Showing posts with label IIPM Gugaon. Show all posts
Showing posts with label IIPM Gugaon. Show all posts

Monday, October 08, 2012

WORLD: ENERGY CRISIS AND WHY EVEN WE COULD BE WRONG :-)

The lethargy to move to alternative fuel seems almost insane...

The reality is that many underdeveloped and developing nations have similar sources of alternative energy; yet, fail to see the potential. If most of the major metropolitan cities turn to CNG as the standard fuel for all public transport systems and private vehicles, it would reduce the oil demand significantly. While billions of dollars are being spent in most nations for construction of highways, a fraction of similar investments for the creation of mass rapid railroad transport system running on gas (not gasoline, but hydrogen based gas) would not just drastically reduce the need for fuel oil, but would also help in creating a cleaner environment.

Reports state that India’s natural gas production is slated to touch nearly 170 million standard cubic metres per day by 2011-12. So, when natural gas and CBM can run power plants and vehicles, when an Iran or Russia based pipeline can meet the rest of the demand, why is such a price rise paranoia?

As the oil reserves near depletion in Middle East, the price of the same can only go up. A war between Israel and Iran might never happen but the fear factor of the same would continue to push the price northward. It’s time to exit this game theory of US (who perhaps benefit the most as the more the price of oil rises, more becomes the demand of dollar to buy the same). Let’s hope that the day gas becomes the preferred fuel is not far. And what would be proof of that? That’s easy. That would be the day an exemplary American President bombs a state called Bihar in India and claims he did it for saving the world from weapons of ‘gas’ destruction.


Read more....

Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face


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Saturday, September 08, 2012

Priyanka’s multipurpose acting chops

Let’s face it: Anjaana Anjaani is not going to find a place on the list of her mentionable movies. And Khatron ke Khiladi (KKK) was much better off with Akshay Kumar. (In fact, KKK plans to rope back Akki for their next season). But hey, Priyanka Chopra has just been voted the most kissable star in Bollywood! She may be training to kick some serious butt in the upcoming Don 2, but that, Ms Chopra, should give you an idea of the kind of action most would like to see you in.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Friday, August 31, 2012

irat Bahri wonders whether the debate is relevant at all

Is a corporation meant to look at the larger good or just at profit maximisation? the debate continues to catch the imagination of executives and academicians. Virat Bahri wonders whether the debate is relevant at all

We believe that the very basis of this debate, just like the debate between growth and equality (that they are necessarily contradictory) is weak. Shareholder value and social responsibility can coexist quite well. Drawing correlations between profitability and social good is too tasking even for the most prolific economists; but there are numerous instances of companies that balance the two quite well. And the most convincing evidence of that can be found in our own B&E Power 100 list of India’s most profitable companies for 2010. In fact, the select group of companies that we have featured in this issue from the list are focusing on social good and also consistently proving to be prolific wealth generators in their own right.

State Bank of India had relatively flat growth to register profits of Rs.91.66 billion and was at rank 5 this year (Rank 3 last year). Net Interest Income (NII) increased by an impressive 13.91% as compared to the previous year and the bank’s Net Interest Management (NIM) has also improved to 3.18% if you consider results for the quarter ending June 2010. Fee-based income increased by 26.57% yoy for the year and forex income also grew by 34.59% yoy. Meanwhile, it also serves a vital role in the government agenda as a PSU, with its network of 7400 rural and semi-urban branches, which help the agri sector. Around Rs.560 billion of advances from SBI reach approximately 7 million farmers. Once again, this should have an indirect positive effect on SBI as rural prosperity improves, since it will have built a strong relationship of trust with them.

