Scrutiny-US TERRORISM REPORT: INACCURATE

The Country Terrorism Report published by The US seems more led by an Ulterior Agenda, as the report ignores the wolves and castigates the sheep when it comes to deciding who sponsors terrorism and who doesn’t

But the most hilarious part is that the report ignores Pakistan in this “state-sponsored terrorism” group. While Pakistan has refused to hand over the 26/11 Mumbai terror attack suspects to India despite being provided with enough evidence against Hafiz Saeed (leader of Jama’at-ud-Da’wah), many US government representatives have many a time acknowledged and accepted that Pakistan as a nation has sponsored terrorism for long. But the report presumably doesn’t accept that premise.

As per the report, 75% (of total 11,500 attacks & 13,200 deaths) of terrorism attacks and deaths occurred in South Asia. But irrespective of that, no South Asian nation has been accused of being a “state sponsor” of terror or has been reported for not coordinating in counter-terrorism activities.

Cuba as a nation has a relatively “unblemished” record for fighting terrorism – few globally would debate that. Similarly, Sudan has worked as a cooperative partner in global counterterrorism efforts against al-Qaeda in 2010 but still appears on the list. The Venezuelan government officially “rejected” the report describing it as “plagued with false affirmations, political preconceptions, and veiled threats.” Its Foreign Ministry states that “the US State Department tends to classify as ‘terrorists’ or ‘complacent with terrorism’ those governments and political organizations that do not bow down in the face of its imperial intentions.”

Looking at the fine print in the report, that allegation does not appear to be too far off the mark.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

“I Foresee a lot of Action in Retail Space”

Govind Shrikhande, CEO, Shoppers Stop Ltd.

B&E: What steps have you taken to combat the flurry of shopping malls, which is affecting your business in a big way?
Govind Shrikhande (GS): Firstly, our operation are very different from the operations of a shopping mall. In fact, we are a high-end chain of large-format departmental stores where the focus is on selling the most relevant consumer products. Also, we ensure that we are present near every major shopping mall across metros. For instance, one can see us around the Select City Walk mall in South Delhi and the Raja Garden shopping area in West Delhi. Further, we are also expanding in a big way. We will be launching about 5-6 stores this year alone, and expect to reach 67 stores (from 43 stores at present) in the departmental stores format in the next three years. We are also expanding in other formats like hyper-market format. HyperCity, our hyper-market chain, currently has 10 stores across India. We plan to double this number in the next four years. Today, we are not only present in metros, but one can also see us expanding our reach across Tier 2 and Tier 3 towns (such as Vijaywada, Indore and Bhopal) in the country. We are also planning to enter Coimbatore and Ahmedabad very soon. In fact, today we are the largest retailer in India with total retail space of about 3.5 million sq. ft. in 16 cities across the country. We want to quickly take this number to 25. While in Delhi and Mumbai we plan to have 10 stores each, for Bangalore and Chennai we are targetting 5 stores each. In fact, in the next three years 75% of our store will be in the major metros across India. All in all, we are targeting an investment of Rs.4 billion in the next four years.

B&E: A committee of secretaries (CoS) has recently given final shape to the draft policy for allowing 51% FDI into the country’s multi-brand retail format.What do you think of the proposed change? What impact will it have on the Indian retail sector?
GS: I have always been of the opinion that the Government should allow FDI in retail but with certain strings attached. It would be to India’s advantage to have FDI in retail, to push exports up substantially. In fact, it will bring in a lot of economic wealth to a whole host of people involved in the manufacturing. Although a lot of discussion are going around the proposed FDI limit in multi-brand retail, the policy changes are still not clear in terms of how much investments will be allowed in back-end and how much in wholesale cash-and-carry format stores; whether there will be a minimum investment cap of $100 million or not. But anyways, it will be a big boost to Indian retail as it will definitely bring in a lot of investment. Further, I think we need to focus more on the departmental store format, as there is still not much happening in the segment. In fact, if FDI is allowed in multi-brand retail, department store format would be among the first to benefit from the decision.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Arvind Mehta, Joint Secretary, Ministry of Commerce, Government of India

B&E: The gap between imports and exports is widening. Is it a worry? And how much can it impact the GDP growth in India?
AM: If we look at last 3 years trend, the gap has not widened and remained stable at around $100 billion. In fact, the good part of the story is that while there were speculations that the gap will widen, that has not been the case. Add to that, the fact that out forex reserves has reached $300 billion and remittances have been good is encouraging. FDI has kept swinging but it’s now on the upswing again.

