Britannia and Nestle are strong players in the southern region

The group’s move into the dairy business (butter, ghee, paneer, ice-creams) – for which it has already acquired two plants – is another feather in its pan-Indian ambition cap. T. D. Mohan, Director, CavinKare insists that the group will invest about Rs.180 crore into the dairy biz over the next two years. For now, Britannia and Nestle are strong players in the southern region, but CavinKare is confident that through its unique model of procuring milk from farmers, it will be able to make its dairy business worth Rs.1,000 crore in the next couple of years. “Our core strength is product development, distribution and brand building and we’re leveraging these in our dairy business,” adds Mohan. Besides, only last month, CavinKare forayed into the restaurant business by launching an outlet in Puducherry. And CKR’s team is actively scouting for potential acquisition of existing restaurants so that CavinKare can move in quickly to lend its brand.

To be fair, CavinKare has a lot going for it. Besides, Nirma may not have succeeded, but there are too many instances of regional brands making it big on the national scene. Anchor toothpaste, which started in Rajasthan is today ubiquitous all over U.P., M.P. and Bihar. Likewise, Ghadi Detergent kicked off in U.P. and has a huge presence in M.P., Rajasthan and Gujarat now. Kerala’s Jyothi Laboratories, is doing particularly well in the North-East and West Bengal.

CavinKare itself has beaten expectations. For instance, Chik shampoo is the market leader in U.P. and Nyle derives 90% of its sales from non-south regions. Even Spinz is a top-selling brand in M.P., while its deodorants sell spectacularly in Maharashtra too; Indica hair dye is going great guns in Gujarat. In fact, the group derives less than 50% of its sales from the south these days, primarily because it has maintained its low and mid income positioning in these regions too. And while its ambitions to straddle the urban SEC A segment in retail ventures like foods and beauty salons may yet come true, the same may not really hold true for the FMCG category per se. On the contrary, its past FMCG forays in the SEC A segment have not met with much success. Perhaps the astute entrepreneur CKR has an inkling of the potential bottlenecks. “If I’m asked who is CavinKare, I would say we are someone comfortable playing in the mass market as well as at the top end of the middle class. We are not present in the SEC A category as of now. For that matter even Sunsilk is not penetrating the SEC A category. So we are comfortable with the positioning we have given ourselves,” he says carefully.

They can however still do it. At the end of the day, it’s all about innovation, distribution and understanding the consumer and CKR has proven himself time and again on all three fronts. Most importantly, he has his eyes set high. He wants to be an “HUL in the making” in just another decade. Well, talk about the sheer joy of thinking big!!

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Source : IIPM Editorial, 2010.

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

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In the Pink of health

Economic development and health insurance go hand in hand; yet in the Indian context the correlation seems more skewed towards economic development. With enormous potential, glimmers of hope are emanating for the industry.

“Meant for the rich, educated or those in business… benefits hospitals more than holders” is the common (negative) perception about health insurance in India where the healthcare expense is a mere (3.6% of the GDP). What is startling is the fact that the health insurance market is still grossly under-penetrated with only 2% of the billion plus population possessing a health insurance cover. Juxtapose these with the fact that during 2008-09, the general insurance industry recorded total health insurance premium of Rs. 6,625 crore (a 30% improvement over the previous year).

Moreover, for the last six years health insurance industry has been growing at a CAGR of 35% to reach the current level. That clearly indicates the huge potential that the industry has in India. For private players in the domain, health insurance is emerging as an increasingly significant line of business. V. Vaidyanathan, MD & CEO ICICI Prudential Life Insurance Co Ltd, avers “health insurance contributes to 7% of the total premiums and we expect it to increase to 15%.”But then, as J. Hari Narayan, Chairman IRDA says, “the growth in numbers is also fraught with numerous challenges of ensuring accessibility, affordability and efficiency in the health insurance system, which requires sustained and focused efforts on the part of all stakeholders.”

But the question remains the same – why do people have a negative perception? It’s simply for the fact that approximately 70% of the health expenses are out of pocket. As a matter of fact out of the Rs.2 trillion health insurance spread, almost Rs.1.3 – 1.4 trillion are out-of pocket expenses. There is some inherent problems viz. definition of pre-existing disease/ critical illness, et al, which makes matter worse. 30% of health insurance claims are rejected and unbelievably 90% of these rejections are due to pre-existing diseases. If the industry has to grow, “the communication between sales force and policy holders must increase,” says Hari Narayan.

