IIPM ARTICLE BROADCAST: April 2013

Tuesday, April 30, 2013

Reflections on a changing China

Arthur C. Wheaton, Director, Western NY Labor & Environmental Programs and Faculty of Industrial Relations at Cornell University’s School of Industrial & Labour Relations, after spending more than two weeks in cities across China, writes on the country’s evolving economic and social environment

In June, I boarded an Air Canada flight from Toronto (Canada) to Beijing International Airport with my Chinese-born wife and our nine year-old daughter. Designed to help teach our daughter about Chinese culture and to improve her Mandarin language skills, the trip was our first to mainland China in eight years.

We were fortunate to be able to visit some of the same families and places that were part of our first trip. The contrast between then and now in lifestyle and other trends was astonishing. On both trips, I filtered much of what I saw through my lens as an automotive industry specialist for Cornell University’s ILR School. Cars are a reflection of what has shifted in many elements of Chinese life and I will report here on some of the changes.

First, it is impossible to summarise China’s economic and social conditions. With more than 1.3 billion people living in China, there are too many perspectives to consider for a short answer. Statistics and data on China’s economy are available from sources. What is unclear is how accurately those numbers reflect the reality of the people living there. The statistics and economic data tend to focus only on the highly developed regions of China and might not apply to all of China.

According to Helen Wang, author of The Chinese Dream: The Rise of the World’s Largest Middle Class..., there are more than 300 million Chinese who are considered middle class. That is nearly the population of the entire United States. The middle class has a growing discretionary income and a growing force in the Chinese economy. A lot of Chinese, especially young women consumers, are smitten with luxury brands. They associate Western luxury brands with quality of life and sophistication. They want restaurant meals, health club memberships and travel. They want to see the world. The restaurant business and malls are therefore doing very well in the country.

I can confirm from my own experiences that the love of quality and luxury goods described by Helen Wang is accurate. Thanks to insights from friends on this trip, I hope to provide to B&E’s readers a few glimpses of the economic and social conditions of China today. Our friends either live or work in Beijing, Xi’an, Shenyang, Shanghai, Shenzhen, Lanzhou or Zhengzhou. Their are into banking, retail, stock trading, financial management, teaching or are military officers and government officials in China.

The changes in the economic and social statuses of the families in the eight years since my first visit are marked. All the families could be described as middle class to upper middle class. When I met these families in 2004, only one owned a car. The rest relied on public transportation, bicycles, taxis and friends. Today, all of them do.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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Saturday, April 27, 2013

Death to the life giver?

The unregulated surrogacy industry is leading to the exploitation of several poor women

Sample this: An industry worth $500 million in 2002 stands as a $2.3 billion industry in 2012. An industry serving its clients with only 350 odd centres in 2002 has grown and crossed the mark of 1000 plus centres. And in spite of this impressive trend, this particular industry still remains highly unorganised and unregulated, and its growth has actually led us towards serious social issues. Welcome to the surrogacy industry of India!

Surrogacy generally refers to the carrying and delivering of another couple’s child by a woman. It’s a solution for couples where the female partner is not able to carry the child for whatever reason. India has become one of the most preferred fertility tourism destinations across the globe, and has become a ‘baby factory’ of sorts with respect to IVF and surrogate births due to long waiting times in other developed nations owing to various reasons, including shortage of eggs and sperm, lack of donor anonymity, overregulation, high costs and poor experiences of treatment.

Surrogacy hasn’t enjoyed legal sanction in a number of countries. Several developed countries such as Japan, France, Italy and UK have even banned or restricted, in one form or the other, commercial surrogacy, where the carrying woman gets paid for being the surrogate mother. Surrogacy is illegal in several states of America too. The legal issues coupled with the high prices of commercial surrogacy have made it quite expensive (with rates as high as $30,000) around the world, while Indian clinics, which are often running without government regulation (which helps them to also avoid heavy taxation) offer their services for one tenth of the costs internationally.