B&E: Sectors like automobiles and real-estate are seeing decline in sales and many domestic companies are parking money outside rather than investing in India. Don’t you think that reflects on the economy negatively?
AM: Talking about parking money outside, I think it’s actually creating brand value. When Tata acquires Jaguar, they add to India’s export market. Moreover, this further helps in branding and technology transfer. Investing outside means benefits come in. A lot of firms are investing outside to get access to mineral resources, oil resources or coal. It means that in some ways, returns will come back to India in terms of earnings.

B&E: Do you think India is capable enough to sustain the growth that the country has seen for a longer period?
AM: Why not, later on it can absorb even 10% growth and do it continuously for two decades the way China did it. If China can do it, then I don’t see any inherent difficulty for India. As a system, the model is already there and all nations go through a particular phase when they remain on high growth path for two decades before they start slowing down. India will continue on this momentum and hopefully gain from the democratic dividend where China’s cliff of democracy would make it fall. Thus, projecting in the long run, India’s growth is far more superior to China.

B&E: Can India, with its host of problems, witness a decline in growth; can we by any chance view a recession by the year 2012?
AM: If the world markets collapses, India will surely feel the pain, because then, there is nothing much in your hand. Then, India will certainly have to be worried. But as long as the Central bank does not become over ambitious and try to curtail the growth story and worry about Inflation, we should be able to manage the impact. Inflation is important, but they have to be very clear about their policies and policy implications. Otherwise, it can choke the growth story.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

INDIA’S 100 MOST PROFITABLE COMPANIES WHO IS THE NEW NO.1?

As India Intensifies its Struggle against Corruption in The Political Sphere, Virat Bahri wonders why The Debate on Transparency can’t be Extended to India inc. as well, and how B&E Power 100 Companies can play a key role

India’s own corporate governance legislation in the form of Clause 49 was developed in 1999 itself, as per the proposals of the Kumarmangalam Birla Committee under SEBI. A lot of the requirements were quite similar to SOX, which came later, and Clause 49 has been hailed even beyond Indian borders. Around 84% of the companies surveyed in a Grant Thornton-FICCI study have admitted that investor perception has improved for companies implementing greater transparency into their systems as per the ruling. But implementation of laws is where statistics really get damning. Another KPMG survey had 71% of respondents saying that penalty levels to discipline poor and unethical governance are low, 53% believe that even the new proposed Companies Bill will have insignificant impact and 35% cite weak regulatory oversight in India as the culprit. On that point, the cover story of our sister publication Banking Finance & Markets for May 2011 revealed some shocking findings. Out of the 8,47,615 companies registered with the Registrar of Companies (RoC) as on March 2010, only 53.8% filed their returns last year. These companies find it perfectly acceptable to do so, since they can easily escape prosecution with a petty fee (or a pettier bribe). Prosecution is hardly visible for 20 companies blacklisted by the SEBI between 2006 and 2010. Moreover, some 50000 cases of corporate fraud are pending in Indian courts and conviction rate is just 5%. In US, 1236 convictions were secured post Enron in just five years. Larger companies could be even harder to prosecute because of the power they wield. South Korea witnessed this some time back when Chung Mong-Koo, Chairman, Hyundai Motors got away with Presidential pardon for a fraud conviction due to his immense worth for South Korea. Hyundai posted a sales turnover of KRW 36.77 trillion in 2010, a significant 3.13% of South Korean GDP at current prices of around KRW1,172.8 trillion for that year (The Bank of Korea).

