Wednesday, March 31, 2010

Book tales

TSI Five-O: Post apocalyptic tale with rousing action but predictable twists

I must confess that I am a little biased towards Denzel Washington. As a result, my expectations from “The Book of Eli” were fairly high what with the chance of catching Denzel in an action-oriented tough-guy-on-a-mission-post-apocalypse role. And sure enough, in terms of the setting, art direction and cinematography, the film captures post apocalyptic America (apparently ravaged by a nuclear war) quite brilliantly but Denzel as Eli, the man entrusted with protecting a book that contains the secrets to save all of mankind is a bit out of place at times.

His supporting cast is admirable; young Mila Kunis is pretty impressive and Gary Oldman absolutely brilliant as Carnegie, the bad guy who wants the book. But with metaphors and martial arts intertwining, the action is what stands out; the plot only plays second fiddle. The audience is never really in much doubt about what the ‘book’ might be and it weakens the suspense, though the revelation about Eli towards the end is a neat touch. There was a chance to make it something more complex and deeper, but ultimately “The Book of Eli” sticks mostly to the basics.

It is a well-set Western with an apocalyptic backdrop, but as a metaphorical story, well let’s just say it misses the mark.
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Tuesday, March 30, 2010

They make money from water

The daily income from such business is Rs 65 lakh

Traders are taking full advantage of the drinking water shortage in Kerala. They are minting money by selling water. Of late it has become a roaring business with many new entrants taking a plunge. To start a business of collecting and then distributing water doesn’t need heavy investments. The most they do is take a water-rich land or lease or rent and dig borewells.

In Thiruvananthapuram district it was found that 30 cents of land in a village near Aryanad has six borewells which are more than 500-feet deep. Everyday hundreds of trucks ply on this route. They fill their thousand litre tanks from these wells and then supply it to water tanks in houses, hotels and construction sites.

Local sources say the daily income from such trade is Rs 65 lakh. A full tank of water fetches something between Rs 1,500 and Rs 2,500. Interestingly, water exploitation is illegal, but till now the government and local police have seen the other way.

The sale of water is common in those parts of the state where rivers and wells have dried up. In Palakkad, Idukki and Kollam districts water sales are high. Kerala is facing a drought like situation. Scientists predict that the drought will intensify in April and May. According to them, water scarcity will be felt more in these months. The shortage of water has become a perennial problem.

The Kerala Water Authority is providing drinking water to panchayats. Tankers and lorries are being deployed for this purpose. Official sources say at least one lorry is deployed to cover one panchayat. Besides, each lorry is allowed to make up to four trips a day.

However, it has failed to address the problem. Villagers still complain of not receiving sufficient water being supplied by the government agencies. With no other option left, the villagers fork out money to purchase water from private water sellers.

The situation in these regions is deteriorating as there is no understanding between the government agencies and the locals over rain water harvesting.
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Friday, March 26, 2010

Sweet revenge

India’s version of the Razzies, the Golden Kela Awards, where the worst performances are picked and ‘honoured’, was recently held in the capital. Sajid Nadiadwala’s “Kambakkht Ishq” was among the films at the receiving end of their ridicule, and was crowned the worst film of the year. Kareena Kapoor, who was an all new size-0 in the film, was also given the dubious honour of the worst actress of the year. Apparently, 3,00,000 people voted for these awards, and so revenged the film industry for unloading reels of rubbish at them in 2009 !
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Thursday, March 25, 2010

Chinese puzzle

As 21 Indian diamond traders languish in a Chinese jail Surat is feeling the tremors of the crisis, reports Hitesh Ankleshwariya

Just as the Gujarat diamond industry was beginning to shrug off the ill effects of two years of recession, it has been hit by a fresh crisis. Twenty-one diamond traders from the state have been jailed in China’s Shenzhen special economic zone for offences that are yet to be specified.

These traders, who ran diamond polishing units in China, have been in jail for two and a half months. However, the Chinese authorities are yet to frame charges against them. About a decade ago, China had invited diamond traders from Surat city to set up shop in the Shenzhen SEZ with the obvious intention of exposing its own merchants and workers to the intricacies of the trade.

The 100 diamond polishing units owned by Gujaratis in China have now been shut down. These merchants have moved to Hong Kong, leaving behind the millions of dollars that they invested in the Shenzhen SEZ.

Rohit Mehta, president of the Surat Diamond Traders' Association, says, “The diamond traders are accused of smuggling, but no case has been filed against them.” Diamond merchants in Gujarat are in a state of shock and are unwilling to speak on the matter for fear of queering the pitch further for those that are behind bars in China.

Gujarati diamond traders had headed for China, attracted by numerous rosy schemes. But the dream soured soon enough. Traders in Surat allege that China was only interested in learning diamond cutting and polishing skills from Gujaratis and cut into their monopoly over the business. “That aim has been achieved, and now they are bent on driving us out of the SEZ,” they say.

