IIPM Beyond Imagination: April 2013

Tuesday, April 30, 2013

Indian CEOs’ perceptions of the business climate in China; an exclusive ICMR survey

Business & Economy magazine in association with the Cornell University, IIPM Think Tank and the Indian Council for Market Research (ICMR) conducted a survey to understand what doing business in China really means. The survey is aimed at helping Indian companies better understand not only the challenges and opportunities of doing business in China, but also the country’s policies with respect to Indian business. 109 CEOs and top executives from India participated in the survey. A structured questionnaire on the current economic & business environment in China was designed and telephonic interviews were conducted pan India. The sample included respondents across sectors/industries – pharma, IT, FMCG, manufacturing: automotive, auto components, electronics, steel, telecom, textile equipment and others.

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

Saturday, April 27, 2013

Challenging the protege

Lula's reviving ambitions could set him on a collision course with 'protege' Roussef in the coming months

The stocky and bald ex-president of Brazil, Luiz Inácio Lula da Silva, who has been the lynchpin of the ruling Workers’ Party (PT), seems to be ready to square up with his handpicked successor Dilma Rousseff for the presidential throne again. Although he has said that Brazil needs a mother (referring to Dilma Rousseff), his personal ambitions are on the ascent. He recently intoned, “I am not going to let some Tucano be President of Brazil again.” Tucano is the brash nickname for his arch rival from the opposing ‘Brazilian Social Democracy’ party. Further, he also drove home a point at a Brazilian TV show, where he said that he can contest the next election if Rousseff “doesn’t want to run.”

There is no denying the fact that Lula’s popularity in Brazil can daunt the staunchest of opposition. If he so desires, he can bring the entire country to a standstill and mesmerize voters with his charisma. After returning from successful cancer treatment, he has already started to flex muscles within his Workers’ Party. That Lula’s veto is valued by civilians was clear when Lula backed one Mr.Haddad for the Sao Paulo mayoral post, trampling the ambition of the more popular and currently serving Marta Suplicy.

So far, he has only presented himself as a back up to Rousseff. But considering that the elections are still some way off, it is quite possible that Lula is only playing himself in! But Rousseff has matched his performance and even taken some tough decisions. She has sacked eight ministers who belonged to Lula’s coterie.

These are writings on the wall that Lula cannot take his election for granted. He has to match the roll-off benefits of his protégé Rousseff. And lastly, Lula has to push back on some of his strong armed tactics; or else cracks in his relations with Rousseff could start becoming evident sooner rather than later.

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

Thursday, April 25, 2013

“We are not distracted by scooters and mopeds!”

K. Srinivas, President – Motorcycles, Bajaj Auto Ltd., speaks to B&E about how Bajaj Auto made inroads into the motorcycle industry and how it plans a bigger tomorrow with a strong back-end unit

B&E: How has the transformation from scooters to motorcycles been for Bajaj Auto? Do you believe that the company took the right call by completely moving away from the scooters segment?
K. Srinivas (KS): Last month, Fortune magazine, while naming Rajiv Bajaj, MD, Bajaj Auto, as one of the most influential Asian CEOs, commented on Bajaj Auto being the motorcycle powerhouse. This statement in a nutshell defines the goal of Bajaj Auto which is to be a dominant player in the global motorcycle market. Our first milestone was achieved last year when we became the third-largest motorcycle manufacturer in the world after being the most profitable. How did a “scooter manufacturer” become a “Powerhouse of motorcycles”? It starts with our strategy of focus. With a global market of 60 million motorcycles each year, we have enough head room to grow. Focus demands sacrifice, hence we have freed ourselves from being distracted by mopeds and scooters. We believe that strategy is not only about what one does, it is also much about what one doesn’t do.

B&E: Even when the Pulsar was launched, most experts didn’t give Bajaj much of a chance with motorcycles. The reason being that your first bike wasn’t “conventional” enough to suit pockets or heads in the Indian mass-market. What do you have to say on this?
KS: Even within the motorcycle industry, one can make a choice to compete in all segments with “me too” products or to differentiate oneself. We believe in sharply positioning our brands. For example, in 2001 when we introduced the Pulsar, we did exactly opposite of what the motorcycle industry was doing during that time. The market was fuel-efficiency and 100cc. We introduced powerful 150-180cc engines. The market was conservative bikes. But the Pulsar was aggressive and sporty. The market was small bikes. The Pulsar was a big bike. The market was economical bikes. The Pulsar was expensive. Even then, industry experts never gave us a change, and we didn’t listen to them!

