IIPM ARTICLE AND PUBLICATION: March 2013

Thursday, March 28, 2013

The long march from Administration to Ministration; An Exercise to Fruition?

The past two Decades have seen many Social Initiatives being taken up by Bureaucrats, both current and former. But as is Evidenced Empirically, it’s a tough Jump for these Administrators to Finally end up making a Positive mark on Society, leave alone be Considered as Social Transformational agents...

According to a survey conducted by Hong Kong-based Political and Economic Risk Consultancy, India’s bureaucracy is the worst in Asia. Ranked as the least efficient, the report said that the country’s civil service is a “slow and painful process”. India obtained a score of 9.4 on a scale of 10 where 10 indicates the worst. The survey also said that the bureaucratic red-tape is a serious problem in India and China. The Economist put out a classic synopsis of the civil servants in India in 2008, quoting, “India has some of the hardest-working bureaucrats in the world, but its administration has an abysmal record of serving the public... Indeed, all [of] India’s administration is inefficient.”

Expectably so, today, if one were to ask a citizen to rank those change agents that had the power to transform the civil society positively, bureaucrats would be ranked pitifully low, if ranked at all. But as strangely and paradoxically, many of the biggest transformations in our civil society have occurred because of individual bureaucrats, current or former.

One such example is this woman who obtained a Masters degree in Political Science followed by a Ph.D in Social Sciences from IIT, New Delhi. She went on to join the Indian Police Service as the country’s first woman IPS officer; she finally retired as the Director General, Bureau of Police Research and Development, Ministry of Home Affairs – that’s Dr. Kiran Bedi for you, one of the winners of the 2011 Bharatiya Manavata Vikas Puraskar (see award details in a related story in this issue), who was more of a social activist throughout her career than just a powerful bureaucrat (remember the sobriquet ‘Crane Bedi’?). She now runs an NGO called Navjyoti, which promotes welfare policing and has managed to bring substantial changes in many individuals through its initiatives in areas like education, women empowerment, family counselling, rural and urban development, health, HIV/AIDS and environment.

Similarly, this woman joined the Indian Administrative Service only to bid adieu in less than six years and devoted herself to social activism. With her organisation Mazdoor Kisan Shakti Sangathan, which functions in rural Rajasthan, she raised her voice for the enforcement of the RTI. The receiver of Magsaysay Award, 2000, Aruna Roy, currently a member of the NAC, has devotedly worked for the rural poor.

Again, this 1968 born man and IIT Kharagpur graduate joined Tata Steel to gain invaluable professional and corporate experience. And then, he joined the Indian Revenue Service and got a prestigious posting at the Income Tax Commissioner’s Office in New Delhi... only to give it all up four years later to start an organisation called ‘Parivartan’ to successfully stir a revolution in the country – a revolution related to what we know as the RTI Act. Meet former bureaucrat and present social activist Arvind Kejriwal who received the prestigious Ramon Magsaysay award in August 2006.

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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

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
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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
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IIPM : The B-School with a Human Face
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Tuesday, March 26, 2013

Rakesh Rewari

As the number of MSMEs grows at a Brisk Pace, SIDBI’s mission of Providing Timely and Adequate Financing only gets more Daunting. Rakesh Rewari, Deputy MD, SIDBI, discusses The Bank’s plans with Mona Mehta

Rakesh Rewari, Deputy Managing Director, SIDBI, who possesses 38 years of experience in commercial & development banking with leading financial institutions and banks in India, covering a wide range of activities relating to MSME (MIcro, Small and Medium Enterprises) financing, venture financing, technology financing, entrepreneurship, micro credit & incubation funds, is a busy man these days. In a tête-à-tête with B&E’s Mona Mehta, Rewari reveals how SIDBI is grappling with the challenges faced by MSMEs in India.