Infosys Technologies retains its position as India’s most profitable IT company and ranks 8th on the list this year (at 7th position last year). After a tough recessionary phase, Infosys has been consciously working towards increasing its client base and having a greater spread of revenues both in terms of verticals and geographies. For 2009-10, its $1 million plus client base expanded to 338 (from 166 in FY 2004-05) and revenue per client has increased slightly to $8.4 million (from $8.1 million in FY 2008-09), as the company sees a more optimistic outlook from its clients. While the contribution of BFSI revenues hasn’t varied much, contribution of manufacturing has gone up significantly. Meanwhile, on the social front, Infosys has highlighted three key binding themes for its sustainability initiatives – social contract, resource efficiency and green innovation. Among other initiatives, it opened the Infosys Science Foundation, in fiscal year 2008-09 a not-for-profit trust for scientific research. Even in the midst of downturn and uncertain outlook, the company made it a point to honour all its hiring commitments in campuses. It may not go down in history as a great initiative for shareholders, but the credibility that such initiatives establish is invaluable, for they will also help Infosys attract the best talent in the country.


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Wednesday, August 22, 2012

Betting big on the inorganic mode

First it was the Bank of Madura. Then, it was Bank of Sangli. And now, the Bank of Rajasthan. ICICI Bank is seemingly strengthening its presence in the Indian banking space by undertaking a slew of acquisitions much like its peer HDFC Bank did in the past. by Avneesh Singh

It was the February of 2008. The world was yet to come face-to-face with the debacle of the US banking giant Bear Stearns. Yet in India, officials of the largest private sector bank, ICICI Bank, had started feeling the heat. And it was not for the fact that they had already predicted the slowdown that was coming their way, it was due to the acquisition of the Centurion Bank of Punjab (CBoP) that proved the genesis of all headaches in the ICICI camp. CBoP had been on the radar of ICICI Bank for quite sometime already, but it was HDFC Bank that finally got hold of CBoP. ICICI Bank, which had held on to its numero uno position in the private banking space and second slot in the banking space apparently felt that it was losing its ground. It made ICICI realise that something’s got to give, if it wanted to avoid nightmares of the likes of HDFC Bank, Axis Bank and Punjab National Bank beating it with the lesson cane! It decided that growing inorganic was the route to redemption.

What followed was interesting. Despite the Bear Stearns episode in March 2008, the Indian banking scenario continued sauntering without many hiccups. There were promises in the air, especially the air above the Indian banks. But something set the cat amongst the pigeons – the crash of the banking behemoth Lehman Brothers, which filed for bankruptcy in September 2008. The world economy was heading for its worst crisis since the Great Dipression and Indian banks set off the alarm. One which set off the louded was ICICI Bank. Reason – during that point in time, it had an exposure of around 57 million euros in Lehman senior bonds and another $30 million in the insurance company American International Group (AIG), whose financial health too was as shaky as Lehman Brothers’. ICICI Bank was forced to pack its dreams (of steaming past others of its ilk in the Indian space) in a suitcase and catch the next flight to the land of protectionism. Times were too risky to take a plunge and ICICI Bank wanted to play safe.

More than a 21 months later, after a prolonged phase of silence, the bank has stepped back into its aggressive boots. And this time around, it has given clear indications of a desire to grow through both organic and inorganic means. Even Chanda Kochhar (CEO of ICICI Bank) has done much work towards rebuilding the perception of the bank amongst its customers. May 3, 2010, also saw ICICI open its 2000th branch in the country (it opened it in Andheri West, Mumbai). But there was more in store for the market. Withing 20 days, the Board of Directors of the bank approved an amalgamation of Bank of Rajasthan (BoR) with ICICI Bank, subject to approval by shareholders and Reserve Bank of India, therefore sending that signal of aggression to competitors and customers alike.


