Friday, August 31, 2012

Future better equipped than the previous generations?

Will the defenders of Indian morality give in and allow adolescents to step into their future better equipped than the previous generations?

A sharply contrasting scenario exists in several other countries. For instance, in USA a show called ‘The Sex Education Show’ is aired while Canada has ‘Talk Sex’ for the benefit of its adolescents, where experts talk explicitly about the topic and even freely relate their own experiences. In India, it’s amusing to note that while we have TV shows akin Splitsvilla and Lovelife, which contribute to the mis-education of the youth, such a hue and cry is made about advertising the ‘Ipill’! Speaking on the issue, Mr. Farook Siddiqui (President-Rotary Club) said, “It is vital for sex education to be taught in schools. Given the sensitivity of the issue, we need specially-trained teachers, who can keep a check on young minds while educating them. The Rotary Club is actively involved in imparting sex education with the help of its youth wings like Interact Clubs & Rotaract Clubs.”

Would the conservative forces in India, which have been battling fiercely against this change give in for the benefit of the country’s youth? Will our country be successful in airing its own show discussing sex-related issues? In this never-ending tussle between Indian values and contemporary morality, let us hope that we find a middle path soon.


Posted by at 10:38 AM
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Thursday, August 30, 2012

The Kinng’s return

Akshay Kumar’s very first production Khatta Meetha isn’t doing too well, but already plans for his next production are afoot. An Indo-Canadian film titled Break Away will be directed by Robert Lieberman and Akki is to be the co-producer of the film. While there are rumours of Akshay being on the look-out for more international opportunities, there’s also news that in his upcoming film Patiala House he will be seen as a sardar. Maybe he’s hoping the ‘Singh Is Kinng’ magic will work again?




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Wednesday, August 29, 2012

MICROSOFT CORPORATION: THE SMARTPHONE CATASTROPHE

Microsoft tried to do to mobile phones what it did to PCs over the past couple of decades. It failed miserably. Firstly, it was a late mover. Secondly, it got the very products wrong and was forced to withdraw them. Does this pull-out imply the end of Steve Ballmer’s smartphone dreams? by Surbhi Chawla

Apart from being the best for the youth, Microsoft’s products were far from being even acceptable. For instance, the trend currently is of larger screens, that give better browsing experience – something which the Kin-duo lacked. Another reason for the failure was the ‘wrong’ choice of carrier. It was a self-inflicted blow. To maximise returns on a handset whose USP was social networking, Ballmer should have instead given the carrier contract to T-Mobile or Sprint, which have had previous experience handling cellphone users traffic on social networking sites. He didn’t and Microsoft was forced to withdraw a product with the shortest life span in its 36 year-old history. So what next for Microsoft? In this light, the news is good. Ballmer is doing what he should – bet big on the success of Microsoft Windows Phone 7 smartphone version. During the first week of July, manpower which previously was allocated for the Kin development team was reallocated to the Windows Phone 7 development group. It is expected that multiple handset makers will launch products based on the Phone 7 platform by the end of 2010. Even as the company plans to continue living the smartphone dream, many have started writing off this Microsoftian chapter. But there are believers too. Says Jeff Kagan, a New York-based telecom analyst, “Microsoft is still a very large and important company in certain segments. But its efforts to enter the wireless phone business have been troubled. I think if it can come up with the kind of OS that customers want, it could be very successful. Just look at how Apple and Google are succeeding. Microsoft can win over wireless users by understanding the basics.”

But Microsoft has to watch out for competition. Apple, Nokia and RIM have a number of impressive products lined-up. The future would see both Droid and Android devices challenging Ballmer’s success. Also, all OEMs that were earlier basking on the success of the Windows (majorly Samsung, HTC and Sony Ericsson) are now riding the Android wave. Microsoft should simply take advantage of the fact that these manufacturers are still game for a Microsoft Windows Phone 7. And there is the tablet category too with MSI, Asus, LG and HP having already showcased their Windows Phone 7-based tablet computers.

There was a time when Windows “dominated” the PC industry. But times have changed, and today, absolute supremacy is passe. It’s unlikely that Microsoft will dominate the mobile platform space they way it dominated the PC industry. But for now, Microsoft has a great chance with the Windows Phone 7, as Michael Gartenberg, Partner at New York-based Altimeter Group tells B&E, “Windows Phone 7 will allow Microsoft to become a strong mobile platform provider. And porting applications & services to other platforms will also make it the key provider for core functionality across multiple platforms and devices.”