It is true that increasing awareness, rising healthcare costs, recent detariffing of the general insurance industry have been key drivers, but the real need is of products, which can capture other expenses. Standard definitions and list of critical illnesses and non-medical expenses will not only enhance customers understanding of these terms but will also help smoothen the interaction between the patients, hospitals, TPAs and insurers by minimising ambiguities.

Gyanendra Kumar Kashyap

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Source : IIPM Editorial, 2010.

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

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High Tech Computer Corp. ever heard about it?

Moving on, apart from the HTC Magic, the company is currently offering 11 handset devices (10 GSM and 1 CDMA) that fall in the price range of Rs.10,000 to Rs.42,000 and is now looking to move beyond just touchscreens. “HTC has already become synonymous with touch phones and large screens in the Indian market and from now on our focus would be to go beyond the same,” explains Ajay Sharma, Country Manager, HTC India. As far as the company’s belief runs, it is only through provision of some differentiating and interesting factor (like a feature which enables the user to switch off the phone’s ringer by just turning the phone upside down) that consumers in the country can actually be attracted; ‘differentiation’ is the word here!

Innovation lies at the heart of HTC, and as company officials claim, 25% of the total workforce is engaged in R&D. Though the company has managed to capture a sizeable presence in India, yet in terms of brand power, it has to make bigger and better marketing efforts, especially when the market has other well-established brands that had moved in much earlier than HTC. Another hurdle for HTC is that, given the fact that it operates in the price points above Rs.10,000, it is clearly gunning the upper crust of the market. Today, the only other player that operates in just the plus Rs.10,000 segment is Blackberry, but its brand is much more recognised and has thus already created a cult following amongst its target group. As Rajeev Makhani, a mobile handset expert and host of Gadget guru at NDTV states, “Blackberry has been widely accepted in the corporate circle, who have actually started a culture of Blackberries. In comparison to that HTC is still small in India.”

Another problem that occured with HTC in the recent past (read: the year 2008) is that, it had made a huge splash by marketing the fact that it has launched the cheapest touch phone, but then the global economic crisis followed and the company suddenly found itself faced against the wall. So where did it go wrong? “What happened with HTC was that it had not hedged against the dollar and was impacted quite adversely and because of that they were unable to launch any new handsets in the Indian market and hence could not keep up the excitement that they had earlier created,” says Ram Makhijani, a telecom analyst. Certainly, any keen observer would have noted the fact that today, HTC only offers 11 products, unlike during 2007, when it had as many as 17! But Sharma dismisses this as the truth as he proclaims, “We are evolving as a company, and what we were doing at that time was right then and what we are doing now is what the time demands from us now.” Defending its claims, HTC also points out that it grew by a whopping 300% during FY‘09 as compared to FY‘08. What’s more, the company plans to sell 1 million units by 2010!

HTC also claims that in its short span there have been a few learnings for them, which they are now applying to the market and is expecting to get good results out of the same. One such learning is that when a person is looking at buying a touch phone especially at such price bands, he/she prefers to get a feel of the same before paying for it and hence, just a dummy may not work. So, HTC has put in place a demo zone at high-end retail outlets to encourage experiential buying.

So, the question remains – will the HTC brand receive more favour in the eyes of Indian consumers? Well, going by Sharma’s confident approach, there is no need to worry for those 25% in HTC’s R&D labs; for the rest (75%) are doing their ‘smart’ selling & branding bit on the field. By the way, I guess HTC could start by disclosing what HTC stands for, as an acronym.

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Source : IIPM Editorial, 2009

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

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All roads lead to... !

Education too, has seen PPPs mushrooming up. The latest plans of Education Minister Kapil Sibal to make vocational training more accessible indicate a bright future for PPP based ventures in up-gradation of ITIs. Till now 171 ITIs have already been identified by the government for upgradation under PPP basis. If implemented in a proper manner it has the potential to transform the education system in the country.

But then, PPPs don’t come without hiccups. While PPPs are proving to be a good means of turning out quality projects, there are long-term troubles attached to the model. The first and foremost is the time. While the tenders are given with a time-frame attached to them, the projects, most of the times, don’t end up on time. Raison d’être: the regulatory loopholes. Price too contributes heavily at times to such conflicts.

For instance, even with PPPs in line, power is one sector that has seen conflicts between the parties, both at the cost and price front. In fact, coming to a fair price agreement is the biggest hurdle in effective use of PPP model. “For augmenting investment, it is critically important to move from fixed rates to market determined rates,” agrees T. N. Thakur, Chairman, Power Trading Corporation.