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Tuesday, August 14, 2012

On the wings of some vanity & wax

Subhiksha was a dream flight, which crash-landed as soon as it took off; B&E presents a decisive story covering a summary of its flawed strategies and the way forward. by Pawan Chabra

Surviving One Bad Year: 7 Spiritual Strategies to Lead You to a New Beginning. In this shallow chick lit, Nancie Carmichael – an author who seems to have graduated from parenting books to self help hocus – spawns chapter after chapter of spiel on not only how to handle personal loss, but even bankruptcy! She doesn't stop there – there's more mumbo jumbo on how to handle depression, disappointment, betrayal, and yes, job losses too! Hilariously, if one does a post-hoc analysis, it just seems that if R. Subramanian, founder, Subhiksha, had even blindly followed the quirky advice conjured up by Ms.Nancie, Subhiksha might have been a better company than what it is now. But as they say, journalistic advice is as infidel a virtue as the devil's religion. Be that as it may, we still decided to go ahead and present a contemporary synopsis of what went wrong with Subhiksha and where is the erstwhile retail star heading to now!

Prosperity is the literal translation of the name Subhiksha from the Sanskrit language. To its credit, the retailer did remain true to the name for more than a decade with its business model, a legacy that even saw eulogies emanating sporadically from industry associations. Then how did the company manage to literally shoot itself? This case study provides lasting lessons in retail strategy.

Subhiksha commenced operations in 1997 and took the conservative route for nine years in the booming retail industry. The clear focus was on establishing its brand name in the country before going for the kill. After making consistent efforts to get a tighter grip on the Indian consumer for the past 11 years, it was announced in early 2008 that the retail chain will invest a whopping Rs.500 crore to increase the number of outlets to 2000 across the country by 2009. Was this target too aggressive, critics asked, keeping in mind that the company had just touched 150 stores across the country in the first nine years of its operations?

Quite possibly. Nevertheless, the company's sales were also growing by leaps and bounds; from a mere Rs.3.3 billion for financial year 2005-06 to Rs.8.33 billion for FY 2006-07, going on further to touch a mind-boggling figure of Rs.23.05 billion for FY 08. Soon enough, media and industry experts were reporting the Subhiksha model (a no-frills model aimed at gaining consumer confidence by offering the lowest prices in the industry attracting the price-sensitive segment of Indian consumers – the largest) as the most successful one in retail; even home-grown counterparts and several multinational firms started rolling out formats inspired from its business model. It was all looking like a dream come true, with R. Subramanian – an IIT & IIM alumnus – driving the growth story. Money was flowing in from PE players and industrialists. ICICI Ventures, which was an entrant during the early years of Subhiksha, became the second largest shareholder after promoters with an exposure of billions of rupees. Notably, PremjiInvest, the PE arm of billionaire Azim Premji, bought a 10% stake in Subhiksha from ICICI Venture in 2008 for Rs.2.3 billion. Subhiksha itself invested in an NBFC for future long term growth funding. With 1,600 stores already set up, even the ambitious target of 2,000 stores for the year looked very achievable.

But something, somewhere, started to go wrong. Reports started filtering in – employees complaining about unpaid salaries, suppliers complaining about huge outstanding payables, rents, bills, and more... Stores started shutting down when funds started drying up. However, the company claimed strongly that there was nothing wrong as these were normal economic slowdown issues and that the stores will be reopened by June 2009.

And then came the shocker! Reports came in that Subhiksha had inflated revenue figures, fudged accounting transactions, and transferred money to non-existing companies. An adamant Subramanian refuted all allegations, and refused to handover the company's reins. Push ultimately came to shove, and finally, facing extremely angry creditors, employees, shareholders (even Premji sent legal notices), and left with a bleeding skeletal firm, R. Subramanian, the brain behind Subhiksha, grudgingly shut shop, yet refusing to "run away."

As it now goes through a corporate debt restructuring plan, the chances of the retailer making a comeback look very bleak. “Subramanian is a great mind and his model was very successful but he was at the wrong place with the wrong people and took the wrong decisions. He has today lost his credibility in the Indian retail market,” says an industry expert to B&E on the condition of anonymity.