The future will belong to non-PC converged devices, and much as this is a challenge to the PC-dominating Microsoft, it’s a golden chance for Ballmer to prove many critics wrong.


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Tuesday, August 28, 2012

JAIDEEP BHATTACHARYA, CHIEF MARKETING OFFICER , UTI MF AMC

Jaideep Bhattacharya, Chief Marketing Officer of UTI AMC in an exclusive interaction with B&E

How has MF industry evolved over the last five years and what kind of growth do you foresee in the near future?
The MF industry has grown at a rate of 31% (CAGR) over the last five years. During the last one year the industry has grown by around 65%. We expect the industry to continue to grow at the same rate in future as well. Though the growth has been fairly good there is a need to further augment equity assets which is predominantly retail. The main purpose of evolution of mutual funds is to bring the retail investor to invest in the capital market to enable them to reap the benefits of diversification.

What should a retail investor expect from mutual funds?
MF products are vehicles for investing in particular asset or category. The risk-return of a MF scheme depends on that of the underlying assets. One may invest in a liquid scheme for short investment horizons, debt schemes for regular return and equity schemes for long term growth.MFs are efficient tools of diversification across assets and categories.

What marketing initiatives have you taken to attract investors?
UTI MF was the first in the industry to launch a product called UTI Wealth Builder Fund-Series II which invests across 3 asset classes – equity, debt and gold followed with innovative campaigns. The marketing campaign effectively utilised the Mumbai Dabbawallahs to carry the product literature to each and every household in the city. 5,000 Dabbawallahs of Mumbai are associated with a huge amount of trust as they carry food from households for the working community. UTI Wealth builder Series-II collected nearly Rs.2.85 billion, five times more than any other NFO launched at that time. Besides, UTI has tied up with NSE to buy & sell UTI MF units through NSE terminal, extending UTI’s reach to more than 1,500 locations through more than 1,50,000 NSE terminals.



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Monday, August 27, 2012

Indian M&As are growing very rapidly in volume

Indian M&As are growing very rapidly in volume and value this year, but valuations of 2007 aren’t expected so soon. Neither are the big ticket deals. In retrospect though, that may actually be a good thing. By Virat Bahri & Gyanendra Kashyap

In the banking sector too, there are expectations of heightened M&A activity in the run up to norms being eased for setting up new banks in the sector. Hinduja group acquired the private banking arm of KBC for €1.35 billion to acquire best in class banking practices in May, and the domestic market is seeing lot of action as well. ICICI recently entered into a merger agreement with the Bank of Rajasthan (BoR) for its branches and customer reach in north and north west India. The swap ratio was fixed at 25 shares of ICICI for every 118 shares of BoR. As new players enter, a shake out is expected in the banking sector as some of the smaller players find it difficult to survive. Already larger ones like HDFC, Kotak Mahindra and IndusInd are actively looking for targets. In the context of universal banking services, the game will be majorly skewed towards players that have greater market share. In fact the government even had discussions with some public sector banks last year, asking them to actively explore M&A opportunities.

On the pharma side, Indian companies find themselves on the other side of the equation with players like Ranbaxy, Piramal Healthcare, Dabur Pharma, Shantha Biotech and Matrix. Indian players are growingly finding it difficult to compete with their largely generics portfolio, which have elicited concerns from the government on the possibility of price increases of essential Indian drugs. Big Pharma is looking for a greater generics play on the other end, as patented drugs reach expiries. Meanwhile, an increasing aggression in the healthcare space is visible with Fortis fighting hard to take control of Parkway Holdings, where it already has a 25.7% shareholding and faces a counter bid from Khazanah. Even IT faces a similar situation to pharma with respect to small and medium sized players, and rumours of a proposed buyout of the promoter stake in Patni Computers by NTT seem to affirm an underlying trend. With increasing competition from other low cost destinations and global IT majors opening delivery centres in India, a number of small and mid-size IT companies will have to redefine their growth model fairly quickly, else they could face the consolidation pill too.

Another sector that definitely merits a mention is the FMCG space, where Indian companies have beein doing a number of acquisitions. The broad rationale is to extend their reach into similar markets, gain new customers and expand in scale. Godrej, which acquired Sara Lee’s stake in India for Rs.11 billion, is the clear leader in this drive. Besides, Godrej Consumer Products Ltd. recently acquired Indonesian insecticide firm Megasari Makmur Group for Rs.12 billion personal care products company Tura in Nigeria for Rs.4 billion and Latin American hair colour company Issue Group for Rs.2.5 billion, which was closely followed by the acquisition of another Latin American hair colour company Argencos. Adi Godrej calls it the 3/3 strategy for growth – three categories - soap, household insecticide and hair colours for three continents - Asia, Africa and Latin America. Recently, Dabur India acquired Turkish personal care company Hobi Kozmetik for around Rs.20 billion in its first overseas acquisition.