A decade back, the Indian government’s earnest efforts to promote medical tourism provided an unprecedented boost to surrogacy. Ironically, India made commercial surrogacy legal back then, but there are no laws yet that protect the rights of surrogate mothers. The recent death of surrogate Premila Vaghela, who was eight months pregnant, has brought to light the paucities in the guidelines governing the industry in India.

Not surprisingly, the growth has also led to exploitation of many poor women who were willing to lend their wombs to feed their families. The Indian Council for Medical research (ICMR) has tried to regulate commercial surrogacy since 2005, but guidelines issued by ICMR are not legally binding and are ambiguous on various issues like the surrogate’s rights, issues of informed consent and adoption requirements. The Assisted Reproductive Technologies Regulation Bill 2010, which is an updated and improved version of the ICMR guidelines, is still pending with the government and has not yet been even presented to the Parliament.

Although several doctors and clinics have claimed that they strictly follow the guidelines provided by ICMR and properly compensate surrogate mothers, the reality is starkly different. In some studies, it has been shown that there have been cases of even minor girls taking up this option due to the lure of quick money!

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Thursday, April 25, 2013

“A lot of our key people have come back from Bolivia”

Sushil Maroo, Group CFO, Jindal Steel and Power Ltd. discusses raw material prices as well as the situation with the Bolivia project

B&E: You have a planned capex of around Rs.80 billion for FY ‘13. How are you planning to spend this money?
SM: We are planning to divide this money almost equally for our steel and power businesses. We have major expansion plans going on in both businesses. We are setting up a DRI-based plant in Orissa, which will have an annual capacity of 2.5 million tonnes. Our pellet mill is about to be commissioned. We are also setting up six power plants of 135 megawatts each. Two of them are already commissioned and work is going on in the remaining four. Apart from this, we are also working on a 2400 MW power plant for Jindal Power Ltd. in Raigarh. We have already acquired land for these projects. Therefore, expenditure on land is all for future purposes. So, all the expenses that I have just talked about are basically towards acquiring the necessary equipment and infrastructure.

B&E: International prices of coking coal have gone down significantly in the last 2-3 quarters. Do you think that the industry is set to gain from this in the long term?
SM: The Chinese steel industry is growing at an aggressive pace. Since they are consuming a lot of coking coal, there is a sustainable demand for it. Coking coal prices were down for a while. But from $145, they are again touching a level of $200. There are only two major consumers of coking coal – India and China. Production is not rising rapidly in India. So, it depends on the pace of production in China. If they continue to go this way, coking coal prices will not remain down in the long run. To add to the worries of Indian producers, the rupee has depreciated significantly. So, we are also incurring a notional foreign exchange loss. For JSPL, 100% requirement of coking coal is fulfilled through imports. Our current requirement for coking coal is about 1.3 million tonnes, which is further increasing as we are undertaking expansion plans.

B&E: You have been trying to tap one of the largest iron ore resources in the world in Bolivia. There have been a lot of issues there. What do you think are the most important lessons from this experience, which you or any other steel company can keep note of when negotiating with a foreign government?
SM: We were looking at Bolivia because there was iron ore as well as natural gas promised to us by the Bolivian government, when the MoU was signed back in 2007. But till date, the government has not been able to provide us with the gas as the contract is yet to be signed. We are not sure about what is going to happen there. The detailed contract should have been finalized by now. We cannot wait till eternity for the Bolivian government to come out with a solution. The situation led to a dispute and encashment of two bank guarantees by the government. The lesson is that when you are negotiating with foreign authorities, you must be commercially and contractually very clear. Whatever you want from the government, you should try to get it upfront on the table, otherwise the situation can get very tough. The gas supply contract, which was not signed in 2007, became a problem in 2012. The second lesson is that you must have enough space for the arbitration clauses if you are going for signing an international contract so that your rights are not affected if there is any sudden change in the circumstances.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Wednesday, April 24, 2013

20 years of change after Rajiv Gandhi

Known as one of the brightest stars in Indian politics, Rajiv Gandhi’s assassination shook up the foundation of the Congress party. A documentation of how his death reversed fortunes of the party, and dramatically altered the Indian political scenario...

