Wednesday, December 12, 2012

MEDIA AND ENTERTAINMENT: SOME HEARTBREAKS

Why bloopers count even in the world of media & entertainment

Then there is the media mughol Rupert Murdoch, who bought the baseball franchise Dodgers from the O’Malley family in 1997, for a whopping $311 million – a high price at that time. Murdoch bought Dodgers hoping that it would complement FOX Sports’ content. But post-deal, Murdoch renewed the contracts of all the players, because of which, their remunerations shot-up by as high as 50%! However, the revenue prospects worsened... Finally Murdoch sold Dodgers for $439 million in 2004, incurring losses amounting to millions of dollars in the process... Another blunder was made by NBC, when it cancelled the Baywatch TV show after just one season (in 1989) for lack of viewership and high costs. Then, David Hasselhoff invested his own money in it and relaunched it in 1991. The show became the most-watched TV show of all times, with 1.1 billion viewers! To sign off, here’s another one from Decca Records when it rejected an unrecognised music band in 1962, stating: “We don’t like their sound, and guitar music is on the way out...” The band was later signed-up by EMI and became an instant hit. You know it as ‘The Beatles’ today! Similarly, Universal Studios approached Mars to use M&M’s in their new film to be directed by Steven Speilberg. Mars refused and Universal struck a deal with Hershey. The movie was The E.T. – one of the biggest hits, ever!

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Sunday, December 9, 2012

Filmmakers chase the ‘Long Tail’

Reaching out to the perfect audience in newer ways…

Typically, the months leading up to summer are quite dry at the box office when it comes to new films. Studios and producers are busy devising strategies for the big budget summer releases and rarely, if ever, look at the mass audience during this time. Of course, independent movie makers, a kind underrepresented in India but quite a force out west, look to make the most of the opportunity. So, last week you had movies like Nandita Das’ Firaaq, Raja Menon’s Barah Aana or Little Zizou, Sooni Taraporewala’s little Parsi flavoured oddball before that. Director Samir Karnik, who had made Heroes, is confident about the movie theatre’s future, “People still love going to the cinemas and like watching movies on the big screen.” But in the same breath he says, “It’s not easy for everyone to afford a movie in the theatres, that’s the reason they find the easier way and watch movies on the net or otherwise.” That begs the question: Are there ways other than the silver screen to reach out to the targeted audience?

Of course, there are the usual rounds of the festivals and even direct to DVD releases but in this age of media driven by people power (think YouTube, Facebook etc.,) shouldn’t filmmakers, producers, studios and distributors be also thinking of ‘alternative’ channels of reaching out? Even if in limited numbers, they actually are. Director Wayne Wang (Maid In Manhattan) premiered his film The Princess of Nebraska in 2008 in the ‘You Tube Screening Room’ whereas Steven Sorderbergh plans a simultaneous video-on-demand release for Che.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Friday, December 7, 2012

POSCO INDIA: SOUNG-SIK CHO

After Cho’s failure to get the Orissa project up and running, Posco must look for an Indian CMD

All these stand testimony to the South Korean steel makers’ India predicaments. Cho, who had earned name and fame across the globe for his acumen in setting up greenfield projects, was bestowed with the responsibilities of POSCO-India in 2006 to solve persisting problems, apart from ensuring smooth implementation of its various projects.

“During his four-year association with Posco India, Cho has a very little success to talk home about. During Cho’s tenure, violence at the proposed site delayed the implementation of the Rs.510 billion plant,” states S. Pattnayak, former chief Public Relation Officer, POSCO India, who had worked closely with Cho for over two years, and isn’t very positive about the work culture of the former CMD. “Although he is a good human being, and a good communicator, he was unable to build a cordial relationship between Korean & Indian employees,” says Pattnayak.

However, it would be completely one-sided, if we were to only consider Cho’s failures. During his tenure at the helm of affairs, Cho was able to obtain the state government’s recommendation to obtain a prospecting license for Posco in the iron-rich Khandadhar reserve. This was done despite stringent opposition. Besides, the company also obtained stage-I of the forest land diversion proposal clearance from the government. “But the ground reality is that there is not a single work done on the base level. And this is because of the mere negligence of the state as well as central governments. So I do not think it is a failure of Cho, I think it is the failure of Orissa government,” avers Dillip Satapathy, Orissa bureau chief, The Business Standard.

