IIPM ARTICLE BROADCAST: January 2009

Tuesday, January 27, 2009

How important India is...

How important India is, becomes clear the moment Fredrik shares passionately with us how he has devoted

a significant time in contributing to the direct selling industry in India; and even envisions India becoming the biggest market for Oriflame internationally. And the key to this? Providing the best natural Swedish beauty products at affordable prices all over India. Fredrik exclaims, “Asia, as a whole, contributes to around 6% of our turnover; and India is one of the major contributors – of course, as it is one of our top three high priority markets.”

But yes, competition does matter. And Amway already has a head start and a uniquely different positioning. But Fredrik’s not losing sleep, “Amway is a very good company and I have respect for it; but it’s up to different companies on how they compete and perform.” Interestingly, rather than Amway, Fredrik’s slugging it out first with his own company’s supply chain and infrastructure, “Maintaining supply chain is our key area of investment. It requires huge capital as India is a huge country. Infrastructure is a major challenge in India. So we continue to invest there too.” Moreover with competitors spending heavily on advertising, even this area becomes a cost laden tubhole for Oriflame. But Fredrik is careful in his plans, “We do lot of outdoor and print media, but we have no plans to go for any TVC right now as our consultant base is not so huge.” And the results seem to be beyond expectations, as he reveals, “We have been growing at 40-50% yoy in the last three years. Now, it is tough to keep up, but we will continue to grow at 30-40% on a year-on-year basis.”

For a man who believes passionately in his employees and even his ‘consultants’ [“The consultants are independent business partners and we motivate them with training, seminars, education and compensation and so forth”], Fredrik comes out as a man well in command of his profession. But the personal front is where his biggest challenges are currently. With apologies to the ladies, the man is married and is a father of three children, and is looking for answers on how to work out a balance between his personal and professional life. Fredrik confesses, “I don’t ‘balance’ as I just work. I do try to look after my family but sometimes I neglect them and that troubles me.”

And curious that we were, we threw the last one at him on the one thing he loves about India and the one thing he doesn’t love; and spank on came the answer, “Oh, I love Indian people but not the climate.” Don’t worry Fred, neither do we [love the climate]! And as far as the other part goes, our newspapers would have given you the dope on how much we Indians love ourselves... [No, Fredrik didn’t manage to sell us the Oriflame face cream].

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
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Saturday, January 24, 2009

No more selfish motives in broadcast media

The Telecom regulatory Authority of India (TRAI) which also regulates the broadcast media has advised the political parties, religious bodies,

urban and local bodies and state governments to stay away from public broadcasting. The regulatory authority has recommended that political & religious body and the state governments should not be allowed to run and own broadcast outfits like cable, DTH, TV channels et al. Those who are already involved in such business should plan to phase out in another three to four years. The recommendations, if made binding by the government, will surely benefit the broadcast industry as the involvement of such parties in the business has put a question mark on the integrity of the medium. There have been debates on the issue raising concerns that such involvements may lead to the misuse of the medium to fulfil the political and other considerations of the party in concern.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

Friday, January 23, 2009

It’s a Dead End! Or is it? -(IIPM-Article)

After years of recording gravity-defying growth, auto majors in India are finally feeling the heat. It’s no longer an easy zip on those hot wheels. Will the survival story be written soon? Pawan Chabra writes...

For long now, India and Indians have debated over the

repercussions of ever-increasing oil prices. There were two wheelers and four wheelers rolled out of the assembly lines all across the country and auto financers were running after prospective ‘drivers’ and ‘riders’, everywhere… Cheap funds, cheap bikes, cheaper cars (with that ‘interest’ string attached), but ‘expensive’ oil! That was the buzz around, and India was worried (and so were the Americans, of course!). It felt like wartime, with guns but no bullets, with automobile engines all around but perhaps no oil to vroom around! And the financials of the auto majors? Oh! They stood tall and pretty, prouder than bearing the ‘seal of the eagle’! Happy Capitalism was the dream word, but no more a reverie!