Moreover, the number of PPPs on the social infrastructure front is also too small at present. In fact, it’s the current policy environment in the country that is discouraging private players from lending in their hands to the government for such projects. Further, wherever a PPP model exists, it’s mostly an Indian company doing the Tango with the government. The contribution from foreign players’ is almost missing.

“Decentralisation of power and quick decision making is what will make the PPP model click in India. Further, it’s important that empowered monitoring mechanisms are put in place so that all such projects are implemented in a time bound and phased manner,” Satish Bagrodia, President, PHDCCI tries to suggest a solution to the problem.

No doubt, in order to make the elephant dance, both private and public players have to dance together too. After all, it takes two to tango, they say! But then, the harmony somehow seems missing as of now and that is certainly not a good sign. If you don’t believe us, ask a dance instructor!

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Source : IIPM Editorial, 2009

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

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Many argue that the success of Airtel is largely because of Bharti’s first mover advantage. In contrast, in all their other (relatively new) businesses, they probably have somewhat of a last mover disadvantage. But a word about SBM, the ‘new age entrepreneur’ is perhaps in order here. Simply surviving (minus the deep pockets of the other biggies in the business mind you), let alone profiteering, in the cat-eat-cat world of capital-intensive big business takes vision, guts and above all, a killer instinct. Sunil had the vision to apply for a telecom licence at the right time and long before the biggies jumped in, he was selling mobile connections – when the price of a handset was Rs.40,000 and calls used to cost a whopping Rs.32 per minute.

When the next set of telecom licences were handed out, large industrial houses jumped in with big bucks. Unfazed, Mittal continued to lay the roadmap for Airtel. He deftly manipulated bureaucratic speed-breakers, competitive sharp turns and raised enough capital to build his infrastructure to achieve the targets he had set for himself. Next, when the entire industry was busy guarding their individual infrastructures, in 2004, SBM went ahead and boldly outsourced Bharti’s cellular network operations to its equipment vendors - Nokia, Ericsson and Siemens. His logic: telecom is a people’s business and so he must focus on customer service. Competition sniggered once again, only to recognise the intelligence of the move later. Two years down, other telcos also began hiving off their tower businesses. His model worked. Airtel recently was the first Indian service provider to cross the 100 million subscribers mark, growing by about three million new additions every month.

Now yeh Bharti maange more! But given the aura, success and grandeur of brand Airtel, can Sunil extract the same value from his other businesses? It should be noted that whenever a well entrenched player in a particular sector has forayed into other sunrise sectors, the path has not been easy. Take the shining example of India’s business monarch, Mukesh Ambani, who deviated from his core competence in the petro-chemical business and ventured into retail; only to falter. Ratan Tata’s ventures into telecom and retail have not really acquired the stature they could have given his deep pockets, huge manpower resource and influence. So what is in store from the next leap of the Mittal brothers? But before, we examine their options, here’s the caveat. Airtel’s m-Cap of Rs.1.52 trillion is a difficult mountain to scale for any of Mittal’s new businesses – at least in the medium term. The analysis of all Bharti Enterprise’s diversifications merely gauges their potential and whether they can ever become the cash cow that Airtel already is!

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Source : IIPM Editorial, 2009

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

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There’s a method even to the cables madness!

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Brand: Havells Cables
Agency: Lowe

Step 1: compromise on margins

Step 2: aggressively sell its switches, energy meters, cables, bath fittings, fans, CFLs, et al and acquire a decent market share in every category

Step 3: focus on brand through large advertising spends. Enhanced brand image would enable higher bargaining power and improve margins.

Havells India did exactly that. It’s high decibel, emotive campaign moved with lightening speed to push the brand up in consumer mind space and Havells moved in for the kill. It’s operating margin went up to 10.05% in June quarter of 2008 from 9.2% in the previous year.

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

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Rise of the Third Front

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The unprecedented, heartrending combined loss of Rs.10,000 crore pocketed by the existing high flyers of the Indian sky in the last fiscal has failed to deter these greenhorns from taking a splurge. The ongoing turmoil has shaken the roots of even the established giants. Reeling under the twin phenomenon of declining passenger numbers and mounting operational costs, Vijay Mallya’s Kingfisher Airlines has lost Rs.6.26 billion and Naresh Goyal’s Jet Airways has registered a loss of Rs.2.14 billion for Q3, FY 2008-09. Such has been the dire market situation that even their alliance is unable to grapple with the situation. “Our Star A viation will shine in this industry with its prudent policies chalked out by experts in the airline industry, backed up by an effective business plan. We are optimistic that the aviation sector would bounce back and there are already signs of the passenger graph going up, though at a slow pace,” counters T. S. Shankar, Head – Corporate Media, Star Aviation to 4Ps B&M.