Twenty one years ago on May 21, 1991, a bomb explosion killed Rajiv Gandhi, while he was campaigning for the Congress party in Sriperumbudur, about 40 km from Chennai, on the second day of the 10th Lok Sabha elections. [Rajiv who had served as the PM of India between 1984-89 (at the age of 40 – he was the youngest ever PM of India) is till this day regarded as perhaps the most charismatic figure that ever took the stage of Indian politics.] The sudden, premature demise of Rajiv not only shocked the world, it also marked an end of an era that saw India being led by the Nehru-Gandhi dynasty for all but five years since independence.

Though nobody took immediate responsibility, the attack was blamed on Rajiv’s arch enemies, the LTTE, that was fighting for a separate homeland for the Tamils in Lanka. Rajiv could not contain the political problems afflicting India, and found refuge in international entanglements and commitments. He committed the so-called Indian Peace Keeping Force (IPKF) to Lanka in July 1987 in an endeavour to help the government there to eradicate militants agitating for a separate Tamil homeland. [The IPKF had to be withdrawn in 32 months.] His period in office was marred by scandals and allegations of corruption on so huge a scale that he undoubtedly lost the election of 1989 partly on account of public perception. The Congress suffered an electoral defeat. His successor, V. P. Singh, could not hold office for long, and Rajiv started campaigning in earnest in 1991. But then, his assassination put an end to his half-finished political career.

Most people remember Rajiv as a visionary who encouraged foreign investment, a freer economy and rejuvenated his own party. “People had sympathy for Rajiv. He was not aware of the problems of the people at the grassroots level. However, he was a very dynamic person,” recalls Mohan Dharia, a former Union Minister who had served in the Indira Gandhi cabinet, but resigned on his differences with her ideologies. He remembers Rajiv as someone who wanted to modernise India.

When US denied to give India the technology of supercomputing, it was Rajiv who encouraged the creation of the indigenous Param Super Computers. Agrees Dr. M. P. Narayanan, former Chairman of Coal India (1988-91), who says that with the demise of Rajiv, India not only lost a visionary, but a receptive and encouraging human being. “His leadership style was such that would even allow mid-level officers to walk up to him and he would listen to their ideas. I wonder if subsequent PMs have ever found time for that,” he says.

Rajiv’s vision for India was that of a modern nation that takes full advantage of technology. We’re living his vision today. Says political observer Suvrokamal Dutta, “Many people believe that it was Narasimha Rao that initiated the globalisation process. However, it was Rajiv who created the ground for that process. He was also working on various missile treaties with Western countries.” Rajiv’s other revolutionary move was to lower the voting age to 18 from 21 years in India. Having said thus, it is important to note that Rajiv’s political career also became mired with allegations and scandals. The Bofors scandal is an unsettled blot on his otherwise glorious career. It cost him three-quarters of his MPs.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Friday, April 19, 2013

Can Spain avert Portugal’s fate?

Like the three eurozone members that have sought assistance, Spain faces big economic challenges. In fact, the recent recession, property market correction, and high unemployment have all taken their toll on the country’s public purse. Can Spain avoid following Portugal, Ireland and Greece?

Tension has escalated in the European bond markets after Portugal finally bowed to the ongoing sovereign debt crisis and requested for an emergency financing from the European Union (EU) during the first week of April 2011. As financial markets had similarly forced Greece and Ireland to seek monetary help from the EU and IMF last year, economists have now started fearing that the recent bailout request from Portugal makes it more likely that other eurozone members will follow suit, and soon. But then, the question is: Who will fall next?