B&E: How are you handling the tight liquidity scenario post RBI’s credit policy announcement? Specifically, how are you supporting MSMEs?
Rakesh Rewari (RR): SIDBI has provided timely financial support to the MSME sector during the global financial crisis and economic slowdown to overcome their liquidity problem. During FY 2009-10, SIDBI provided additional support to MSMEs, such as need-based restructuring of debt, coverage of loans up to Rs.10 million under credit guarantee, providing customised risk capital to MSMEs and setting up an e-platform called NSE Trade Receivables Engine for E-discounting (NTREES) for discounting of MSMEs receivables on real time basis. Further, the bank accorded greater thrust to sustainable development of the MSME sector by way of, inter alia, promoting energy efficiency, clean production credit lines, Green Rating, et al.

B&E: But are you also addressing the issue of inefficient energy use in the MSME space?
RR: To improve productivity and competitiveness of MSMEs through energy efficiency (EE) measures in their production process, the bank upscaled its EE financing by contracting bilateral Lines of Credit (LoC) from Japan International Cooperation Agency (JICA), Kreditanstalt fur Wiederaufbau (KfW) and French Development Agency (AFD). Some of the notable EE initiatives of SIDBI include providing collateral free credit to Mumbai taxi owners to replace their existing petrol taxis with CNG fitted taxis, special refinancing to Delhi Financial Corporation for assisting more than 600 LPG fitted auto rickshaws at Chandigarh, financial support to Bhartiya Micro Credit to provide 500 rickshaws to disadvantaged persons in and around Lucknow and financial assistance to Friends of Women’s World Banking for providing 50,000 solar lanterns to micro entrepreneurs in Manipur and other states of North Eastern Region.

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Monday, March 25, 2013

B&E This Fortnight

INTERNATIONAL
ECONOMY & BUSINESS STRATEGY

Who’ll buy Twitter?

The social media landscape has suddenly been set ablaze with a tug of war between technology titans Google and Facebook. And this time the reason is Twitter. Strategically, Twitter will give a leading edge to the technology barons. The run up to the acquisition is much obvious as the site has lately picked up on the social media circuit and is adding nearly 30 million users every month. Even its revenues are expected to double by 2011. Therefore, Facebook and Google are eyeing this opportunity to boost their market share and leverage the huge subscriber base following twitter. Orkut, Google’s initiative which majorly lost its subscriber base with the launch of Facebook is also looking forward to this buyout. Google was even in talks with Groupon but the developments ended with the latter raising money from venture capitalist. Google & Facebook want total access to Twitter’s data to make use of the real time information, which is an integrated part of their portfolio offerings and have been indexing the tweets by the users. However, it will certainly be interesting to watch the valuation of Twitter which is estimated to be around $10 billion, way ahead of what the analyst speculate. Twitter was valued at $3.5 billion last year when it raised money. It will be an interesting buy for both companies to back them with a big fan following.

Pepsi’s skinny woes!
US food and beverage giant Pepsi Co. posted a disappointing Q4 results with income falling by 5% as compared to Q4 2009 figure. The company’s net income declined to $1.37 billion in Q4 2010 from $1.43 billion in Q4 2009. Though the company is extremely optimistic about the synergies emerging from the acquisition of its main bottlers apart from the $3.8 billion takeover of Europe’s biggest dairy products company, Wimm-Bill-Dann Foods, it has baffled analysts with unsatisfactory guidance for 2011 amidst rising input costs. Meanwhile, rival Coca-Cola has reported a three-fold surge in its profits in Q4 2010. Considering that the recent launch of ‘a new skinny can’ by PepsiCo has invited criticism from NEDA, its CEO Indra Nooyi has all the reasons to rework her strategy.

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Monday, March 18, 2013

Bringing out the Mettle in The Metal

Hindustan Zinc has gained from consistent increase in productivity and efficiency, besides favourable market conditions.

Over eight years have passed since the acquisition of Hindustan Zinc by Vedanta from the Indian government. And going by the results, the Anil Agarwal owned group has been able to progressively give it global size and scale, while keeping it internally strong. The most certain evidence of that is the way the company has emerged post the slowdown.