On hindsight, considering the fake inventory, fake bills and fake companies to which money was transferred, Subhiksha shares a lot of similarities with the largest scam in the Indian market, Satyam Computers Services – though Premji minces no words while referring to his investment in the retail chain as an error and titles the company 'the Satyam of the Indian retail industry’ in an interview to a business daily. But the bleeding retailer is quite fortunate as it has been able to stay out of problems of the magnitude that Satyam faced, where the founder Ramalinga Raju is behind bars and even the auditors and the sister concerns have tasted rough waters.

It is widely believed that the massive expansion plan – mistimed horribly with the onset of the economic slowdown – was the critical tipping point. “The business model per se was very strong and also makes sense in today’s environment; but it was the massive expansion that caused the failure. The empty shelves and a weak back-end changed the consumers’ perceptions about the company,” says Zahir Abbas, Associate Director-Retail, KSA Technopak. Our text messages and phone calls made to R. Subramanian are left unanswered. Even ICICI Ventures, which now holds about 23% in Subhiksha, and still has an estimated exposure of about Rs.1.06 billion in it, chooses to abstain from answering B&E's queries.


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Saturday, August 11, 2012

Next time you reveal your A/S/L (Age/Sex/Location), please watch-out for predators keeping an eye on you!

“There is a huge list of scams such as online earning proposals, duplicate websites, phishing and Spam e-mails, credit card frauds and EFT (Electronic Fund Transfer) frauds.

Globally, more than $6 billion are stolen from consumer accounts by attacks called Phishing, and the scale of such frauds in India is fast catching-up too,” says Advocate Vivek Tripathi. With the availability of Internet on the move via Blackberry, i-Phones and portable USB net devices, it has become a lot easier to log in as and when desired. Our passwords, e-mail accounts, bank accounts, social networking profiles and more can be easily hacked; and not only that, our status messages and personal information lead criminals to our doorstep with incredible ease. Revealing too much information on the net such as making your contact number and residential address public is unadvisable. The moment you update a status message conveying ‘off to ___’ through another computer or mobile, someone keeping an eye on you would know where you logged in from and how authentic your information may be. Guardians of the law and those safeguarding our personal interests recommend awareness and precautions on the Internet.

Technology is man-made and so are its hazards. It depends on the user of the technology as to how he/she takes control and uses it to the optimum. It may be noted that when mind-freak programmers and criminal minds join hands, they can stir-up a deadly concoction, which can easily give the gullible a ‘kick’




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Wednesday, August 08, 2012

The U-turn warning!

After a rather disappointing & loss-plagued 2009, the year ahead will mark a turnaround in the books of the Indian aviation industry. Steven Philip Warner explains…

Call it the past-eraser. Can an individual go back in time, erase his complete past, and come out happier than ever before? The majority would affirm that the answer to that question depends on which individual are we talking about. Only a few would say that the answer depends upon whether such a time machine could exist at all. Fewer still would be intelligent enough to sidestep the complete waste of a question. Being the bard to the fool, the down-in-the-dumps Indian aviation sector has been more than happy to be ‘the’ individual in question! Given a chance, the Indian aviators would attempt precisely what the question portends – to wipe out all the inane decisions that they bet on a few years back!

Yes, the nation grew, and so did the domestic sector post-liberalisation, from 3 million passengers in 1993 to 44.5 million in 2009. But if footfalls had meant profits all the time, even beggars would have been flaunting their flying licenses! Much before slowdown cast its shadow on the global economy, the domestic aviation sector had started rotting; and right from the top! One strategic blunder led to another – illogical fleet and geographical expansions, grossly miscalculated mergers, fractured infrastructure and over-staffing culminated into capacities outrunning logical demand, on the back of ever-growing ambitions of the airline companies. And this is how the numbers appear today: after amassing more than Rs.190 billion in losses in the three years leading to FY2008-09, the boardrooms of airline companies conspired in tandem to rock the flying ships of investors further with predictions of another Rs.70 billion in losses during 2009 (as predicted by the Centre for Asia-Pacific Aviation, CAPA). CAPA further mentions that the big three (Air India, Jet Airways and Kingfisher Airlines) accounted for losses of almost Rs.230 billion [$5.1 billion] during the same period. Estimates for losses for the current financial year are to the tune of Rs.65-70 billion [about $1.6 billion].”