The last of the four PIGS (an acronym used by international bond analysts that refers to the faltering economies of Portugal, Ireland, Greece and Spain; the other three have already faltered), we would say! Reason: Spain’s recovery has been really rough so far. In fact, the eurozone’s fourth-largest economy is among the area’s laggards. While the entire monetary union saw GDP grow by 1.7% last year (with Germany racing ahead at 3.5%, the fastest in the eurozone), Spain’s economy contracted 0.1% in 2010. At 20.5%, Spain’s unemployment rate too is the highest in the area, and almost double of Portugal’s 11.1%, the latest victim to the debt crisis. But then, are these reasons good enough to predict Spain as the next European Domino?

The Banco de España – Spain’s Central Bank – diplomatically ducked our queries and told B&E, “As central bank we do not usually give answers to questions of this kind, especially the questions related to the eurozone debt crisis.” It’s both surprising and amusing to get such a response, given the increasing negativity in global markets about Spain (Enam Ahmed, the London-based Sr. Economist at Moody’s Analytics, tells B&E, “Like the three eurozone members that have sought assistance, Spain faces big economic challenges. Spain has a large fiscal shortfall to finance. Its recent recession, property market correction, and high unemployment have all taken their tolls on the public purse. In fact, the country is likely to slip back into recession in 2011”).

The signals sent by Spain are almost similar to the ones propelled by Greece, Ireland and Portugal just before they collapsed. Like its aggrieved Euro-partners, Spain too has a fragile public finance. Though Spain’s fiscal deficit narrowed last year, it still remains at 6.2%, which is almost double the fiscal ceiling (3% of GDP) set by EU. Even the country’s public and private foreign liabilities at $2.4 trillion (of this total, about $1.2 trillion are owed to foreign holders by Spanish banks & other private financial institutions, while about $700 billion are owed by private companies and individuals. The public sector owes $450 billion to foreigners) are close to 170% of its GDP ($1.3 trillion), much higher when compared to the other three beleaguered nations. For instance, foreign liabilities of Greece stood at 87% of its GDP at the time of the collapse.

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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

Tuesday, April 16, 2013

Another Spanish era. Another bull fighter?

Spain’s new government, due to be Officially Sworn in Mid-December, will have to add new austerity measures beyond those established by the previous cabinet if it wants to regain sustainability of public finance.

Who would have thought just a few years back that countries in the mighty eurozone would fall like a pack of cards. But that is what is happening. First Ireland, then Greece and recently Portugal, all have been victims of the devastating sovereign debt crisis. The reason is simple. Markets have lost faith in policymakers’ ability to do what it takes to carry out serious structural reform, bring down debt, and stimulate growth in their respective countries. And it is evident. After claiming two of Europe’s most popular leaders – George Papandreou, the third member of the Papandreou family to serve as the country’s prime minister, and Silvio Berlusconi, the famous Bunga Bunga organiser who played the first fiddle in Italian politics for nearly two decades – it’s the Spanish Prime Minister Jose Luis Rodriguez Zapatero who is the latest victim of sovereign debt crisis (Zapatero led Socialist Party lost to conservative Popular Party in an election dominated by agendas revolving around sovereign debt crisis on November 20, 2011).

After all, Spain is the 1,000-pound gorilla in the room right now. The monetary union can absorb the shock if Greece and Portugal collapse. But Spain is too large; if it defaults on its debt, the monetary union would likely collapse and all of Europe would descend into a deep recession. However, elections that brought Mariano Rajoy led Popular Party to power in Spain have not been able to restore markets’ faith in the country’s fiscal situation. On the contrary, at an auction of Spanish government debt worth €2.978 billion held after the election, yields reached euro-era highs. Bidders set an average rate of 5.1% for three-month debt, more than double the rate set at the previous month’s auction, while the six-month yield reached 5.2%, up from 3.3%.