Despite this, Cho was left with no option but to vacate the coveted seat after three years at the top due to his inability to get the Orissa project up and running. Pattnayak pin-points, “Koreans do not tolerate failure, and Cho got punished for the same.” An announcement on the new CMD would probably come in any moment. The next CMD will have to make up for the weaknesses of Cho and ensure he can balance the cultural differences smoothly. In that sense, it would not be a bad idea to have an Indian candidate at the helm to better improve the chances of success.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Thursday, December 6, 2012

INDIA INC: SHARE PLEDGING

Companies need to be proactive with disclosure of pledging

The more serious issue, again when we think about Satyam, is that the funds may be going elsewhere. “If the company is ploughing back the funds that promoters have borrowed by keeping shares as collateral in the company itself, then there’s nothing to worry...,” explains Ashok Jainani, VP (Research & Market Strategy), Khandwala Securities Ltd. Pledging as a practice is being exercised since ages to raise money.

However companies used to evade disclosure of their pledging details earlier. “These are notable corporate names, which people trust and expect them to make disclosures on their own. It’s done voluntarily by most global firms,” says a noted financial analyst on condition of annonymity. Many such companies claim to uphold the highest standards in corporate governance. But by responding to SEBI’s directive, these companies have done little to reassure investors of the honesty of their intentions (if their intentions are indeed honest that is!). It’s imperative for such companies to mend their ways, just as it is imperative for SEBI to ensure that no defaulters are spared.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Wednesday, December 5, 2012

JOB CUTS: LOGICAL OR SHEER WHIM-BASED?

Jobs cuts, during recession become a ‘necessary’ evil; and this is the only quick solution for companies...

So do announcements of an aggregate 2 million further drop in global employment count (on a single Monday; January 27, 2009) stand justified as the only short term solution? “Yes, this is perhaps the ‘safest’ and ‘most prompt’ decision at the hands of the decision makers,” thumps Van Jackson, Senior Strategy Consultant and Analyst (Foreign Policy). What makes the case of job cuts stronger is that it is not a very common sight to witness such a move across boards, across industries. It’s not just financial, real estate and auto sectors (the biggest bailout grantees) that stand guilty of handing over pink slips, but companies even in the retail, IT and pharma verticals are making it to the headlines for similar reasons. This recent occurence has therefore proven how it is the ‘demand side’ of the market that is to be blamed for disturbing the equilibrium, which therefore called for a reduction in supply for even maintainence of reservation prices by the companies. And as we consider production economics, a reduction in the ‘L’ (read ‘labour’) factor remains the quickest overnight solution to enforce a production scale cut; hence tormenting job cuts and in thousands! Even David Haigh, CEO, Brand Finance, agreeingly states that, “Companies get hit when salaries become more than the revenue. The current economic turmoil has catalysed the heavy retrenchments taking place in many leading global organisations as they seek short-term measures to cut costs and reduce debt...”

Now for the brighter side of the picture: one party that would be most fearful of the downturn (after the ‘employees’ group) is the army of companies’ shareholders. As per a February 2009 World Bank and S&P report, a gutwrenching $15.53 trillion have been wiiped-off at the bourses during the past 12 months, thus representing a total global stock value erosion of 44.09%! Worse, bourses in emerging markets have been reduced to less than half in value during the given time interval (-51.82%)! Understanding how Jack made job cuts count positively for GE’s stock price and market value, investors and shareholders across the globe can hope that their companies will make the most of the announced and future (more?!) jobcuts, thus giving their stocks a better shot at appreciation. And isn’t the primary objective of a pulicly traded entity protection of its shareholder interests? Isn’t it Jack?


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Monday, December 3, 2012

M & A The Perfect Corporate Crime

CEOs have ripped apart shareholders’ wealth globally under the guise of M&As; Indian firms more so! B&E’s Manish K. Pandey, Deepak R. Patra and Karan Mehrishi undertake the most radical analysis of the recent past and destroy age-old perceptions!

The pity is, Indians never learn! You’ll get the drift by the time you end the introduction. First, the dirt! The year 2000 was the eve of the glorious new century, and a boon for the Big-6 M&A consulting firms. And why not! For these global consulting proponents, an example like the year 2000 Vodafone-Mannesmann merger was god’s gift multiplied many times over. It was proclaimed to be the single largest deal in history. Sir Christopher Gent, then CEO, Vodafone paid a smashing $190 billion for Germany’s Mannesmann AG, making Vodafone the biggest operator in Europe. The combined entity was valued at $365 billion, making it the world’s fourth largest company overnight. What better a gift could the M&A brayers ask for? Wasn’t this M&A deal enough proof that M&As were/are the only dynamic and rapid solution forward to mammoth growth and that all those who had criticised M&As for the past so many years were nothing but dimwits?

