Friday, August 31, 2012

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

Is a corporation meant to look at the larger good or just at profit maximisation? the debate continues to catch the imagination of executives and academicians. Virat Bahri wonders whether the debate is relevant at all

“Corporate social responsibility is a hard-edged business decision. Not because it is a nice thing to do or because people are forcing us to do it... because it is good for our business”
Niall Fitzerald,
Former CEO, Unilever

A corporation’s primary goal is to make money. Government’s primary role is to take a big chunk of that money and give it to others.
Larry Ellison,
CEO, Oracle

Corporations are known to be in existence since the Roman empire. But as far as defining their role in society is concerned, it remains a work in progress. When the father of modern economics Adam Smith expressed his support for free markets, he wouldn’t have imagined that corporations would evolve to the extent that they have today. However, one does get a brief idea from his writings that he was against untethered power in the hands of companies, and advocated increasing competition. The debate on their role and relevance really took centre stage with Milton Friedman’s treatise on the virtues of free markets, when he proposed that the “social responsibility of a corporation is to increase profits.”

When we talk of present day corporations, we tend to have two extremely strong points of view – we dread their growing power and influence (like Smith) and also tend to wonder whether Friedman was actually justified in his simplistic assessment. As blatant misuse of power and influence, especially by the large MNCs came to light, the alternate view of ‘stakeholder responsibility’ gained ground; championed by academicians like Darden School of Business Professor R. Edward Freeman.

The debate rages on, in classrooms and corporate boardrooms alike. It’s visible in how BP continues to be penalised for the Gulf of Mexico oil spill, for ‘being the big bad corporate that compromised on safety systems (payout has reportedly reached $6.1 billion till date). One part of this debate is obviously the legal perspective – the fact that companies must not “be evil or unethical” in pursuit of profits; which could mean various practices like duping customers, engaging in unfair competition, harming communities or environment or exploiting employees. The second perspective is about companies being epitomes of nobility and contributing to the social causes as a responsibility. Now the question is whether investing time and money in such causes is right; especially in public listed companies, where the money belongs to a large group of shareholders. In other words, should CSR only be strategic in nature?


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Thursday, August 30, 2012

2.8 bn still poor; 20% illiterate

The world is better today than 20 years ago; but not for all

Issues such as poverty, sanitation, illiteracy and health care don’t just plague developing or underdeveloped countries but also hold equal significance in the developed world. There is hardly any place in the world that is free of such social shortcomings. These words are extensively and effectively used on political platforms and in global summits. But lip service and the shorter end of the stick are all that the poor get all the time. This is despite the fact that non-government bodies and social watch organizations are working day in and day out across the globe to address these issues.

Going by present data available, as of 2010, there are still 2.8 billion people living on less than $2 a day. There had been many global policies designed to counter and address this problem in particular. One of the measures (under Millennium Development Goals aka MDG) taken by UN and like institution aimed to fight poverty and contain its growth through education initiatives. In the last one decade, illiteracy has seen a noteworthy fall. If the worldwide literacy rate was 73% in 1990 then today it is around 80% - a considerable achievement. But then, most of the development and upliftment has taken place in developed countries. The same trend can be seen with respect to access to health. As of 2010, around 2 billion people worldwide still do not have access to primary care or clinics. Contrast this with the WHO report in 2002, which reveals that 2.6 billion people lacked access to improved sanitation, which represented 42% of the world’s population.

Illiteracy, poverty and related issues are some of the key reasons many sections of the society have a higher probability of turning over to undertaking illegal activities simply for survival. 


Source : IIPM Editorial, 2012.

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

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Wednesday, August 29, 2012

The UN declares water a basic human right. You mean it wasn’t one till now?!

With this problem soaring year-after-year, authorities speculate that India, too, will soon be among those countries where water will be available for a price higher than that of other beverages. Already several areas are experiencing acute shortages in the supply of clean water. Feuds over water are getting more frequent. About two months ago in Bhopal, three people allegedly drawing water ‘illegally’ were brutally murdered by a group of people in broad daylight. In such a grim scenario, the recent diktat by the UN is critical and should provide the poor and middle class much-needed relief.