HZL showed a huge jump of 41% in net sales yoy for FY 2009-10, when it posted sales of Rs. 80.16 billion. Profit After Tax grew by 48% yoy for the period and stood at Rs.40.41 billion. That was admittedly from the low base of the previous year, where the company saw a decline in toplines and bottomlines owing to recession. For the half year ending September 2010, the company has registered net sales of Rs.41.13 billion (growth of 24.58% yoy) and profits of Rs.18.39 billion (growth of 11.24% yoy). The margins were lower than expected due to high stripping costs, storage costs and cost of power owing to higher cost of coal.

COO Akhilesh Joshi comments to B&E, “The key reason for the growth is volume growth as well as improved efficiencies.” In all, Vedanta has invested around Rs.100 billion through HZL. Production capacity increased to 879000 tonnes per annum (TPA) for Zinc (from 169000 TPA in 2002) and 85,000 TPA for lead (from 35000 TPA in 2002). Going the integrated route has been another key contributor to increased efficiencies. Through investments in exploration, the company has added 152 million tones of resources over the years as opposed to depletion of 26.3 billion tones. In FY 2009-10, the company expanded ore production capacity to 8.60 million tonnes per annum through expansion in the Rampura Agucha mine. It also commissioned the 210,000 tonnes per annum Hydrometallurgical Zinc Smelter at Dariba Smelting Complex. In addition, it has developed captive power capacity of 394 MW. The acquisition of Anglo Zinc, when completed, will add significant capacities, and make it the world’s largest zinc producer; besides improving its exposure to European and African markets.

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Tuesday, March 12, 2013

Bonding with Bonds Peaks

World Bond Markets have been a Major Source of Capital for the Governments and Corporate Entities in the Developed World for over 5 decades now. But, Global Recession spurred Government Bond Issuance and hence Developed World Economy moved towards Borrowing through Bonds while banks continue to Struggle

Bonds take over banks

The importance of bond markets as a source of finance increased with greater significance during the recent economic downturn as companies diversified away from relying on banks for funding and many governments increased borrowing to fund their increased spending obligations for the massive economic stimulus to their economies. Amounts outstanding on the global bond market increased 10% in 2009 to a record $91 trillion (see figure). Domestic bonds accounted for 70% of the total and international bonds for the remainder while the same remained at 87% domestic and remainder international in the year 1999. US remains the largest bond market with 22% of the total global bond market and 39% of the total domestic bond market in the world followed by Japan with 18% of global domestic bond market.

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Monday, March 11, 2013

Succour Punch

A 15-Point Plan has been in Place for Decades for the Uplift of Muslims but it has Led to no Visible Improvement in The Community's Lot

Beyond political speeches and public posturings lies the truth. The ruling class has paid lip service to the community for decades and large sections of India’s Muslims have struggled to keep up with a nation on a rapid growth curve. Even the Prime Minister’s 15-point programme, devised to eradicate the problems of the minorities, hasn’t been of much help.

Says Nafees Ansari, Former Principal of Zeenat Mahal Government Senior Secondary School, “In our country, formation of committees is the only solution. These committees take forever to diagnose an ailment. The process is so lengthy that by the time a treatment is prescribed the ailment either takes a new shape or becomes incurable.” She further adds, “The 15-point programme is no different. The suggested remedies remain on paper.”

Dr. Zafar Mehmood, Chairman, Zakat Foundation of India and former bureaucrat, echoes the same sentiment. He was associated with the Sachar Committee and is now aggressively pursuing the implementation of minority welfare schemes. “Solutions are available. The problem is at the bureaucratic level. The bureaucracy does lacks the need will,” he says.

Dr. Mehmood says: “There is need for proper monitoring of schemes. The ministry of minority affairs has now appointed state-level monitors in the hope that this would speed up implementation.”

Praising the work done in Moradabad district of Uttar Pradesh, Dr Mehmood says: “Excellent work has been done in this district but the situation is rather disappointing in the rest of the country”.

