On a sick bed

Measures to revive manufacturing are urgently needed

India is lucky to have two able technocrats at the helm of its economic affairs: Prime Minister Manmohan Singh is an Oxford alumnus while Finance Minister P.Chidambaram is a graduate from Harvard. Yet despite their helmsmanship, the economic horizons of the country have remained cloudy for some time now. That is in sharp contrast to the economic recovery being staged in the United States and China's steadfast growth, even though it has moderated of late. India's economic signals, on the other hand, have reasons to raise eyebrows: the latest figures from the Central Statistics Office (CSO) reveal that industrial growth has “slowed to a 20-year-low of 1 per cent in 2012-13” compared to 2.9 per cent in 2011-12. Clearly, the country is paying a heavy price for its overdependence on the service sector and showing neglect to the infrastructure and manufacturing sectors.

India’s premier rating agency Crisil says that the current situation is reminiscent of the crisis year of 1991-92 when industrial output grew by a mere 0.6 per cent whereas manufacturing output contracted by 0.8 per cent.  In addition, high input costs of raw materials and the crimping shortage of power supply seem to have further aggravated the problem. But what stands out starkly and clearly is that the government's apathy towards the infrastructure and manufacturing sectors is the reason for this gloomy scenario. Thankfully, the government seems to have now shaken off its stupor and woken to the reality that the service sector alone cannot be counted on to generate growth and employment.

FICCI President Naina Lal Kidwai said recently that "supply-side bottlenecks due to inadequate infrastructure, inadequacy of fuel supply linkages and delays in project clearances of large manufacturing and infrastructure projects should be the priority areas to be addressed through policy.” The government would do well to pay heed to such advice.

Read more....

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

IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman

ExecutiveMBA

Lessons not learnt

A 2010 high-level army assessment had predicted Chinese designs on Daulet Beg Oldi but India’s civilian rulers could not care less. Mayank Singh has the details.

The country may have woken up to the surprising and unexpected news of China entering and tenting in Depsang area, 30 kilometers south of Daulet Beg Oldi, in the Ladakh district of Jammu and Kashmir. But not the Indian Army.

According to a high-level Indian Army report submitted in 2010, this latest transgression by the Chinese army was pretty much on the cards. The report which was prepared under the command of a Lieutenant General was, “intended to be a guidance document for commanders and staff in evolving, reviewing and refining of operational plans with full knowledge and appreciation of the overall strategic context under which Sino-Indian military confrontation may occur and with deep insight into PLA’s military doctrinal content, its military capability, availability and types of forces for application in each sector and forms in which the threat may manifest.”

The high-level report had noted - quite correctly as it turned out on April 15 - that the Chinese strategy is not to grab territory but to send a message and to make political gains. It had predicted that China will avoid the Chusul sector but will try grabbing territory on the Daulet Beg Oldi side

The report speaks of the rise of both India and China but warns against lowering our guards. “While seeking and expecting a benign Sino-Indian cooperative and collaborative Asian geopolitical order, it would be imprudent to ignore China’s politico-military capabilities, its Asian and global ambitions and its track record, mindset and strategic culture. There is no alternative other than to intimately monitor PLA’s military capabilities and striving to institute appropriate deterrent military responses, operational concepts, operational  plans and force postures.’’

The report says that China has a proven record of single-minded pursuit of long term goals and objectives which will lead to an environment of conflict of interests with India. Like in the late 1950s and early 1960s before it culminated in a full-fledged border war, the tactics as far as the Chinese is concerned are tried and tested. Whether by accident or design, Chinese troops are more than ever before, crossing into Indian territory. The Chinese deny the charges and whenever solid evidence is presented, they attribute it to “The inexperience of the post commanders.’’

The military establishment is letting it be known that the latest tactical transgression is aimed at showing to the world that India – which has the third largest standing army in the world – can capitulate because of its own lack of foresight and proper appreciation of security situation in a strategic and sensitive arena.

