Showing posts with label IIPM New Delhi. Show all posts
Showing posts with label IIPM New Delhi. Show all posts

Monday, June 03, 2013

Brave New World

The Bombay of the early 1990s opened a world hitherto unseen and the doors of perception had truly been opened, remembers Sutanu Guru

My first encounter with Maharashtra was pristine, ivory tower, innocent and almost like a first love. A small town hick from one of the BIMARU states, I was dreaming of pursuing a Masters in Economics from the hallowed JNU after my graduation. But there was a strike in 1983 in JNU and we were not sure if they will admit students from BIMARU states (Yeah, I know there was no Internet in those days). I was advised to try my hand at Gokhale Institute of Politics and Economics which was highly regarded. After some sniggers and snide suggestions about my pronunciation and conversation skills, I was given a place. Boy, how it opened a whole new world for me. And how.

The batch had just 32 students and the hostel where we stayed had just 32 single rooms. There was Fergusson College next door and a small hilltop called a "tekdi" right above the campus. And of course, Deccan Gymkhana, the area where it was located, was full of retired  Maharashtrians who loved taking long early morning walks. Greenery was a given. And the Film Institute was just about 2 kilometers away. Apart from falling in love with a classmate who taught me Marathi, I fell in love with the Servants of India Society library that reminded me of Thomas Hardy and The Bleak House. I also developed a lustful attraction towards one of our young teachers whose name I forget and began to admire a young professor called Bibek Debroy because he used to allow us to smoke in classroom (of course, he was a brilliant teacher too!). Half the batch was from outside Maharashtra and there were the usual vibes about being a local or not. And yet, all differences vanished when we debated the relevance of Baba Amte, the great anti-leprosy fighter and a man that Anna Hazare can never be. All differences vanished when we heard of V. M. Dandekar, the man who sort of started the poverty ratio debate in India. That short man with a white beard and sort of timid jumping steps was someone we held in awe. As we did Bhimsen Joshi who captivated us hicks all night with his magical voice in concerts. You may not believe it, but some of us actually read Marx and Keynes and animated debates over them through the night; sometimes helped by grass, Led Zep and Doors. Without realizing, I had realized I had started conversing in Marathi. But there was a darker side. Once, when me and my Konkan Marathi lady friend and some other friends were buying cigarettes, I was abused in Marathi by some young guys because I made a joke about Marathi. I wanted to respond in anger, but was dragged away by the friends saying it is not worth fighting with goons of some outfit if I recall was called Patitapavan Sena. My Marathi friends were deeply embarrassed because they knew I understood the abuses flung by those goons at me. We forgot all that soon when we started debating the ultimate what if about what would have been the fate of modern India had Baji Rao Peshwa had not been killed in the Third Battle of Panipat. Some of my Marathi friends were Brahmins, and some were from what we now should call the upwardly mobile castes. I used to sense a kind of anger amongst the later whenever there was any praise of Dada Kondke, Maharshi Karve, Bal Gangadhar Tilak or Gopal Krishna Gokhale. To tell you frankly, I was innocent but not a fool. And in 1983, I sensed that some intellectual morons like us were discussing Marx versus Keynes when Maharashtra actually was being ruled by what my then Marxist friends used to call Kulaks (Sharad Pawar might be a good example today). A small town hick like me who wanted to transcend all this could not fathom how educated guys discussing Marx suddenly became subtle caste foes. And then one day I think I lost my lady friend. When she questioned my status as a Brahmin and asserted how Konkan Brahmins were the purest of them, I could not help pointing out why so many Konkani Marathi ladies had blue eyes. And I laughed. And lost.

I visited Pune again in 2007 and in 2011. Before my 2007 trip in a taxi from Bombay (oh, Mumbai), I had nursed dreams of that old world sleepy charm of the city, despite media torts to the contrary. My colleague Devdas introduced me to some activists on the outskirts of Pune. This was the time when anti-North Indian agitations had already gathered momentum. One of the activists was very happy that a senior journalist from Delhi could speak even broken Marathi. He just opened up and said how the locals were being driven to poverty by this new culture of globalization. I was zapped. Later, I attended a prayer cum motivation session of a group that was responsible for destroying the library of the famous Bhandarkar Institute (close to the Gokhale campus). There, I heard so much vitriol against outsiders and so much hatred against Dada Kondke that I realized I am now in a new Maharashtra. I didn't even go to Gokhale. In 2011, one of my relatives who is studying in Pune, it remains a hot education destination, told me that their lives are made miserable by Marathi goons.

