Showing posts with label India. Show all posts
Showing posts with label India. Show all posts

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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Friday, August 10, 2012

INDUSTRY STATUS FOR ORGANISED RETAIL

The least the Budget can do is set a time frame and an action mechanism to address the issues pertaining to its legitimate growth as an Industry of the future

A recent report on Indian Retail traces the history of organised retail in India as being spread over 4 phases, and identifies the period from 2010 as the fourth and Consolidation phase. Whether there will be more phases or more stutters in the growth of organised retail remains to be seen, but what is certain is that the government has the biggest hand to play in the making or breaking of Organised Retail in India. And the eagerly anticipated 2010-11 Budget (to be presented on February 26, 2010) will have ample opportunity for setting the tone right for the next 5 years, just like the historic budgets in the early 90s liberalised the Indian economy.

The reasons for this great dependence on policy, over demand and markets, are both financial and regulatory. The financial reasons are well known: the possible boom in foreign direct investment (FDI) when retail sector is opened up, the entry of global brands that would bring best products and services given our growing demographic attractiveness, and the possible effects on local employment, sourcing and allied services. Little can be expected however, in this budget, in terms of loosening of the FDI reins, as this change would need more political courage & conviction (which is lacking till date) and more time for formulating the ground rules to address the fears in various domestic quarters.

But what is more critical than even the above would be the symbolic change that can be brought within the regulatory function of the government. Organised Retail does not have the status of an “Industry” like the banking and financial circles, because of the lack of regulation and clarity within the government on Emerging Retail. What the retailers would be keen to see would be an official acknowledgement of the role that Organised Retail would play in the next decade or more, and a policy statement governing the vision of the government in making this happen.


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Wednesday, August 08, 2012

Daring to Dream beyond Third World!

 I t is the season for pundits to pontificate on the decade that has gone by and appear suitably magisterial while predicting what lies in the decade looming over the horizon. I never wanted to be a pundit and will never be able to appear magisterial. So, I will restrict myself to suggesting some basic mindset changes in our country if we are to finally discard the Third World tag by the end of 2019.

The mindset change that we need is to stop thinking of India as a former colony and a victim of global myriad conspiracies. We as a nation are becoming so prickly that it is often laughable. If George Bush signs a nuclear deal with India that is truly historic, we whine and crib and proclaim that America wants to colonise India. If China arm twists the World Bank into not giving a loan for a project in Arunanchal Pradesh, we see dark conspiracies and start revisiting 1962. Ditto for the Doha round of WTO, for the Copenhagen Round of climate control talks and permanent membership of the UN Security Council. As a nation, we must become less prickly and more practical in pursuit of national interests. And what is our long term national interest? Growing at 8% a year and finally eradicating poverty. For that, we need to reform ourselves; not blame America or China.

The second mindset change that we need urgently as a society is to become more generous and charitable. Sure, we have examples of generous individuals and institutions in India. But what they do is not even a patch on what greedy capitalists do in America. I humbly request each one of the 200 million middle class Indians to make a pledge that they will voluntarily contribute Rs.5,000 a year towards primary education of poor children. Believe me, if middle class individuals and corporate entities make and implement this pledge, India will eradicate illiteracy by 2019 – even if successive governments are inefficient and corrupt.

The third mindset change that we as a society and nation need to urgently implement is to raise our sense of civic pride and responsibility. I know it is a tired cliché, the one about the Indian keeping her home spotlessly clean while nonchalantly dumping garbage on the streets. Indians desperately need to learn more civic manners and work ethics. It is wonderful to gloat about the beauty of our chalta hai mindset, but we will never cross the threshold of Third World scorn unless we change our ways as citizens. And please don’t blame politicians for this; it is you and I who are squarely to blame.

The last and most urgent mindset change is related to our education system. Our education system is geared to mass manufacture unemployable morons who only know how to follow orders, rules or a set pattern of work. Innovation, free thinking and initiative are ruthlessly discouraged – by schools, by parents and by peers. India will always be condemned to be a Third World nation unless we change this.


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Monday, July 30, 2012

Stratagem-TELECOMS: HIKE IN TARIFFS

The recent tariff hike is a bold attempt on the part of leading telecom operators to nudge the industry to a more mature phase and shift the focus to revenue and profitability instead of merely adding subscriber numbers 

With such compressed margins, incumbents have no option left except to go for an increase in tariffs in order to arrest and limit the decline in profits. And as subscription to services has been increasing sequentially for all companies even as spectrum licences remain capped, the only choice left has been to play the tariff card. Wireless subscriber base increased from 840.28 million in May 2011 to 851.70 million at the end of June 2011, registering a growth of 1.36%. However, subscribers’ growth in June and in the preceding three months has been among the lowest in the past many years and confirms industry’s suspicions that the relentless fall in tariffs kickstarted by new operators since 2009 in order to acquire new subscribers has finally bottomed out. “India is no longer just a new market for telecom where subscriber acquisition is the key. Tariffs have already reached a stage when there is no elasticity left, so no matter how much lower they go, you aren’t going to see an incremental rise in customer volumes,” says a telecom analyst.