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“Voluntary Compliance is Heartening”

Chandrashekar Hariharan, CEO and Co-founder, BCIL

BCIL has emerged as one of the major players in green building space in Souther India especially with its various green themed green homes. Sridhar Hariharan, CEO and co-founder, BCIL, reveals to Kumar Buradikatti the insights about green building sector in India

B&E: What are the major challenges faced by green project developers in India?
Chandrashekar Hariharan (CH): The major challenge is lack of knowledge among builders and architects of the need and the how-to's of design approaches needed to make buildings energy-efficient or 'green'. The second is that promoters have not so far had clients demanding such efficiency. Clients themselves who are buyers of homes, office spaces or those who lease mall and shopping outlets have not been aware of the tangible benefits of 'green buildings'.

B&E: Out of industrial, commercial and residential green projects, which have better returns and why?
CH: The catch is that when it comes to builders of homes, since the businessman is selling the property instead of leasing it, the builder doesn't see reason for investing time or effort. It's only when business gains directly from it that the builder sees tangible . This is in cases where the builder maintains post-occupancy needs and saves on energy costs with 'green installations' like shopping malls, hotels, hospitals and such, where the capex spender is also the opex owner.

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Thursday, March 07, 2013

“When you compete against Tatas, you don’t take chances!”

Karl Slym, President & MD, GM India has spent close to three years in the Indian market. The times have changed him considerably, more with respect to his understanding of the Indian customer. Slym shares with B&E the decisions taken in the hard times and the strategy forward with GM’s Chinese JV Partner.

B&E: GM has seen some of the toughest times in India and even in the current situation, the company has been unable to touch high volumes in its India journey. What are the key takeaways so far?
Karl Slym: The journey for GM in India has been very exciting so far. The past three years have been very exciting in particular because of the fact that it was a time when all was going as per the plan; where we had just introduced the Spark to the Indian market and we were pleased with the outlook. But then recession came along and General Motors filed for bankruptcy. No matter how much we tried to reinforce that it was back in North America that General Motors was facing problems and everything was fine in India, it wasn’t working. Be it an employee, a previous customer, a prospective customer or a supplier; all were worried about the future of GM in the Indian market. It was then that the ‘There for you – There for India’ campaign started to make rounds.

B&E: It was the same time when we saw you on the idiot box as well. What was the foundation behind you being the brand ambassador for the company?
Slym: We had a long discussion about the same for hours and came to a conclusion that it cannot be a Bollywood star who could convince the stakeholders about a bright future for GM in India. That could only be the person who is in charge of running the Indian operations. And the rest of that is now history.

B&E: Now, you have a JV with SAIC, which is your partner in the Chinese market as well. How are you expecting things to change in the times to come for the Indian market post the JV?
Slym: The JV is already eight months old, as it started on the 5th of February; and I can bet that you haven’t seen anything really changing in the company since then. The reason is because our plan is to ensure that the world should not feel any difference. The best way I can explain is that earlier I used to have only a GM menu but now I can bring in an SAIC menu as well. It’s like the consumer can have both vegetarian and non vegetarian food in the same restaurant. Earlier, in the GM menu we were not able to address the CV demand and as close to 40% of the vehicle sales happen in the CV segment in India. We now plan to bring CVs to the Indian market. We have already proven our success through global products like Beat and Spark and by partnering with a player that has proved it can succeed in the emerging market environment; you will see a lot of benefits of the same going forward.

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Wednesday, March 06, 2013

Muslim voice can't be heard as a monolith

The issue of Babri Masjid has long been under scrutiny, but B&E’s Syed Khurram Raza finds that the Muslim voice can't be heard as a monolith

Lecturer in Kirori Mal College Khalid Ashraf says “Both Muslims and Hindus should respect the verdict of the court and it is the government who has to see to it that the court order is implemented in its true spirit. It is high time that leaders of both the communities understand that education, peace and development are more important than these masjids and mandirs. If there is no peace and no welfare, then the basic purpose of the mosque and temple is defeated. If human beings live in peace and harmony, then the purpose is served whether the mosque or the temple exists or not.”