That got me thinking about my other major encounter with Maharashtra. I joined The Economic Times as a young hick in 1986 and actually struggled to find a roof. Thanks to a journalist in Maharashtra Times, the local language newspaper, I found shelter and eventually a paying guest accommodation that had six guys, 20 mice and about a 100 cockroaches in Maximum City. I survived. I loved Bombay of that time because it was so open and meritocratic, if you were willing to work hard. Bombay was exhilarating. I mean, I actually could go to the Taj and to attend a Press Conference and drink so called scotch and have chicken tikka. And then then there were those junkets where a bunch of journalists like me (wow I belonged) were flown to places in Indian Airlines flights to peddle a new public issue which is now called an IPO. But most importantly, Bombay of those times was dreams. I still remember my stint in Business World where Dilip Thakore was the editor. I wrote a story on garment exports and he seemed happy with it. I actually got to meet either Ajay or Dilip Piaramal with Dilip in the hallowed corridors of Bombay Gymkhana. I was so excited after that meeting that me and my friends went on a binge that ended in a place called Gokul in Colaba and then lots of food in what is now called Bhendi Bazaar. You know, the waiters who served us food were Muslims, as were the owners of those joints. They looked at you with a snigger. But they didn't give a damn about the nationality, caste, religion or gender of the person who paid the bill. It is not as if we hugged each other. The realization of "difference" was there even then. But it used to be a kind of live and let live. The live and let live dictum was visible even in that famous Anil Ambani-Tina Munim marriage where a huge media contingent from Delhi was invited. By then, I had shifted to Delhi and was part of that contingent. Even back then, in 1991, the fault lines were clearly visible. The Shiv Sena was no longer just a Bombay- centric party whose cadres used vocal and muscle power to do what they wanted to do. It had emerged as a strong political challenge to the Congress.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Wednesday, May 08, 2013

Why He Will Be even More Dangerous for India in 2013

This man has already achieved what no other non-member of the Gandhi family has ever done. The closest to his record is Atal Bihari Vajpayee, who was Prime Minister for six consecutive years between 1998 and 2004. P. V. Narasimha Rao is another non-Gandhi who completed 5 uninterrupted years as the Prime Minister. The next best is a Gandhi family member Rajiv Gandhi, who led the government between 1984 and 1989. No other Prime Minister – except Jawaharhal Nehru and Indira Gandhi – has survived five uninterrupted years as Prime Minister. Nehru was PM continuously from 1947 till his death in 1964. Indira Gandhi was PM between 1966 and 1984, except for a two and half year exile between 1977 and end-1979. The way things are changing in Indian society and economy in terms of aspirations and expectations, even die-hard supporters of Congress will snigger at the suggestion that Rahul Gandhi could be Prime Minister for 10 consecutive years beginning 2014. So there is absolutely no doubt that, in a factual context, Manmohan Singh has already secured his place in history. It is a different matter that an ‘unelectable’ bureaucrat completing 10 successive years as Prime Minister reflects on the quality and the depth of Indian democracy. But credit must be given. Manmohan Singh will almost certainly complete 10 years as PM. But will history talk about him and his lengthy tenure the way it will keep dissecting the track record of Nehru and Indira? For that matter, forget Nehru and Indira, will he ever acquire the stature that even Vajpayee has assured for himself? Let’s look at it in another, more blunt manner: will history ever talk about the legacy left behind by Manmohan Singh? Quite frankly, history books will confine him to a supporting role at best as they analyze the legacy of Sonia Gandhi. Sad, but Dr. Singh will leave behind no legacy: faceless bureaucrats who selflessly do the bidding of political masters never do so.

And yet the man, the economist, the bureaucrat, the courtier and the reluctant politician knows that he has achieved something phenomenal by becoming Prime Minister for two consecutive terms. And even faceless bureaucrats have egos and dreams. There is no doubt whatsoever that Dr. Singh knows his days as Prime Minister are numbered. He knows that even if the UPA manages to win another term in 2014 and Rahul Gandhi decides he is better off enacting the role of Sonia Gandhi by pulling the strings from behind the scenes, it is another courtier who would be anointed Prime Minister. He also knows that fawning Congressmen will instantly delete him from even contemporary footnotes the moment another courtier takes his post. I mean, if they don’t care a fig about him even now when he is the Prime Minister, what chance would he have as an elderly statesman without even the fig leaf of perceived power and authority? Surely, it must be rankling. It would rankle any normal human being with normal feelings and human emotions. And Dr. Singh is undoubtedly the embodiment of middle class normalcy.