The Indian M&A story goes far beyond though, as a large number of small deals that happen need to be analysed to comprehend the story in its entirety. On a sectoral basis, information technology, consumer discretionary and industrial sector led the rest in H1, 2010 (VCCircle) in terms of volumes. Avinash gives a general view on the broad rationale used by Indian firms at a micro level, “Indian companies are primarily looking to buy outside for technology, they are looking to buy outside for brand name, they are looking to buy outside for some of the softer things like customer base, distribution network, things that they do not have currently in India.” For instance, Deloitte advised Hindustan Dorr Oliver when they acquired DavyMarkhum this year. DavyMarkhum helps them get into the heavy fabrication side of the business. A number of such fits can be seen as per the opportunity. For instance, the downturn has left many auto component firms in US and Germany in difficult times. They automatically provide an opportunity for Indian auto component firms to fill in gaps in their strategy.

One question that comes up in the context of these M&As is the size factor. Indeed, the leverage levels are low and we may not get those big ticket deals too soon. But that shouldn’t worry us much, since size is certainly not the ultimate criteria to look at for M&A. Yes, Indian companies may seem mildly aggressive as compared to global players and even compared to Chinese counterparts, but to an extent, caution is highly justified in M&A deals. They do need to step up the pace, but not necessarily look to outcompete the global giants. Instead it is better to look at their own capabilities and potential before taking the plunge.


Posted by at 12:41 PM
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Saturday, August 25, 2012

THEORY ‘I’ OF M&AS

The how, when, why, wherefrom of what all we undertook in this mammoth M&A analysis of Indian cases ranging from the year 2000-2006
Now the tough read! The methodology adopted during the study was empirical, with broad usage of deductive and cognitive reasoning. The study tests the hypothesis on a factor-by-factor analysis. The study was divided into three phases. In phase I, the analysis of shareholder value change using market capitalisation values was undertaken. In Phase II, analysis of shareholders’ value change using the Tobin’s q factor value was conducted [Tobin’s q is the ratio of the market value to book value of a firm’s assets (also known as replacement cost) where market value is the sum of the book value of long term debt and the market value of equity (m-cap)]. In phase III, analysis on the basis of revenue and profit was performed. Within the overall analysis, we’ve considered different deal sizes (three in case of Indian firms acquiring Indian firms: less than $10 million deal value, between $10-50 million deal value, greater than $50 million deal value) (three again in the case of Indian firms acquiring foreign firms: less than $50 million, between $50-250 million, and greater than $250 million).

If T is year in which the acquisition took place, then the results in each of the scenarios and levels have been analysed for four time periods, or event windows (EWs) – the first (EW1) being the period T-1 to T+1 (where T+1 and T-1 represent one year durations, plus and minus) the second (EW2) being in the period T-2 to T+2, the third (EW3) being in the period T to T+1 and finally the fourth (EW4) one corresponding to the period T to T+2. And finally, to make it more complicated for the finance-nerds, we’ve thrown in a few summary tables. Where will you find the comprehensive research? Our website of course (www.businessandeconomy.org). As the saying goes, more of that later. Enjoy the experience...


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Friday, August 24, 2012

WHO FEAR LOSING THEIR LAND AND LIVELIHOOD

RELIANCE’S SEZ PLANS AT RAIGAD ARE YET TO RECEIVE SUPPORT FROM THE FARMERS THERE, WHO FEAR LOSING THEIR LAND AND LIVELIHOOD. APPRARENTLY, THERE IS A SERIOUS CRISIS OF CONFIDENCE

In addition, various public meetings from the tehsil level to the central level have been held to help people understand the adverse impact of the SEZ. Anti-Reliance SEZ activists include several trade unions and 11 political parties. Also, several organisations including Jagtikikikaran Virodhi Kruti Samiti, Peasant Workers Party, et al have also vehemently opposed the project. By October 2006, nearly 14% of the total land was acquired and there has been no further extension since. Moreover, of the 50,000 families spread across 45 villages, notices were served to 28,000 families, who were owners of the land. The remaining land were owned by money lenders, agricultural labourers working on salt pans and traditional artisans dependent on agriculture. As part of the Reliance SEZ rules, only farmers, who have clear title of the land get compensation. Later, as many as 96% farmers rejected RIL’s SEZ proposal. Speaking to one of the villagers, B&E learnt that the land being acquired by RIL was one of the most fertile lands of the district. Of the 45 villages, 22 villages within the SEZ area come under the command area of Hetavane project.

