Saturday, December 22, 2012

India’s most high profile sibling rivalry

It’s slated to be the largest non-pharma deal this year (till date), if successful. But the Bharti-MTN deal is much more than that, for it can potentially be a major game changer in corporate India’s most high profile sibling rivalry – that of the Ambani brothers

Guess who benefited from this public demonstration of the bitter spat and subsequent split? Sunil Bharti Mittal and Airtel because Mukesh and the thousands and thousands of his employees switched over to Airtel connections!

The reverberations of that ‘switch’ are being felt even today; even as the second instalment of the UPA regime settles down to govern the country. You guessed it right again. We are talking about the latest bombshell that was dropped by Sunil Mittal recently when Bharti announced a ‘New Deal’ (You can call it an agreement, a merger, a reverse merger, an acquisition or whatever word takes your fancy!) with MTN, the South Africa-based telecom giant. An excited Sunil Bharti Mittal has said on that deal, “We are delighted at the prospect of developing a partnership with MTN to create an emerging market telecom powerhouse. This opportunity also represents a first of its kind in developing an Indian-African initiative that would serve as a shining example of South-South cooperation.”

One year ago, it looked as if Anil Ambani was all set to steal the thunder from Sunil Mittal when ‘agreement’ talks between MTN and Bharti collapsed and Reliance Infocom emerged as the new and favourite suitor. One year down the road, you could say that the wheel has turned full circle and the lead established by Sunil Mittal and Airtel as the unquestionable number one telecom player from India now looks unassailable.

Some simple facts – most of them known to you by now – will establish why Sunil stands taller than Anil. The $23 billion deal – the largest non-pharma deal in the world in 2009 so far – will create an entity that will automatically become the fourth largest mobile service provider in the world with more than 200 million subscribers. Just recently, when Airtel had announced celebrations to mark the accomplishment of a 100 million subscriber base, Sunil Mittal had already hinted to this magazine (see exclusive interview) that the 200 million milestone will come far more quickly. If the deal goes through – as most analysts and insiders expect it to – what Sunil had hinted at will have already happened! And it will happen thanks to a mind bogglingly complex ‘agreement’ that will involve both cash and fresh equity. Once the deal goes through, Bharti will hold slightly less than 50% of MTN equity while MTN, in turn, will hold a 36% ‘economic interest’ in Bharti. The term ‘economic interest’ is jargon being bandied about right now because there is still some confusion about how much equity foreign investors can hold in an Indian telecom entity. As of today, foreign investors, including the largest shareholder Singtel, hold almost 74% of the equity in Bharti – the limit allowed as per existing rules.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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Monday, December 10, 2012

Issues that really needed to be urgently addressed

The UPA announced some schemes for the working class, but largely ignored the issues that really needed to be urgently addressed, says vikas kumar

It is deplorable that in most of the states, the minimum permissible daily wage is less than Rs.50; the level of minimum wages rises above Rs.100 only in four states.

It goes without saying that even such low minimum wages are not always paid. Seasonal variations in availability of work and calamities of various kinds – from drought to social conflict to reduction in demand – adversely affect employment and livelihoods on a regular basis. In the tenure of UPA government, Jan Swasthya Bima Yojana was launched, to provide cover of up to Rs.30,000 for workers below the poverty line. But a majority of the working class does not even have any idea about the benefits of the scheme till date. Interestingly, the Congress’ manifesto for this election pledges that, if re-elected, it will cover all families under the poverty line within the next three years. Moreover, as M. K. Pandhe, trade union leader, laments about another problem, “When banks are giving 8.5-9.5% rate of interest for 400 days, it is ridiculous that EPFO is providing 8% rate on 30 to 40 years deposit.”

The manufacturing sector, has been hit in the mid section by age old labour laws like the Industrial Disputes Act of 1947 and the Factories Act of 1948. Provisions like restricted working hours for workers and restriction on contract labour discourage businesses. And ultimately, they are also affecting the labour market. The UPA also failed to address these concerns of the manufacturers, and take the initiative to herald a new era in Indian industry. That is extremely callous. If labour reforms are not done, entrepreneurship is discouraged, and it ultimately hits the workers hard.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Saturday, December 08, 2012

NEDFULNESS: SYMBOL CHANGE

Example of a responsible ministry

And the cost of replacing YTL by TL stood at YTL 1.14 million. In addition, the country is also incurring a cost of YKr 11 to 12 for changing from YTL to TL for each bank note. Iran has also planned to change its currency, Rial. The value of Rial has gone down so much that it has become negligible. 500 Rials is worth mere 5 cents while 50,000 Rials is worth $5.30. Iran wants to change its currency to revalue its Rial.