This is where India begins to enter very dangerous times. Dr. Singh would be determined to leave at least some legacy behind. He is not a fool. He knows there is no chance of a political legacy of the kind left behind by Nehru, Indira and Vajpayee. He also knows that history books will credit not him, but Narasimha Rao as the architect of economic reforms. In fact, in terms of economic performance, his long tenure as PM would be torn to shreds by objective historians. Do remember, he was aware of all this even back in 2008 when it was not certain that the UPA would be voted back to power.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
BBA Management Education

Monday, May 06, 2013

M&As: A Phenomenon of the Market

M&As have always been an area of debate for business experts. However, new research explains who acquires whom, whether payment is made in cash or stock, what valuation consequences arise from mergers, and why there are merger waves

In the late 1990s, the United States and world economies experienced a large wave of mergers and acquisitions, culminating in the bursting of the Internet bubble and the subsequent stock market fallout.

Until now, there have generally been two ways to understand mergers and acquisitions. One explanation relies upon the notion of synergy, i.e. the greater profit potential that results from combining two companies. The second explanation suggests that mergers and acquisitions are the product of bad management being kicked out by better management.

Previous research has addressed the separate merger waves of the past 40 years, offering a different explanation for the waves of the 1960s, ‘80s, and ‘90s. A new study, Stock Market Driven Acquisitions, undertaken by me and Andrei Shleifer of Harvard University, offers a more unified framework for understanding the different characteristics of acquisitions and how they vary over time.

We suggest that mergers and acquisitions are a financial phenomenon created by stock market misvaluations of the combining firms, and are related to the level of the market as a whole. Markets are inefficient, while managers of firms are rational, taking advantage of stock market inefficiencies through well-timed merger decisions. The objective was to come up with a simpler theory recognising that valuations differ from true fundamental values temporarily because of market sentiment. In part, companies make acquisitions or become targets of acquisitions to benefit from stock prices that are temporarily out of whack.

The Spiraling Effect of Misvaluation

A company’s valuation may be heavily influenced by investor psychology, since expectations for growth are built into the price investors are willing to pay. For example, to justify paying a price-earnings multiple of 150 ($150 per current dollar of earnings), you would have to believe that the company’s earnings will grow dramatically over the next five to seven years.

We find that in the 1990s, the valuations for the market were pushed up for some companies much more so than others, creating the “haves” and the “have nots.” Misvaluation in this context refers to the “haves,” such as America Online (AOL), Cisco, and Intel, being deemed worthy of excessively high valuations based on unrealistic growth expectations. These companies knew their share price would fall when the market learned of its overconfidence. The star companies therefore had a short-run opportunity to cash in by using their stock as currency to buy other companies-hard assets that were more sanely valued.

Our model says there was some sanity prevailing among the CEOs of high-flying companies. They knew that the valuations were unreasonable, so by acquiring all these earnings producing assets in exchange for their shares, they cushioned themselves from the full impact of the bust.

Why would a company agree to be sold in exchange for overpriced stock? The answer can be found in the different “horizons” of corporate managers. Horizons refer to how long a manager wants to hold onto a company. Managers with short horizons might wish to retire or exit, or simply have options or equity they are anxious to sell. Managers with long horizons might want to keep on working, be locked into their equity, be overconfident about the future, or just love their business.


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

Saturday, May 04, 2013

An Alzheimer's cure?

Millions of dollars are being poured into fighting Alzheimer's, but the cure could be a step nearer

Alzheimer’s Disease (AD) is fast emerging as one of the most menacing threats to the human race in the coming years.

By 2050, people of 60 years or more will account for around 22% of the world’s population. As per Alzheimer’s Disease International (ADI), an international association to fight AD, around 35.6 million people are affected by the disease. Furthermore, some 7.7 million cases are added each year. At the current pace, the number will double every 20 years. Around 58% of AD patients are in the developing countries, and the ratio is expected to reach 71% by 2050. AD is the sixth leading cause of death in the US today and around 5.4 million Americans have AD. The total cost to fight AD in America is $200 billion to date, and the total cost to the world is $604 billion. The US FDA has approved six drugs to cure AD. But surprisingly, a drug called LMTX, by a Singapore based biotech firm, could be the best bet. The claim by the firm is that the drug can even reverse the effects of AD – by attacking tau and amyloid deposits, two proteins that cause brain plaques.

But all these medicines may well be reducing the smoke than putting out the fire. Professor Ruth Itzhaki from the University of Manchester in an exemplary medical research proved that the Herpes Simplex Virus – which causes normal skin rash in almost 90% of the population – was found located right within the protein plaques of 90% of AD patients.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Saturday, April 27, 2013

Cicero's Challenge 2012: The nation’s grandest inter-school event

It was a fest to remember. On the sprawling lawns of The Indian Institute of Planning and Management (IIPM)’s international campus in New Delhi, on May 3, 2012, over 6,000 school children congregated to create what has become one of the biggest and most eagerly awaited events for the national student community. Cicero’s Challenge 2012, IIPM’s annual inter-school festival – which has the debate competition as the signature event and many other thrilling competitions – witnessed a display of excitement, energy and vigour that’s hard to put down in words.