If Gent’s strategy cup ran full of suicidal moves, Arun Sarin – who was on the Vodafone board since June 1999 (and was equally, if not more, to blame) and who took over from Gent in April 2000 – redefined the standard of how much shareholder value could ever be destroyed from a company. Eight years since the deal, the value of Vodafone in terms of market capitalisation stands at $161.4 billion (as on July 24, 2008), down by a sickening $203.6 billion, a fall of 53%! Arun Sarin ensured that in the last eight years since the merger, Vodafone has become the biggest loss making company ever in the history of mankind! The loss: $86 billion! Both Arun Sarin (who exited in June 2008) and Christopher Gent, apart from the other top management, retired multi-millionaires, a far cry from thousands of Vodafone pauper shareholders.

If that sounded absurd, Gary Foresee took on the infamy mantle with ease. Gary joined Sprint as CEO in the year 2003. Signing bonus amount: $6 odd million! Subsequent years’ pay: Between $1.5-6 million! Gary’s claim to (in)fame was ensuring Sprint’s spectacular merger with Nextel in 2004-05. He sold the deal on the fact that the combined telecom giant would have a subscriber base of 53.8 million in the US! What he sweetly left out was the disaster the deal could be. At the time of the deal, the Sprint Nextel common stock was trading at $26.9; it’s at a sickening $8.30 today! While many shareholders got wiped out Mr. Gary Foresee was kicked out at the end of 2007. His severance package? $40 million!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Sunday, December 2, 2012

PEPSI: LOW COST PARADISE

Pepsi’s new initiative in rural markets faces a branding challenge

Health continues to be the predominant plank for Pepsi. Indra Nooyi affirms, “Pepsi’s beverage portfolio in India is 30: 70 proportion of ‘good for you’ product: ‘fun’ product. But we would be making it 50:50 by focusing more on healthy lines.” Apart from that, the company wants to engage in manufacturing healthy products for the poor who suffer from deficiencies of key micro nutrients like iron and Vitamin A. The genesis of a Re.1/Re.2 product line is expected very soon for the rural market.

It’s basic economic theory that in a slowdown, FMCG would be one of the last to fall, as it accounts for a miniscule part of the buyer’s income. And when we talk about Re.1 shampoo satchet’s or Re.2 health products, they are quite a potent insurance for slowdowns! But in a market used to the likes of Parle-G and Britannia Tiger, Pepsi will have to face quite an uphill communication challenge. It is being speculated that the company may do a brand extension of its Frito-Lay brand. That would indeed be a prudent step to overcome the branding challenge.


Source : IIPM Editorial, 2012.An Initiative of IIPM, Malay Chaudhuri

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Friday, November 30, 2012

Gotta stay longa' in tonga

Located in the South Pacific, the Kingdom of Tonga is one of the most picturesque and pure of the Pacific Island nations. It doesn’t matter whether you’re a new visitor or one of those old travellers re-visiting; the sheer liveliness of this place is definitely going to get you glued here for at least a good week. Nestled between the Fiji, Samoa and the Cook Islands, Tonga is the heart of the most happening holidays you would ever want to go for.

If you’re a party person then Tonga is the perfect place to be as it gets you the most happening parties you could ever go to. But if partying is just not your thing, then simply hit one of those deserted beaches and enjoy the waves hitting the shore while you sip on a refreshing coconut juice. Water-sport lovers have a host of activities – ranging from exhilarating dive trip to surfing, kayaking and canoeing – on this wonderful island. Tonga, for you information, is not just about parties, and beaches only. There are a whole lot of things of interest to any tourist in Tonga. So how about heading towards Mapu’a ‘a Vaca Blowholes just to see what the place has in store for you? Stretched over a 5 km range along the south shore of Tongatapu, these geyser-like fountains which shoot up as high as 98 ft are formed when maximum amount of seawater goes up through natural vents in the coral limestone. ‘Mapu’a ‘a Vaca’ meaning ‘Chief’s Whistles’ are definitely one of the most famous attractions in the whole Kingdom of Tonga, making it the most visited sight in the whole of the archipelago. Thinking where to go next, then make a quick visit to Mu’a, an archaeological sight containing one of the richest archaeological remnants of Tonga. The place boasts of nearly 28 royal stone tombs (15 are monumental) and are built with enormous limestone slabs carried by canoes either from nearby sights like Pangaimotu or from far away sights like Futuna. One of the interesting structures of Mu’a is the ‘Langi Namoala’ which has a fine example of ‘fonualoto’ which means ‘vault for a corpse’ on top. It was said that the vault was the burial site of a female chief but is now surprisingly empty.