As water is fast becoming a premium commodity, bottled water companies are jubilant but also sympathetic for the poor people, for whom water threatens to become a luxury product. “With the recent declaration by UN about people’s right to clean water, the government would make conscious efforts to provide clean water. This will give those people, who are deprived of regular supplies of water, a reason to smile”, said the marketing manager of a bottled water company.

Although gallons of water exist in the form of oceans, converting saline water to consumable drinking water is a procedure that is extremely expensive and requires advanced technology.

Life without water is impossible to imagine. It’ll thus be good to remind ourselves that all rights come with duties, so that every individual does his bit to conserve this precious resource in ways we need no more coaching on. Let’s amend our ways and allow one less reason to people to kill each other over!


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Friday, August 24, 2012

Tom’s secret of success

Tom Cruise’s new flick Knight and Day is gaining great reviews and guess whom he credits his success to? His four-year-old daughter – Suri Cruise! He reportedly told a magazine about how she hears out the scripts of his films. He simplifies the plot for her understanding and answers all the (mostly relevant) questions this little woman asks. And in trying to interest her and make her laugh, he gets better and better!


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Wednesday, August 22, 2012

M&M: REVA ACQUISITION

Despite promises, Reva has been struggling over the past decade to strike gold when it comes to sales. But with M&M acquiring a controlling stake in the electric carmaker, much is expected to change in the near future. So has Anand Mahindra placed an electrifyingly winning bet? by Pawan Chabra

There is also another interesting talk doing the rounds amongst auto experts. When Reva entered the UK market, it did so sans dealers, sans showrooms, sans advertising and sans salesperson – in short, like a bull skydiving sans a parachute! And guess what it had in mind – to sell its products through the online route. However, with M&M coming into the picture, Reva will find due sense being knocked into its head, as it goes on to become a mainstream automaker, thanks to M&M’s widespread distribution network. Just a niche manufacturer, no more! As for M&M, the excitement is no less. Apart from getting aggressive with the upcoming launch of Reva NXR & NXG, M&M is now looking ahead to sell the electric car in US. But what about India? Is there really a market for electric cars?

Sounds harsh, but critics argue that with around 3,000 electric vehicles on the Indian roads, it’s not Reva alone that is struggling. Players like Honda have also tasted the salt, bitter to the tee. Even the much-hyped Civic hybrid gained such a lukewarm response in the Indian showrooms that the company was forced to empty its inventory at a massive discount of Rs.800,000 on the marked price. However, there are optimists who expect that 20% of cars sold in India by 2020, would be electricity-run. Considering this, the bet placed by M&M on Reva seems to be a winning one. Further, as far as synergies between the two are concerned, Mahindra’s past record and its love for alternative fuel engines (Scorpio Micro Hybrid, for instance), the two seem to be a well-matched. “As a result of Mahindra’s investment, the new company Mahindra Reva will be able to scale, innovate and accelerate for greater electric vehicle access to consumers,” explains Maini. In fact, an internal research on past Indian mergers by B&E’s research desk supports Manni’s claim. The study conducted over a period of a decade, reveals that whenever an Indian company has acquired a “controlling stake” in another Indian firm for over $10 million, the shareholders wealth on an average, has increased by over 135% within two years of the deal; that’s a buy for the M&M stock! With a running cost of Rs.0.40/km, Reva has a clear edge in a market like India. Even the Pulitzer Prize winning Thomas Friedman has praised Reva to no ends in an op-ed column in The New York Times early this year. And are we forgetting this – M&M has just laid its hands on the top-selling electric car in the world! So whether we see a new record-breaking hybrid model from M&M (like the Toyota Prius, the largest selling hybrid) or we see the deal falling flat on its face, expectations and critics are a part of any new deal package. Surely, Maini’s got his money and M&M has got the marked “environmental” touch now, and both Anand and Maini know that India will take time to warm up to the hybrid game, but Europe and Americas are waiting!


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Tuesday, August 21, 2012

Walk out, or not?