The theme for the 2012 edition of the festival was ‘Get Real’. The two-day competition kicked off with its signature debate event, which saw students debating on the topic ‘Technology’ in the preliminary round, which was followed by the finals on the second day. The 27 finalists debated on the topic ‘The virtual world is where I can really be me’. Saksham Agarwal of Amity International School, Gurgaon bagged the first prize in the debate competition, which included a cash prize of Rs 1,00,000, a certificate and a trophy. Prof. Rajita Chaudhuri, Dean, Centre for Enterprise Management, IIPM and Prof. Arindam Chaudhuri, Honorary Director of IIPM Think Tank, were the judges for the debate finals. Prof. Arindam Chaudhuri said, “Every time I judge an event at Cicero’s, I discover new, budding schools that haven’t been heard of before; Montfort School, for instance.” In all, the event went beyond expectations to live up to its image of being the nation’s greatest inter-school event.


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

Wednesday, April 24, 2013

Barack Obama’s Kony capitalism

Ugandan Joseph Kony’s past is reason enough to target him as a crime perpetrator; but the grand involvement of United States in such a myopic issue clearly seems to be only with an objective to capture oil resources in the Ugandan region than for any other altruistic reasons

Joseph Kony. By some accounts, he’s a raving lunatic. By other accounts, he’s purely a cult religious fanatic. By almost all independent and reliable accounts, the man is a cut-down-to-size erstwhile extremist on the run who might previously have had fair resources under his command, engineering random killings, ethnic cleansing and abductions not only in Uganda – his former homebase from where he used to lead the Lord’s Resistance Army (LRA) – but also in South Sudan, Congo and Central African Republic. But by no sane account is the man currently worth the title of a global terrorist.

Of course, two decades ago, Kony was a different man, with a larger-than-life persona, commandeering armed men under the LRA umbrella ostensibly fighting for “freedom”. But over the years, the LRA – which sources claim had above of 100,000 fighters during the 1990s, including a significant number of children – has been decimated quite impressively by Ugandan forces. As of date, some estimates mention that the LRA – if it at all exists anymore as an entity – couldn’t have more than a hundred so-called fighters, and those too operating discretely without any central command. And the reason for that is that Kony’s been on the run for quite a long time; and his motley LRA crew – which Uganda strongly claims is being ‘supported’ by Sudan – wouldn’t even have been known in countries outside Africa had the US not decided to get in their spin doctors into the act and brand Mr. Kony as the new Osama bin Laden.

In other words, Kony – who is often now referred to even as a plain vagabond criminal – is not worth betting your grandmother’s Edward shilling on. Far lesser is he worth creating a Lord’s Resistance Army Disarmament and Northern Uganda Recovery Act (which Mr. Obama created in May 2010) or demanding more funding from Congress primarily to target Kony and his coterie (which the US President again did in November 2010) or sending “combat-equipped” US defence forces into Uganda with a prime objective to remove Kony and destroy LRA (which Mr. Obama again managed in October 2011). And to top it all, the spin doctors even released a Youtube video called Kony 2012 in March 2012 (it’s been viewed more than 100 million times on Youtube and Vimeo as this magazine goes to print). The video documents Kony and LRA’s various ‘atrocities’ and demands action.

The gaumless ridiculousness of Mr. Obama’s so-called altruistic moves got highlighted to worse levels when on March 21, 2012, the US Senate passed a resolution against “the ruthless guerrilla group” and backed efforts to target Kony and LRA. Seriously, is all of this for a man who has, as per the US government’s own admission (Donald Yamamoto from the US State Department revealed the figures), just 150 fighters left? Kony had been operating for decades and the US did nothing. Then why now, when Kony is already almost extinct?


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

Saturday, April 20, 2013

Can Zinger become the Big Mac in India?

Shrugging off its early failure, KFC from the stable of Yum! Brands is now eyeing to replicate its Chinese success story and trump McDonald’s in the Indian market. But the question remains – can it beat McDonald’s first mover advantage in this market, and of course its robust supply chain?

It’s 9 o’clock on a wintry sunday morning and despite the chill and a holiday, quite a few young couples could be seen taking a relaxed breakfast at a KFC outlet in New Delhi’s Connaught Place. Whether they are pressed for time or it’s their love for KFC morning offerings, is not known. But certainly the ubiquitous Louisville, Kentucky-based chicken specialty restaurant from the Yum! Brands stable, has caught the fancy of urban youth. So much so that the well-entrenched McDonald’s known for its family and kids TG, has aggressively revamped its offering to orient itself to the young adults.