B&E: And similar was the reaction to the launch of the Discover in the 125cc category?
KS: Yes. When we introduced the Discover in 2004, we pitched it against boring bikes. Discover was a 125cc commuter bike, with a sporty styling, DTSi engine, alloy wheels, self-start, nitrox suspension, LED tail lamps. It had all features which were reserved for sporty bikes. Then, manufactures were telling commuters – “You need fuel efficiency, then you will get boring bikes. If you want exciting bikes, buy a sports bike.” Discover created the “Sports commuter” category in India. And just like Pulsar, it recreated the “sports” category in India. It’s no surprise that we are market leaders in both these categories today.

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

How long will Hero rule the motorbike-land?

Homegrown business brainpower from the Munjals have ensured that Hero MotoCorp hangs on to the crown for more than eleven years. And during these years, the most unexpected of moves from Bajaj have failed to dismantle Hero’s machines

In the summer of 2001, Hero Honda’s (now Hero MotoCorp) 78 year-old boss Brij Mohan Lall Munjal got the opportunity of a lifetime. He had the chance to invite 3,000 Hero Honda motorcycle owners for a grand celebration. Reason – each month, between April and July that year, Hero Honda had outrun the long-standing no.1 seller of two-wheelers Bajaj Auto in sales (volumes). So August 2001 it was, a time for Hero Honda to declare that boom time was over in Bajaj land. That Munjal Sr. wanted the world to acknowledge his company’s ascension to the throne was proven by the manner in which he used the merrymaking opportunity to pull down Bajaj a peg or two. He organised a grand celebration in Pune – Bajaj’s hometown!

The 2001-02 season proved a watershed year for Hero Honda. The uncorking of the Hero champagne bottle in Bajaj territory also symbolised a shift in tectonic plates in the two-wheeler business. During that year, for the first time in 45 years since scooter was made commercially available in India, sales of the product fell. In FY2001-02, sales of this product dipped 2.6% y-o-y to 0.85 million. On the other hand, sales of motorcycles continued to rise (by 36.8% that year to 2.89 million). By the time that financial year ended, Hero Honda had been crowned the new #1, with a market share of 49.60% (as compared to 35.08% a year back), miles ahead of the new #2 Bajaj whose market share fell to 24.60% (from 36.26% a year back).

Eleven years later, Hero MotorCorp remains the #1 in the domestic circuit with a 45.17% market share, while Bajaj – despite retaining the silver – has become smaller with a 19.10% control of the Indian market. In fact, how dominant a force Hero has grown into () can be understood from the fact that the manufacturer is today the world’s largest two-wheeler manufacturer (in volumes).

Three big changes have occurred in the industry during the past decade. First, the sight of geared scooters across showrooms is history. [The last time Bajaj rolled out this product was in 2009.] Second, having parted ways with Honda, Hero MotoCorp is an ‘independent’ powerhouse that seems to be growing in stature each quarter – much like the Bajaj of the 1980s & 1990s. Third and most important, competition in the category has risen tremendously, especially with the arrival of players like Honda, M&M and TVS, that have both geared and non-geared products on offer.

The shift of demand from geared scooters to motorcycles stripped Bajaj of its glory. While the scion of the Bajaj dynasty, Rajiv, was not slow to judge fluctuating moods in the market, his effort to salvage some pride can be only termed “reactionary”. Going by numbers, Bajaj does not appear deserted or facing a storm – actually, the situation seems fine. Today, motorcycles account for 92.67% of its sales volume (FY2011-12), as compared to just 8% fifteen years back (remember the Boxer, the Champion and the KB100 & KB125 brands?). But its high-quality positioning strategy seems to have fallen weak before Hero’s price leadership and made-for-the-masses positioning. The current market share difference is proof (Bajaj’s 19.10% vis-a-vis Hero’s 45.17%). Despite 25 products launched in the motorcycle segment since 2000-01, not only is Hero (which has launched only 16 products in the segment) sitting more comfortably on top, Bajaj is finding hard to deal with the walking dead of the present decade – scooters!