Till recently, the key performance indicator for telecom firms was to bring in new subscribers, both to be competitive and get additional spectrum (given the government’s earlier subscriber-linked formula for spectrum). But with changes in spectrum policy, that is not so crucial. The likely auction of spectrum in future, as proposed by the new telecom policy, and likely to be announced within the next three months, will remove the perverse incentive to add customers at any cost. Already, new subscribers rarely add to firms’ revenues. This is because over 90% of India’s subscribers are in the pre-paid segment, which mostly has low-volume, low-revenue users. The ARPU in this segment is abysmally low at around Rs 125 a month, according to industry estimates.

Will operators scale up their tariff hikes to a pan India level, including many other circles in the near future? Not at least for the next two to three months, say industry experts. “Only after seeing the results in certain circles where some operators have done the hike, I am sure they would measure the response for a couple of months and only then move on to either reduce it or effect similar hikes in other circles,” says the head honcho of a leading telecom firm, which has not raised its tariff so far. Most experts opine that the Indian telecom market is not quite there yet where operators have such pricing power as to be able to raise tariffs without losing customers. A large number of operators still have underutilised assets and they would rather use their assets at whatever pricing they can get rather than let it be idle without generating any revenue whatsoever. New players are in the process of acquiring a critical mass of subscribers and cannot risk losing them by increasing tariffs. Officials from new telecom firms are admitting that they view these tariff hikes as phenomenal opportunities to grab customers. To cash in, new companies like MTS and Uninor have already gone aggressive with their advertising campaigns of late.



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Thursday, November 06, 2008

IRDA: INSURANCE REFORM

Performance of VC funds has always been under scanner. Kalpana Jain, Senior Director, Deloitte India IRDA: INSURANCE REFORM(for those who do not know, Deloitte handles more than 50% of the PE deals worldwide) avers to B&E, “Only three out of every 10 PE deals turn out to be a success.” On the other hand International Finance Corporation in one of its working papers titled, ‘Commercial Discipline for Development Impact’ has mentioned, “Even well-performing private equity funds tend to have only 10%-20% winners.” That simply means when insurers will put investors’ money in VC funds, they will actually be betting on a less than 30% success ratio. So, now on investors must keep their fingers crossed while paying premium for the safety of their future.

However, supporters of IRDA may argue that the regulator has not allowed insurers to put in a large share of the investors money in VC funds. But then, when the government and the regulator are moving forward together to bring in the much needed reform in the sector, what makes them allow to experiment in an area where they cannot go big even in the future. This may be considered as a step taken by the regulator to add some momentum to the flow of funds.....Continue

Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Wednesday, October 22, 2008

Looking good has never felt so good!

It’s time for India to get in step with the world and ring in a new era in fashion

Ever begun the day on a really dull note and felt much better once you got all dolled up for the day? Dressing up can be loads of fun and from ties to skirts to little matching trinkets, many of us take a lot of care in looking just right. For many, looking good makes them feel good too, though if you keep up with the times and switch to ethical fashion, we guarantee you will feel good every single day. Ethical fashion is all about clothes and accessories that are made without harming the environment, animals and bettering the lives of the workers/artisans/craftsmen.

Among the most stunning options to get some good karma and pampering yourself are the eco-friendly diamonds, which were brought into India by Renaissance Diamonds last month. Laboratory grown, these diamonds match up to mined diamonds in brilliance and have the identical physical, chemical and optical properties. The difference is that they are cheaper, and as they’re made in labs, there are no environmental or social costs involved....Continue

Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

Read also :-
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Thursday, August 30, 2007

“The company believes in making the best engineered products.”

Adds Rahul Aggarwal, VP, Global Marketing Hub & India Marketing, Lenovo, “The company believes in making the best engineered products.” He mentions at length the superior, innovative additions in Lenovo desktops, “The thinklight for reading in the dark, the face recognition system, the hard disc protection system, the jog dial for quickly moving from music to movies to photos, the roll cage for protecting the screen…” The IBM effect is still visible here.

Then, one wonders, what gives Lenovo a better chance than IBM, which was always famed for these technologies, but failed to convert them into market gains. Here, Rahul clarifies, “IBM’s focus was slowly shifting towards large enterprises, services and soft ware. In client PC segment, on the other hand, the rules of the game had changed...” This, according to him, is where the Chinese edge is helping now.
For Complete IIPM Article, Click on IIPM Article

Source: IIPM Editorial, 2006
An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative
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Tuesday, August 14, 2007

Sun in Taro with $454 million

Sun Pharmaceutical Industries Ltd. has entered into final Sun Pharmaceutical Industries Ltd. agreements with its subsidiaries for acquiring Taro Pharmaceutical Industries Ltd. The deal (worth $454 million) will be funded with interior accumulation and proceeds from its FCCB. This multinational has its footprints in U.S., Israel and Canada, of which North America begets more than 90% of Taro’s sales. Dilip Shanghvi, Sun CMD, stated that the company looks forward to working with Taro and its employees further ahead. It’s the apt opportunity for the duo to create increasing value and add a complimentary multinational organization to Sun’s business. More so to the deal, there are bright chances to build on Taro’s expertise in dermatology and paediatrics, along with its speciality and generic pharmaceuticals and over-the-counter products.

For Complete IIPM Article, Click on IIPM Article

Source: IIPM Editorial, 2006

An IIPM and Management Guru Prof. Arindam Chaudhuri's Initiative
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