Then came the turmoil, and happy faces soon faded into the background; many of them belonging to the automaker community. And 4Ps B&M spoke, last issue (dated November 7 – November 20, 2008) through its cover feature titled, ‘Bechara Bajaj’ commenting on the deplorable 34% fall in sales figures (in units) reported for October 2008 as compared to the same month the previous year. We thought, it was just the ailing Bajaj (and hence ‘Bechara’) that was getting its pockets ripped apart by the recessionary jackals. But then came some more shockers – Hero Honda and TVS, the other two two-wheeler players also reported a fall in sales units over the previous year. And if that wasn’t enough to convince us all of the melancholic environment in their factories, the Society of Indian Automobile Manufacturers (SIAM) disclosed that sales figures for the entire auto industry (including the four wheeler giants) had plummeted by a 14.2% during the month of October 2008 (compared to the previous year). That meant a reduction in monthly sales by 145,817 units for the industry! And suddenly, it feels like the war times are back, with no guns available this time… Yes, oil prices have stabilized globally and there is good news everywhere when it comes to this ‘liquid gold’ at the moment. But there are cut downs reported all across the sector with players announcing reduction in production volumes… No engines, but oil… no guns, just bullets!!!

Undoubtedly, auto majors are not going through their best times and with problems like auto financing and constant input cost rise ailing the sector, the end of this dark tunnel is not yet within reach. So when will the sector bounce back? SIAM had projected a growth rate of 12-15% earlier this year. It was later revised to a more modest 8-10% in September, a figure which looks bloated witnessing what is happening all around at the moment, globally. “The economic slowdown and auto financing issues are the main reasons for the slump in the automobile sector. It happens with all sectors every 4-5 years, though the effect is very severe at this point,” asserts Vaishali Jajoo, Auto analyst, Angel Broking. The report released by SIAM for the month of October clearly showed that the units produced were higher than units sold for almost all major auto players like Bajaj, Maruti Suzuki and Hyundai. Indeed, the dry festive season has rubbed salt on their wounds. “By mid-October, it was clear that there is going to be a major fall in number of units sold of auto majors. The sales during Diwali were very disappointing this year,” says auto expert Murad Ali Baig.

So is the worst happening in India? Well, not really. The situation for auto players in India looks far better than in other global markets. As in the United States, the bailout package from the Fed and survival strategies for the auto majors has been the hottest topic of debate from the past many days.

The good news is that there are still some players in the Indian market which are insulated from the global heatstroke. Surprised? Sample this: Yamaha with the launch of its R15 and FZ16 made the most of this ‘rather cold summer for its competitors’ and successfully captured significant market share in the premium category (most of which was snatched away from Bajaj) even as a company spokesperson confidently assets, “Yamaha has launched the R15 and FZ16, and our commitment to provide international quality and lifestyle attributes of Yamaha brand to Indian consumers has enabled the company to rebuild the Yamaha brand in India.” And then there is Toyota Kirloskar which has made a rather lucky strike with its timely Corolla Altis attack. “The Altis has been able to achieve a market share of 47% in October 2008, thereby retaining the market leadership in the premium sedan segment,” asserts Sandeep Singh Dty. Managing Director, Marketing, Toyota Kirloskar Motors (TKM) Pvt. Ltd. The company considers this sl owdown as just a temporary lowdown and hopes that it will fade away in the mid-term. But while we say that Toyota has been able to ward off evil eye, it also doesn’t mean that it has been a happy ride for the company. Toyota has extended the time limit to attain a 10% market share in India by another 5 years i.e. from 2010 to 2015. Though, the company officials cite its disputes with the suppliers as the main reason behind the recent problems, yet we all know – it’s the slump in the sector that didn’t spare the rod as was evident when Vikram Kirloskar, Vice Chairman, Toyota Kirloskar confessed, “Demand is very weak in the market at present and tightening of interest rates have affected the auto market as a whole.”

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

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

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Top Articles on IIPM:-
'This is one of Big B's best performances'
IIPM to come up at Rajarhat
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The Hindu : Education Plus : Honour for IIPM
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IIPM ranked ahead of IIMs

Thursday, January 22, 2009

Carbon ‘Black Jack’ Traders! - "IIPM News"

Gyanendra Kashyap of 4Ps B&M gives the final F-word-primer on facts, figures, foibles and farces in carbon trading... and investigates the paradox of why the bigger polluters will gain more in carbon trading in future!

They could have called it carbon dating instead of carbon trading,

for all we care, given the completely controversial and practically outdated methodology on which this concept thrives! But we’ll cross the damned Kwai bridge when we reach it. First, the ides of March. There is no question that global warming has been the most talked about phenomenon in the last century and in this one too. Environmentalists have more often than not been sidelined as the trouble creators. Surprisingly, the most impactful of all the environmentalists has perhaps been the one who has been least known – the man who is credited with inventing carbon trading (pundits call him the father of carbon trading) – Richard Sandor! The man gave an economic value to efforts dealing with reduction in pollution, the most crucial aspect of environment. Sadly, what he envisioned is perhaps miles off what is becoming of this ‘business’.