In fact, those in the know here point out that some Gujarati traders had seen through the Chinese gameplan early enough to pull out their men from Shenzhen before things could go out of hand. Many wound up their business in China and returned to Surat.

Many Surat diamond merchants have been visiting China for years. They are familiar with the way things work in Shenzhen. On condition of anonymity, one businessman says, “The Shenzhen SEZ is an hour’s drive from Hong Kong. Corruption is rampant here and local businessmen and officials are part of the racket. It is surprising that Gujarati traders are being victimised for playing by the rules of the game here.”
In Shenzhen, rough diamonds are smuggled in through a clandestine route to evade the import tax and 13 other duties levied by the Chinese government on the trade. “This illegal movement of diamonds happens with the collusion of locals. Officials and policemen turn a blind eye because they too are on the take,” says a Surat businessman.

So, diamond trading circles in Gujarat are mystified at the sudden clampdown in which a total of 50 people, including the Gujarati traders, were taken into custody for alleged diamond smuggling. But for want of proof, 15 Gujarati traders were let off. They are now in Hong Kong with their workers.

Ironically, relatives of the arrested diamond businessmen have not sought any kind of help from the Surat Diamond Traders Association. Says Mehta: “Not a single family has approached us. The information we have is based on media reports and accounts provided by businessmen based in Hong Kong. Till we get formal requests, we can’t help them.”

The president of the Gems and Jewellery Promotion Council, Vasant Mehta, says, “The Indian embassy in Beijing is working on this matter. So I do not see any reason for issuing any statement,”

Of the 21 arrested traders, 14 are from Palanpur, a north Gujarat town with a sizeable diamond trading community. All of them own thriving diamond units in Surat city.

Palanpur diamond industry president Jayantibahi Padhiyar says, “The Gujarat diamond traders’ business typically extends from Antwerp to Dubai. They earn billions of dollars in foreign exchange and thus serve the nation. It is a well known fact that the diamond trade is not a business of 100 per cent honesty and integrity. The Indian government must come to the rescue of the arrested traders as they are, first and foremost, Indian nationals.”

Padhiyar feels that the families of the traders are not trying hard enough to secure their release. “They are misguided by some local traders and brokers. That’s why the case has been not resolved yet,” he adds.

“I think what has happened in Shenzhen is a deliberate conspiracy to eliminate the Gujarati traders. We have reason to suspect that local Chinese traders and the police are hand in gloves in this matter. If this isn’t stopped right away, nobody will want to do business in China in the future,” says Padhiyar.

Some local traders believe that the arrests are part of a Chinese plan to exert pressure on India. Last October, India had made several drastic changes in its business visa policy. Under the new stringent rules, those who come to India on business have to return to their countries within a stipulated period of time. These changes have hit the Chinese businessmen the hardest.

The other theory doing the rounds in Surat is that the Chinese action stems from envy. The Shenzhen SEZ was dominated by Gujaratis, who made rapid progress here, and local Chinese traders did not take kindly to this success story. The traders are, therefore, being systematically targeted by the authorities.
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Tuesday, March 23, 2010

Cashing in on Cesarean?

Most women are hale and hearty and capable of an uncomplicated natural childbirth, yet surgical childbirths are increasing...

Any sort of experimentation with nature’s way always attracts attention and debate. Medicine in several ways has led to the triumph of human will over nature’s rules. But this time the world is divided over the delivery techniques of childbirth. Today, a mother can opt for a natural delivery or choose the surgical (Cesarean section) route, but a sharp increase in the latter method across the world has stirred widespread concern. While in the US, one in four children is born via Cesarean section (C-section), WHO has reported that one in five deliveries in India is by Cesarean too. Obstetrician David Campbell Walters in his book, Just Take it Out: The Ethics and Economics of Cesarean Section and Hysterectomy (1999) claims that in the US, ‘in 20 years, there will be no more vaginal births.’ If you look at Walters’ claim in light of the existing figures of C-section deliveries in metros like Mumbai and Delhi (20-25% C-section deliveries) and even in most provinces in China (where according to China Philanthropy Times, the average rate of Cesarean birth has reached 40 percent), his prophecy might actually become a reality in a large part of the world… But what is driving doctors and mothers-to-be to opt out of the natural vaginal delivery? Why do doctors like David Campbell Walters (though in minority) advocate that women be allowed to choose a pre-planned Cesarean?

“Apart from the straight visible medical indications that suggest choosing a Cesarean delivery, most of the doctors today want to avoid the possibility of lawsuits for any problems in the child arising during labour,” says Dr. Kiran Dua, an experienced Gynecologist associated with several health care institutions like Lamaze that advocate normal delivery. He adds, “Most of the doctors think that if they can get free in two hours with a Cesarean, why should they monitor someone for 16-18 hours in labour and take stress?”