But looking at the volatility and uncertainties related with the air fare, travellers have switched loyalties towards relatively affordable air-conditioned bogies of the trains in this period of persistent financial crunch. The fact has been testified with the evident decline in the Indian air traffic by 4% for the period of April to November with a corresponding increase of 18.33% in passengers travelling by trains. Moreover, under the directives of the Airport Authority of India, 10% extra fees in the form of aeronautical fees and airport charges will now be levied on air travellers from 84 state-owned airports across the country, which will make it more unviable for the new players.

The fall in the Aviation Turbine Fuel (ATF) prices by 55% since August 2008 might seems to be a breather, as it accounts for more than 45% of an airline’s operating costs. But in reality, the fall in ATF prices has been easily negated by falling demand and plummeting revenues. Adding to the woes is the implementation of removal of fuel surcharges from airfares, thus further hurting the revenue generation. “The fall in ATF prices is definitely a relief but with new players coming into the market, an air fare war is likely to begin again; the travellers would definitely benefit from this, but with lower air fare the players’ revenue generation would take a beating for sure,” supports Hatim Broachwala, KSL. Fueling the fear of airfare war Zavery confirms, “Our basic strategy is to provide cheaper private air travel for the business or leisure traveller.”

Given that the International Air Transport Association (IATA) has revised the losses for the sector to go up to $4.7 billion (from the earlier $2.5 billion) in the current fiscal, the worst is yet to come. The revision emphasises that air traffic is likely to further contract by 5.7% in the coming year. “Demand has deteriorated rapidly amidst the slowdown. Combined with an industry debt of $170 billion, the pressure on the industry balance sheet is extreme,” testifies Giovanni Bisignani, Director General & CEO, IATA. In the current scenario, this ‘third front’ will have to ready itself for some seriously difficult times. And seeing the fate of some of their predecessors, extreme caution is advised!

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Source : IIPM Editorial, 2009

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

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B&O Beovision 9

IIPM Programme :- SUPERIOR COURSE CONTENTS

Technical Specification

Screen Size – 50 inch; Resolution – 1366x768; Dimensions (WxHxD) – 127x122.9x56.9
PRICE: Rs.15,00,000 without taxes
WARRANTY: 2 years

Run by the fastest engine in the world, B&O Beovision 9 is a total entertainment solution with high quality. The in-built Hard Disk recorder serves as a unique feature that allows to play, pause, record and replays the pictures. The automatic colour management has the feature of adjusting the set once every 120 hours of viewing. It possesses a contrast ratio of 3000:1. The Beovision 9 is available in six different colours. Talking about the sound system, it has surround sound system with centre loudspeaker with power amplifiers of 2x250 watts. It also has 4xHDMI and 2 USB ports, allows wide range of sources and devices, optional beomedia technology.

Marketers’ delight: B&O Beovision gives you the pleasure of enjoying the best quality and standards of picture along with complete home theatre benefits.

Tester’s note: Pros – Automatic colour management. Excellent sound quality and sleek design. Con – Comes in the extreme high-price range.

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Source : IIPM Editorial, 2008

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

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You, me, and... a lotta debt!

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Religare’s takeover of Hichens leaves many questions unanswered...

Before we break the suspense, let’s give the usual spin. London’s oldest stock broking firm has accepted an open offer from Ranbaxy’s Religare Capital Markets Ltd. (RCML), which will pay Rs. 226.05 per share, valuing Hichens, Harrison & Co. Plc at Rs.4.4 billion. “Our businesses are complementary and this will help both leverage the expertise, acumen and capabilities of the other,” averred S. Godhwani, MD, Religare Enterprises (parent company of RCML), to B&E. Hichens surely has a strong hold in emerging markets and on the face of it, the deal seems appropriate for increasing Religare’s global presence. Well, on the face of it...

Of course, the deal will not only increase the portfolio of investment products that Religare will be able to offer domestically (apart from the global capital that can be sourced by it cheaply), but it would also give Religare the opportunity of “creating a global distribution platform,” as told by S. Nath, Director, RCML.

But experts are perhaps ignoring a few critical facets. Crisil has already put Religare’s short term debt program on ‘Rating Watch – Negative Implications’, due to the debt it’ll have to mobilise for the deal. Secondly, Religare Enterprises, the holding concern, as per late 2007 figures, only has a 3.89% of the Rs.4 billion Indian financial services sector, clearly pointing that it could well have invested in increasing domestic shares first. And lastly, though share prices post the April 5th deal, have remained more or less constant (Rs.370 avg, BSE), trading volumes have most strangely gone down from a high of 92,944 traded shares (March 25, 2008) to a classic low of 5,460 shares (April 11, 2008), displaying a clear negative trend. Without doubt, the most imperative measure for Religare is nothing but managing cash...and a lotta debt!