No doubt, Spain, the last of the four PIGS (an acronym used by international bond analysts that refers to the faltering economies of Portugal, Ireland, Greece and Spain; the other three have already faltered), has avoided the need for external aid due to a slew of spending cuts and reforms by the socialist government so far, but then how long? Spain’s recovery has been really rough so far. In fact, the eurozone’s fourth-largest economy is among the area’s laggards. While the entire monetary union saw GDP grow by 1.4% last quarter (Q3 2011), Spain’s economy crawled at 0.8% in Q3 2011. At 21.52% (a 15-year high in Q3 2011), Spain’s unemployment rate too is the highest in the area, and almost double of Portugal’s 12.4%, the last victim of the debt crisis.

Read more....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 15, 2013

A script made for ‘unhappily ever after’ endings?

Corporate cultures trying to manage creative processes are viewed with suspicion. And considering how they are destroying our film industry, it’s not without reason
Issue Date - 13/10/2011

For the most part, corporate cultures have been quite adept at creating highly efficient and result oriented business processes and adhering to them to ensure more predictable outcomes. Managing creative processes, on the other hand, has often been considered the Achilles Heel for professional managers. Therefore, when the trend of corporatization of India’s film industry began a few years back, there was reason enough to view the entire phenomenon with skepticism. And today, if we look back at the string of box office disasters that they have led to, those fears are justified.

Our most recent debacle in this regard is Mausam, the Shahid Kapoor-Sonam starrer directed by Pankaj Kapur and co-produced by Vistaar Religare (JV of financial services player Religare & Vistaar Entertainment), Eros International Media & Cinergy. The final verdict on its performance isn’t out yet, but it opened to around 40% bookings and initial word-of mouth is making it worse. The most interesting aspect of the movie over the last week has been the Twitter war that Shahid unleashed. Film critic Taran Adarsh had tweeted that Mausam’s numbers were below average, to which Shahid shot back saying, “So all those trying so hard to s***w Mausam can go s***w themselves.” Adarsh replied back saying that Shahid should introspect into the movie’s shortcomings rather than “maligning him (Adarsh) on a public platform”! In fact, one industry source tells us, “All of Religare’s projects are big flops and one suspects foul motives behind spending so much money into big films.” Other notable examples of such terrible flops or rank average performances come to mind. Raavan was one of the biggest of last year; reportedly bought by Reliance for Rs.1 billion. Reliance Big Pictures was also involved in Kites, another box office failure (both lost an estimated Rs.1 billion together). UTV’s Ronnie Screwvalla has a background in the entertainment industry, but he is now well known for deploying the corporate model. And last year, UTV Motion Pictures was party to another huge debacle – Farah Khan’s Tees Maar Khan (reportedly saved only by opening collection of around Rs.500 million) apart from Sanjay Leela Bhansali’s Guzaarish (lost around Rs.350 million), which also failed to enthuse the box office. This year, the record has continued with Saat Khoon Maaf, which failed to enthuse audiences. PVR Pictures was involved in two big ones - Khelein Hum Jee Jaan Se (lost around Rs.300 million) with Ashutosh Gowarikar Productions and also acquired domestic theatrical rights of Action Replayy (failed despite being a Diwali release & lost Rs.150-200 million). Their co-production Aisha with Anil Kapoor also flunked.

A number of large corporates have entered the industry in the past few years with disappointing outcomes. Aditya Birla group’s Applause Entertainment was behind the widely acclaimed Black and Dev, but the corporate house decided to exit the business in 2009. Mahindra Group’s Mumbai Mantra Media was planning to unleash a steady flow of 28 movies a year by 2010, but their website shows only four productions to date. The Bollywood film they brought out is Sorry Bhai and if you would struggle to remember the lead cast of the film or what it was about, we don’t blame you. PVR Pictures has now been merged with PVR Ltd. and have reportedly decided to refocus on film distribution. UB Group’s Vijay Mallya also opted out early. Managing films as verticals of large corporate houses often seems to be moving to a dead end. Then there are a number of corporates who have done brief stints in the industry and bid adieu. An insider in the industry makes a damning accusation, “Big corporations are almost like government organisations where the business head is looking for a share or a cut in return for accepting projects.”

