Monday, March 11, 2013

“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.


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

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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.


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

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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.


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

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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.


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

Read more......

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.


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