But the critical question is this: if we continue to ignore threat perceptions issued by the army under the guise of misplaced liberalism, then what happens to the intelligence which is being laid out on a platter? The Chinese are not known for making halfhearted efforts and their focused work in Tibet has significantly added to the threat perception and war waging capabilities against India. In Tibet, China has added 20,000 km of railway tracks over the last two decades, compared to a measly 860 km by India in the same period. Here again, it is question of overlooking sensitive developments. While the Border Roads Organisation (BRO) continues to bicker over its inability to carry loads at high altitude because they do not have helicopters, a decision on it has been conveniently kept on the back burner.

Ever alert to the Chinese threat, the high committee report has systematically collated and presented relevant facts and assessments on aspects which would govern China’s geopolitical and military behaviour in the immediate foreseeable future, especially with regards to India. According to the army, the report is an appreciation of the ground situation and an attempt to put things in perspective – the developments in Ladakh have proved to be uncannily precise.

The report says that in the backdrop of key tenets of PLA’s military doctrine of Active Defence, War Zone Campaign (WZC) and recently-evolved Unrestricted Warfare - keeping in view its sectoral military aims - describes and analyses three plausible operation level scenarios which may emerge in a timeline of 2012-17. The scenarios are analysed for costs-risks-gains to China as well their military and geopolitical impact.

Critical to the Chinese plans is their War Zone Campaign (WZC) Doctrine. According to the report, the Peoples’ Liberation Army (PLA) has formulated military doctrine for fighting war at the operational level which it refers to a war zone. The strategic doctrine dictates that military campaign in a war zone is a series of related battles fought under a unified command to seek political capitulation of the adversary.

The report says that it involves a phased rapid yet calibrated rising of conflict threshold and force application while offering an opportunity to the adversary to capitulate and seek negotiations prior to transcending to next phase in the escalatory ladder. Military destruction and annihilation is only a means; political capitulation of the adversary remains the main objective.

The success of this doctrine is based upon preliminary lulling of the adversary into state of complacency while the PLA upgrades its readiness levels. This preliminary phase, to be executed during peace time and over prolonged periods is referred as “External Calm & Internal Intensity (ECII)”. Once PLA’s desired readiness levels are achieved and geopolitical situation is considered appropriate, the actual military campaign under a unified HQ (WZC HQ) would commence under the WZC Doctrine under three phases.

Phase 1 includes actions by ‘Elite Forces and Sharp Arms (EFSA)’ or Jingbing Liqi. In this phase, special operation forces (SOF) are deployed to gain first hand information of the battle, disrupt the enemy’s build up and make a political statement asking the adversary to back off. The aim is political victory, not territorial gain. If the adversary backs off, the WZC is considered successful.

In Phase 2, if the adversary does not capitulate through EFSA measures, the next phase is to ‘Gain Initiative by Striking First' (GISF) or Xianji Zhidi. The purpose is to prosecute ‘deep non-contact battle’ through long range precision strikes at adversary’s strategic locations and major military infrastructures. These are to be conducted in synergy with intense cyber war and other elements of asymmetric threats. The main objective is to cause decision paralysis and convince the enemy of the inevitability of military annihilation unless they capitulate and seek negotiations. This is often referred to as `winning victory with one strike.’

Read more.....

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

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year

BBA Management Education

“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.

Read more....

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

 

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

The torch bearer

2008 Olympics is Guo’s baby

Just nine months ahead of the Olympic Games, China’s communist party has picked Guo Jinlong, as new mayor of Beijing. Guo, a native of Nanjing, Jiangsu province, is considered to be a stranger to Beijing city. With most of the planning and execution for Olympic Games nearing end, Guo appointment is certainly a political move that has very little relation to the Olympics.

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.
 
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links  
IIPM : The B-School with a Human Face

DR. WILFRIED AULBUR, MD & CEO, MERCEDEZ-BENZ INDIA

He’s the man who has been steering the Indian arm of Mercedes-Benz for the past five years. In an Exclusive with B&E, Dr. Wilfried Aulbur, CEO & MD, Mercedes-Benz shares where the company is heading
 They entered India in 1994. After some restructuring globally and getting accustomed to the Indian landscape, we today know them as Mercedes-Benz India. It wasn’t a smooth ride, but today the luxury automobile giant rules the roost. 