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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

Saturday, April 13, 2013

B&E Indicators

Asian liquidity remains solid

Liquidity remains solid for non-financial, speculative-grade companies in Asia. The region’s Liquidity Stress Index was 12.3% in June, unchanged from May, and far below the 37% high it hit during Q4 2008 amid the global economic recession. In fact, the Asian Liquidity Stress Index has remained near its current level since the start of 2011 and is at its lowest levels in three years.

A low probability of default in the region

The high level of corporate liquidity in Asia suggests a low probability of default for the region’s speculative-grade companies. In fact, there were no defaults during the first half of 2011. Even the Asia-Pacific (ex Japan) trailing-12 month speculative-grade default rate has remained at 1.7% since the beginning of 2011. This situation, coupled with manageable refinancing needs, indicates that the default rate will continue to stay low for the rest of the year as well.

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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

Friday, April 12, 2013

Required: Unequal Access to Education for Women

The Struggle of Women to break The Shackles of Patriarchy and Create an Individual Identity has been well Documented. But we Still have a Long Way to go in Creating a Level playing Field for our Women.

Addressing the International Women’s Day forum on March 8 this year, Ban Ki-moon, UN Secretary-General said, “An investment in the education of women and girls is an investment in our own security, prosperity and future of the planet. We know that when women and girls receive more education, they are able to contribute greatly to their families, villages and nations as successful workers, healthy mothers, and full participants in the political life of their countries.”

From breaking the cycle of poverty to enhanced employment opportunities and better health, the benefits of educating girls and women are well-documented. For example, according to a report recently released by United Nations Development Programme, the GDP of countries such as India, Indonesia and Malaysia could be raised significantly if women in those countries were employed at the level of many developed countries. The International Bank for Reconstruction and Development report, Women’s Education in Developing Countries, documents, “The evidence is overwhelming that education improves health and productivity and that the poorest people gain the most. When schools open their doors wider to girls and women, as well as to boys and men, the benefits multiply. Indeed, failing to invest adequately in educating women can reduce the potential benefits of educating men. This failure exacts a high cost – in lost opportunities to raise productivity, to increase income, and to improve the quality of life.”

The most pivotal long-term solution to breaking the vicious cycle of social and economic exploitation of women is to empower them through education. On paper, women in India enjoy equal status to that of men. Striking a positive note towards women empowerment, the government of India had declared the year 2001 as “Women’s Empowerment Year” in order to promote the vision “where women are equal partners to men”. From the concept of ‘welfare’ in the seventies to ‘development’ in the eighties and then to ‘empowerment’ in the nineties, our laws, development policies, plans and programmes have aimed at women’s advancement in different spheres. In recent years, the empowerment of women has been recognised as the central issue in determining the status of women. The National Commission for Women was set up by an Act of Parliament in 1990 to safeguard the rights and legal entitlements of women. The 73rd and 74th Amendments (1993) to the Constitution of India have provided for reservation of seats in the local bodies of Panchayats and Municipalities for women, laying a strong foundation for their participation in decision making at the local levels.

But the reality still smacks of a wide gender disparity in the very basic literacy level. According to Census 2011, the effective literacy rate (age 7 and above) are 82.14% for men and 65.46%. And with states like Rajasthan, Bihar and Jharkhand, where women literacy is at 52%, 53% and 56% respectively, contributing to the cause, we have bridged the male-female gap in literacy rate from 24.84% in 1991 to only 16.68% in 2011.

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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

The Global Wealth Report 2011

Driven by The Performance of The Capital Markets and The Growth of GDP in countries around The World, Global Wealth continued to show a robust recovery increasing by $9 trillion to reach a record $121.8 trillion in 2010. Given the fact that wealth is being created at a remarkably rapid pace, it is estimated that by 2015 the global wealth will be pegged at a whopping $162 trillion. B&E analyses the paradigms of global wealth.