But while a Cesarean delivery leaves the mother with a severe, longer-lasting pain and with a risk of infections, it may cause harm to the child too in the form of ‘accidental surgical cuts, respiratory problems, failure to establish breast-feeding, and asthma’. Most often, mothers agree for a Cesarean “at the initiation and encouragement of the doctor and then to avoid labour pain”, says 31-year-old Sejal, a mother of two, and adds, “I was ill-informed about the cons of a Cesarean and my girl does have a respiratory problem.”

Vaginal births are not all perfect too, and in cases of poor care and midwifery, they may lead to ‘alterations in sexual sensation and if forceps are used, it may lead to urinary incontinence.’ Cesarean, as an informed choice, is being advocated by many in the US who contend that the costs, risks and benefits of both the procedures are balanced. But “In India, the money a doctor makes in a Cesarean is double the amount you get in a normal delivery, that too with much lesser effort,” reveals Dr. Dua. This leaves Indians with the task of discerning if their doctor is really concerned about their health, or of his/her own vested interests...
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Saturday, March 20, 2010

When the ‘ketal’ goes boiling...

An unknown Indian firm Dorf Ketal buys up the global catalyst business of DuPont Chemicals! Why isn’t everybody this side of the Atlantic celebrating, asks B&E ‘s Angshuman Paul

Seriously, how many of you had ever heard about Dorf Ketal? Considering that it is an Indian specialty chemicals company worth $220 million (revenues for year ending March 2009; targeting $300 million by 2010-11), you would understandably be quite reluctant to reply in the negative.

However, it isn’t entirely surprising that the company operates in relative obscurity. Besides the fact that it is a B2B player, the company has followed a very conservative model for growth and diversification. Consider this – after eight years of their corporate journey, the company decided to diversify (in 2000). And then, unlike other companies, Dorf Ketal hasn’t believed much in the concept of branding as a B2B company; even as world famous B2B companies are beginning to realise its criticality. And they intend to keep things that way. “Since we are in the B2B arena, mass consumers are not expected to know about us, but our target audiences like Reliance, IOC et al, know about us” argues a senior official from Dorf Ketal.

Nevertheless, things seem to be changing during the last decade for the company. They have grown by more than 30% during this period by cashing in on acquisitions. A bird’s eye view at the activity of the company during the past decade tells us that in a time span of eight years, the company has made at least five acquisitions to leverage potential synergies. For instance, when it acquired Sanmarg Specialty Chemicals-owned Intec, it helped Dorf Ketal to diversify into organic products like titanates and zirconates that have a strong demand in industries like oil & gas, paints & coatings, printing inks, industrial sealants, corrosion protection & emission reduction.

And now the name of Dorf Ketal has suddenly gatecrashed into notice with the acquisition of the global catalyst business of DuPont Chemicals and Fluro Products for around $40 million. The deal has been funded through debt and equity funds injected by the promoters. This particular venture of DuPont minted revenue of $50 million during 2008.

DuPont has deemed the business to be ‘non-strategic’ to its long term growth plans. On the other hand, senior officials in Dorf Ketal are hugely optimistic about the synergies that Dorf Ketal would enjoy from DuPont Chemicals & Fluoroproducts business. “It will provide us with several product innovations and technological developments pioneered by DuPont and also strengthen our position on the global platform,” says Vijay Malpani, Group Finance Controller, Dorf Ketal Chemicals (I) Pvt Ltd. The deal also enables the Indian chemical major to acquire DuPont’s assets associated with the Specialty Catalyst Business which comprises trademarks, sales, marketing and customer service. Strategically, the group has acquired the assets and deliberately avoided acquiring the entire business in terms of human capital. The company is trying to avoid the risk of a cultural mismatch with a US-based business.

The company plans to allow itself some lag time before it can take over operationally. DuPont will continue to manufacture and supply specialty catalyst products to Dorf Ketal for approximately 1 year under service and supply agreements. DuPont is also assisting Dorf Ketal with technology transfer & in setting up a new plant. Sudhir Menon, CMD of Dorf Ketal says, “The acquisition is a well thought plan to consolidate our position in newer product segment.”
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Friday, March 19, 2010

Katrina, a plain Jane?!

While most actresses never shy from blowing their own trumpet, Katrina Kaif is one modest girl who after having topped the most searched person on Google, and having been voted as the Sexiest Woman Alive, Most Desirable Woman and the No. 1 Hot & Sexy Heroine, thinks that she isn’t all that hot and sexy! Katrina feels that the audience sees actors in a certain role and form their opinion, and that actors try to live up to their image. In her upcoming film “Raajneeti”, Katrina seems to be trying to break free from her current image. Let’s wait and watch if her alternate avatar finds as many fans.
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Thursday, March 18, 2010

The road to uncertainty

Pressure is on the govt not to close the transport corporation

The Shivraj Singh Chouhan government that had decided to shut down the Madhya Pradesh Road Transport Corporation (MPRTC) in 2005 has been unable to do so because of the Central government’s negative response. The government doesn’t know how to handle the explosive situation after the Central government and the surface transport ministry expressed their unwillingness to provide no objection certificate (NOC) to it.

