, his son, Syed Hamid, inherited the holy relic. Hamid sold it to a wealthy Kashmiri businessman, Khwaja Nur-ud-Din Ishbari," says Tariq Ali Mir, a journalist and a student of history. “It was initially kept in Naqshband Sahib, (a shrine in the heart of the Srinagar city) but the shrine was small and therefore not capable of handling the huge crowds that flocked to the holly relic each day. So, the relic was shifted to Hazratbal,” Ali Mir added.

Friday, July 30, 2010

Exclusive Darkness at noon

Dependants of jawans killed by Maoists struggle to stay afloat. A report from Orissa by B&E’s Dhrutikam Mohanty

Bardhan and his family reside in a single-storey building in Gadakana area of Bhubaneswar. It has neither a boundary wall nor a proper approach road. The entrance has no door bell. So we knock on the grille. The family’s pet dog, Blackie, barks in response. Jayakrishna is soon at the door to usher us in.

His elder son, Ajit Bardhan, was an Orissa police sub-inspector posted in the Maoist-infested Sundargarh district. While on patrol duty, Ajit was overpowered by a group of Maoists and abducted. The very next morning – the date was July 16, 2009 – his body was found near Jharbeda. Darkness descended on the slain cop’s family. Unable to withstand the shock, Jayakrishna suffered a heart attack. Ajit’s widow, Rosalin, who was expecting her first baby on August 7, experienced acute labour pain even as arrangements were being made to take her husband’s body to Puri.

The Orissa chief minister, Naveen Patnaik, came down to Ajit’s residence to express his condolences to the bereaved family. When he learnt about the condition of the cop’s father and widow, he immediately instructed senior officers to make all arrangements for them.

But nothing moved after that. Say Jayakrishna, “I am still wandering from one office to another for the release of my son’s provident fund amount and family pension. They haven’t even paid a small amount of Rs. 17,000, which I spent on my treatment after the heart attack. The CM had declared the government would bear all the expenditure. I have been to the Rourkela SP’s Office and the IG Operation’s office on several occasions, but nothing has been done. It is humiliating. It is as if they are going to do us a favour. Did my son lay down his life in vain?”

Ajit Bardhan, in a letter to his wife Rosalin, had once written that it would be the happiest moment of his life if he were to die serving the nation. If only he knew what would be in store for his family after his death, he might have changed his view. Rosalin, who recently got a police job under the rehabilitation scheme, is still waiting to get her other dues. She says, “My father-in-law has taken much pain to get my husband’s legitimate dues and I couldn’t help him because of my job and daughter Arushi.” Arushi is only eight months old.

Thursday, July 29, 2010

WHERE HISTORY SIMMERS...

Although known for its commerce; Amritsar has nurtured many a literary and artistic talent. It is the city of celebrated painter G.S. Thakur Singh and the famous novelist Nanak Singh. It is also the city in which a formidable talent like that of Urdu fiction writer Saadat Hasan Manto was nurtured. The daughters of this city have done it proud and among them are the country’s first IPS officer, Kiran Bedi, theatre diva Neelam Maan Singh, cinema directors Deepa Mehta and Mira Nayar as well as poet and actor Deepti Naval.

Amritsar is also famous for its hand-crafted Punjab juttis and savouries like papadh and warhi. And it is only this town that can tickle the tastebuds the Punjabi way like no other place. Come here for delicious thali fare at Kesar dhabha, Amritsari fish, karhai mutton, chana-kulcha and much else. They say you are not born unless you see Lahore and it is equally correct to say you haven’t seen Punjab if you have not been to apna Ambarsar, for that is the Punjabi colloquial pronunciation for the town.

Nirupama Dutt

Monday, July 26, 2010

Regencyhotel, Tunis

Luxury awaits you at the Regency Hotel, Tunis. Located only 20km away from Tunis-Carthage International Airport, this hotel is one of the favourites for tourists and those travelling for business. The hotel offers an array of amenities like an indoor heated pool, Hamam (the traditional Turkish bath) a paddling pool for toddlers, and a fitness centre for the health conscious. For those wishing to soak in the sun should seek no further as the hotel has its own private beach. That done, treat yourself to the finest exquisite liquor at the sports bar or relish the varied cuisines at the hotel's multi-cuisine restaurants. In a nutshell, this hotel has all that you desire and perhaps a little more!

The view: The hotel has a beach-side setting, offering a gorgeous view of soft sand and crystal-clear water.

Archi Type: The hotel architecture is a mix of the contemporary and the traditional, and an exterior that is best described as imposing. The use of exotic fabrics, fragrant woods and marble complement the grand architecture.

Bon apetit: Experience international gastronomic delights at the various in-house restaurants serving a variety of cuisines. At the Splendido Grill one could choose from a selection of grills and barbeques. For those who wish to hanker after oriental flavours, the White Elephant Thai restaurant offers exotic delicacies.

Around the corner: The hotel is strategically located at a stone’s throw from the tourists' point of interest. The Village of Sidi Bou Said and Carthage are a short walk away. One could also visit the Bardo National Museum and Tunis Centre, which are in easy reach of the hotel.

Under the carpet: The Regency Hotel comprises many floors, and with only two lifts available, choosing to move between floors via lifts could mean long waits.

In essence: Set in a picturesque location, the hotel offers comfortable accommodation and convenient facilities to its guests. Perfect for those seeking a beach getaway

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

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

For More IIPM Info, Visit below mentioned IIPM articles.
“We will change your outlook” - The Sunday Indian on B-SCHOOL RANKING SCAMSTERS EXPOSED! A must read...
The Sunday Indian:-
B-SCHOOL RANKING SCAMSTERS EXPOSED!
For Exclusive Footage by Sunday Indian Click Here

Outlook Magazine's B School Ranking Scam Exposed
Business Standard Exposes the Outlook Magazine Money Editor
Don't trust the Indian Media!

IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM: An intriguing story of growth and envy
Prof Arindam Chaudhuri of IIPM on MF HUSAIN‎