Considering all these, it seems extremely important to estimate the cost involved with India’s symbolic plan of changing the symbol. Moreover, there seems no regulation that will make sure that the new symbol will not hurt someone’s cultural or religious sentiments which are for some odd reasons too volatile in the subcontinent. There are no any specific guidelines from the government on whether the old notes and coins will remain in circulation with the new ones.In this time of downturn, the decision on a new coin symbol is highly debatable. This may not only dilute the brand equity of rupee but will encompass needless expenditures at a time when government coffers are already drying up.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Friday, December 07, 2012

More blasts from the past...

A recent release of classified documents shows how US has manipulated West Asia. A B&E exclusive

American Presidents have wanted to differentiate themselves from their precursors with abrupt alterations in Middle East guidelines and dubious tactics that have only helped in damaging American integrity in the area. And as far as conflict resolution is concerned, on several occasions, presidential judgments and the out-sized sway of White House advisers and foreign statesmen and their envoys, have defined US policy. Recently, declassified White House documents released by National Security Archive reveal how knee-jerk actions (and inactions) by several presidents of the United States shaped the (mis?)fortunes of Middle-East.

For example, the personal pleadings of Soviet leader Leonid Brezhnev, who tried to convince President Nixon in June 1973 that conflict was imminent in the Middle East and that the lone approach to avert it was by a vigorous ambassadorial involvement by the superpowers, went unheard. The document reveals Brezhnev pressing, cajoling, and nearly beseeching with Nixon to arrive to a concord on Israeli terms. It emerges that Brezhnev's endeavour possibly would have been genuine. But in the summer of 1973, the outlook in the White House appears to have been that given the “Watergate Scandal” on the domestic front, it was politically too hazardous to move into the minefield of Middle East negotiation. And war followed, as Brezhnev had envisaged.

However, when war broke out, Nixon’s resolve of non-intervention melted and the US started arming Israel. The documents released show how, in a propaganda move, US accused USSR of intervention to justify its move.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Thursday, December 06, 2012

ICELAND: PM RESIGNS

Iceland's PM resigns on the back of global economic turmoil

This crisis has been a tremendous let-down for 320,000 Icelanders, whose rising incomes and prosperity had left them quite unprepared for this. "What this essentially means is that this is a country without a government, so it's impossible to say what might happen next,” says Gunnar Kristinsson, Professor at Iceland University. It is anticipated that the economy will shrink by 9.6% in 2009, while unemployment will touch 7.8%.

Bailouts by neighbouring countries and IMF are failing to prop up the economy. The new PM Johanna Sigurdardottir is asking Central Bank governors to resign and is building consensus for a union with EU. As other options fail, this indeed seems to be the best way forward.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Tuesday, December 04, 2012

Theory of creative capitalism...

Bill Gates writes about his theory of creative capitalism... inputs coordinated by B&E’s Ruchika Chawla

 Creative capitalism isn’t some big new economic theory. And it isn’t a knock on capitalism itself. It is a way to answer a vital question: How can we most effectively spread the benefits of capitalism and the huge improvements in quality of life it can provide to people who have been left out? Creative capitalism isn’t an answer to the relatively short-term ups and downs of the economic cycle. It’s a response to the longer-term fact that too many people are missing out on a historic, century-long improvement in the quality of life. In many nations, life expectancy has grown dramatically in the past 100 years. More people vote in elections, express their views and enjoy economic freedom than ever before. Even with all the problems we face today, we are at a high point of human well-being. The world is getting a lot better. Of course, governments in developing countries have to do a lot to foster capitalism themselves. They must pass laws and make regulations that let markets flourish, bringing the benefits of economic growth to more people.

More than 30 years ago, Paul Allen and I started Microsoft because we wanted to be part of a movement to put a computer on every desk and in every home. Ten years ago, Melinda and I started our foundation because we want to be part of a different movement – this time, to help create a world where no one has to live on a dollar a day or die from a disease we know how to prevent. Creative capitalism can help make it happen. I hope more people will join the cause.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Monday, December 03, 2012

Indian animation industry

The Indian animation industry desperately needs some brand recall

The fact remains that the Indian animation industry has to grow out of the long shadow of Hollywood and to some extent Bollywood, and to carve its own identity, its own niche, populated with characters which have the same recall and relevance as Mickey Mouse. But sadly, it is in this department that Indian animation has yet to make a real breakthrough. Although Hanuman was a hit, it failed to create an icon, and with Hanuman Returns not doing so well along with outright disasters, like Ghatotkach: Master of Magic and Roadside Romeo, its back to the drawing board (literally) for Indian animation. Mr. Ronal D’mello, Managing Director and CEO of Maya Academy of Advanced Cinematics strikes a positive note, “India has a huge young population and the animation genre will catch up ultimately in all mediums of audio visual entertainment. The industry is quite buoyant in international content outsourcing for the right players and with the constant improvement of quality of animation by Indian animation studios with every passing production on the floor, it won’t be too ambitious to anticipate Indian studios producing entertainment for a global audience.”