Besides, the Industrial Dispute Act 1947 doesn’t allow any government to wind up Transport Corporation. Since 2005 the central transport ministry has rejected the state government’s proposal to close the MPRTC thrice. After rejecting the proposal for the second time, the transport ministry had declared: “In many countries the transport is operated in public interest.” But this didn’t stop the state government from changing its mind. It approached the central ministries of road transport and highways and labour and employment for the third time on November 12, 2009, seeking its mandatory approval for closure of the MPRTC. But the Central government didn’t accept it. Rather it asked the government to send another proposal on how to restructure the transport corporation.

It was then that the Madhya Pradesh government sought Rs 2590 crore from the Centre. At the same time on January 12, 2010, it posted the proposal to the ministries. Chief minister Chouhan even wrote to Prime Minister Manmohan Singh asking him to intervene and resolve the matter. However, both of these were rejected, leaving the government with no other option but to mull on closing the MPRTC for good. The process of closure, Chouhan said, has reached an irreversible stage with 93 per cent of the 10,719 employees having opted for VRS. “Moreover, all the 681 nationalised bus routes operated by the corporation have also been denationalised,” he pointed out. But there is still some hope.
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Wednesday, March 17, 2010

It’s all about homework!

'Homeschooling' is here to stay, especially in the developing world

The concept of 'homeschooling' has not caught-on with parents in this part of the world. But then, in most of the developed countries the whole idea of homeschooling has gone beyond mere alternative education and has entered the ambit of politics and lobbying.

For the starters, homeschooling is the education of children at home and is seen as an alternative, in developed countries, to formal education. However, the surge in homeschooling is hitting the market of conventional education system in the US. A conservative estimate shows that over 50 million children are enrolled in over 100,000 schools in the US. The average per student expenditure in the US public schools is around $7,000.

In the US, where quality of formal education is quite worrisome, parents are largely opting for homeschooling. Take for instance, the IQ level (and maths skills) of an average American student is far too less than his counterpart in the developing countries. A 2007 survey by the Department of Education reveals that 88 per cent of homeschooling parents felt their local public schools were unsafe, drug-ridden or unwholesome in some way and 73 per cent complained of shoddy academic standards.

However, in developing countries, the practice of homeschooling is not so common. Reason being, that homeschooling is too expensive in metros (even surpasses school’s tuition fees). And in non-metros (or tier-II and tier-III cities) parents are not able to match up with modern education syllabi. Moreover, homeschooling is not encouraged at the time of college admissions. Unlike the West ­— where there is a strong network of activities and legal lobby that has ensured colleges/institutes to have a separate policy — developing countries do not have any body to advocate this concept.
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Friday, March 12, 2010

Budget backlash

The fuel price hike Announced by the finance minister has galvanised the opposition to close ranks in a rare show of unity. But will the sound and fury translate into long-term political gains? Pramod Kumar reports

In the final Cabinet meeting prior to the presentation of the Union Budget this year, three important financial decisions were taken. As the meeting drew to a close, the petroleum minister made a request for a hike in fuel prices. Finance minister Pranab Mukherjee assured him that some steps had already been taken through the excise duty channel. But agriculture minister Sharad Pawar and railway minister Mamata Banerjee warned that a fuel price hike would fan anger against the government and adversely affect the prospects of the UPA in Assembly elections scheduled for the coming months.

Mukherjee replied that not hiking fuel prices would adversely affect the pace of pro-people projects. So the allies advocated a 'wait and watch' policy: increase the prices of petrol and diesel and then gauge the popular reaction; if things threaten to snowball, get the UPA chairperson Sonia Gandhi to intervene and order a partial rollback. It was also suggested that the time-lag between the hike and the eventual rollback could be utilised to lessen the oil pool deficit. In that scenario, the Congress would have its cake and eat it too, it was pointed out. But the fuel price hike triggered something that the Congress had not bargained for: new-found unity in the Opposition ranks which had for months been in disarray. In fact, a few parties that support UPA from outside have also thrown their weight behind the hue and cry raised by the Opposition. By protesting both inside and outside the ring, the two Yadav satraps — Lalu and Mulayam — have made it amply clear that they might even withdraw their unilateral support to the UPA on the issue of price rise. Political pundits, however, feel that this will not affect the UPA as it enjoys a comfortable majority.

The problem is that this approach by the allies has found resonance in the Congress itself. Some elements in the ruling party are not convinced with the logic trotted out for raising the petroleum prices through the Budget. Party leader Digvijay Singh has already expressed his reservations on the issue. Similarly, there is unease among the youth brigade too. In fact, the son of petroleum minister Murli Deora, Milind Deora, has openly come out against the decision. And he minced no words. He went as far as to write letters to both Sonia Gandhi and Manmohan Singh seeking their intervention.

Congress strategists believe that such a step was necessary to correct certain financial misadventures of UPA-1. They claim the priority for the current regime is to strengthen the economy. Prior to the Budget, Mukherjee had clearly explained all the tough measures and had assured the Cabinet committee that although these measures would hurt momentarily, they would lead to long-term benefits. They would help put the economy back on track following the recession. He put forth the same explanation in the aforementioned Cabinet meeting too.
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Thursday, March 11, 2010

That’s the shape of your heart?