Moreover, India still has a long way to go in terms of investor protection. Shareholder voting procedures are notoriously inefficient (they still often do a show of hands in India rather than actual counting!) and fail to fulfil their purpose of active, informed and widespread shareholder involvement even on issues like approving large transactions. This becomes even harder as most listed companies are promoter/family owned in India. That is why even warrants are normally issued to controlling shareholders. Satyam attempted a major investment of around $1.6 billion in Maytas, which was blocked by shareholders, and that started the entire scrutiny into its accounts. A white paper by the Asian Corporate Governance Association (ACGA), Hong Kong, points out that the overt reliance on mechanisms like “independent directors (appointed by controlling shareholders), independent board committees and greater corporate disclosure as the primary mechanisms to check abuses of power by promoters and to safeguard the interests of minority shareholders is likely to prove weak and insufficient (as in the Satyam case)”. The report, besides highlighting issues like provision of timely, standardised and quality information to shareholders including financial reports, publishing results of voting, et al (a number of B&E Power 100 companies have scope for improvement on these fronts); also cites serious flaws in the auditing profession in India. The greatest anomaly is that the Institute of Chartered Accountants of India acts as a self regulator, whereas there are independent regulatory bodies in other countries.

This year, the B&E Power 100 list is led by Reliance Industries, which wrested the top spot from ONGC this year. But it’s quite a coincidence that RIL faces issues of transparency at the moment, with respect to the CAG accusing the government of wrongly allowing the company to hike its capital expenditure in the D-6 basin. Interestingly, three more Power 100 companies – Wipro, SBI and Sesa Goa face scrutiny over their accounting practices. RBI found some irregularities in loans extended by SBI to telecom companies. Wipro has been asked by the US SEC to prove that its auditor KPMG is indeed independent as per continuing investigation of the embezzlement case. Sesa Goa has come under investigation for alleged over-invoicing of its imports. Even Infosys faces a lawsuit in Alabama, since whistleblower and former employee Jack Palmer has accused the company of sending Indian workers to US on B-1 visas when H-1Bs faced restrictions.

One cannot deny that a number of the B&E Power 100 companies have taken valuable steps towards developing corporate governance standards, and it would be unfair to apply the ‘guilty till proven innocent’ yardstick for every case that comes up. But it is critically important that they maintain them, push the envelope towards best practices and even lead the way. Corporate governance isn’t expected to get much better in India without strict convictions, but these companies can definitely lead by example and become the benchmarks for India Inc. in that sense. If these ‘Power’ players disappoint their stakeholders even one bit, it can send years of enterprise down the drain, and hamper India’s growth trajectories for years to come ahead.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Florian Müller, Founder, FOSS Patents & Co-founder of Rival Networks

B&E: Will payouts in settling patent infringement cases show on Google’s net earnings from Android?
FM: Since Google itself is rarely sued, the impact on the net earnings of device makers will be greater than on Google’s earnings. The Oracle lawsuit could, however, require Google to pay something on the order of a billion dollars depending on the exact outcome. The extent to which Android is accused of infringement is unpredecented. 42 lawsuits in a little more than a year show that there are fundamental problems. There are definitely some Android-specific reasons, such as Google’s ‘loose management’ of intellectual property issues, that contribute greatly to this mess.

B&E: Some have even pointed to security issues related to the Android OS. Is that something which handset makers and buyers should be wary of?
FM: By emphasising that the software is “free”, Google positioned Android as the poor man’s iPhone. But the security issues come with it. The Android Market is not managed well by Google. It contains programs infected by malware. I use a Samsung Galaxy, a high-end Android phone, and I like it for the most part, but I don’t have confidence in Google’s app store and never buy anything there.

B&E: Android Market Place is not giving Google enough topline push. Are the earnings enough to sustain stable Android OS projects in future?
FM: App stores can but only be a small part of a revenue mix. In Google’s case, there’s not enough money to be made there to sustain development of an OS.

B&E: Finally, will the Andoird connection enable handset and tablet makers like HTC, Samsung, LG, Dell, Acer et al, to make money in times to come?
FM: There are about three dozen device makers who have adopted Android by now and it’s clear to me that when growth rates flatten, most of them won’t make money with Android-based devices anymore. For now the explosive growth of the smartphone market creates some short-term opportunities, but strategically those device makers are in a difficult position because Google controls the platform. Google bullies Android device makers and forces them to do what it wants. Right now the biggest problem for makers of Android-based tablet makers is a lack of demand. Android tablets are a failure so far. They also turn out to be too expensive.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Policy -GOVERNANCE: PUBLIC IMAGE

Over two years have Passed since a Series of Leaked E-Mails Triggered Doubts over The Extent of Global Warming being Projected by The IPCC, with its Chief, Rajendra Pachauri, having made to beat a Hasty retreat on its stand over Reports on Melting glaciers. But Pachauri, Disappointingly, still enjoys The Support of Various Government Functionaries

The shame that Pachauri has brought on to himself, the country and the cause being heralded by several genuine environmentalists, is also not new to the government. Union Environment minister Jairam Ramesh had termed such forecasts as alarmist and without scientific basis. Stressing on enhancing scientific capability, Jairam Ramesh said that the most important lesson that India must learn from the whole episode is that there is no substitute for domestic scientific capability.