B&E: With a gamut of luxury car makers like BMW, Audi, et al, having set foot in India, what has been your focus & strategy to fight competition?
WA: Our core focus has been value for money. This is the reason we haven’t decontented our offerings. Further, we have not gone into overly aggressive discounting because at the end of the day we believe that the luxury car buyer is looking for an experience and is willing to pay the money for that. In fact, the strategy has paid off well and we have a very good bottomline. Going forward, we plan to continue along these lines.

B&E: Audi and BMW entered the Indian market 4-5 years ago and they have successfully been able to eat a considerable portion of the luxury car pie. How has this affected Mercedes-Benz?
WA: Competition has increased but then that’s market dynamics. In a market brimming with opportunities, redistribution of market share is actually healthy. If you look at markets such as Brazil, China or Russia you’ll observe similar scenarios where luxury car brands have divided the market among themselves. We are growing very significantly in China and have sold more than 1,00,000 vehicles within the first nine months of this year. This means that over 10% of our overall global sales is coming from China. While 22% comes from US, about 45% of the total global sales comes from Europe and other western countries.

B&E: How important is the Indian market for Daimler AG?
WA: As of now India is just 1%. However, 10 years down the line we will achieve the same size as that in the United Kingdom. But, at the end of day the market share that we are talking about is very small in terms of volume.

B&E: To what extent does Mercedes-Benz rely on local manufacturing?
WA: As compared to other luxury automobile manufacturers, we derive the highest degree of local value addition. For the C-class and E-class we have local body shops which takes care of the paint job. We also have assembly lines for the E-class. In fact, this flexible manufacturing setup with limited investment gives us the advantage to produce more variants and churn out larger volumes.

B&E: The road ahead for Daimler AG in India...
WA: Daimler has already made huge investments in India. We have recently announced an investment of over Rs.3 billion. In fact, with growth opportunities, investments are gradually moving up. Human resources at Bangalore have also been ramped up from 200 to about 600 employees. There are no specific plans as far as investments are concerned, but considering the overall landscape, we are definitely at par with competition in the industry.

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.
 

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

IIPM : The B-School with a Human Face

Policy-MEDIA: REGULATION

Instead of taking a close look at its own policies that led to the recent public agitations, The government is now looking at ways to attack freedom of press, just for being the carrier of bad news.

The history of the government stepping in as regulator has not been impressive. Moreover, the latest proposal does not seem to augur well for the already tarnished image of the UPA. “The fast-expanding soft power of modern media came out loud and clear during the Anna Hazare movement. This power needs to be understood, appreciated and suitably harnessed,” opines B. Raman, Additional Secretary (retd), Cabinet Secretariat, and presently Director, Institute For Topical Studies, Chennai. Rather than learning the lessons on how soft media galvanised the youth, the government is indicating that it would like to regulate this very soft media. Critics feel that this is certainly not a move in favour of progress.

The catch here is that the apparent aggression by the government to jump into regulation is not actually based on the noble idea of making the institution of media, also dubbed as the fourth pillar of our democracy, more accountable. The timing of the move suggests that the government is angry with the wide coverage that the media has given to the now frequent apolitical agitations against the way this government has been functioning. In such a scenario, if the government is to start regulating news content, all news items related to public angst against the government and issues of corrupt government practices would be termed unsuitable. This would essentially mean that the press will have to recuse itself of its primary duties of providing true, fair and unbiased information to its readers or viewer that relates in particular to the government of the day. More than anything else, it is about the government’s consistent lack of vision and a sense of priorities. Irrespective of whose government is in power, media policy in India fluctuates between the state’s desire to control on one hand and its neglect of the key issues on the other.

Today, the entire world, including China where the media is totally state-controlled, is waking up to the soft power of media. India, however, is thinking of setting up a group to deal with the accountability and regulation of media. The government, instead of blaming the media for the public flak that it has received for its own misgivings, should focus on its own deeds that lead to such agitations. Perhaps getting more interactive and participative with the media through its leaders and spokespersons could work better. The question the government should be asking is how they can facilitate the growth of this sector, instead of looking at dictatorial ways and means to regulate it.

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. 

Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine 
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society.... 
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail