Thursday, October 11, 2012

Colour me pink...

As the government relents, steel players must get their house in order

“Don’t put the steel industry between two prongs, where one prong is regulated by the suppliers of raw materials and the other end is held by the regulated prices. This way the steel industry will crash…” said Moosa Raza, President, Indian Steel Alliance (ISA), when B&E interviewed him in March 2008. Though ISA has since dissolved, but Raza’s words are finding resonance today, as all major steel players of the country have, one after the other, posted losses for the third quarter ending December 2008. Will 2009 see the Indian steel sector resurface or drown?

While net profit of Tata Steel and SAIL dipped by 56.36% and 56.4% respectively; JSW Steel recorded a net loss of Rs.1.27 billion as opposed to Rs.3.55 billion during the same period last year. “The losses were mainly due to rise in raw material costs, slackening demand in the home market and foreign exchange fluctuations,” points out a Mumbai-based steel and metal analyst.

The problems with the sector date back to 2007, when India’s iron was being guzzled by China whereas the latter was not allowing its coking coal and coke to be exported to India. This lead to high prices of coking coal and coke (key ingredients in steel manufacturing), which forced steel players to increase selling prices of their products. That’s when the Government of India intervened, unfairly, if you take the steel players’ perspective, and withdrew tax benefits entitled to the steel sector in March 2008. The Government also banned exports and scrapped the Duty Entitlement Pass Book (DEPB) Scheme, which allowed steel players duty-free imports of raw materials equivalent to the value of exports. A drop in demand of steel in the domestic market by sectors such as automotive, construction, et al further worsened the situation. And this is reflective in the current balance sheets of the Indian steel players. If those owning captive mines like Tata and SAIL are facing reversals, imagine the plight of the others.


Source : IIPM Editorial, 2012.

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Wednesday, October 10, 2012

RURAL COURTS: A NOBLE IDEA

Many people die before their cases come to a logical and fair end...

It must be noted here that a novel idea has been adopted by the Gujarat Government by introducing evening courts. This has enabled the daily wage earners to attend the courts after a full day of work. Quite credibly, a figure of 45 lakh pending cases in 2003, with 65 lakhs new cases, have been reduced to only 20 lakhs of backlog cases as on date.

The Central Government, on the other hand, wants these new courts to follow the Singapore model, where the civil or commercial disputes will be resolved using mediation and conciliation mechanism. The ‘Singapore Mediation Centre’ follows a method where the arbitrator has to repay the entire fees in failing to resolve the case in 40 days. Even this kind of efficiency could make our judiciary more accountable to the poor people who have almost but lost their faith in our judicial system. The fact remains that the faster a case is resolved – even if wrongly – improves the chances of the future of our judiciary. We’re all praying...


Source : IIPM Editorial, 2012.

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Tuesday, October 9, 2012

Smokin' hot spot!

Miami can be aptly defined in just two words, beaches and skyscrapers as on the one hand it has beautiful white sand beaches with glistening blue waters and on the other, it ranks third in the US and 18th in the world to have a rising skyline with 24 skyscrapers to its credit, the tallest one being Four Seasons Hotel and Tower. Miami is the only major city in the US to have the smallest land area and is surrounded by two national parks, the Biscayne National Park on the east and the Everglades National park on the west. Ranked “America’s Cleanest City” by Forbes magazine, thanks to all the green cover around the city and clean streets; it is also the third richest city in the States and the Port of Miami houses largest number of cruise ships in the world and has many cruise line headquarters.

Miami is divided into different sectors, North, South, West and Downtown, which actually is the eastern side of the city where you would find city’s best architectural works, tourist attractions, and is its financial hub. South Beach on the other side is more popular with the youth and has restaurants, bars, bohemian shops and, what you wouldn’t want to miss is the nightlife of South Beach which can boost your energy level even if you are wearied after a long day; that is what Miami’s effervescent lifestyle can do to you – retrieve the wild side in you!

Miami is very popular with filmmakers all over the world and many television shows and movies have been set or shot in this city. It also has many entertainment venues, museums, theatres, performing arts and is home to Florida Grand Opera and has Florida’s grandest performing arts centre.


Source : IIPM Editorial, 2012.