Three and a half years back, Business & Economy had warned about the manner in which unsound pricing policies were preparing grounds for players in the domestic sector to end up underwater. It finally happened in 2009, when everything including passenger volumes (the last hope) went against the domestic airlines. Barring only one domestic carrier – IndiGo – all others posted losses for FY2008-09, with the big three, which together accounted for 59.4% of the domestic market share in 2009, posting the biggest annual losses totalling Rs.76.34 billion. The low cost carriers also lost money, with SpiceJet & GoAir reporting negative bottomline figures of Rs.3.53 billion & Rs.225 million respectively. l.

So after a loss-splattered 2009, all questions that arise about the immediate year ahead is simply answered in a one-line poser – how further than the ocean bed can you sink?

After a disaster-struck 2009, it’s not difficult to imagine an improved year ahead; rather a ‘different’ one, when the very structure and composition of the sector would undergo a steady transformation into becoming more of a low-cost strategy dominated market. Strangely, an operating model which was non-existent in the Indian market until six years back, could account for almost 70% of domestic capacity within the next two-three quarters. This is due to the decision taken by carriers such as Jet and Kingfisher to reconfigure the majority of their domestic aircraft to operate all economy, no-frills service. Air India is also planning to follow suit. As the Indian Aviation: Outlook for 2010 report mentions, “There has been a clear recognition that there is a limited market for full service travel, particularly business class, beyond the key metro routes. Full service may in future be restricted to just a handful of services, or may even disappear entirely.” Today, big players like Kingfisher and Jet are already operating about 70% of their capacity in the budget model. Therefore, by the end of 2010, these two players will quite possibly become the two largest LCCs in the market.The transition to lower cost operations should allow the big-3 carriers to develop a more competitive cost structure, which is essential for survival. Jet Airways and Kingfisher are both faced with a cash crunch and urgently seeking to capital.

Though high debt and fuel price fluctuation (which had fallen to stable levels during 2009) remain two big concerns for 2010, Indian private domestic airlines are expected to make a combined profit of $250-300 million (Rs.11.43-13.71 billion) during the coming financial year FY2010-11, with Kingfisher Airlines likely to break even in Q3, 2010. Even a January 2010 report, by Centrum Broking, predicted Jet’s return to profits (of Rs.140 million) in Q3, 2010 as opposed to a negative Rs.2.14 billion in the same quarter in 2009. SpiceJet’s operational performance is also forecasted to improve by FY2010-11. Currently, the Indian aviators have a combined debt in excess of $10 billion, and they would need urgent capital raising of up to $12 billion over the next 2-3 years to finance aircraft deliveries (with a need to increase equity by $1.2 billion over the next 3-6 months). But with global sentiments improving and investors mushrooming thick and fast, this shouldn’t prove too difficult.

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Tuesday, July 31, 2012

Doesn’t pay to be ‘Sam-struck’!

Most Indians had hailed the nuclear deal with US as one of India’s greatest achievements. Instead, it is increasingly looking like one of its costliest mistakes

The US-India civilian nuclear deal which is more popularly known as the 123 Agreement has been the most deceiving deal India has ever signed in recent history. Admittedly, we say this with the benefit of 20:20 hindsight, but then, this realisation is not yet visible in the government. The inconclusiveness and shifting priority of the deal has only strengthened the fast emerging sentiment that US is not genuinely interested in India’s needs and prosperity; it just values rational and logical interference on matters that would restrain India’s global diplomatic leadership – and India’s energy security is unquestionably one of them.