But for some reason, we know, it beats well, and beats shareholder expectations by miles too. The only issue is that it‘s making them unhappy now!

“In a very tough environment, we delivered fourth quarter business results in line with expectations we provided in December.” These were the words of Jeffrey R. Immelt, Chairman & CEO, General Electric Co. as the company announced the results for the quarter-ending December 2008 on January 23, 2009. You said ‘tough environment,’ Jeff? Joking right? But your corporation is stronger than ever, isn’t it? What about the Jupiter-sized cash infusion of $3 billion in October last by Warren Buffett. And didn’t the US Prez (apparently impressed by his coverage on GE Capital-owned MSNBC Universal) sanction a government loan package of a staggering $139 billion to you. But of course Mr. GE, it’s also really alright that your stock, trading at $10.04/share on the NYSE (as on March 17, 2009, having fallen by 73% compared to a year back) is at an 18-year low; nothing much to worry about, really!

Your financial results also aren’t too suicidal, with income for Q4, 2008 (at $3.72 billion), having fallen y-o-y by a murderous 44.4%. And the top-line figures? Well, they are modest too, with revenues for Q4, 2008, recorded at $46.21 billion, a sad y-o-y drop of 4.9%. And what about the other GE pride, your NBC Universal unit. We heard that it is also not giving smiles to investors, having posted a 6% decline in profits! But then as we said before Mr. GE, nothing much to worry about, really!

Then there are more matters doing the rounds in my family circle –that you did something which none could achieve at GE in 71 years? You actually slashed dividends from 31 cents to 10 cents a share per quarter? Guess, it must have got you busy on your voicemails of late! And what about this for pride... My office folks were also talking about you singing a ‘bailout’ song this summer alongside Rick (GM), Ed (AIG) and Viki (Citi). Wow! I’d want a record of that too... autographed!
And we read your bio too! It went something like this: Immelt took over as the 9th Chairman of GE in September 2007. An MBA from Harvard, Immelt joined GE in 1982. He became a member of the GE Capital Board in 1997 and the President & CEO in 2000. Named thrice as one of ‘World’s Best CEOs’ by Wall Street Journal’s Weekly publication (Barron’s), Immelt is also a member of The Business Council and the Federal Reserve. We haven’t missed awe-inspiring tales of your efforts at GE, to instilling investor confidence. However we’d beg an answer for the recent cut in GE Capital’s (GECC) ratings by S&P from ‘AAA’ to ‘AA+’, an event which has further shaken investor confidence. You gave no answer, and Robert did. He dropped a mail (by the way, Robert Schulz is a Credit Analyst at S&P), and this is what he wrote, “GECC is under increasing earnings pressure, due to the recent sharp deterioration in general economic conditions around the globe.” Controversy about the shaky liquidity position of GECC is also doing the rounds in our neighbourhood. And there are experts that claim that in case of delinquencies in loan repayments, GECC will not be in a position to bear the credit risk. (Oh! These experts I say!) Then there was an estimate by CreditSights, an independent credit research firm, which I bumped into over the Internet. It forecasted how GECC needs $25 billion to get to the level of banks of its size. (Well Jeff, I’m your fan, and I do have some ten dollars in my bank. Tell me if I can help.)

Alright, forget experts, forget Schulz, forget the world, but don’t forget me Jeff. You’re my hero. From you I’ve learnt how to reduce a company’s share price by 80% (as you did during your tenure of seven years). From you I’ve learnt to gear myself up for a high write-off in pocket cash this year. [GECC dangerously faces “very high” write-offs in 2009 too!]. And what’s best, even I am not sure of crossing the $10 billion in earnings this year, just like GE. ‘Tough environment’, Mr. GE. But, what a coincidence... Enough jokes!
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Wednesday, March 10, 2010

Useless effort!!!

Example of a responsible ministry

The Indian Ministry of Finance has announced a public competition to select a design for the new symbol of the rupee. Currently, rupee has no globally recognised symbol like the Dollar, Pound, Yen, or the Euro. The word “rupee” originated from the word ‘rup’ or ‘rupa’ which means ‘silver’. The rupee is generally abbreviated to Rs or INR (Indian National Rupee). To encourage participants, Government has also promised a prize money of Rs 25,000 to the five shortlisted participants and whopping Rs 2,50,000 for the winner.

One should not forgot that changing the currency symbol can be a costly exercise for the government. For example, when Euro was introduced after the replacement of guilder in 1999, it cost Europe’s biggest companies more than $50 billion to update their computer systems. Europe had to replace 70 billion coins which was an expensive proposition. Turkey too changed its currency. In January 2009, Turkey officially started using the Turkish Lira (TL) instead of Yeni Turkish Lira (YTL). And the cost of replacing YTL by TL stood at YTL 1.14 million. In addition, the country is also incurring a cost of YKr 11 to 12 for changing from YTL to TL for each bank note. Iran has also planned to change its currency, Rial. The value of Rial has gone down so much that it has become negligible. 500 Rials is worth mere 5 cents while 50,000 Rials is worth $5.30. Iran wants to change its currency to revalue its Rial.