Additionally, animation movies from Israel have shown, through their award winning efforts such as Waltz with Bashir and others, that it is possible to get global recognition with a limited budget. And with the forthcoming release of the costliest animation movie ever from India (with an estimated budget of Rs.60 crore), Sultan the Warrior, starring Rajnikanth in the lead role is set to hit the theatres in January, along with UTV’s Arjuna, India will surely be seen on the world animation map.
 

Source : IIPM Editorial, 2012.An Initiative of IIPM, Malay Chaudhuri

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Saturday, December 01, 2012

GOOGLE, YAHOO!: TALKS BREAK DOWN

Yahoo!'s only worthwhile option now seems to be AOL

And Steve Ballmer, CEO, Microsoft has added fuel to the fire by declining any more bid for acquiring Yahoo! which has taken Yahoo!’s stock price to a 52 week low at $11.25 on October 28 (trading at $11.87 on November 10).

The online ad industry is expected to grow manifold in times to come, which makes it all the more lucrative. So, the option available to Yahoo!; at least at this point is that, it should shortly be knocking at the doors of AOL. And if speculation is to be believed, Microsoft will wait for AOL-Yahoo! merger and then buy the merged entity altogether. That's a convenient anti-Google gang up. Besides, it would not catch the attention of the Justice department. Of course; Google may have a few points to ponder then.


Source : IIPM Editorial, 2012.

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Friday, November 30, 2012

http://iipm-college.blogspot.in/2012/11/will-policy-makers-ever-take-technology.html

Reforms can help realise India’s economic potential, provided there are ‘real’ reforms!

India’s economic reforms are at risk. The acceleration of GDP growth in the last decade has been nothing short of amazing, but the benefits are distributed very unequally across regions of the country and social classes. Intellectual opposition to reforms stems from justified concerns about these negative aspects of growth, from nationalism or anti-western attitudes, and in some cases nostalgia for the days of socialist ideological purity. Political opposition to reforms is partly for tactical reasons, but it also comes from states and groups that have fallen behind. The spread of violent movements adds to the risks. These developments can be serious deterrents to investors in India’s economy – both domestic and foreign ones. But stopping or reversing reforms is not the answer. What India needs is strengthening and extension of the right kinds of reforms. What are they?

This is hardly a recipe for turning away from markets; indeed, historical evidence shows that a state-controlled economy stimulates bureaucratic caution and inertia, not innovation and entrepreneurship. Nor is it a recipe for isolation from international trade; once again the evidence on the economic costs of isolation and the benefits of trade is overwhelming. However, it is a warning against letting markets rule unchecked. Adam Smith warned us about businessmen conspiring against the public good, and his warning remains just as pertinent in today’s world with its Enrons and subprime lenders. Unlike some other economists, Rodrik is not supportive of inflationary fiscal and monetary policies. Finally, and most importantly, he emphasises the need for social cohesion; if a significant part of the population feels that it has little stake in the economic progress of the country, that can lead to social disruptions, prevent further progress and wreck what has already been achieved. What does this perspective imply for India? Let us begin by identifying the binding constraints. In my judgment, the most important ones come under the category of “inadequate infrastructure.” I mean not just physical infrastructure such as transportation, communication, and power supply, but also, and perhaps more importantly, institutional and organisational infrastructure, especially the mechanisms for regulation and for contract enforcement.


Source : IIPM Editorial, 2012.

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Tuesday, November 27, 2012

REFORMS: THAT IS, IF YOU THOUGHT YOU’LL BE BORED TO DEATH,

In other words, the reasons for our super-obsession with criticising India!

Similarly, corporatisation as well as structural reforms in the Indian Railways can make it the real catalyst for unleashing economic revolution across India by making railway stations act as commercial hubs. In the same league, doing away with the typical sickening License Raj that is plaguing the education sector and replacing it with a professional and visionary education (regulatory!?) authority, which pro-actively motivates private players, can do wonders!

In the last seventeen years, India has witnessed many an ‘economic’ reform, but few ‘structural’ ones. To simply disregard the potential that governmental organisations have, is easy. But the cup, my dear mistress, is as empty as your imagination or character wants it to be. Well, I am not Victor Hugo, but I still ended up with three lovers – poverty, illiteracy and disease. Look how imaginative I am Helen, look how imaginative...