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

Wednesday, April 24, 2013

“Uncertainty compounds overtime”

Lubos Pastor, Charles P. McQuaid Professor of Finance and Robert King Steel Faculty Fellow at the University of Chicago Booth school of Business, believes that contrary to conventional wisdom, stocks are riskier in the long run. Therefore, it makes sense to hold fewer stocks as investors get older, but the reduction in the stock allocation should not be as steep as conventional wisdom suggests.

Investors are often told that stocks are highly risky for anyone investing for a period of five years or less. Extend that horizon to 15 years or more, however, and the risk of owning stocks falls dramatically – they are told – because a longer investment period allows more time for a bull market to cancel out a bear market. Thus, investors who hold on to stocks for a long time can expect to earn high real returns with low risk. This conventional wisdom has become the cornerstone of long-term investing. Popular target date mutual funds, for instance, start with a high allocation in stocks and glide toward a lower stock allocation as investors move closer to retirement.

The idea that stocks are less risky in the long run is supported by the historical performance of stocks. Indeed, the classic book, Stocks for the Long Run, by University of Pennsylvania professor Jeremy J. Siegel, shows that stocks have consistently outperformed bonds over various 30-year periods since the early 19th century. Investors might use this evidence as reason to put more stocks in their long-term portfolio. But according to a recent study, “Are Stocks Really Less Volatile in the Long Run?” undertaken by me along Prof. Robert F. Stambaugh of the University of Pennsylvania, investors should pay attention not only to historical estimates, but also to the uncertainty associated with those estimates.

What matters to investors is a measure of volatility that captures the uncertainty about whether the average future stock return will resemble its historical counterpart. This uncertainty compounds over time, so that its effect on the volatility of stocks increases with the investment horizon. In fact, the volatility of stock returns over long periods of time can be so high that it can overturn the conventional view, which is exactly what we find. When investors take the uncertainty associated with historical estimates into account, they discover that stocks are riskier in the long run.

Uncertainty Trumps Mean Reversion
From the 1950s to the 1980s, the view that dominated investors’ understanding of stocks was that stock prices followed a random walk; that is, stock price changes cannot be predicted based on past price movements. Because changes in stock prices are independent from one another, the volatility of stock returns is expected to be equal at all investment horizons. In other words, a person who invests in stocks for one year and another who invests for 30 years would face the same amount of risk on a per-year basis.

Beginning in the 1980s, people started to realise that it was somewhat possible to forecast stock prices – just enough to induce a slight “mean reversion” in stock returns. The idea is that bull markets tend to be followed by bear markets, so that stock returns end up close to the historical average. The concept of mean reversion makes stocks less volatile in the long run, a powerful idea that was popularized by Siegel’s book, which presents evidence of mean reversion using more than 200 years of stock returns. Today, almost anyone who wants to save for retirement or their children’s college tuition is given the same advice – to load up on stocks and hold on to them for a long time, because stocks are safer and the returns higher than bonds over comparable periods.

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

Friday, April 19, 2013

“Perhaps the US Navy seals did capture Osama alive...”

Cairo-based max rodenbeck, middle east bureau chief at the economist, discusses Bin Laden’s death, the involvement of Pakistan and the effects of Osama’s death on other terror outfits.

B&E: Recently, America celebrated the end of Osama bin Laden, as the end of the mastermind behind the biggest terror threats worldwide. Is it actually such a victory?
Max Rodenbeck (MR): Understanding that he was one of the biggest criminals in world history and the biggest threat to peace, the celebration was called for. But to hope that this would bring an end to all kinds of terrorist attacks like those masterminded by the al-Qaeda under bin Laden’s leadership, I think it is premature to think that such a thing will happen. Osama’s death is a big blow to al-Qaeda, The outfit has grown considerably weaker in the past ten years, and it is not clear as to who will be the successor to Osama.