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Monday, October 8, 2012

B-SCHOOL INTERVIEW: XLRI-JAMSHEDPUR

XLRI Jamshedpur is the oldest B-School in India and Continues to be Among the Best in Business. With Management Education evolving fast Amid Bigger Challenges, XLRI Director Fr. E. Abraham, S.J. Shares his thoughts in an Exclusive Interview

B&E: What vision does XLRI foster for India in the long term?
EA: The vision that XLRI fosters for India is one where we can produce a new breed of managers and leaders who can shape the destiny of India with competence and dedication. The basic thrust of our education is to train young minds to produce leaders who will excel in competence, personal values and social concern.

B&E: How can the structure of exposure and industry interface be made more robust in a country like India that is evolving into a true globalised economy?
EA: Besides offering to students the courses that are relevant and useful in a way so as to cater to the requirements of the industry today, XLRI places equal emphasis on visiting faculty from industry who come here and share their experience and expertise. These sessions are built into the regular classes in a structured way. XLRI is also the first B-School in the country to have introduced the concept of the CEO Forum. Such a forum provides our students with a unique opportunity of a face-to-face interactive exposure to CEOs thereby enriching the students further with the practical know-how that is to vital to their formation as managers.

B&E: How can we address the failure of the Indian education system to produce world class research and publications? What steps are being undertaken by XLRI on this front?
EA: XLRI believes that intellectual capital is the hallmark of a good business school. Consequently, all our efforts are aimed in this direction. Our competent and qualified faculty are encouraged to publish books as well as research articles in journals of repute, both national and international. Also, our faculty regularly presents papers in international conferences.

B&E: Why, according to you, have the advocates of Indian management education failed to create and contribute to contemporary theories of modern management?
EA: Indian management education has largely focused on excellence in teaching. Due attention has not been given to excellence in research. As a result, Indian business schools are not known for original contribution to management theory.

B&E: Don’t you think it is high time for B-Schools to start teaching sustainable capitalism – a concept which will not just address the motive of profit maximization for an organization, but will also ensure that corporations start moving in the direction of sustainable development?
EA: XLRI does not advocate unrestrained capitalism. Its curriculum puts a great deal of emphasis on benefiting all stakeholders, ethical conduct, and sustainable development. Through formal courses and extra-curricular activities, students are given insights into environmental issues, problems of poverty, and social entrepreneurship.

B&E: What is your advice to youngsters ready to go out and face the world?
EA: Dream big, think positive, work hard and remember to care for the marginalized people in the society. “Live, love, learn and leave a legacy”.


Source : IIPM Editorial, 2012.

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Saturday, October 6, 2012

Government’s Culpable Homicide

With not One Toxicity Testing Lab, The Government is Committing a Crime

A few weeks back, numerous media reports exposed the presence of banned pesticides in fruits and vegetables in India which endanger the lives of consumers. Improper and non-scientific usage of pesticides like chlordane, endrin and heptachor during agriculture is quite rampant in our country. Since most farmers don’t have an idea about appropriate measures of pesticide that should be used during cultivation, they end up using harmful and banned pesticides in agriculture. Excess usage of such toxic pesticides may lead to development of various neurological problems, kidney damage and skin diseases among consumers.

As per a November 2010 study conducted by NGO Consumer-Voice India, eatables have 750 times more pesticides in India as compared to global standards. Indian farmers also practice externally injecting hormones into vegetables and fruits to ripen them faster. Illegal use of the drug Oxytocin in fruits and vegetables has been reported across the country. Oxytocin is a drug generally used to induce childbirth and lactation in females. Chemicals like copper sulphate are used to give artificial colour and shine (freshness) to fruits and vegetables, which again have serious health implications. Accumulation of heavy metals like lead, cadmium and chromium in vegetables has been regularly reported. Such drugs, which are also used to mislead consumers into believing that the produce is fresh can cause serious health problems.

But the icing on the cake is that there is practically no specialised facility available in the country to test the presence of such chemicals. Neither has the government moved into a compulsory regular approach to training farmers; the current Krishi Vigyan Kendras are still serving only their titular function.


Source : IIPM Editorial, 2012.