And more critical is the controversy surrounding TERI University functioning and Pachauri’s dubious role within it. The UGC (Institutions Deemed-to-be Universities) Regulations 2010, notified on May 21, 2010, clarified that the chancellor of any deemed university will have to be either a respected educationalist or an esteemed public figure “other than the head of the sponsoring society or his/her relative”. Additionally, the chancellor should not be a member of the society/trust promoting the institution. R. K. Pachauri apparently has no qualms over going against all these rules in TERI University, which is a deemed to be university.

It is very well known that R. K. Pachauri is the Director General of TERI, the parent body of TERI University, which is a deemed to be university. At the same time, he flagrantly holds the post of Chancellor and Chairman of TERI University, clearly contravening the UGC 2010 Regulations. Will the UGC act to immediately cut this blatant contravening? Not till he continues basking in the support of various government functionaries. While individual motives and an absence of the desired integrity quotient have been a well-known factor behind diminishing the credibility of larger progressive human interests, the support that the Prime Minister and other government functionaries continue to display for Pachauri is nothing short of tragedy in itself.

What is more worrisome is that this is not the first time that the media has raised these concerns. After having announced his total support for Pachauri and the cause he was pursuing, Dr. Singh still shares the dais with Pachauri at international events on more occasions than one. Why is it that the Prime Minister of India, hailed by many as an epitome of honesty and integrity, agrees to stand next to a person like Pachauri? At the recent inauguration of the Delhi Sustainable Development Summit, 2011 in New Delhi, Pachauri, in the presence of the Indian PM and foreign and Indian dignitaries said, “It is time for us to ask ourselves whether we have done enough to keep the promises made in these global events.” A good time for some introspection, perhaps, Mr Pachauri?

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Stock Exchanges: Is Bigger, Better?

Stock Exchanges globally are Consolidating in order to cut costs and Invest in Technology that will allow them to Host as many Transactions as Quickly as possible. But is Bigger Necessarily better? 

At one time, stringent regulations prevented stock exchanges from operating across country borders. Then came globalisation and together with technological advances, they ripped open the doors to the world’s most storied and impregnable stock exchanges. Decline in trading volumes and increased competition from alternative electronic platforms have prompted exchanges to combine.

Take, for instance, the New York Stock Exchange. In a world of around-the-clock trading and rapid-fire algorithmic programmes, its significance to investors has diminished. The exchange is now looking to merge with Deutsche Börse of Germany. In fact, as competition among exchanges has grown more intense in recent years, increasing hordes of investors seeking speed, lower costs and greater liquidity have flocked to electronic platforms that pay little heed to financial centres or tradition. Once mighty and powerful exchanges are under pressure to get bigger to cut costs and invest in technology that will allow them to host as many transactions and as quickly as possible. In fact, NYSE is not new to consolidation. In March 2000, Brussels, Amsterdam and Paris Exchanges led to the creation of Euronext, which in turn merged with the New York Stock Exchange a few years later in April 2007.

Deutsche Börse, which manages the Frankfurt exchange, has reportedly agreed to buy NYSE Euronext for $10.2 billion, creating the world’s largest exchange in terms of revenues, with its biggest strength in the derivatives market. With the deal in its final stages, Deutsche Börse shareholders are expected to own 60% of the combined company and NYSE Euronext shareholders taking the rest 40% stake. The combined group will have net revenues (2010) of $5.4 billion, becoming the world’s largest exchange group by revenue and with yield synergies worth $405.2 million.

There have been other prominent announcements of mergers and alliances amongst global stock exchanges in recent months. There are proposals to merge the Toronto Stock Exchange with the London Stock Exchange. In October 2010, the Singapore Stock Exchange, SGX, was taken over by the Australian Stock Exchange, ASX, in a deal worth $8.3billion.The deal is currently under review by the Foreign Investment Review Board of Australia.