Pawan Chabra

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Source : IIPM Editorial, 2008

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

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Recession seems to be imminent in the US. Its length & severity now need to be judged by policy makers so that they may attempt to minimise the damage

IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA

Is it a ‘Recession or a Slowdown’ in the land of Uncle Sam? The debate rages on in earnest. Leave aside the fact that the National Bureau of Economic Research (NBER) defines recession as “a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income and wholesale-retail trade…” What matters the most is the fact that the US is suffering from one of the worst housing and financial crises in living memory. The ongoing crisis may not adhere to the definition as given by NBER; yet the outlook for US economic growth, employment figures et al has worsened in the last couple of months and the possibility of a recession cannot be ruled out. The financial market crisis, which erupted in August 2007, is worrying one and all.

The analogy drawn, however, has been debated by economists and analysts alike. Is the economy in a short-lived, cyclical recession or will there be a capitalist economic crash? As it is, the devastating 1929 stock market crash leading to the Great Depression of the 1930s silenced similar debates at that time.

The International Monetary Fund (IMF), though not very vocal of the present developments in the US (as it was during the East Asian Crisis), has said in its recently published World Economic Outlook, “The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression, inflicting heavy damage on markets and institutions at the core of the financial system.” It further estimates that the total losses for banks, hedge funds, pension funds, insurance companies and sovereign wealth funds arising out of the crisis will swell to $945 billion. Even the estimates have been a point of debate; some argue that it is pretty much an accurate estimate of the loan losses while others argue that the estimates do not in any way reflect possible decline in the quality of the loans that they hold.

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Source : IIPM Editorial, 2008

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

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BERNARD ARNOLD - Defining luxury

IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA

BERNARD ARNOLD
Defining luxury
LVMH is one of the earliest brand that came to India and slowly, the brand has become a recognised brand among the Indian premium class. The credit should not be only given to the chairman and CEO Bernard Arnold because as far as my knowledge about LVMH goes, there is immense teamwork there. But yes, if the leader is not competent enough and fails to guide his team, then no team, especially in business, can grow. I think the Chairman knows how to identify the market and then make a proper team for that market. He identified India & China much before any other players did and then supported the markets with a good team.

Today LVMH has an edge over the other luxury brands. To speak about the future, we all know India is an emerging market for all luxury brand and the early movers will necessarily be the winners. In this parameter LVMH will be one of the few players which will able to make profits from India. This definitely means that Bernard Arnold has big plans for India and the way LVMH is expanding, at least one of its brands will be present in every city of India. I feel, Arnold and his team will have the maximum retail presence and maximum brands in Indian market. He has successfully integrated various famous classical brands into the LVMH umbrella and he knows the perfect time to introduce them in Asia Pacific. The success of LVMH will motivate other luxury companies to come to India and this in turn will help India shine in the century in context of luxury goods too.

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Source : IIPM Editorial, 2008

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

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beginning of the end?

IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA

There has been talk of an al Qaeda resurgence, but the truth is that most hard-core members of the first and second waves have been killed or captured. The survival of the social movement they inspired relies on continued inflow of new members. But this movement is vulnerable to whatever may diminish its appeal among the young. Its allure thrives only at the abstract fantasy level. The few times its aspirations have been translated into reality – Taliban in Afghanistan, parts of Algeria during civil war, and Iraq’s Anbar Province – were particularly repulsive to most Muslims.

What’s more, a leaderless social movement is permanently at the mercy of its participants. As each generation attempts to define itself in contrast to its predecessor, what appeals to the present generation may not appeal to the next. A major source of the present appeal is the moral outrage provoked by the invasion of Iraq. As the Western footprint there fades, so will the appeal of fighting it. And new hotheads will always cause ever escalating atrocities, which will, in turn, likely alienate potential recruits.

The US strategy to counter this terrorist threat continues to be frozen by the horrors of 9/11. It relies more on wishful thinking than on deep understanding of the enemy. The pursuit of “high-value targets” directly involved in the 9/11 operation over six years ago was an appropriate first step. And the US has been largely successful in degrading the capability of al Qaeda Central. But this strategy will backfire when used against the leaderless jihad. Radical Islamist terrorism will never disappear because the West defeats it. Instead, it will most likely disappear for internal reasons. The key is to accelerate this process of internal decay. This needn’t be a long war, unless US policy makes it so.