Considering all these, it seems extremely important to estimate the cost involved with India’s symbolic plan of changing the symbol. Moreover, there seems no regulation that will make sure that the new symbol will not hurt someone’s cultural or religious sentiments which are for some odd reasons too volatile in the subcontinent. There are no any specific guidelines from the government on whether the old notes and coins will remain in circulation with the new ones.In this time of downturn, the decision on a new coin symbol is highly debatable. This may not only dilute the brand equity of rupee but will encompass needless expenditures at a time when government coffers are already drying up.
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IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Monday, March 08, 2010

“No schemes! No gimmicks!!”

LG finally had it right the third time in india. now it is decisively upping the stakes

“Our determination for walking the full distance is unwavering. We would like to move faster but we won’t be impatient. A broad consensus in favour of industrialisation (in India) is gradually emerging and we trust that the respective Governments are doing their best...”

Yes, this is a comment from a Korean company on its commitment towards India. But while you may be tempted to think this is LG, it is actually a comment from Posco, when we asked them how, despite the problems with the steel plant, the company continues to stubbornly invest time and money in its India plans. While making steel and making consumer durables are like chalk and cheese, Posco’s determination may be due in part, to the inspiring forays of other Korean MNCs in India; LG in particular.

LG had earlier tested the waters with two unsuccessful attempts (in the form of JVs with Bestavision and Birla group). In March 1997, K. R. Kim (who was then working in Panama) was bought on board to spearhead the Indian subsidiary of the Korean consumer durable giant. Moreover, the market, which was led by the likes of BPL, Onida, Videocon, Weston, Philips, et al, was now changing. LG, along with the other Korean giant Samsung, proved more than a handful for the incumbents, with their aggressive pricing, promotion and distribution strategies.

Cut to 2009, the company has not only clocked a mind boggling turnover of Rs.107.93 billion in 2008 (with a growth rate of 18%) but is also aiming high for its next big fix – the $6-billion revenue target by 2010. But the initial experience of LG in India has not been a cakewalk as the key challenge for the company at the time was not of growth but of survival. From cultural conundrums to corruption, from office space hiccups to high attrition rates, the company had it all. In fact, there was a time when the durable giant had to bear the wrath of the local land mafia and criminal elements at its manufacturing base at Greater Noida in Uttar Pradesh.

But what came to the company’s rescue was their will to learn from their own mistakes and set out new rules of their own. For instance, in the late 1990s, when the competitors lured the dealers by giving them credit periods of 45 to 90 days, LG in fact asked dealers to pay in advance for its products. This helped them pick the right kind of partners from the crowd. Among the few initial strategies, which the company adopted, was a change in the management structure to suit the local requirements and backed by an understanding of Indian work culture. They vested the power in the hands of Indian employees in a big way with their own Foreign Service Employees (FSE’s) confined to just being facilitators. Interestingly, LG did not initially get into price wars, which was the vogue at that time in the segment. Their slogan was ‘No scheme, no gimmick, great products and honest prices’. But LG had to also deal with the image of ‘inferior products’ in some categories.

So, as the company realised it had greater potential in the lower segments, it went on the rampage with fierce price wars and sorted out penetration issues. Moon B. Shin, in an exclusive interaction with B&E, elucidated, “To increase brand awareness, LG sent vans across India, covering a distance of 5000 km every month and focused on building a strong dealer network.” These strategies gave it market leadership in many categories. As per 2008 figures (ORG-gfk), LG was commanding a share of 24% in ACs, 24% in microwaves, 27% in DVD players, and 23.1% in LCD TVs. Interestingly, LG later saw that the low end was becoming increasingly crowded and therefore launched its Blue Ocean Strategy. Now LG is consciously trying to play on the ‘best-in-quality’ positioning and deliberately commanding premium on price; knowing well that the ‘inferior’ perception is not a problem any more. The only problem is that key categories have seen decline in market share in India for 2008 (see B&E Corporation on LG in the issue dated February 6, 2009). Could LG’s second repositioning lead to confusion in Indian customers and decline in its fortunes? Indeed, it’s a sword that could cut both ways. They must use it very, very carefully.
For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Saturday, March 06, 2010

When the ‘ketal’ goes boiling...

An unknown Indian firm Dorf Ketal buys up the global catalyst business of DuPont Chemicals! Why isn’t everybody this side of the Atlantic celebrating, asks B&E ‘s Angshuman Paul

Seriously, how many of you had ever heard about Dorf Ketal? Considering that it is an Indian specialty chemicals company worth $220 million (revenues for year ending March 2009; targeting $300 million by 2010-11), you would understandably be quite reluctant to reply in the negative.