The mergers show that exchanges are positioning themselves for an improving macroeconomic climate, especially after taking a major hit during the financial crisis. But what gives in this mad rush towards merging and taking over? Clearly, this fresh consolidation wave is being driven by two factors: Investors’ increasingly global view as they seek opportunities in all markets, rather than just at home, and two, fierce competition from alternative trading systems (ATS), which is putting pressure on the revenues of traditional exchanges. Unlike in the past, when exchange operations depended heavily on traders, today they’re dominated by highly sophisticated and automated trading systems.

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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.

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management

Scrutiny - AVIATION: DGCA NEGLIGENCE

The DGCA head should be Immediately Suspended & Questioned on numerous loopholes in our Aviation Infrastructure Endangering Thousands 

Charge 2 - Gross disrespect for human lives: Forget the current scam, the DGCA is still ambivalent on their decision of suspending/cancellation of the license of any pilot for three months if he/she is caught drunk while flying. In a situation where hundreds of lives are involved, the DGCA should instead have taken a decision to initiate criminal action against any drunken pilot. As per the Act, such pilots should have been jailed and fined. When was the last time you heard of such an imprisonment? Never, right? Pilots mostly escape this test as it is conducted only for vulnerable/important routes. Also, no such test is conducted post a flight. DGCA should be immediately prosecuting drunk pilots under cases of culpable homicide and attempts to murder and DGCA officials should be arrested for not initiating compulsory alcohol tests pre & post flights in all flight cases.

Charge 3 - Killer airports: DGCA officials have still not improved the safety infrastructure of airports. Numerous airports in India have shorter runways as against the international norm of 9000 ft long runway. This forces pilots to take-off at high speeds and calls for planes to fly light. The Mangalore plane crash, which killed 158 people, was due to a short runway & pilot inexperience. DGCA is too slow in undertaking a full review of safety infrastructure at airports.

When a government organization is found corrupted at the work level, for example in the AICTE case, more often than not, the entire organization needs a revamp. Current DGCA head SNA Zaidi, who was appointed in 2008 and whose appointment led to a court case, is not even a person from a technical airlines background – leave alone one who can be a visionary on such issues. Zaidi has recently given hints that DGCA is understaffed to undertake current issues. When we checked their roster of employees from available statistics, the count was close to 350. Understaffed? Ineffective, inefficient and insidious would have been better adjectives. If the government really wishes to change the DGCA’s corrupt practices, the first person to be kicked out should be its head. 

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

B. K. Sinha, IAS, Secretary, Ministry of Rural Development

B&E: What have been NREGA’s key achievements apart from providing 100-day livelihoods?
BKS: NREGA is the only programme which is recognised across the length and breadth of the country. If you think in terms of national economy, we find that it permits work on the categories of SC/STs, land reforms beneficiaries, small farmers et al, a combination of which comprises of 90-95% of the farming population operating in about 60-65% of the land area. The result is that we have enormous lands at our disposal for NREGA works and once the development has taken place; there is no need for NREGA. Also, the rise of jobs under the programme has arrested the migration from rural households.

B&E: What is the level of impact that NREGA has had on the wage market in our rural areas?
BKS: Agricultural wages had been static till before the rise of NREGA. There is an acknowledged effect of NREGA on agricultural wages, which is why the farmers are so against it. The labour class is beholden to the farmer or the rural elite structure for two reasons. One is for employment and the other for money to be borrowed in times of need. Sitting here, we may not realise the importance of Rs.10,000 that the labour is getting through this programme but nevertheless, it is important to recognise its significance in diminishing the stronghold, which the rural elite class has had over development in the past.

B&E: There has been a lot of negative talk over issues related to implementation and monitoring schemes of the programme. What is your take?
BKS: I admit that there have been glitches but we know what is to be done and we are unfolding. Much depends on the robustness of the institutions involved in the implementation of the projects and upon the quality of thought of the state governments. The most critical thing in NREGA is how decisions are taken. The Act has very comprehensive guidelines and is democratic in nature but it is not implemented in a democratic manner. No central government can adequately monitor a programme of this magnitude. The panchayats do not have the requisite machinery, state governments have their own way of looking at things and we have to make provisions for these diversities. It will see tremendous success if we are able to upgrade 65% of our land.