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Friday, October 5, 2012

HOW POLICYMAKERS ARE DESTROYING THE GREAT INDIAN TELECOM DREAM

In Conversation with Akhilesh Shukla, COAI Director General Rajan S. Matthews highlights the Importance of Cooperation between The Government and Players to take the Telecom Sector Ahead

B&E: The overall penetration level in India has reached to 56%. Considering the affordability of the telecom services do you think more penetration is possible, as those who can afford are already added to the network?
RM: The penetration level in India can go up to 95%. Reaching the rest of the 5% would be very difficult and expensive for the operators. To achieve such a high level of penetration level, government and operators have to work together. Today, infrastructure is the major cost in rolling out the services in the rural area. If the cost of infrastructure could be brought down with the help of policy makers, we can achieve the huge penetration level. Besides, we need to relax the KYC (Know Your Customer) norm for the rural people. Some of the prospective customers lack basic documentation including date of birth certificate or a proper address proof; a must for a new subscriber currently.

B&E: What is the future potential and transformative impact of the telecom industry in India?
RM: The future of telecom industry is still very bright. Today, the data services account for 7% of the telecom revenue. The launch of 3G services by the operators could fuel the contribution from data services to 30% of the revenue. Mobile banking again has a very bright future. Today, the penetration level of banking services is struggling at 48% of the total population. In case the mobile industry helps in improving the penetration of basic banking services to the next 20% of the masses, it would be a huge opportunity for telecom operators. What we need to do is to continuously innovate keeping in view our domestic need and environment.


Source : IIPM Editorial, 2012.
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Monday, September 10, 2012

Raju hasn’t yet left the building!

In a little over a year post takeover, Mahindra Satyam finally declared its past two fiscals’ results on September 29, 2010. B&E jumps inside the numbers and brings you the analysis!

“Good judgment comes from experience, and a lot of that comes from bad judgment.” When Will Rogers made this statement historic, he wouldn’t have expected the corporate world to make this the basis of their pristine learning. Well, they did, and the top examples are in the M&A world, where the most profitable bets are generally not made on the best performing companies, but rather the worst performing ones – as they’re undervalued, yet have intrinsic worth. Recession left a number of such companies in the global economy, ripe for the picking.

Satyam was one such firm alright, undone by the malpractices of its own founder, Ramalinga Raju. When Tech Mahindra acquired the company on April 13, 2009 for Rs.58 per share (in fact, the Satyam stock had once reached below Rs.10 levels), it was quite obviously a purchase that was done with the future, rather than the present in mind. Satyam had a promise surely. But apart from the fact that the company had been underperforming its peers, there was the huge accounting muddle to solve. Revenue was overstated by Rs.53.62 billion from April 2002 to September 2008. Profits, more so. Given that, when Mahindra Satyam decided to finally declare it’s ‘true’ results for the past two years, apprehensions were clearly on their inflated high.

The good news is that Mahindra Satyam’s results for FY 2008-09 and FY 2009-10 (released on September 29, 2010) are, in one word, not shocking. Revenues for 2008-09 stood at Rs.88.12 billion and dropped to Rs.54.81 billion by 2009-10, a telling fall of 37.8%. Net loss was a far more relieving statistic for the last fiscal at Rs.1.25 billion compared to Rs.81.746 billion for 2008-09, which would give the impression that the company has just about bottomed out with respect to its financials; and the liabilities are on their way out. A class action suit is still pending from US investors and there are 37 Indian companies claiming unpaid liabilities to the tune of Rs.12.3 billion from the Raju family. But the company claims the liabilities are done and over with. Vineet Nayyar, Chairman, Mahindra Satyam, commented on the results, “With this announcement, we have fulfilled an important commitment and kept to our promise of transparency and agility. It also marks the beginning of a more significant journey of growth and the future.”

One of the biggest contributors to the reduced loss is the reduction in employee costs by 34.45% to Rs.39.81 billion. There was a mass exit across the hierarchy over FY 2009-10. The headcount stood at 27,000 at the end of the year compared to 44,000 in the beginning. Just like employees, Tech Mahindra also faced an exodus of customers, even large ones like Coca Cola, Novartis, Pfizer, BP and Telestra. In all, it lost around 194 clients and added 44 clients in FY 2009-10.


Source : IIPM Editorial, 2012.
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