Carbon trading is a part of international emission trading norm, which incentivises companies and/or countries that emit less carbon. If a company is registered with the appropriate council (mentioned later in the article), and it manages to ‘emit’ carbon dioxide ‘less’ than the quota allocated to it, then the company ‘earns’ a certain number of carbon credits, which, later on, the company can sell in carbon trading bourses to other firms that have exceeded their allocated limits of carbon dioxide production. That’s as simple as it should have been... Well, it somehow didn’t work out that way.

The emission reduction scheme is based on ‘cap and trade’ wherein the total annual emissions are capped and the market allocates a monetary value to any shortfall through trading. Businesses can exchange, buy or sell carbon credits in international markets at the prevailing market price. Over the years, it has become a source of earning revenue in developing countries. And how? Companies in this part of the world are typically less polluting (as they’re less ‘producing’) and the extra credits are sold to firms in developed countries. But strangely, in the future, it would surely be the more polluting companies that would stand to gain from this system of carbon trading.

But first, some more facts. This market is continuously growing and has been attracting huge investments. Investment banks (like Morgan Stanley, Merrill Lynch et al) have been active players and many carbon funds have been set up, with investors in those funds either planning to use the carbon credits that result from those investments for compliance purposes directly (e.g. with the EU-ETS), or simply as investments to sell. The ICECAP fund run by Natsource is an example of this. China (thanks to its large size, economies of scale in originations, favourable investment climate), which has quadrupled its number of projects in the pipeline from January 2007 to March 2008, dominates the global carbon market with 73% share in terms of transacted volume followed by India.

It is also a fact that India has gained a considerable share in the carbon trading market and companies have reaped in huge profits. Torrent Power, which recently switched over from a coal-fired power plant to natural gas (in a bid to reduce GHGs) earned 3.2 million carbon credits (this translates to whopping earnings of €54.14 million). In 2007, two projects of JSW Steel were awarded 5.4 million carbon credits (out of which one project was issued 4 million carbon credits). Examples like these will make it easy to understand why companies try hard to grab a part of the carbon credit market. It’s easy million dollar earning. As a matter of fact, India Inc. can exploit numerous business opportunities in developing low carbon technologies, an area which is expected to grow to $3 trillion per year by 2050.

As mentioned earlier, India (with a 6% market share and 930 projects in pipeline) is next only to China and contributes to about one third of the total CDM (Clean Development Mechanism, which accounts for 16.5% of the market) project base registered with UNFCCC (United Nation Framework Convention on Climate Change). In 2007, Indian companies reportedly earned $300 million by selling CERs (equivalent to one tonne of carbon dioxide) and this earning is all set to touch $3.6 billion by 2012. The carbon trading market has grown phenomenally. The global carbon market was just $11 billion in 2005; went up to $31 billion in 2006; touched $64 billion in 2007; and is thundering upwards at $96 billion as per current figures. It is in reality expected to be a trillion dollar institution by 2020.

Corporate players across the globe foresee a huge demand in the future and hence are developing environmentally conservative technologies. This will not only help them cash in on millions of dollars of future demand but will also portray them as responsible corporates. Speaking exclusively to 4Ps B&M, Tom Johnstone, President & CEO of the $8 billion behemoth SKF (the world’s largest ball bearing manufacturer), said, “Carbon credits enhance both the company’s image as well as profits,” and further added that it’s a win-win situation for both the company and the consumer.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

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

Tuesday, January 20, 2009

Ready to cut, but not to sell...

The surviving financial giants of America (the erstwhileWall Street to be precise) are now taking every possible step to keep them guarded

from the spillovers of the on going financial crunch and remain afloat. Bank of America (BoA), the third largest bank of the United States, has already got into the cash saving mode by adapting cost cutting measures. It has laid down plans of slashing up to 35,000 jobs spread over a period three years. The objective is to save a whopping $7 billion and offset the erosion of business inflicted by global economic downturn. However, it has poured cold water on reports of shedding its 19.13% stake in China Construction Bank at a discount of almost 13-17% to raise around $3 billion. The news was enough to have a negative impact on the market standing of the Chinese lender, as its stock prices nose dived by almost four per cent. Thus, the company (BoA) is ready to adopt any method to cut cost but not by selling off stakes.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

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