A Remarkable Growth Indeed

While it is true that the rate of growth of global wealth has taken a beating since the sharp financial turnaround witnessed during the financial crisis in 2009; the 8% growth in global wealth in 2010 translates to approximately $20 trillion above from where it stood during the depth of the aforementioned financial crisis. The global wealth is expected to increase at an annual rate of 6% over the next several years (the rate of growth during 2002-2007 was 11%) and is estimated to be pegged at $162 trillion by 2015. According to Citi Bank and Knight Frank’s global wealth report 2011, if the world’s wealthy are considered to be one community, the collective wealth of the high-net-worth-individuals shot back up last year by 22%.

Good times are back

It is apparent that amidst the signs of sustained recovery seen in both developed as well as emerging markets, global wealth grew in nearly every region of the world. As a matter of fact the Wealth Distribution Model as developed by Knight Frank and Citi Bank illustrate the fact that money is now sitting in Asia Pacific which, while still third behind North America and Europe, is fast catching up. However, with $38.2 trillion in AuM, that is nearly one third of the global wealth, North America is the world’s richest region. Wealth grew fastest in Asia Pacific (ex Japan) by 17.1% while it declined by 0.2% in Japan. Together, the emerging markets (Asia -Pacific, Middle East & Africa, and Latin America) accounted for $29.7 trillion in AuM.

Read more....

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

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 08, 2013

A ‘dichotomy’ across institutions!

The Sports bill proposed by Ajay Maken has the right idea when it comes to demanding greater accountability from sports bodies. But rather than encouraging intervention in bodies like BCCI, Maken should have demanded accountability from the ministry itself.

The recent altercation over the ‘Draft National Sports Development Bill- 2011’ aka Sports Bill has exposed the conflict of interest between Union Minister for Sports and Youth Affairs Ajay Maken on one side and the vanguards of sports federations in India on the other side. Ultimately, the bill has been rejected by the Cabinet.

This unique sports bill that is more or less unprecedented in the absence of a law to the effect, has three essential points. First, heads of the sports federations will retire at the age of 70 years from now on. Secondly, all the sports federations including the autonomous BCCI and IOA (Indian Olympics Association) will come under the purview of the RTI Act. And thirdly, 25% of the seats will be occupied by former sports persons from the same sport on the executive boards. Apart from this, all federations need to register themselves under the new act within one year to be eligible to send their teams for participation in any foreign sporting events. Also, all the federations will come under the purview of the World Anti-Doping Agency (WADA). While ministers like Vilasrao Deshmukh (President, Mumbai Cricket Association), Sharad Pawar (ICC President), Farooq Abdullah (President, J&K Cricket Association), Praful Patel (President, All India Football Federation), and C.P. Joshi (President, Rajasthan Cricket Association) among others are against the new proposed bill, sports persons of repute including cricketers Kapil Dev, Bishen Singh Bedi and badminton legend Prakash Padukone are favouring the move.

The bill faced heavy criticism upon being introduced in the cabinet meeting on September 1, 2011, with some calling it a draconian law to strangulate sports authorities in India. It may be true to an extent considering the government’s efficiency at handling sporting events in the past (most recently, the CWG mess). There’s also the inherent fear – quite rightly so – that if obscenely cash-rich organisations like BCCI are brought under direct government control, it won’t be long before one of the strongest sporting fields – cricket – is reduced to, say, hockey’s current state; hockey, for information, is supposed to be the “National Sport” of India. On the other hand, Maken argues that a proper sports law would have in fact prevented the scams in the CommonWealth games. In fact, Ajay Maken also sent a letter to the PM blaming former sports minister Mani Shanker Aiyar for the CWG mess to an extent, claiming that Aiyar had played an “obstructionist” role. Of course, it is a different matter that true to his reputation, Aiyar ripped the ‘dichotomous’ cake out of Ajay with his now well known “me Stephanian, you Hansraj” rhubarb.