Not that we’re quite in awe of nuclear energy (read B&E’s cover issue dated June 23, 2011), but the 123 agreement at least was supposed to give us flexibility to use the nuclear route when in need. After considerable negotiations, India finally signed the 123 US-India nuclear deal in October 2008 (United States-India Nuclear Cooperation Approval and Non-proliferation Enhancement Act), which promised India access to stocks of enriched uranium and foreign investments in the country as well. The government went overboard and India bought 40 foreign nuclear reactors, which were estimated to have production capacities of 40,000 MW of electricity by 2050 – and in return, India was to be treated as a ‘nuclear weapons state.’

But then, there has always been more to this deal than meets the eye. Recently, during the debate on the Civilian Nuclear Liability Act, the Parliament found out that many technologies (including the reactors) provided by foreign firms were faulty and outdated. In simple words, in the veil of a nuclear deal, what foreign (read: Western) companies did was that they sold outdated and obsolete nuclear technologies to nuclear-hungry India. This deal also pushed back our plans of thorium-based reactors, which could have solved the energy problems to a large extent. Given the fact that we have a large indigenous supply of thorium and raw thorium is available in plenty on Kerala’s shores, the cost of running & operating a thorium based reactor would have been significantly reduced.


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Saturday, July 28, 2012

Double Dip M&A? Amidst possibilities of another global downturn, what will the m&a scenario for the coming quarters be?

B&E & IIPM Think Tank present the M&A update 2011-12, Including a Primer on M&As across The Globe this year and analysis on Major Sectors of India that are ripe for M&A

The B&E/IIPM Think Tank mergers & acquisitionSreport, 2011-12
As US corporate profits reach 60-year highs and global economies start accelerating, M&As are coming back with a bang. In fact, investors have already started flexing their muscles as new capital starts flowing into their funds. Yet, with the global economy facing the possibility of another downturn, is the corporate world ready for consolidation? Will buyers and sellers indulge in as frenetic an activity as seen in the pre-recession days? Or will the coming quarters be a damp squib on takeover sentiments? B&E and IIPM Think Tank present the M&A update for 2011-12

Companies spend more than $2 trillion on acquisitions every year, yet the M&A failure rate is between 70% and 90%…” When Profs. Clayton M. Christensen, Richard Alton, Curtis Rising, and Andrew Waldeck of the Harvard Business School wrote these words in their March 2011 seminal work titled ‘The New M&A Playbook’, they must have wondered what’s ‘new’? Nothing actually. Irrespective of the year one takes, the failure rate of M&As has more or less always bounced between the percentages they mention. Yes, there have been good years, when the failure rate has defied expectations and has been only around 60%. And there have been bad years, when almost every M&A attempted destroyed shareholder value. But that’s about as much as one needs to know about M&As. From Accenture to McKinsey, from BCG to Booz Allen Hamilton, from Stanford to Wharton, there is little debate left globally on whether M&As add to shareholder value... they don’t. In fact, most destroy it with surety. But then, why do CEOs globally still go ahead and attempt mergers and acquisitions?

One line of thinking compares the M&A behaviour of CEOs to cigarette smoking. There’s no debate on whether smoking causes cancer. It does. Yet, one would find pretty sane, intelligent and bespoke individuals indulging in the exercise. Logically understood, the attitude is quite addictive, whether for smoking or for M&As. CEOs get infatuated to the M&A dopamine high and the rush of seeing their companies’ turnovers double, even triple overnight – and not because of any strategic moves they might have made in the marketplace, nay any innovation, or a product launch. But simply, an M&A; “The bigger the ego of the acquiring company’s CEO, the higher the premium a company is likely to pay for a target,” write Dr.Mitchell Marks and Dr. Philip Mirvis in their 2011 paper in Journal of Business and Psychology, quoting varied research studies. There’s another line of thinking that says that as the average probability of success of a new business anyway falls between 10% and 30%, an M&A activity should not be considered anything different. The success rate of an M&A exercise mirrors what one would expect from a new business venture; and therefore CEOs should necessarily take it up, as there are 10% to 30% M&As that are superlatively succeeding too in maximizing shareholders’ wealth. Be that as it may, 



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