If generation X thought ‘family is foremost’, for generation Y, are parents a pest?

Oprah: So now both of you are living with your (Abhishek’s) parents…
Aishwarya Rai and Abhishek Bachchan: Yeah.
Oprah: Now how does that work?!
Abhishek: You live with your family?
Oprah: No…
Abhishek: How does that work?!

…and there was a roaring applause. For years now there have been discussions and debates over India aping the West, and one of the bones of contention being youngsters wanting to separate from their families and lead an independent life. I was often puzzled when my friends would want to have a separate home, until one day I had an elaborate discourse with my cousin who is now happily settled in the US. “The motivation to move to the US was the thought of being away from my parents”, he’d mentioned. “For one, it’s an escape from the everyday explanations of one’s whereabouts. Apart from that, I wanted to handle my own life without being pestered about issues like cleaning, studying, spending money, watching TV or calling friends over. I used to have an argument almost every second day with my parents, but now that I’m away, our relationship is beautiful.” With the newer generation striding ahead of the past generation, such problems are prevalent in most homes. Sushma Virk, school teacher and mother of twin girls, gives a parent’s point of view, “There’s a point in time where parents have to control the children; probably during those early teenage years. And then there are times, early 20 onwards, when parents have to listen to the children because then they are mature enough to understand what’s good for them.” On being asked if she’d allow her girls to separate if her rules don’t go down well with them, Sushma said, “Not at all! As far as possible I will try to find a middle path. I guess this is the time when children want to have fun. So, why not let them live their way?”


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Tuesday, August 14, 2012

If this is how you treat martyrs...

Many of you might dismiss this as a plug; but believe me, this one comes straight from the heart. If you can spare some time, please read the cover story of The Sunday Indian magazine that is available in the stands. You will read about a police constable Pratima Rout, one of the few who survived the Maoist massacre of Nayagarh (Orissa) in 2008. She was hospitalised with four serious bullet wounds. Forget adequate care, appreciation and compensation, Pratima realised that a senior cop of the IPS cadre actually stole some of the money allotted to her for treatment. The police department of Orissa now wants to recover the money from her. The same police department kept sending her notices demanding why the bullet riddled Pratima is not reporting for work. You will read about Mase, the widow of martyr Ganga Madkami, a policeman killed during a Maoist mine blast in Orissa in 2008. Mase and her eight year-old son Sunadhar, stay in a tribal village in the Malkangiri district – far away from the state capital Bhubaneswar. She is crestfallen and defeated by India’s bureaucracy; the illiterate widow has to go every month to Bhubaneswar and bribe a gang of ghouls (office babus) before she can lay hands on the pension due to her.

There is yet another case in which the Chief Minister of Orissa Naveen Patnaik personally intervened; or so the media reported. Sub-Inspector Ajit Bardhan was abducted and butchered by Maoists in July 2009. His retired father Jaykrishna Pradhan suffered a heart attack. The CM personally visited their house and issued categorical orders that the father and the widow (who incidentally went into labour on hearing of her husband’s death) be taken care of. Today, the retired father is doing the rounds of government offices because even the provident fund and family pension of his martyred son is yet to be released. There are numerous destroyed families of martyrs in Orissa – and everywhere else in India – who are going through more state-sponsored trauma.

Just forget all the hogwash about India Shining. How in God’s name can a nation and society even have the temerity to lay claim to greatness, when it so callously treats the families of those who laid down their lives to protect the nation and the society?

I could be biased because many of my close family members serve in the Armed Forces. But really, the shame is searing and scathing. I recall the summer of 1999 when India was fighting the Kargil war. My brother-in-law who belongs to The Rajputana Rifles, was sent with his unit to Kargil, leaving my sister and two young kids behind at Faizabad where he was posted. At the height of the war, I actually saw my sister being heckled by the railway reservation clerk at Faizabad who mocked at the fact that her husband had been sent to fight a war and she needed a train ticket that was her right as a citizen. I realised that day that the most destructive legacy the British had left behind was the bureaucracy. 


Read more.....

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Monday, August 13, 2012

Is Subhash Chandra finally passing on the sceptre?