On hindsight, in rejecting Maken’s jumpstart overtures, the ministry seems to have acted in both the right and the wrong manner. For sure, the bill needs to be studied in depth on the matter of how it has delegated the powers so that it is not misunderstood as being intrusive in nature – and this is what is the ministry’s primary reasoning. Another immediate issue is the lack of significant official representation from the government. For example, in the National Sports Development Council that the bill envisages, there are 23 proposed members in all consisting of eminent athletes, officials of the national sports federations and dignitaries from other walks of life – and there are supposed to be only four government officials.

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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

Tuesday, April 02, 2013

Sony’s (Intelligent?) bet on The Idiot Box

Sony India has been Focussing Big Time on its Television Business in India. And it seems to have paid it off well. But then, it will Certainly have to come with Some Innovative Strategies soon if it wants to continue rising up The Ranks.

“It’s a time of transition, which makes things even more difficult”. These words from Osamu Katayama’s book These are our future (which details Sony Corporation’s recent history) aptly describe the phase that this Japanese multinational is going through at the moment. First, a devastating earthquake in Japan. Then, a cyber-attack on its network. And finally, a colossal net loss of $3.1 billion for the financial year ending March 31, 2011 (Sony’s second worst financial performance ever). All this has not only made its share price tumble over 25% since the turn of the year, but has also put an enormous pressure on its chief executive Howard Stringer who is striving hard to win the battle against the odds, one after the other.

In fact, when Howard Stringer, Chairman, CEO & President, Sony Corporation, took over the reins of this Japanese conglomerate in June 2005, its three major businesses – gaming, mobile phones and television – were already losing momentum, globally. Thus, the task ahead for Stringer was not only to save these businesses from collapsing, but also identify functions and markets that could serve as alternative sources of revenue for Sony, at least till the time these businesses were back on track, live and kicking.

Although Sony had been in India since 1994, it was only then that the Indian consumers saw Sony recognising the real potential of this ‘Asian Tiger’. Thus, everything from more launches, slightly more affordable prices, to more stores, to even zero-interest finance schemes, to things which Sony had never done before, were all suddenly happening, and not just in India, but across the globe. Result: Sony’s CPD division, which sells televisions, digital imaging, audio and video products, semiconductors, components and business services, recorded a respectable profit of $35.4 million in FY2010-11, up 1.6% y-o-y, at a time when the core divisions were bleeding losses.

No doubt, the strategy paid it off well across countries, but then India seems to be special, so much so that the company is now looking at the country as a priority market and expects it to become the fourth largest market for its products in the world, contributing as much as 10% to the group’s sales in the next couple of years. In fact, Sony, which started off slow in the Indian market, is now rising up fast in a market dominated by chaebols like LG and Samsung.

Cut to the chase, the focus for the time being is on its television business, particularly the Flat Panel Display (FPD) TV market in India. In fact, as per the US-based market research firm DisplaySearch, Sony has already overtaken Samsung Electronics and LG Electronics for the top position, with 22.1% of flat panel TVs shipped in the Indian market in 2010. Even according to the GFK Nielsen Urban India Panel TV (LCD + Plasma TV) Report (for April-June 2010 period), Sony Bravia (Sony’s flagship FPD product) had become the market leader in Flat Panel Display segment in the first quarter of FY2010. It had grabbed a market share of 32% by value, and 29.5% by units sold. The company had sold more than 1,00,000 units during this quarter, more than the number of units sold by any other brand in the market. For the month of June alone, Sony had captured a significant market share, 33% by value and 29.5% by units. The company reported maximum sales in the states of Maharashtra, Delhi, Tamil Nadu & West Bengal during this quarter. For starters, under the FPD TV market, the 22-inch, 32-inch & 40-42 inch segment comprises of more than 75% of LCD units sold in the country. And interestingly, Bravia was the leader in all the three categories.

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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