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

The auto quagmire and gasps for breath...

B&E’s Karan Mehrishi dives deep into the auto quagmire and gasps for breath...

But it’s not as if GM’s alone in the bloodbath. Ford is not too far behind when it comes to sharing in the scathing hits. When William Clay Ford Junior gave an interview to Planman Media a couple of years back, he had just entered India and was typically gung-ho about cutting it clean very soon. In the first week of August 2008, Ford reported the biggest and worst one quarter loss (April to June 2008) in the history of the corporation! $8.7 billion! Year 2007 loss: $2.7 billion! Year 2006 loss: $12.6 billion!

Not surprisingly, while annual sales have regularly fallen or remained stagnant at GM (2006: $205 billion sales; 2007: $181 billion; 2008 six months: $80.6 billion) and Ford (2006: $160 billion; 2007: $172 billion; 2008 six months: $85 billion), the sales at Toyota (2006: $179 billion; 2007: $202 billion; 2008 six months: $118 billion) and Honda (2006: $84 billion; 2007: $94 billion; 2008 six months: $54 billion) have been constantly rising. But more importantly, companies like Toyota and Honda have raked up humungous profits year after year! Toyota had profits of $11.6 billion, $14 billion and $6.18 billion in 2006, 2007 and the first six months of 2008. While Honda, during the same periods, had profits of $5 billion, $5 billion and close to $2 billion!

Compared to the accumulated profits of $44 billion in the last three years of the fuel-efficient focused Japanese Big 2, the Detroit Big 2 had accumulated losses of a mind numbing $82 billion in the same period!!! What gives?!?! That’s when I came across four extremely critical issues that could surely define the reasons why the global auto industry dies sooner than later...


Source : IIPM Editorial, 2012.

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Saturday, November 24, 2012

SPICEJET: STAKE SALE

It’ll be tough to turn around SpiceJet without a radical reorganisation

“The financial markets have shown great sensitivity in valuing airlines on the basis of the direction of fuel prices. In the last week for example, a fuel price decline of around 10% has seen the share prices of some major US carriers increase by up to 40%,” informs Somaia. SpiceJet began operations in February 2005. Posting losses of up to Rs.7.5 million on a daily basis, it speculated to break even before 2009-10. Thanks to mounting fuel costs, its shares have lost almost two-thirds of their value in 2008. This bleak situation has resulted in reducing routes, rescheduling aircraft orientation and the need to raise an additional $100 million.

The WL Ross deal undoubtedly seems to be an opportunity to start afresh for SpiceJet. It will provide a platform for correcting past losses and restructuring operations to be more efficient and hopefully more adaptive to market demands and competition.


Source : IIPM Editorial, 2012.

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Friday, November 23, 2012

Dam’d if you do; dam’d if you don’t!

Governments rarely consider rehabilitation while drafting dam projects

Dam’n it! We’ll jump directly to the point. There are over 50 million people displaced in the country so far since 50s. Land owners or tenants who occupy the land were compensated monetarily which was never enough to resettle.

The example of Hirakud dam (1957) is a case to point. The government acquired over 727 sq. km of land under the imperialistic Land Acquisition Law, which displaced over 1.8 lakh people. Though later, experiencing the severity of displacement and sufferance of affected families, a policy was finally adopted for rehabilitation and resettlement of displaced people; but as always, it remained on paper only. On another front, after the uproar of the Narmada project, a special World Bank team, Morse Committee, concluded in 1992 that relocating displaced people is impossible (unless resettlement plans have been made in advance); but Indian governments continued with the projects without any such plan.


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

The current inflation can turn out to be too dear for UPA

Prof. Arindam Chaudhuri
Hony. Dean, Centre For Economic Research and Advanced Studies, IIPM    
  
For any country like ours, which houses the maximum number of poor households, any form of price distortion in basic commodities invariably remains a sensitive issue. And probably it is for this very reason it has been observed that citizenry has historically pardoned various elected governments of poor overall governance but has never pardoned any government for general prices mismanagement. And that is all the more reason, it becomes even more intriguing to analyse as to why the current UPA government has allowed the inflation to go beyond control and that too, at a point in time when the elections are ‘round the corner. On the face of it, it looks like that two reasons, i.e. complacency and miscalculation had been the villain of peace for the ruling UPA. For they could never pre-empt that the crude oil prices would spiral to this extent, and even if they had, then they had blatantly avoided it by thinking that they would be able to tide over the situation riding on the growth plank. This is also evident from the statements that are being issued from the Finance Ministry, wherein the onus of the inflation is put on crude oil prices!