As subhash chandra plans a gradual exit, B&E catches up with him and his two sons to discover more of what’s going on at work

It’s strange that someone who’s worth $2.5 billion has “poverty” on his mind; Subhash Chandra does! And it’s a tale that even you would have never ever heard before, or at best, would have discarded, as just another dig from the grapevine. As a young lad, Subhash Chandra wanted to become an engineer. He found the first step in the dark and managed to make his way through the gates of an engineering college. But much before he could justify his faith in Newton, he was asked to empty his hostel dormitory; the reason: Nandakishore Goenka’s pocket (Chandra’s father) wasn’t deep enough to keep his son’s engineering dreams alive. Chandra isn’t too shy about it, as he tells B&E, “I still remember the day I was asked to leave the engineering college, as my family could not afford the fees and the expenses thereof. Otherwise, life would have been different.” This Hissar-born, seventeen year-old lad had to leave college, as his father considered his education a big liability and preferred that Chandra came back to his father’s rescue in the family agricultural business; Chandra’s future, a big black question mark!

Mechanics to agriculture is a transition that few would embrace with a happy heart, but Chandra had no choice. Then, everything changed. Within a year of his joining his father’s business, he had proven the turnaround CEO for dad. A year later, he started a vegetable oil unit and he bloomed yet again. This once self-proclaimed dreamer of hi-tech machines, had heard his calling!

Today, Chandra easily finds a handsome position in any list that would feature the world’s billionaires. Technology’s loss proved media’s gain, and for the past three decades, Chandra has steered his brainchild – the Essel Group. This November he will also turn 60, and as any seasoned lion, in the course of natural progression, he has been in the thick of succession planning activities at work. And he has been gradually passing on the baton to his two sons: Punit and Amit Goenka. Chandra himself has been making public his intentions to give up control over his company for quite some time now. Punit Goenka, Chandra’s elder son, says, “He has given a time of two years, but I don’t think he will ever retire completely.” The younger lad Amit’s response (on when he expected Chandra to retire) was dramatically different. “What?” was his exclamation!

Punit however says, “Five years ago, my father was actively taking all key decisions in the company, but today I see his transition into more of a non-executive Chairman. He doesn’t interfere in the day-to-day business.” Today, Chandra doesn’t even attend the monthly meetings of the company. “I send him a report about these meetings today, but I don’t know whether he checks it or not. But two years down the line, I think we will just see him at board meetings or at dinner tables.”

Meanwhile, the GenNext at Zee and other businesses of the Essel Group looks all charged up and ready. Punit Goenka is spearheading the group’s flagship company Zee Entertainment Enterprises Ltd. (ZEEL), while Amit Goenka is the vanguard of the technology frontier of the Essel group and is responsible for evaluating and identifying innovations. Amit is the CEO of Pan India Network Pvt. Ltd. He is actively involved in managing the affairs of the lottery business of the group.

Incidentally, Punit’s first love was also technology. In fact, it was Punit who was actively involved in the launch of Dish TV. But later, he was convinced by father to get more involved in the media business. Thus, Punit joined Zee TV in March 2005, a time when the company was struggling hard to retain viewers & advertisers. Even its revenues were falling dangerously. “After KBC happened to Star Plus, it destroyed other channels. But Zee TV made an unbelievable comeback after 2005 and since then, they have been growing steadily. I think they have been lucky to finally get Punit Goenka as their captain. Hope he can keep the momentum going in the face of stiff competition,” said a senior executive working with a General Entertainment Channel.

Today, Zee TV is running neck-to-neck with the top two GECs (Star Plus and Colors). Sample this: the average channel share of Zee TV in the GEC category during the last four weeks has been 19%, just short of the top two – Star Plus (23%) and Colors (22%; refer table). But quiz Punit about competition and he says with a characteristic calm, “My view is that a lot of cheap money has come in, and they have tried hard to capture market share. But we at Zee, are frankly not in this business to raise money from third parties. In terms of profitability, no one can match Zee. So that way, I am already number 1. Number 1 in rating terms is of no use, if you don’t monetise!”




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