Syed Shahabuddin is very categorical that once a masjid is always a masjid. He says, following the Hanafi school of thought, that a masjid’s place cannot be given to anyone nor can be used for any other purpose.

Shahbuddin does not blame Rajiv Gandhi and says that the late leader was misled. He says, “When I met Rajiv Gandhi, he told me that he was misled by two persons and he named them.” Shahabuddin says “If the suit is decided in favour of the Muslims, then in my view Muslims need not build a mosque at the mosque site. But they also should not give it to anyone else as the Islamic law does not permit anyone to sell or gift masjid land. Nevertheless, they can give the adjacent land to the Hindus.” However, there will be few takers of this formula as hardliner Hindus will stick to the Garbh Griha demand.

There are some other Muslim leaders who are in favour of giving the land to Hindu organisations but with the condition that the land goes to Shankaracharya and that the VHP, Bajrang Dal and Shiv Sena is kept away. One leader, who does not wish to be identified, says, “We want to restore the glory of Shankaracharyas and keep these elements out. We are having talks in this regard.”

Two senior members of the All India Muslim Personal Law Board fully endorse Shahabuddin’s viewpoint of not building the mosque in case the verdict goes in favour of Muslims. They are of the view that this issue should be buried once and forever.

During the monsoon session, several Muslim parliamentarians sat together when one MP recieved information that inputs from Intelligence agencies suggested the verdict could go against the Muslims. One of them immediately called up Zafaryab Jilani to get the exact feedback. When Zafaryab Jilani assured them that there was very little chance of such a thing happening, they were relieved. However, they have decided on the immediate need to ensure that Muslims take the verdict humbly and do not celebrate or hail when the result is out.

Muslims born after 1992 are not even interested in this issue. They are more interested in social networking sites, big money, football or Shah Rukh Khan. According to sources, the Centre is already drawing contingency plans. There is a feeling at the Centre that some stray incidents could take place. It does not apprehend anything major as the losing side will have the option to knock on the doors of the Supreme Court.

The Uttar Pradesh chief minister, Mayawati, has already asked for more forces from the Centre. A strong message has gone out to the DMs and police officials that if anything untoward happened in their areas, strong action will be taken against them.

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Tuesday, March 05, 2013

NORDIC: DOUBLE-DIP RECESSION

Tighter monetary policy has not only weakened domestic demand in Nordic’s biggest economies, but has also put a brake on region’s overall growth momentum. Is Nordic slipping back into recession? Manish K. Pandey

While central bank of Sweden didn’t respond to the queries sent by B&E (till the time this magazine went to print), Øystein Sjølie, Communication Advisor at Norges Bank gave the same old excuse: “We are not authorised to comment on the economic situation of the country.” However, central banks of Finland and Denmark were at least brave enough to accept the fact. “Public finances have weakened substantially as a result of the recession, from a surplus of more than 3% of GDP in 2008 to a deficit of 2.8% in 2009 and just over 5.5% in 2010. The deterioration is not only caused by the automatic effects on both the revenue and expenditure sides, but also by considerable fiscal easing and public investments. In view of the prospects of dampened growth and continued deterioration of the labour market, the government deficit is expected to remain large with the public sector’s debt too rising sharply,” agrees Merete Lucie Trojahn, spokesperson, Danmarks Nationalbank to B&E.

Even Tuomas Saarenheimo, Head of Monetary Policy and Research Department, Bank of Finland accepts the fact to B&E that the Finnish economy has been hard hit by the global financial crisis. And why not? The share of exports, which was more than 40 % of GDP (in volume terms) before the crisis burst out, have declined by nearly 25 % in volume terms in 2009. “Although the current state of the Finnish economy is much less gloomier than it looked like about half a year ago, one should remember that Finland is still highly dependent on the overall development of the world economy and world trade. If the world economy continues to recover, the Finnish firms are in a good position to benefit from increasing demand in the export markets or vice versa,” Saarenheimo tells B&E.