However, it isn’t entirely surprising that the company operates in relative obscurity. Besides the fact that it is a B2B player, the company has followed a very conservative model for growth and diversification. Consider this – after eight years of their corporate journey, the company decided to diversify (in 2000). And then, unlike other companies, Dorf Ketal hasn’t believed much in the concept of branding as a B2B company; even as world famous B2B companies are beginning to realise its criticality. And they intend to keep things that way. “Since we are in the B2B arena, mass consumers are not expected to know about us, but our target audiences like Reliance, IOC et al, know about us” argues a senior official from Dorf Ketal.

Nevertheless, things seem to be changing during the last decade for the company. They have grown by more than 30% during this period by cashing in on acquisitions. A bird’s eye view at the activity of the company during the past decade tells us that in a time span of eight years, the company has made at least five acquisitions to leverage potential synergies. For instance, when it acquired Sanmarg Specialty Chemicals-owned Intec, it helped Dorf Ketal to diversify into organic products like titanates and zirconates that have a strong demand in industries like oil & gas, paints & coatings, printing inks, industrial sealants, corrosion protection & emission reduction.

And now the name of Dorf Ketal has suddenly gatecrashed into notice with the acquisition of the global catalyst business of DuPont Chemicals and Fluro Products for around $40 million. The deal has been funded through debt and equity funds injected by the promoters. This particular venture of DuPont minted revenue of $50 million during 2008.

DuPont has deemed the business to be ‘non-strategic’ to its long term growth plans. On the other hand, senior officials in Dorf Ketal are hugely optimistic about the synergies that Dorf Ketal would enjoy from DuPont Chemicals & Fluoroproducts business. “It will provide us with several product innovations and technological developments pioneered by DuPont and also strengthen our position on the global platform,” says Vijay Malpani, Group Finance Controller, Dorf Ketal Chemicals (I) Pvt Ltd. The deal also enables the Indian chemical major to acquire DuPont’s assets associated with the Specialty Catalyst Business which comprises trademarks, sales, marketing and customer service. Strategically, the group has acquired the assets and deliberately avoided acquiring the entire business in terms of human capital. The company is trying to avoid the risk of a cultural mismatch with a US-based business.

The company plans to allow itself some lag time before it can take over operationally. DuPont will continue to manufacture and supply specialty catalyst products to Dorf Ketal for approximately 1 year under service and supply agreements. DuPont is also assisting Dorf Ketal with technology transfer & in setting up a new plant. Sudhir Menon, CMD of Dorf Ketal says, “The acquisition is a well thought plan to consolidate our position in newer product segment.”
For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Friday, March 05, 2010

The family man

Though very different from how he is perceived, Abhishek Bachchan is a complete family man who is extremely possessive about his family members, and very rightly so. After upbraiding a Mumbai newspaper for falsely reporting that his wife Aishwarya couldn’t bear a child due to stomach tuberculosis, Abhishek is all set to rescue his dad’s dream project AB Corp and take it to the heights his father had once hoped to take it to. Looks like AB’s baby is not a baby anymore!
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Source :
IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Thursday, March 04, 2010

Jumbo-Size Shoe to Ease Pain

Kuntalini’s new Rs 1,500 shoe is the talk of the town

Kuntalini, a kunki-trained elephant of Jaldapara Wildlife Sanctuary, which comes under the Cooch Behar Forest division in West Bengal, is the centre of attraction. The 52-year-old female elephant struts around the area, wearing a shoe on one of its legs. The huge shoe is strapped up with white cotton ribbon. A close look shows “specially ordered” inscribed on it.

Kuntalini is not wearing the shoe for fashion. But when veterinarians failed to treat its injury, they suggested that the tusker be made to wear a shoe, so that its footpad injury could be protected. And this has helped the animal from further hurting its wound. The “hardworking forest employee” as it is called by forest workers was injured a year ago. Sources say that the elephant had stepped on a sharp piece of deer horn while patrolling the area. The injury was not life-threatening, but it led to profuse bleeding. Despite officials administering medicine on it, the wound did not heal. Besides, whenever Kuntalini was taken to the forest for work it used to hurt its footpad.

It was then that the sanctuary’s vet came up with the idea of a shoe. And a range officer of Jaldapara east was convinced. He managed to design the shoe for the elephant in two days. Help of a local cobbler was taken to make such a huge shoe. Made of hard leather and adhesive, the shoe is 130 cm in radius and 20 cm in height, weighing only 532 grams. Also, rubber is pasted on it. The unbranded shoe costs only Rs 1,500. At least two forest workers helped Kuntalini wear this shoe. To make sure that it doesn’t come off when the elephant walks, the employees tied it up with cotton ribbons. A senior forest official said: “We are still monitoring the elephant. Once we are confident, it will be allowed to petrol the forest. Kuntalini was lucky to survive. But there were others who couldn’t survive their injuries”. Another kunki-trained elephant Shakuntala in north Bengal forest had died of its wound. Veterinarians did their best to save it, but they failed. The elephant had sustained an injury while it was roaming in the forest. According to some sources, Shakuntala had hurt its right paw from a sharp nail. Initially, medicines and herbs were applied on the wound. But when it didn’t heal, the veterinarians operated on it. However, its condition started deteriorating and the wound never healed. After some days it died. Perhaps its death forced the forest officials to think differently this time.