B&E: While reacting to the news of Osama’s death, the British PM had said that there was a need for the West to be cautious of a backlash. Also, Taliban has vowed to launch an attack on US and Pakistan to avenge Osama’s death. How real are these threats?
MR: More than considering them real or not, it is better to understand these as short-term threats. The most striking response to Laden’s death from the Muslim world has been the silence. There was not a great deal of comment at all. Besides the people who are on the fringe of Islamic radicalism – the Jihadist fringe, which is a very small fringe element in the Muslim world today – the rest are not upset about Osama’s death. But in terms of an immediate backlash, it is pretty likely that some of those groups associated with al-Qaeda will feel the need to either express their anger or reassert the fact that they still exist by launching an attack.

B&E: Reports have claimed that Osama bin Laden, in recent times, was not as active as he was, say about 10-15 years ago. What are your views?
MR: It is true that Osama’s leadership has not been that important in recent years. In fact, the central leadership of al-Qaeda has not been that critical. The work of al-Qaeda around the world over the last couple of years has been carried out by groups that are only remotely linked to al-Qaeda. Laden’s leadership has been less important of late. I think this has also largely been because he has been unable to communicate. His leadership position had weakened even before his death.

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

Tuesday, April 16, 2013

B&E Indicators

Poor growth

Since the first quarter of financial year 2011-12, growth has been slowing down consistently and presently it is pegged at 6.9%, least in last 2 years. While services have been performing better with a 10% growth, industry has been trailing with a moderate 4.3% growth. As per experts, negative global outlook is the key reason behind this dismal performance. Worse, forecasts suggest the trend to continue for two to three more quarters.

Missing Investments

Consumption slowed down considerably in 2011 missing all its targets for the year with government consumption, one of the major constituents, seeing a negative growth. However, on the back of a strong middle class, private consumption has led the race to a respectable position. Investments have also been sluggish due to negative returns that the financial markets are offering.

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

Asian bond market report

Capital flows into emerging East Asian bond markets remained strong as investors chased yields during the first half of the year. Relatively strong economic fundamentals, interest rate differentials, and the potential appreciation of regional currencies acted as the key pull factors for these countries to offer higher yield on relatively longer tenure bonds.

Indices heading south again

Unresolved sovereign debt issues in the United States and the ongoing Eurozone debt crisis has jolted investors’ confidence on global asset markets. Rising risk aversion has sharply dragged down global equity markets, particularly in the aftermath of Standard & Poor’s (S&P) downgrade of US sovereign debt. However, considering the baseline scenario, MSCI indices show that the Emerging Europe stock markets have been the worst affected lot since the 2008 financial crisis. And the scenario has been further aggravated by the sovereign debt crises in mature markets and the potential impact on the wider economy. This has led investors to re-think their definitions of risk-free and risky assets and prompted safe haven flows into gold, the bonds of higher rated corporates.

Us stands tall at the top spot

As suggested by an Asian Development Bank report, demand for local currency (LCY) government bonds picked up in the middle of 2010 and remained strong throughout the first half of 2011. Overall, there has been a bullish flattening of yield curves in most markets; in many cases there has been a downward shift of the entire yield curve. Total LCY bonds outstanding in emerging East Asia grew 2.4% on a quarterly basis in 2Q11 to reach $5.5 trillion, with growth driven more by the region’s corporate markets rather than its larger government markets. The most rapidly growing corporate bond markets in 2Q11 were Indonesia (8.9%), the People’s Republic of China (PRC) (6.3%), Malaysia (4.9%), and Singapore (4.7%).

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

Saturday, April 13, 2013

“Bureaucracy is a huge Operational Hassle in India”

It was almost 12 years ago when Mark Wilson joined Siemens. And since then he has held various positions in finance and management within The Organisation. In 2002, he was appointed Managing Director of Fujitsu Siemens Computers in South Africa. In April 2007, he was made the Senior Vice President of the Middle East Africa and India Region. In an exclusive interview with B&E, Wilson throws light on the company’s growth trajectory.