Well, the fact cannot be denied that crude oil prices have created a havoc globally, throwing almost everything out of gear. But then, this is also true that the signals for such price hikes were evident from last year itself. Then the question that arises is why didn’t the UPA take adequate measures to mitigate the crisis back then? Was it that they were thinking that they would be able to peacefully manage their own tenure and leave the mess for the next government? Whatever might be the case, this cannot be denied that it is sheer lack of prudence and proactive thinking that has driven the inflation to insurmountable heights to touch a 13-year high! In fact, in one of my earlier columns, I wrote how this current global food crisis and resultant price rise has come as an opportunity to the ruling UPA government, wherein the tables could be turned in India’s favour for becoming the global food supplier. For India possesses every resource to become the world’s food bowl. But then it seems that the policy makers are content blaming the global crude price rise and passing the buck to the Reserve Bank of India to mitigate this monstrous inflation.


Source : IIPM Editorial, 2012.

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Wednesday, November 21, 2012

Technology and dating communities

Technology and dating communities stay in step with the changing times...

Two years ago speed dating came to India with the first event being held in Mumbai. Speed dating is at times described as a, ‘formalised matchmaking process’. In truth, it is nothing more than throwing an equal number of guys and girls together and each guy gets some three minutes to chat with every dame before moving on to the next. Sounds like a dream come true, right? Well, it has its own catch; you would get the girl’s number only if she has also shown an interest in you.

And oh, guys get charged more for the same services! Why? Well, isn’t it obvious? Although yet to take-off fully in India, the concept has proven to be sound and successful and usually safe. The reason could be that as a society we are yet to fully de-stigmatise dating as a concept, with people who take the help of dating agencies labelled as losers or of a loose moral character. Take Sanjana for example, she runs a ‘friendship circle’ (another name for what essentially is a dating agency) in Delhi called Cool Friends. “Our aim is to find like-minded friends for people in this unfriendly world,” she says with a straight face when asked about the friendship circle.

With metros like Delhi and Mumbai serving as a veritable melting pot for all of India’s religions and countless castes, it is getting harder for parents to insist that their child marries within the ‘community’. This, coupled with ever greater interaction between young people of different regions (with the coming of age of the Internet and greater mobility overall) has ensured that dating has been demystified, although risks remain.

“I started dating a guy I met through Facebook. He really seemed wonderful and funny. But I later found out that along with his age, he had lied about many things. He turned out to be four years younger to me after claiming that he was three years elder!” says Monica laughingly. Well, at least he was not a repressed freak…


Source : IIPM Editorial, 2012.

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Tuesday, November 20, 2012

An Indian hero’s animated adventures?

Is the world ready for an Indian hero’s animated adventures?

For such animation film enthusiasts, in the pipeline is Karan Johar’s Kuch Kuch Hota Hai, an animated version of the award-winning Kuch Kuch Hota Hai, Yash Raj film’s and Walt Disney co-production Meet the Roadside Romeo, Pritish Nandy Communication’s animated version of popular films like Howrah Bridge, Amar Prem, Barsaat Ki Ek Raat and Ek Khiladi Ek Hasina; with the aim to recreate the magic of these films using animation. Interestingly, Ghatothkach-Master of Magic, directed by Singeetam Srinivasa Rao of Appu Raja and Pushpak fame, produced by Shemaroo Entertainment and Sun Animatics, made both in 2D and 3D, has been released in English apart from Hindi, Tamil, Telugu, Kannada, Malayalam and Bengali to reach a wider audience. Revolving around the escapades of Ghatothkach, the mighty son of Bhim, the prince of the forest blessed with magical powers, this film has managed to generate a lot of curiosity amongst both the Indian and International audience.

“Most of the animation films made so far have been based on well known gods and goddesses. But this film is based on a lesser known mythological character which does not enjoy a ‘God status’ in Hindu mythology, thereby making it very interesting in terms of characterisation and packaging,” reinstates Maroo. Such is the magic of Ghatothkach...that the film happens to be the very first Indian animation flick to be premiered at the Cannes Film Festival this year. “Last year we had promoted the film at the Cannes and by God’s grace the film received a very good response. There are no boundaries to creativity in animation, and with such films’ market flourishing, I think it is the right time to move towards the unknown,” adds Smita Maroo.

With trends changing fast, it is difficult to predict what future holds for this genre (animation). For now, just sit back and sing along... “Main hoon Ghatothkach…” 


Source : IIPM Editorial, 2012.

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