Forest officials said: “This is for the first time in the world that such a shoe was made for a domesticated elephant”. But, earlier too, a female elephant Radha was made to wear a shoe in 2007. However, Radha was not manning the forest. Her shoe was gifted by one Raju Sagar, a devotee of Lord Ganesha.

While talking to TSI over phone, elephant expert Parbati Barua said: “This is an extraordinary step taken for an elephant. In Thailand, elephants are made to wear socks to save them from infection”. Forest department officials are mulling a proposal to use such kind of shoes for elephants that guard the sanctuary with a purpose to save them from injury. But Barua is unconvinced. She said: “This shoe or shoes are not natural thing for these Big Bosses (elephants) of forests. They have to be accustomed with it. If such a decision is taken, then officials have to make sure that they monitor the animals and sterilise their shoes.” Kuntalini was rescued from Sonpur Mela of Bihar in 1962. Since then, it has been patrolling the forest to protect other animals from the poachers. The forest is close to the Bhutan and Bangladesh border and poachers throng the area for their victims.
For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Wednesday, March 03, 2010

Maxim Gorky to Russian Comrades

Among the pictures of Soviet champions that used to hang in all Russian school and library, the one of Maxim Gorky was almost at all times given pride of place with Lenin. Gorky was a symbol of the Soviet literary enterprise. He was celebrated as the first Great Russian author to surface from the working class, as a life-long comrade of the Bolsheviks, and as the creator of Socialist Realism, the arty principle of the Stalinist rule. Following letter was written on the eve of the crushing of the first revolution attempt by the Socialists.

January 1, 1906

Comrades,


The conflict against the mean oppression of poverty is a conflict for the liberation of the world from that net of coarse contradictions in which all men are fiercely and impotently struggling. You are manfully trying to break this net: your enemies are making determined efforts to entangle you till more securely in its meshes, your weapon is the sharp sword of truth, that of your enemies the crooked needle of falsehood. Dazzled by the glitter of gold, they slavishly trust in its might, and do not perceive with what steadily increasing brightness burns the great ideal of the union of all men in one comrade-family of free workers. Socialism, the religion of liberty, equality and fraternity, is as unintelligible to them as is music to a man who is deaf and dumb, or poetry to an idiot. When they see the mighty march of the masses of the people toward freedom and light, dreading a disturbance of their peace, trembling for their position as lords of life, they hide the truth even from one another and console themselves with the spectral hope of defeating justice. They slanderously describe the proletariat as a dark mass of hungry beasts whose one desire is to gorge large quantities of food and who are ready for the sake of a good hunk of bread to destroy everything with which they cannot fill their maw.

Religion and science they employ as instruments for holding you in servitude; they have invented Nationalism and Anti-semitism, venom with which they would poison your faith in the brotherhood of all men; even God exists for the bourgeois merely as a guardian of property. In Russia a revolution is bursting into flame, and they slander utterly the Russian proletariat, representing the workman as a mere unconscious elemental force, a barbarous horde, ready to destroy, to wipe out completely all that exists, and incapable of creating anything but anarchy.


The man who addresses you now is a man of the people, one who knows the people, and who has not broken his connection with the people until this day, one who is an open-minded spectator of the struggle of the Russian proletariat, and this man declares to you:

The Russian proletariat is struggling consciously for the political freedom it urgently needs, and that it wrung the Manifesto of October 30 from the Government by its own strength. They tell you this Manifesto was an act of the Emperor's free will; his truth is, it was a trophy of the people's victory.

If the interests of the nation had really been dear to the Government it would assuredly have seen to it that the Manifesto of October 30 would secure in every corner of the Empire the force of unalterable law. But our Government is stamped with the habit of arbitrary rule; it denies all laws and is filled with the one great care of securing its own position, which, finding most profitable, it has naturally no desire to abandon.

The Russian Government has, as a result of its tactlessness, gained a Pyrrhic victory; by its impotence and forced brutality it has driven moderate elements towards the left, and will, I am confident, drive them still further in that direction. The Russian proletariat is marching towards certain victory, for in Russia it alone is spiritually strong, it alone has faith in itself, to it alone belongs the future.

Long live, then, the proletariat as it goes forth to renew the whole world. Long live the working men of all lands who by the strength of their hands have built up the wealth of nations and are now labouring to create it new life! Long live Socialism, the religion of the future.

Greetings to the fighters, greetings to the workers of all lands, and may they ever have faith in the victory of truth, the victory of justice! Long live humanity fraternally united in the great ideals of equality and freedom!

M. Gorky

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Don't trust the Indian Media!