Starting in 1996, after a slow and circumspect start, today KFC is Yum! Brands’ best performing subsidiary in India, well ahead of Pizza Hut – once the flagship for the US-parent company in India. But what’s worth noting is that with KFC Yum! Brands is hoping to create a China like success story in India. Today KFC is 80% of the Yum! Brands’ over 4,200 outlets in China – a market which contributes 33% of its global revenue. But then that’s not without a solid reason. While India being a chicken loving country, the chances of KFC’s continuing success becomes stronger, more so as offerings like Zinger Burger, and the trademark KFC hot and crispy chicken offerings, are gobbled by urban India. Officially the QSR chain is growing at a blistering 70%. And the company has already started eyeing for bigger targets. When asked about the company’s target to hit Rs.10 billion turnover in India, Dhruv Kaul, Marketing Director, KFC India says, “With the kind of growth and expansion we are having, that looks a very humble figure, we are aiming much higher in the coming years.”

However, to achieve these bigger targets, KFC has to take the game away from McDonald’s, which already has a very strong presence across the country. Certainly, the QSR that believes in finger licking taste has outlined few key growth areas to take the matter forward. While keeping its great taste USP alive by further expanding and localising its menu is its primary strategy, increasing its footprints to roughly 50 cities, increasing the serving hours and thus drawing a broader customer base – especially among the Indian youth – are the key focus areas for the company now. Working on the lines, the company recently introduced Streetwise range starting at Rs.25 to cater to the college going youths, and lure the mass that have been loving McDonald’s happy price menu (starts at Rs.20) so far. Moreover, KFC now aims to expand to 100 items serving all kind of customer needs from health to indulgence.

McDonald’s on its part too knows that KFC is the one to watch out for. As such the Big Mac maker is on a good move growing at 35% over a revenue base that’s much bigger than KFC in India, and doubling its revenue every 3-years. But then the fact that the past couple of years have seen KFC’s aggression bringing it good dividends is something hard for McDonald’s to ignore. No doubt, a serious competition is already in place. The flow at which both players have started offering new products, right from burger specialty to their respective beverages, to hit the other’s menu clearly explains how spicy the chicken and the burgers have become in both the board rooms.


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

For More IIPM Info, Visit below mentioned IIPM articles
 

Tuesday, April 16, 2013

In need of a bailout

With several power utilities running up prohibitive losses and power tariffs remaining static for years on end, the much touted growth story for the power sector looks like tripping up.

The red flags are up for the power sector, which was once considered to be the next ‘big thing’ in India’s growth and investment story. But in the face of mounting losses by already debt-ridden state electricity distribution companies, existing and future loans to the power sector have become a cause of deep concern for banks and state lenders such as REC, PFC and others. Lenders such as Power Finance Corp (PFC), Rural Electrification Corp (REC) and several banks have together lent about Rs.4.8 trillion to the sector by March 2011 and total advances are expected to grow 23% over the next two years. Moreover, around Rs.560 billion of these lenders’ exposure is potentially at risk if there is no meaningful progress on power reforms in the next 18 months. And going by the way the power distribution sector is racking up losses, funding for the sector looks headed for real trouble.

Losses for state electricity distributors, which depend on state support and borrowings from financial institutions to meet revenue shortfalls, doubled in the two years since April 2008 to $12.9 billion, according to a Power Finance Corp report. The net losses of the power distribution firms, which have been widening over the past five years, was pegged at about Rs.400 billion in FY11. As a result, many distribution firms are financing the gap in their revenues and costs by debt funding. Nine states including Rajasthan, Bihar and Haryana account for 80% of the outstanding debt (see chart). But mounting losses at state electricity boards (SEBs) and delays in the execution of new power plants are making servicing of loans and interest payment difficult. SEBs are on a brink of bankruptcy as they are saddled with losses running into millions of rupees on account of power theft during transmission and distribution, billing inefficiencies, and, more importantly, because they have to buy expensive power to tide over short-term deficits. To add to the woes of distribution companies, power subsidy requirement by distribution utilities has increased both in absolute and percentage terms over the last few years, which means that the ratio of average revenue realisation (ARR) to average cost of supply (ACS) and the gap between ARR and ACS has deteriorated. From a credit perspective, timely disbursement of subsidy to distribution companies remains a critical factor, given that any significant delay in subsidy payments by the State governments can impact the cash flows of the state-owned power utilities.