B&E: In cases of corruption or mismanagement of work or funds, why don’t you direct the officers involved to stop funding for work?
BKS: The formulation of the Act is such that most powers rest with the state governments where planning is not right. If we find anomalies in a certain area and decide to stop funding or work, it will violate the right to 100 days of employment of every household. If there is some official involved in corruption, taking action against him is as important as ensuring that the democratic right to livelihood of the people does not get affected. In many places, the Act is bureaucratically controlled, making petty bureaucrats very powerful, since they have the power to stop work and funding. When you have such power, you have to take decisions very judiciously.

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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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

The Death of a Brand…in India.

 It’s sad how a Giant like Mitsubishi has almost Fallen by The Wayside in The India Auto-Sweepstakes, with much of it being its Own Undoing. B&E does a to-date-legacy Summary on The Death of a Brand…in India.

Yes again, Mitsubishi is reportedly exploring a joint venture with France’s PSA Peugeot Citroen SA and Nissan for its small car manufacturing plans, but even these plans are unlikely to benefit their India strategy in the short-run. Worse, now the India problems for the Japanese automaker have now gone beyond the product mix – its partner (Hindustan Motors) is also facing severe challenges on its end. It is now even being reported that the Mitsubishi is now firming up its plans to part ways with Hindustan Motors. While the company has a long history of managing partnerships, it also has had bitter experiences with names like Chrysler and Mahindra in the past (Currently, the company leverages 20 business partner facilities in about 10 countries apart from eight of its own in six countries).

“But another area that Mitsubishi has been facing issues within India is that of distribution. While the product strategy for any company is very important to ensure a successful journey in any market for that matter, distribution is equally so,” says Abdul Majeed, India Leader for Automotive Practice, PricewaterhouseCoopers. In this regard, breaking up with HM might actually be a blessing in disguise. And that’s because once Mitsubishi is out of the stifling HM alliance, it could well attempt to join hands with its global partners like Peugeot and Nissan in India as well. This, quite obviously, would have the two required benefits – one, Mitsubishi’s product portfolio could get an immediate boost; two, Mitsubishi could immediately synergize its cost portfolio in production and distribution with its alliance partners and work more efficiently.

There’s also this lingering suspicion that all Mitsubishi lacks in India is visionary and energetic leadership. Take this for example. As the company launched the Lancer Evolution X model in the country last year, it was able to generate a lot of buzz in the Indian market. However, as there were no follow up efforts from Mitsubishi’s end to keep the excitement going, the consumer interest also vanished in the meantime. Be it the Lancer, Cedia or the Pajero, while the consumer is aware of these products – and might even be intending to buy them en masse – Mitsubishi itself doesn’t seem too excited of getting the Indian consumer to buy its cars (PwC’s Majeed even says, “Mitsubishi isn’t much interested in India. The company is happy selling in other parts of the world.”).

There’s also this fatalistic conjecture that Mitsubishi is actually planning to leave India in the near future and focus whole heartedly on China. Well, while we’re sure that this is only a conjecture, the fact is that if Mitsubishi even now doesn’t show extreme aggression in its India strategies, we could well be witnessing the demise of an iconic brand... in India, to say the least!

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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. 

IIPM Best B School India
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Facebook’s Future, Zuckerberg’s Choice!

While The World debates over when Facebook will go Public and what its Worth would be, Mark Zuckerberg is Worried about a Decision he has to make – Sell-off his 24% Stake & Bid adieu to Facebook or alter The Very Business Model by Diversifying. What should He Choose?

How much is Facebook worth? Actually, the 26 year-old founder & CEO of Facebook – Mark Zuckerberg, doesn’t care. He publicly claims so. In fact, he proved it when he outplayed a clever Wolf’s bait (Michael Wolf, the-then President of Viacom’s MTV Networks) in the fall of 2005. The 19 month-old Facebook, was then, only famous in American circles. To befriend Zuckerberg, Wolf proposed a jet ride from San Francisco to Westchester (NY). During the five hour-long flight, Wolf postulated that Zuckerberg should consider selling a stake in Facebook to Viacom. That was around 10 pm on a cold December night of 2005.