B&E: What was it that motivated you to begin your career in the IT sector? Was the environment in South Africa conducive to this sector?
Mark Wilson (MW): It’s been more than 18 years since I took up the job, and as far as I can recollect the developments in information technology domain in South Africa motivated me to take up a job in this sector. It all began 20 years back when in college I was deciding on the right career path to tread on. The IT space then was at its budding stage and looked promising. Siemens, a technology innovator with a great track record had just set foot on the South African soil. I thought it was a good opportunity, knocked at the door and was lucky enough to bag a job with them that offered me a very good profile in the administrative department at one of their start-ups. So that’s where I started, and since then there has been no looking back. After my first promotion, I was made the management in-charge and was required to head the Service Division. Later, I was given a key position as the Financial Director at Siemens’ Service Division. My journey in this organisation has been a great learning experience.

B&E: As you venture into an alliance with Siemens Enterprise Communications (SEC) to offer integrated service in the IT and communication space, what leverage do you think customers in India will get from this association?
MW: Recognising the increasing convergence between telecommunications and IT, Fujitsu India is partnering with Siemens Enterprise Communications to ensure that our Indian customers can benefit from the best of German-Japanese IT platforms and communication capabilities. Together, we expect to redefine innovations and raise the bar in terms of customer offerings. We are certain that this relationship will broaden our scope, increase market share, and strengthen core areas of customer responsiveness.

B&E: What is the scope of these integrated communication services that you, along with SEC, are offering in India?
MW: In India, there is a growing market for unified communications. The services we offer are intelligent solutions to make life easy at the enterprise as well as personal level. For example, if you want to make a conference call and you are not sure of the ones available at that moment through online/voice/video/etc, the comprehensive software will determine who all are available and on what platform, thereby enabling a hassle free conference call experience. Similarly, if you are a celebrity and want to decide what calls you want to take and when, our IT-Communication integration service does that for you too.

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

Friday, April 12, 2013

Who Will Knock Exxon Mobil off?

A quick look at FY2010’s top Profit-Making US firms (B&E US Power 100, 2011), and on how these Powerhouses will Perform in 2011 and a Decade later. Will there be a New #1 or will Big Oil Dominate forever?

The signs are everywhere. From General Motors (GM) to Ford, from Citigroup to AIG – the list of those who have defied the quotient of “sustainability” in the modern capitalistic era is to say the least, very long. Once they were the original model of success in profit-making – an archetype to emulate for all profit-loving corporations for years together. But in time, their brains which over decades were hardwired to be optimistic, were forced to live through the pain-filled sensation of losses; the glorious assembly lines and conference rooms turned a Golgotha. You ask – how could GM – a company that until 2008 had been America’s most profitable in 30 of the past 50 years – suddenly go bust? GM was what made Detroit – it made America audacious, a characteristic that was thereon inculcated into other big corporations in other First World nations as well, making them all recklessly bold characters in defiance of convention. But, it happened. Stripped naked by the US government, GM even got delisted. Ford fell too. Only, it needed no foodpack from the government to survive. AIG, a one time pride of insurance-loving America became a $170 billion headache for taxpayers when 2008 ended. Its books got laden with a loss of $99.3 billion in FY2008 alone. The following year, it lost another $10.3 billion. Then there was Citigroup – the hero of America’s private banking revolution. After recording $127.56 billion in bottomlines since the turn of the century till FY2007, the company delivered two consecutive years of losses until FY2009 ($29.28 billion). None of these companies found a place in the list of America’s 100 most profitable companies list for FY2009.

Ashamed & dethroned. But the pendulum has swung back, saving these companies a lifetime at the museum. Going by this year’s B&E US Power 100 list (FY2010), these very fallen angels are back. GM features on #27 (profit of $6.17 billion), Ford on #25 ($6.56 billion), AIG on #22 ($7.79 billion) & Citi on #17 ($10.60 billion). And unlike last time, this time around, they are back to defy the theorem of “sustainable loss-making”. That they have crawled back is good news, but the reverse can occur as fast. History does repeat. This oscillating bob is therefore ‘the’ concern for all profit-making powerhouses today.