Terrorist acts must be stripped of glory and reduced to common criminality. Most aspiring terrorists want nothing more than to be elevated to the status of an FBI Most Wanted poster. Younis Tsouli boasted online a few months before his arrest, “I have the Feds and CIA, both would love to catch me. I have (an) MI6 on my back.” Any policy or recognition that puts such people on a pedestal only makes them heroes in each other’s eyes. They aspire to nothing more glorious than to fight uniformed soldiers of the sole superpower. That’s why the struggle against them must be given to collaborative law enforcement. The military should be limited to denying terrorists a sanctuary.

It is equally crucial not to place terrorists arrested or killed in the limelight. The temptation to hold press conferences to publicise another “major victory” against terror must be resisted. The US underestimates the value of prosecutions, which often can enormously demoralise radical groups. There’s no glory in being taken to prison in handcuffs. No jihadi Web site publishes such pictures. Arrested terrorists fade into oblivion; martyrs live on in popular memory.

This is very much a battle for young Muslims’ hearts and minds. The point is to regain the international moral high ground. There’s been a gradual shift to online networks, where young Muslims share their hopes, dreams, and grievances. That offers an opportunity to encourage voices that reject violence.

The entire debate must shift from imagined glory to very real horror. Young people must learn that terrorism is about death and destruction, not fame. The voices of the victims must be heard over the bragging and posturing in online jihadist forums. Only then will the leaderless jihad expire, poisoned by its own toxic message.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

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Farmer will continue to be at the mercy.

IIPM - Admission Procedure

Vibha Batra, Co-head (Financial sector Ratings), ICRA, agrees: “A large percentage of these overdues (of Rs.60,000 crore) could be on the books of cooperative banks and rural banks. Therefore, the impact on scheduled PSBs may only be a subset of this amount. Further, the incremental hit on the PSBs’ capital (assuming no reimbursement from the government) could be still lower to the extent of unprovided NPAs, as these overdues could comprise interest overdues on NPAs (which are not booked as income).”

At the same time, economists like Swaminathan Ankleswaria Aiyar feel that the waiver will reduce demand for farm loans in the next season, thereby allowing banks to lend more to other profitable entities. This will immediately improve their bottomlines in the coming year. In many ways, the state-owned banks will suddenly be in a much-better financial position, and will also be more prepared for Basel II norms as well as for the aggressive entry of foreign banks in 2009 due to changes in FDI norms.

However, there is a flip side to the issue. In fact, there’s another catch; it’s called Catch 60,000. And this shows that what Chidambaram has done is not going to make too much of a difference. It’s only a political hype; at the socio-economic level, the lives of the impoverished and suffering farmers will not change. In addition, the loan waiver scheme goes against the letter and spirit of the finance ministry’s report in July 2007 on agriculture indebtedness by a committee, headed by R. Radhakrishna.

For instance, the Committee found that most of the farmers were indebted to non-institutional (read: non-banking) sources. In 2003, over 42% of them had taken loans from such agencies; in fact, nearly 27% of the farmers were in debt to the local private moneylenders. In states like Andhra Pradesh, Rajasthan, Bihar, and Punjab (surprise, surprise!), the farmers were more dependent on the moneylenders for finances. In Andhra Pradesh and Rajasthan, the exposure was over 65%, and the figure was over 50% in Punjab. Even in states like Tamil Nadu, it was slightly higher than 45%.

When one looked at the marginal and small farmers, the dependence on non-institutional sources went up dramatically. In the case of farmers, who owned less than 0.01 hectares, their exposure to moneylenders and traders was over 75%. Those who owned 0.01-0.40 hectares got nearly 57% of their loans from such agencies. Overall, the figure for those farmers who owned upto two hectares of land – it’s these farmers who have got the much-touted loan waiver from Chidambaram – was nearly 50%.

“It is indeed a matter of concern that in spite of all the efforts made for the spread of institutional finance (read: scheduled banks), it accounted for only two-fifths of farmers’ outstanding debt. Since the interest rates charged by non-institutional sources are high, this might have imposed heavy burden on farmers,” noted the report. Therefore, the Budget largesse means nothing, or little, for these farmers. Unfortunately, it is especially true of states, where the dependence on farming is higher than others.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
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Debunking the Regan myth to curry favour with conservatives

IIPM : EXECUTIVE EDUCATION

Reagan might have got it all wrong. But is there any point for US presidential candidates to time and again re-hash the same old story?