Though Denmark and Norway saw their real GDP rising during the first quarter of 2010, the scenario here too looks bleak as high-frequency data by Moody’s Economy.com points towards a slowdown in these economies in the near future. In fact, manufacturing purchasing managers’ indices for Denmark and Norway have been trending weaker since March 2010. Further, rising levels of household debt too posses a threat to the region’s recovery in the long term. While household debt is 167% of disposable income in Sweden (compared to 104% a decade earlier), the ratio has almost doubled in Finland to 107% in 2009 from 65% in 2000. Even in Norway, the debt ratio is expected to reach 197% of disposable incomes by 2010 end, up 14.5% from 2005 level.

No doubt, one way out of the chaos is to ease the monetary policy, but then it might fall back on the policymakers as it could further bloat the new housing bubble which is in the making in most of the Nordic countries. A closer look at the numbers and one could clearly asses the real threat. While existing home prices in Norway and Sweden have risen substantially by 10.8% and 10.7%, respectively, in Q1 2010 from year-ago levels, they have gone up by 10% in Finland, after surging a record 11.4% in Q1 2010.

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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

Saturday, March 02, 2013

MF INDUSTRY: CHALLENGES & FUTURE OUTLOOK

Leave aside regulatory changes, the Indian mutual fund industry today faces a number of issues which are characterized by lack of investor awareness, low penetration levels, high dependence on corporate sector and spiraling cost of operations. Structural changes in business models are what AMCs now require if they want to sustain profitability by Mona Mehta

Further, the dependence on the corporate sector is still pretty pronounced at 51% when compared with economies like US & China where investments channelised through corporates, comprise only around 15% & 30% of the AUM, respectively. This under volatile market conditions, sound a note of caution for the industry, as high dependence on the corporate sector may result in the fund houses being prone to unexpected redemption pressures. Considering the untapped potential, competition too is all set to gain momentum in the Indian MF industry, which is making dominant desire to progress, a reality, through wealth creation.

In fact, the moot point here is amidst the new transparencies that will be introduced in the system meant to boost investors confidence and ensure fair competition in the industry, it is equally important for AMCs to understand how critical is it for them to collectively work towards facilitating more innovation, financial inclusion, cost management, increased investment in technology to support distribution network, with the support from channel partners and regulators alike.

Ramdeo Aggarwal, Co-Founder and Director – Finance, Motilal Oswal Financial Services too feels that in India, creation of the fund is not coming from the strength, in sync with the trend existing in other parts of the world. For instance, in US, founders of fund create fund based on certain insights and convictions for the benefit of customers post which the funds are traded to get the asset, say, may be worth Rs.1 trillion. Hence, Indian asset management companies (AMCs) now need to work on developing new USPs in handling people’s saving.

“The financial inclusion category today has the most competitive and cost efficient structure in place, which we believe is extremely favourable for the final investor. MFs have been extremely transparent with high disclosure standards which help investors in their process of due diligence. With increase in category awareness and enhanced brand connect, AMCs have been able to reach out to the customer more effectively,” Nipun Kaushal, Head – Marketing, ICICI Prudential AMC tells B&E. However, Kaushal refuses to divulge details of the product innovations that he is planning to come up with due to competitive strategies.

Even the regulator now seems to be paying heed to ensure that MF industry sustains its profitability. In fact, Securities and Exchange Board of India (SEBI) has recently issued directions for the mutual fund industry stating that no business houses without five-year financial services experience will be permitted to own stake in an AMC, with an aim to enable only the serious investors to get into the business. “As MF business has a long gestation period, therefore the regulator is now looking for shareholders who can stay for long and are experienced in the industry,” spokesperson of Edelweiss AMC tells B&E.

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