How impressive is 80% as an indicator to a trend? Quite. If compared to a similar list prepared fifty years back, 80% of the names that appeared on this year’s America’s 100 most profitable list are new. This implies, on an average, every decade, 16 companies on the list are replaced by new ones. Digestable? Not if you understand how the dynamics of the current globalised scenario is bringing new names to the fore, faster than ever before. As per the 2011 B&E US Power 100 list, compared to a decade back, 56 new companies have knocked-off as many names from the ranking – much higher (and dangerously so for existing names) than the average replacement rate. This brings a new question to the front – how sustainable are the current profit-making schemes of the top names on the 2011 B&E US Power 100 list? Will the top names in the list retain their places when we repeat this exercise next year? And a decade later, can we imagine a new dominant #1 or will oil companies continue to flash? Many questions, one answer – read on.

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 8, 2013

Will they keep getting it right?

Post the recovery in the global economy, Indian IT firms have the opportunity to chart a new growth story. An analysis of their results provides valuable insights on the way forward

Even though he has got himself out of Infosys, it will remain hard for Infosys founder and former Chairman N. R. Narayana Murthy to stay out of public attention. And he makes it even harder due to some of the statements he makes, which may not win popularity awards, but bring us face to face with valid truths that we often try to sneak away from. In a seminar organised by the Project Management Institute a few days back, Murthy lamented on the laid back attitude of Indians, low focus on merit in society and how this affected our work. And around the same week, he was busy drafting a letter to FM Pranab Mukherjee on how delays at immigration were discouraging foreign clients from coming to India, and that IT firms should sponsor world class VIP lounges at airports.

Without a shadow of doubt, the Indian IT sector has been a study in contrast as compared to the economy in general. The sector has registered blistering growth (revenues of Rs.4.38 trillion in FY 2010-11 and growth of 19% yoy as per NASSCOM), generated high employment, developed a powerful export model and also delivered on creating benchmarks in terms of best business practices.

Normally, we describe India’s IT story as TCS, Infosys, Wipro & Cognizant (followed by Mahindra Satyam, HCL Technologies and the rest of them). These four have been often used as the barometers for experts to judge the entire sector and where it is headed.

By that yardstick, there have been a number of mixed signals in the results of these companies for the quarter ended June 2011. And not surprisingly, the ‘basics’ that the Indian IT sector swore by at one point in time are also losing some of their relevance over time and CEOs are often seen talking about inflection points. B&E analyses the broad picture that emerges from these results and also strategic implications for IT companies.

It is known how the results showed a surprising contrast between the performances of Wipro and Infosys on one hand and TCS and Cognizant on the other. Infosys revenues grew by 23% yoy to reach $1.67 billion for the quarter, but net income after tax grew by only 17.8% yoy and declined by 4.5% qoq to reach $384 million. Wipro, on the other hand, posted IT services revenues of $1.41 billion, an increase by 16.9% yoy while net income just increased by 1% yoy to touch $295 million. In the case of TCS, revenues increased by 34.4% yoy to reach $2.4 billion and net income increased by 30.6% yoy to touch $532 million. Cognizant, which beat Wipro in terms of revenues to reach the number 3 position in the quarter, saw revenue rise by 34.4% yoy to reach $1.48 billion and net income reach $208 million, a growth of 20.78% yoy.

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

Tuesday, April 2, 2013

Is SEC Setting us up?

Out of 26 Odd People Under Trial in The Galleon case, Gupta is in The Few Facing Civil Instead of Criminal Proceedings. Is The SEC setting The Stage for an Escape Route?

The verdict is finally out, loud & clear. Good guys have won yet another round (apparently)! The nailing of Galleon Group hedge fund (managing over $7 billion before closing in October 2009) tycoon Raj Rajaratnam has been brandished around by SEC in an attempt to project the view that the US legal setup is still not a set-up in US when it comes to chasten influential financial-world figures. One has to accept to SEC’s credit, the Galleon case is the biggest blow against insider trading in a generation as the trial involved some of the most high-profile executives on the Wall Street. But hold on to your beer barrels, we just might have been had by the SEC.

First the empirical evidence. No doubt, there have been cases in the past where people have been caught for their crimes, but almost all of them (except a few; see chart) surprisingly escaped unscathed. Even the government has tried to curb cases and incidences of insider trading by putting in place laws like SOX (the Sarbanes-Oxley Act of 2002), but much in vain. According to data compiled by Bloomberg, while there were just 70 hedge funds managing $39 billion in 1990, the number had grown to a whopping 2,600 (managing $1.7 trillion) by the end of 2010. And so, one may presume, the cases of insider trading.