Historical narratives matter. That’s why conservatives are still writing books denouncing FDR and the New Deal; they understand that the way Americans perceive bygone eras, even eras from the seemingly distant past, affects politics today. And it’s also why the furor over Barack Obama’s praise for Ronald Reagan is not, as some think, overblown. Fact is that how we talk about the Reagan era still matters immensely for American politics.

Bill Clinton knew that in 1991, when he began his presidential campaign. “The Reagan-Bush years,” he declared, “have exalted private gain over public obligation, special interests over the common good, wealth and fame over work and family. 80s ushered in a Gilded Age of greed & selfishness, of irresponsibility & excess, and of neglect.” Contrast that with Obama’s recent statement, that Reagan offered a “sense of dynamism and entrepreneurship that had been missing.” Maybe Obama was, as his supporters insist, simply praising Reagan’s political skills. But where in his remarks was the clear declaration that Reaganomics failed? For it did fail. The Reagan economy was a one-hit wonder. Yes, there was a boom in the mid-1980s, as the economy recovered from a severe recession. But while the rich got much richer, there was little sustained economic improvement for most Americans. By the late 1980s, middle-class incomes were barely higher than they had been a decade before – and the poverty rate had actually risen. When the inevitable recession arrived, people felt betrayed – a sense of betrayal that Clinton was able to ride into the White House.

Given that reality, what was Obama talking about? Some good things did eventually happen to the US economy – but not on Reagan’s watch. I understand why conservatives want to rewrite history & pretend that good things happened while a Republican was in office. But why would a self-proclaimed progressive say anything that lends credibility to this rewriting of history – particularly right now, when Reaganomics has just failed all over again?

Like Ronald Reagan, President Bush began his term in office with big tax cuts for the rich and promises that the benefits would trickle down to the middle class. Like Reagan, he also began his term with an economic slump, then claimed that the recovery from that slump proved the success of his policies. And like Reaganomics, Bushonomics has ended in grief. Public mood today is as grim as it was in 1992. Wages are lagging behind inflation. Employment growth in the Bush years has been pathetic compared with job creation in the Clinton era. Even if we don’t have a formal recession, the optimism of 90s has evaporated. This is a time when Progressives ought to drive home the idea that right’s ideas don’t work and never have.

It’s not just a matter of what happens in the next election. Clinton won his elections, but – as Obama correctly pointed out – he didn’t change America’s trajectory the way Reagan did. Why?

The great failure of Clinton administration was the fact that it didn’t change the narrative, a fact demonstrated by the way Republicans are still claiming to be the next Ronald Reagan. Now Progressives have been granted a second chance to argue that Reaganism is fundamentally wrong: Once again, vast majority of Americans think that the country is on the wrong track. But they won’t be able to make that argument if their political leaders, whatever they meant to convey, seem to be saying that Reagan had it right.

Paul Krugman

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

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Entertainment Boy

IIPM : EXECUTIVE EDUCATION

Moser Baer’s Ratul Puri has taken risks & entered uncharted territories, which will test his mettle to the fullest, feels MANISH K. PANDEY

Often, leaders tend to shun complicated projects, but Ratul Puri, Executive Director, Moser Baer, thrives on them. And that aggressive stance has earned rich rewards as well, as he has played a major role in making Moser Baer a global behemoth. “Ratul is a sharp-minded professional with a proactive approach towards work. He is a visionary...,” says one of his current employees. In retrospect, his is a journey from a 3-storeyed infotech firm in Delhi’s congested Lajpat Nagar, which was on the verge of closure thrice during its initial days, to the second largest optical storage media manufacturer in the world and, finally, to the new diversifications into photovoltaic & home entertainment.

After Ratul joined Moser Baer in 1994 at the age of 22, he was instrumental in setting up Moser Baer’s Noida & Greater Noida plants to manufacture recordable compact discs (CDRs), and the plants were the first of their kind in India. Moving further, he is now leveraging Moser Baer’s robust R&D strengths to develop a new generation of storage devices, which can archive critical & sensitive data for years. Already, Moser Baer has become the leader in marketing new storage formats like Blu-ray Discs and HD DVD.

But his impeccable strategic acumen came to the forefront when the company ventured into new and unrelated areas like photo-voltaic and home entertainment. Since 2006, Ratul has bet big bucks on non-conventional energy sources. By 2010, Moser Baer aims to derive 40% of its overall revenues from selling solar panels, which is now a hot bed of opportunity. Industry sources expect the global PV business to grow over six times to $40 billion by the same year. Moreover, the demand here is price-elastic. If Ratul can offer a cheaper option, as Moser Baer has done in storage devices, he can expand this market exponentially.