The following month, Wolf flew to Palo Alto, to propose a stake purchase to Zuckerberg. He declined. Another month, another attempt; only this time, Wolf had no Power Point ready and underwent a more delicate experience. He got to visit the youngster’s one-room untidy apartment. The outcome however remained unchanged – Zuckerberg yet again declined Wolf’s $1.5 billion offer for a 100% stake in Facebook. That was 3 pm on a February afternoon of 2006.

Many thought that the Harvard drop-out had then caught the wrong end of the fishing line. He hadn’t. Today, Zuckerberg is the youngest self-made billionaire on the planet, worth $4 billion and owns 24% stake in a much bigger Facebook, with a user base of over 580 million (it crossed the 500 million mark in April last). Better still, his social networking machine is now cash-flow positive and after making $700 million in revenues in 2009, is forecasted to touch $2 billion this year. It also has plans to go public sometime between late 2011 & early 2012. So will the market consider this intangible web property worth billions of tangible green bills?

Over the years, Zuckerberg has accepted some overtures that have certified the market values of his brainchild. In March 2008, when Microsoft signed a contract that included a 1.6% stake buy in Facebook for $240 million, it put the value at $15 billion. The $4 billion current valuation of Zuckerberg’s stake also puts Facebook’s market value at a close $16.7 billion. There are also experts that are optimistic about a post-IPO Facebook. Rick Sturm, CEO of New York-based Enterprise Management Associates (EMA), tells B&E, “The Mcap of Facebook is likely to be around $34 billion.” We have our doubts.

Even if we assume Facebook to be the next big wave after Google, its value (considering the ratio of Google’s Mcap of $27 billion on Listing day and its revenues the previous year) comes to only $11 billion – exactly what US-based Next Up Research’s independent forecast and Felix Investments’ $25 per share offer value it at. There is also a great similarity between the two online companies in case of revenue streams, which gets us to expect a Google-like market reaction to Facebook’s IPO. [When it went public, Google was earning 99.97% of its revenues from ads, almost equal to Facebook’s 100% today.] There is however a small hitch – six years back, the market was bullish and investors were willing to dole out billions without much of a thought. Today, the sentiments are more “cautious”. Also, Facebook’s user base of above 580 million does not imply the same number of “unique” visitors. There is bound to be some double count, which weakens Facebook’s case (which was not the case with Google’s model when it went public in 2004). In short, the Mcap could fall short of $11 billion. Says Massachusetts-based Analyst Richard Louis to B&E, “The market value of Facebook is unclear. At this time, it is just an alternative site to post information. Over the years, its value will fall if it doesn’t diversify.”

So will Facebook become a fad? Louis says it already is: “Facebook is already a fad. I don’t think it is going to grow out of that.” Pessimism apart, the giant’s credit notes being reduced to scribbled sheets appear quite a possibility. And the market has proven to be a fickle group; Facebook cannot overlook this truth. Speaking to B&E from California, Jeremiah Owyang, Partner, Altimeter Group says, “Facebook is at risk. Other social networks became complacent, got sold to larger media entities, or failed to invigorate their talent tools and suffered as a result.”

Debate is also on that Facebook could become larger than Google. Speaking to B&E from Chicago, Andrew Lipsman, Senior Director of research agency comScore Inc., sounds optimistic. He says, “Facebook can eventually becoming the largest web property in the world (currently it is #4). But this would still take a few years. To get there, it would need to get traction in some of the larger Internet markets where it still has a limited presence, such as Japan, S. Korea, Russia & Brazil.” But Sturm doubts it. Says he, “It is unlikely that Facebook will become bigger than Google. It is riding the wave of popular infatuation. Things can go wrong for Facebook. What if some hacker found a way to compromise its security? There are many possibilities!” Facebook also has to move away from relying only on online ads. While Facebook is growing, so is Google. Not content with being the dominant search engine, Google continues to attempt to mean more things to more people. Its latest innovation is Google RealTime. In short, cautious, but deliberate diversification will benefit Facebook, as Owyang of Altimeter says, “Facebook will need two strategies to maintain leadership: Innovate & integrate features at all consumer touchpoints, so it’s no longer just a destination strategy.” This typically implies that Facebook has to look beyond social-networking communities.

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Source : IIPM Editorial, 2012.

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

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