However, this time, thanks to the diligent prosecutors and FBI agents involved in the case that Rajaratnam, a Sri Lanka born US citizen, was finally found guilty of conspiracy and securities fraud on all 14 counts, and now awaits sentencing on July 29, 2011, which is most likely to put him behind bars for the next decade or so (or even more!). Rajaratnam is said to have made over $60 million by illegally trading on secret tips from bankers, consultants, traders, directors, and former employees of some big companies, including Goldman Sachs (GS) and McKinsey. Apart from Rajaratnam, there are more than 40 people who are now facing insider trading charges stemming from a nationwide investigation that has roots going back to 1998.

But now that Rajratnam is down, what awaits Rajat Gupta?
As one would know, the United States Securities and Exchange Commission (SEC), on March 1, 2011, accused Gupta of illegally tipping Rajaratnam with insider information about Goldman Sachs and Procter & Gamble while serving on the boards of both companies. For instance, in October 2008, Gupta apparently attended a Board meeting of Goldman Sachs where it was revealed that Berkshire Hathway, owned by the legendary investor Warren Buffett, would invest $5 billion in the company to bail it out of trouble. SEC has evidence that Gupta passed on this information to Rajaratnam, who in turn made a killing. In fact, wiretaps of phone conversations between Gupta and Rajaratnam released by prosecutors during Rajaratnam’s trial clearly show that Gupta discussed the details of Goldman Sachs board meetings with Rajaratnam, including the company’s plan to buy some other financial firms like Wachovia and AIG.

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 1, 2013

It’s Time to Shun Berlusconi

Italy’s High Level of Government debt makes it Vulnerable to a Worsening Sovereign debt crisis. Can Italian PM Silvio Berlusconi, who is Currently Facing Sex & Power abuse Charges, save Italy from a free fall?

While the Italian Prime Minister Silvio Berlusconi has been extremely successful in organising his famous “Bunga Bunga” parties (which he denies of and is currently facing sex & power abuse charges), the 74-year-old TV magnate-turned-conservative politician has totally failed when it comes to handle the Italian economy which has been struggling to gain momentum following the 2009 recession that forced the value of its economic output to shrink by 6.7% (Q1 2009).

A closer look at the numbers and one can easily sense the real trouble. First, at 130%, the debt-to-GDP ratio of Italy is surpassed by no other eurozone nation (except Greece and Ireland, which have already opted for EU-IMF bailout package). Second, its anemic nominal GDP growth rate of 1.23% per annum over the past decade makes it the second slowest growing economy in the euro area after Portugal (Portugal’s growth rate has averaged only 1% during the past ten years). If this isn’t enough, Italy’s recovery has already started losing momentum as GDP growth slows to 0.1% (q-o-q) in Q1 2011 from 0.3% in Q3 2010, the weakest performance over the last one year.

In fact, several economists expect the Italian GDP growth to slow to 0.6% in 2011 from 1% in 2010 as major fiscal consolidation at the domestic level, as well as in most of its European trading partners, weighs on demand. While fiscal tightening across Europe is set to dampen demand for key Italian exports as four of its five biggest trading partners (Germany, France, Spain and UK) are in Europe, private consumption (which comprises over 50% of Italy’s GDP) too is expected to remain under pressure considering high unemployment, subdued wage growth, and tight credit situation in the country. Softer domestic and export sales could even prompt some companies to stop hiring and slim workforces. This, combined with public sector job cuts, is set to put upward pressure on the unemployment rate, which is already hovering at 8.7% at present.

Further, the economy lacks one of the most important components of all if growth is expected to be sustainable – the gross fixed investment, which has once again started falling after growing at a healthy rate of 4.6% during first quarter of 2010. In fact, the rate of gross fixed investment is expected to deteriorate further as the weak economy erodes profit margins and puts downward pressure on capacity utilisation. What’s more? Moody’s Analytics anticipate the growth in gross fixed investment to come down to literally zero by Q3 2011.

Read more....