Under the circumstances, it’s no surprise that some of the state electricity boards are already asking for loan restructuring by extending the repayment period. Loan advances to power sector constitute nearly 7.3% of total outstanding credit for banks. Of this, nearly 30-40% is accounted for by state electricity boards (SEBs) and face a much greater likelihood of being restructured if things get any worse. According to brokerage firm Macquarie, up to 40% of advances to the power sector could be restructured. Canara Bank has the highest exposure to power, with 13.3% of its assets exposed to the sector, while Kotak Mahindra Bank is the least troubled with almost negligible exposure to power. India’s top two lenders, State Bank of India and ICICI Bank, are among those having high exposure to the power sector, with more than 300 billion rupees of loans each. According to Chairman and Managing Director of Punjab National Bank K.R. Kamath, “Wherever we had issues on state electricity board short-term loans we have restructured and converted them into long-term loans repayable over a period of time.” In fact, PNB has restructured loans worth Rs 1.7 billion given to Tamil Nadu state electricity board in the second quarter. A similar predicament is being faced by Indian Overseas Bank, which has lent more than 91 billion rupees ($1.8 billion) to the power sector. “Some of the state electricity boards are asking for loan restructuring. We’re seeing how that can be worked out,” says Chairman and Managing Director M. Narendra. According to the Reserve Bank of India, bank loans outstanding to the power sector as on September 2011 was Rs 3,007 billion. Banks exposure to power sector at the end of August 2011 accounted for 7.9% of total bank credit. The maximum limit is 8.3%, which leaves almost no room for further funding.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail

IIPM Links
IIPM : The B-School with a Human Face

Monday, April 15, 2013

RTI needs more teeth

B&E: The PM, along with some of his colleagues, has been critical of some of the provisions of the RTI. What do you read from the PM’s remarks?

ND:
The impact of RTI has begun to show now. I think the RTI, not as a law, but as a system, gives it strength. The government has also been in trouble on many occasions due to RTI and their anger is unfortunate. This is one legislation that has been passed by this very government. What the PM has said is unfortunate. I would be happy if he had talked about strengthening its implementation instead of attempting to dilute it.

B&E: The PM’s call for a critical look into the RTI Act has emboldened voices seeking dilutions to RTI. Do you see it as a threat to RTI?

ND:
The threat from the political class to RTI has existed since the Act came into being. Barely six months into the formulation of the Act and the government was already on its toes to clip its wings. I remember we had a hard time keeping the RTI in its current form. However, with the kind of community support that the RTI has garnered in these 6 years, it will not be easy for any government to amend it.

B&E: What is your reaction to remarks that the RTI has inbuilt weaknesses?

ND:
I feel that there are weaknesses in the Act, but in the sense that it doesn’t have sufficient teeth. There is no provision for fixing responsibilities & imposing penalties.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail

IIPM Links
IIPM : The B-School with a Human Face

Friday, April 12, 2013

Sony’s (Intelligent?) bet on The Idiot Box

Sony India has been Focussing Big Time on its Television Business in India. And it seems to have paid it off well. But then, it will Certainly have to come with Some Innovative Strategies soon if it wants to continue rising up The Ranks.

“It’s a time of transition, which makes things even more difficult”. These words from Osamu Katayama’s book These are our future (which details Sony Corporation’s recent history) aptly describe the phase that this Japanese multinational is going through at the moment. First, a devastating earthquake in Japan. Then, a cyber-attack on its network. And finally, a colossal net loss of $3.1 billion for the financial year ending March 31, 2011 (Sony’s second worst financial performance ever). All this has not only made its share price tumble over 25% since the turn of the year, but has also put an enormous pressure on its chief executive Howard Stringer who is striving hard to win the battle against the odds, one after the other.

In fact, when Howard Stringer, Chairman, CEO & President, Sony Corporation, took over the reins of this Japanese conglomerate in June 2005, its three major businesses – gaming, mobile phones and television – were already losing momentum, globally. Thus, the task ahead for Stringer was not only to save these businesses from collapsing, but also identify functions and markets that could serve as alternative sources of revenue for Sony, at least till the time these businesses were back on track, live and kicking.

Although Sony had been in India since 1994, it was only then that the Indian consumers saw Sony recognising the real potential of this ‘Asian Tiger’. Thus, everything from more launches, slightly more affordable prices, to more stores, to even zero-interest finance schemes, to things which Sony had never done before, were all suddenly happening, and not just in India, but across the globe. Result: Sony’s CPD division, which sells televisions, digital imaging, audio and video products, semiconductors, components and business services, recorded a respectable profit of $35.4 million in FY2010-11, up 1.6% y-o-y, at a time when the core divisions were bleeding losses.