By acquiring stakes in three firms – Solaria, SolFocus and Stion – and establishing thin solar film plants across India, Ratul has made his intentions clear. Moser Baer has also made investments in Slovenia-based Solarvalue, which manufactures silicon ingots/wafers. This may turn out to be a smart strategy as it will help overcome the existing supply constraints in raw materials.


Moreover, how can one forget Moser Baer’s foray into home video segment last year? It was Ratul’s vision to swamp and invade the already-entrenched market with low-priced VCDs and DVDs. The move opened up a new opportunity, as the segment is expected to grow at a CAGR of 18% over the next five years (according to joint study conducted by FICCI and PricewaterhouseCoopers). And he doesn’t want to stop there. Ratul has chalked out huge plans to mark Moser Baer’s presence across the value chain – from film production to distribution at the customer’s doorstep. As he is responsible for corporate management and financial control, Ratul has always focused on maximising shareholders’ value and raising funds from global and domestic investors. Under his leadership, Moser Baer wooed various institutions like IFC, Electra Partners and Warburg Pincus Singapore LLC to invest in the company. In fact, Electra had picked up a sizeable 17% stake in Moser Baer and offloaded 4% at huge profits. Moreover, a year ago, when the storage media industry was facing a severe global pricing pressure, coupled with competition from low-cost producers and rising raw material prices, Ratul played a crucial role in bringing Moser Baer back on the growth and profitability path. In FY 2006-07, the company not only posted a 19.8% increase in gross revenues to Rs.20.74 billion, it improved margins that drove a 2,253% growth in net profits to Rs.1.09 billion. Says Yogesh Mathur, Group CFO, Moser Baer, “I agree that two years prior to the last one were not good. But now, both the industry and Moser Baer are back on the growth and normal profitability cycle.”

So, should one give credit to Ratul or was the recovery a part of the improving business cycle in the sector? Current employees contend it was a mix of both; Ratul also imposed cost efficiencies & forced productivity improvements during that critical period. Many feel that this crisis also gave Ratul the idea to transform Moser Baer into a multi-technology organisation & ventured into solar electricity & home entertainment.

However, Ratul faces many challenges in the near future. In the storage device business, technology becomes obsolete in no time, and all players have to keep pace. Although Moser Baer has successfully transformed itself several times with changing technology, it may not be so easy in the near future. In home entertainment, distribution is still a weak link. While Moser Baer has played the price warrior card nicely, it has to soon play the premium content & technology ace too.

But Moser Baer managers are excited and enthusiastic about Ratul’s capabilities. “We are bullish about all three businesses. We see the optical storage business growing at 25-30% CAGR over the next few years. Home Entertainment is a huge opportunity and we expect this to be over half-a-billion dollar business in the coming few years,” says Mathur.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

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Communicating information

IIPM : EXECUTIVE EDUCATION

It will take some time for people to understand RTI

He is a respected bureaucrat, something uncommon today. He has been trying throughout the year to make the government more transparent & accountable. He has appointed lawyers, judges & journalists as information officers to strengthen the RTI Act. The law is new & the people’s rights are yet to be fully utilised, but we are determined to implement it in both letter & spirit,” the Central Information Commissioner, Wajahat Habibullah told B&E.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

Read these article :-
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Jobs aplenty...

IIPM’s 36th Glorious Year of Academic Excellence

but whom to employ?

India is gradually entering the league of richest countries in the world, but will its people be as wealthy as the average American and European? As per the Indian Labour Report 2007, 90% of Indian youth are unemployable. While only 8% of the youth are unemployed, 53% have some kind of skill deprivation. With nearly 90% of the jobs in the country being skill orientated and most Indians having some kind of skill deprivation, the whole issue unemployment and employability needs a fresh look.

It is estimated that India needs to allocate about Rs.490,000 crores in order to train its skill deprived workforce over the next two years. The current budget for the same is just 25% of the required amount. Along with monetary allocation, proper academic planning, including technical and vocational training, is essential. Majority of India’s youth are below the age of 35 and this should tip-off the polity that unemployability is a bigger concern than minority reservation. Mere rhetoric would not solve the problem of rural unemployment. Wish the Indian Labour Report had got even an iota of the attention that the Sachar Committee report has been garnering. Until better sense prevails, India’s dream of reaping demographic dividend will remain a dream or daydream at best.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
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The Indian Institute of Planning and Management (IIPM)
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