One group had moved the High Court and Supreme Court against this acquisition process and the SEZ Act. The allegation is that RIL has been unable to fulfil promises with respect to its plants in Raigad. For instance, IPCL was taken over by Reliance 25 years back, but villagers there say they are still deprived of their jobs. As on date, RIL still awaits approval to bid for further land.

In fact, there are several dimensions for SEZs as far as the principle concept is based, which need to be taken into account. N. D. Patil, president, Jagatikikikaran Virodhi Kruti Samiti, points out, for instance, “Reliance had declared a 9,000-acre aerodrome project at Pune which is quite huge when compared to any international aerodrome project.” In fact, there is a proposal to scrap the SEZ act and post the Direct Tax Code implementation, the entire economic rationale behind SEZs has become questionable. The debate rages on...



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Thursday, August 23, 2012

Being Human

Recently, actor Salman Khan was shooting in Mahabaleshwar, and 30 children from a neighbouring village walked for two hours in the hope to catch a glimpse of the super star. When Salman heard about the children, he went and met them, played with them, allowed them to watch the shooting and had some food and water brought in for the kids. What’s more, he asked his assistant to go to a nearby market and get bicycles for all 30 of the children so that they wouldn’t have to walk back home! Now that’s how one rides straight into people’shearts!


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Wednesday, August 22, 2012

The New Growth States to watch out for!

Prasoon S. Majumdar, Editor (Economic Affairs), B&E with Sray Agarwal of the IIPM Think Tank analyses how India’s so called most backward states are collectively set to take India to the next level

Interestingly, this growth has not been in isolation! It has also augmented the per-capita income of these states, indicatively bridging the national income parity to some extent. As per a study by ASSOCHAM ECO PULSE on “States Performance in Per Capita Income Growth” – Jharkhand’s per capita income grew to Rs.14,990 (16.6% growth), Orissa to Rs.14,795 (11.5% growth) and Chhattisgarh to Rs.16,365 (8.8% growth). What is even more interesting is the very fact that this growth momentum has also been instrumental in creating an enabling environment for investments, hence ensuring a greater impetus to growth in the foreseeable future as well. States like Bihar are already witnessing an upsurge in investment proposals in the steel, cement and power sectors. More so, Bihar is slated to become the cement hub of the nation and India’s fastest growing cement market in the times to come.

It is not just Bihar An in-depth analysis of state-wise investment also indicates that other similar states are also all set to take the big leap. For example, Orissa claimed Rs.3,25,285 crore capex investment, which is around 30% of the total investments announced in India during the last quarter of 2007-08. Big names like Vedanta Resources, Tata Steel, Mesco Steel and Bhushan Steel are all set to invest more than Rs.40,000 crore and install steel plants with aggregate capacity of 18.5 million tonnes in the state. Even Rajasthan cornered an impressive investment figure of Rs.11,102 crore for fiscal 2009, especially for energy and food processing projects.

Investments apart, the indications of the boisterous growth in these states, have also been observed by the rapid rise in sales of consumer goods. And if tele-density is any indicator for growing trade and commerce, then the slower states are getting tele-networked at a furious pace. As per the Telecom Regulatory Authority of India’s (TRAI) report on the Indian Telecom Services performance indicators published in September 2009, Gujarat’s tele-density (the number of phone connections for every 100 people) in urban areas is just 85.04 and overall tele-density is 50.52 while the national average urban tele-density is 102.79. Furthermore, Gujarat ranks eighth in the country in total tele-density. The urban tele-density in Rajasthan (104.4%) and Orissa (101.59%) match up to the national level of 102.79%. In Bihar and Jharkhand, tele-density were hovering around an impressive 99.41%. A comparative analysis also indicates that the total number of phone subscriptions in Orissa and Bihar had increased by 13.9% and 12.8% respectively on an average over the last five years. Contrast this with Gujarat that witnessed a growth of only 5.9%.

No doubt, the growth indicators of the conventional laggard states are looking promising like never before, which also ensures that India’s promise to deliver on the growth numbers would not be as skewed as it used to be earlier. There is also no doubt in the fact that India is on the verge of initiating a new growth story for itself, which is relatively even and balanced. However, the disparities are just not intra-region; there are stark disparities within the states as well. There is still a long for India to go, but at least it has made the right beginning. For now, let’s celebrate the new kids in the block…


Posted by at 12:29 PM
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