No doubt, the strategy paid it off well across countries, but then India seems to be special, so much so that the company is now looking at the country as a priority market and expects it to become the fourth largest market for its products in the world, contributing as much as 10% to the group’s sales in the next couple of years. In fact, Sony, which started off slow in the Indian market, is now rising up fast in a market dominated by chaebols like LG and Samsung.

Cut to the chase, the focus for the time being is on its television business, particularly the Flat Panel Display (FPD) TV market in India. In fact, as per the US-based market research firm DisplaySearch, Sony has already overtaken Samsung Electronics and LG Electronics for the top position, with 22.1% of flat panel TVs shipped in the Indian market in 2010. Even according to the GFK Nielsen Urban India Panel TV (LCD + Plasma TV) Report (for April-June 2010 period), Sony Bravia (Sony’s flagship FPD product) had become the market leader in Flat Panel Display segment in the first quarter of FY2010. It had grabbed a market share of 32% by value, and 29.5% by units sold. The company had sold more than 1,00,000 units during this quarter, more than the number of units sold by any other brand in the market. For the month of June alone, Sony had captured a significant market share, 33% by value and 29.5% by units. The company reported maximum sales in the states of Maharashtra, Delhi, Tamil Nadu & West Bengal during this quarter. For starters, under the FPD TV market, the 22-inch, 32-inch & 40-42 inch segment comprises of more than 75% of LCD units sold in the country. And interestingly, Bravia was the leader in all the three categories.
 

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 

Monday, April 01, 2013

“It’s all Good in Canada.” Really?!

During The Recent Election Campaign The Newly elected Prime Minister of Canada Stephen Harper touted Conservatives as The Best Economic Managers The Country has ever had. But can his so-called ‘Best Brigade’ Assure Canada of a growth that’s really sustainable in The Long run?

On May 30, 2011, when the 308-seat House of Commons of Canada next rises, it will be dominated by 167 Conservatives. Well, this certainly means a lot to Stephen Harper, who, despite winning two previous elections (Harper was first sworn in as Canada’s Prime Minister in 2006), has never before held a majority government. But then, does this really mean anything to the Canadian economy which, perhaps, is standing on the verge of a slowdown?

Interestingly, all this while, Harper has been repeatedly telling Canadians that the Conservatives are the “Best Economic Managers” that the country has ever had, and it’s because of them that Canada bounced back strongly from the global financial crisis. “But are they, really?” is the question that several have been asking on the streets of Ottawa & Toronto since March 25, 2011 when Canadian opposition parties had brought down Harper’s government by supporting a motion of no confidence that held Harper in contempt of Parliament for refusing to share financial details of decisions taken by him with the House.

No doubt, to some extent Harper seems right, as of the seven industrialised nations that comprise the G7, Canada clearly stands out when it comes to economic recovery from the recent recession. It not only expanded at an annual pace of 5.8%, but also recovered both the employment and real output losses that accrued over the troubled course, in just one year. But then, though Harper now has the clear mandate to deliver on his promises and the freedom to do so without much intervention from the opposition, there are many who still doubt his claims. And, there are good reasons for Canadians to be sceptical of Harper’s claims and even more reasons to be worried about what his promises (currently, the Harper administration projects a deficit of $29.5 billion for this fiscal year and a return to surpluses by 2014-2015) and policies would mean for Canada’s economic future.

After growing at a red hot annualised rate of 5.8% in Q1 2010, Canadian economic growth had come down to just 1.8% in Q3, 2010. Though the GDP growth has unexpectedly risen to 3.33% in Q4 2010, the celebration isn’t going to last long as domestic demand, which so far fuelled this growth, is all set to decrease in the near future. While a still healthy job market (employment growing at 2% y-o-y in Q1 2011) should continue to fuel domestic demand, there are several potential headwinds that need to be avoided. Further, with the benefits of the inventory swing (inventory rebuilding had accounted for over 33% of GDP growth in 2009) behind and the boost from government stimulus (over $60 billion in 2009 and 2010) fading, how is that Harper’s so called “Best Economic Managers” going to sustain Canada’s economic boom in the long run? In fact, they have yet to explain how they will find $1.6 billion in cuts already booked in the 2011 budget.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist). For More IIPM Info, Visit below mentioned IIPM articles

Thursday, March 28, 2013

Still very Stuck with a ‘P’rofound ‘E’xuberance

Though Sensex has been Correcting itself Since Last November, at Current PE, it looks Overvalued. And with Jittery Corporate profit growth Forecasts, it is surely due for Further Correction.

24.15 was the PE multiple (price to earnings) of Sensex when the BSE benchmark scaled its lifetime high of 21,005 for a day in November last year. At the same time, that was the value which made many analysts act like disciples of Yale professor Robert Shiller calling the market movements “irrational exuberance” (Author of Irrational Exuberance Shiller, using Cyclically Adjusted PE model, had claimed at the peak of dotcom bubble that markets are overvalued and soon it succumbed to the bubble burst bringing glory to the author). And as we know since then, the Sensex has rolled down 12.21% to close at 18,439 on March 14, 2011. But the million dollar question that still worries a common investor is that, with the Sensex PE reading 20.02 currently – against 10-year average (quarterly) of 18 – can we say that the index is operating at a sustainable value or is it just a breather before another major correction?

Before getting into the details one first needs to understand what does PE multiple of an index stand for? In simple words, Sensex PE at 20 means Sensex is now valued at 20 times the cumulative earning power of its 30 constituents. Even if it sounds arbitrarily high for a common investor, in true terms, it is nothing new for the Sensex, more so for that the index has sustained over this value for over 18 months between 2006 and 2008. So, what is the problem that we are talking about?

Well, it’s actually the change in conditions, both economic and market. The most critical fact about the PE multiple of Sensex is that it is based on the anticipated earning power of the companies and while the economic conditions were suitable in 2006-07 to achieve rapid growth, it’s bleak at present. Although the reviving demand, both in the domestic market and globally, will provide Indian companies a boost in sales, the real task is to maintain the kind of profit margin that they are used to. If a substantial rise in raw material prices in the last year was not enough to dampen the momentum, rising crude oil price (already gone past $100 per barrel) is ensuring that the corporate profit in the coming months falls below market expectations. And the trend is already setting in. Considering the quarter-on-quarter cumulative net profit of Sensex companies in 2010, the growth quotient has fallen from 15.41% in the March quarter to 8.45% in December, threatening the market confidence and of course, the future value of the index.

In fact, discounting for the negative sentiments, the Sensex, which offered a mind boggling 157% between March 2009 and November 2010, has already lost over 12% since then. Whereas, global indices like Dow Jones Industrial Average and S&P 500 have advanced 4.3% and 6.3% respectively during the same period. For that matter, despite being on the receiving end, other BRIC benchmark indices have confined their losses to 6 to 8%. In fact, the Russian RTS index has gained a mind-boggling 18.5% during the same period.


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

For More IIPM Info, Visit below mentioned IIPM articles

Monday, March 18, 2013

“We Need a Real Estate Regulator”

Kamal Khetan, CMD, Sunteck, has taken Sunteck to Unimaginable Levels Within a decade. He talks to Mona Mehta about The Present and The Future
Sunteck Realty started their business in 2000 from Mumbai and have gone on to become Mumbai’s second largest real estate player with a plethora of premium offerings in the residential and commercial segments. Kamal Khetan, the founder promoter and present Chairman and Managing Director of the Sunteck Group, reveal the success model of the story and the fast changing real estate landscape in the country in an exclusive interview:


B&E: How do you rate Sunteck Realty’s performance on the financial front and what have been the kind of targets achieved till now and also set by you?
Kamal Khetan (KK):
Our financial performance this year has been extremely good. The cumulative sales are Rs.1.43 billion (bn) and customer advances stand at Rs.4.35 bn in September 2010. We continue to achieve higher volumes and higher sales realization across our projects. This is a growth of about 40% over the corresponding period last financial year on revenue. We are confident of achieving our target of FY11 and have targeted cumulative sales of Rs.20 bn by year end out of which, we have already achieved more than Rs.1.6 bn till date. On all projects, we are achieving a minimum premium of 25% to 30% in each market.

B&E: What has the major focus of the top management in terms of managing cash flows especially when home equity is increasing with regards to loans? What has been your overall growth strategy so far?
(KK):
The company remains focused on acquisitions it also believes in utilizing each rupee generated from internal accruals for further acquisitions. Our cash flow remains strong and our volumes and price points are only growing. We don’t believe that the increase in home equity (required for home loans) is impacting the volumes or price point of our products.

B&E: How do you believe that the real estate industry has evolved over the years in India and what are the major policy or institutional changes required in the near future?
(KK):
The real estate industry will continue to be a high growth sector, with a significant potential not only to provide homes and business locations but also sustainable employment. In the medium to long term, we expect the industry to benefit from newer construction technology, design and building automation, as well as green technology. We expect to form larger partnerships with government and local bodies to develop comprehensive high density developments with requisite infrastructure and public amenities for all. We believe that the country requires a real estate regulator. This will help in making the sector more organized and customers and stakeholders to gain confidence in the industry.


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

For More IIPM Info, Visit below mentioned IIPM articles