Source : IIPM Editorial, 2012.

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Thursday, November 29, 2012

Build, operate, lease, tarnished!

How road construction projects have got affected due to stupidity

The enduring inflation is not only preoccupying the finance ministry but also hampering India’s growth story. General road construction project cost has jumped by almost Rs.1 crore for every kilometre due to the rise in input cost by 25%. This is mainly due to the rise in prices of steel and cement. Interestingly, inflation is not what is killing road development. For example, the government’s decision to liberalise international borrowing norms for companies will allow construction companies to raise credit up to $500 million. This may to a large extent fulfil India’s infrastructure investment demand of Rs.7,91,000 crore. This liberal dual-beneficial commercial borrowing will help companies to raise funds and fight inflation as well. What in reality is playing truant is allocation of funds. As per local municipalities, sufficient funds are not allotted to meet their demands and needs. The authorities need to understand that these frequent delays are hampering the growth story beyond calculation. The 5,846-km-long golden quadrilateral highways have already gone Rs.12,000 crores in excess. Projects under JNURM [that are largely affected] have the potential to revive urban India but are becoming bureaucratic hells.

One needs to learn from Public Private Partnership models like used in airports privatisation, telecommunications et al. Public projects needs to be modified and twisted to suite the public-private model. This will ensure projects meet deadlines and budget without compromising on quality! Sadly, in India, any world-class model is either criticised ad nauseum or is simply disregarded as a one-off wonder!


Source : IIPM Editorial, 2012.

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Wednesday, November 28, 2012

Raj unleashes 'Goonda' Raj

MNS's demonisation outside Maharashtra may consolidate its votes

An egotist nephew walks out of his clan frustrated that the nepotistic patriarch would prefer his son as his successor come what may. He burns with rage to prove his political prowess. When he writes (or someone else does it for him) he talks of strategies that Congresses across the world have employed. First hand lessons in politics (of hate) from his uncle are embedded deep within him. He knows that ‘insiders’ vote when ‘outsiders’ are demonised. He swiftly identifies the ‘bhaiya’ outsiders. The strategy works! He hits the headlines on TV, is highly popular on the Internet, is spoken about (read against) in the courts & corridors of power. Having demanded apologies from the greatest Indian movie star, he emerges as a pan-Indian hate symbol.

Raj Thackeray, the nephew of Balasaheb Thackeray knows how to play his cards. The Bombay High Court slammed the Maharashtra Police on September 25 for failing to take an action against him. A modern day Tughlaq that the Maharashtra government has allowed him to be, he ordered that all the sign boards in the global city to be changed into a language that he has known ever since he wore his first pair of knickers. The 'don'-ish order was largely followed. Later, a trader’s body approached the Court bringing that reprimanded the Maharashtra Police. Signboard makers may decide to work free for Raj when he contests the upcoming assembly elections. But then accepting his dictats may jeopardise Maharashtra's image. Assembly elections in Maharashtra are scheduled for next year. As far as poll history goes, Thackeray won 35 seats in 10 municipal corporations in February 2007. He is now a formidable power waiting to make a bigger killing. Prominent voices in Maharashtra oppose Thackeray’s tactics, albeit with a cautious approach. “Mumbai is a cosmopolitan city.


Source : IIPM Editorial, 2012.

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ISRAEL: ELECTIONS

There are tremendous expectations from the new Kadima Chief; will she be a hawk or a dove?

She shall also have to understand that Israel cannot afford manifesting the divide between Fatah & Hamas as some of her predecessors relished doing. Also, she has to understand that Hamas is a reality and she shall have to take them in confidence in order to achieve a long-lasting peace. Palestinians will like her to stop and reverse the process of Jewish settlements in the occupied territories.

The spread of West Bank settlements – accelerating this year despite the talks – undermines Israel’s claim that it is serious for peace. Then there are Israel''s perpetual problems with Iran. Though a US-Iran clash seems unlikely, speculations are rife that Israel may take a unilateral action against Iran. Livni, a pragmatist will need to counter the pressures from hardliners to repeat the actions her country took against Iraq and Syria. Livni knows that a slight flare-up on this front may “obliterate” a good portion of the globe.

It can be safely said that Tziporah Livni’s name is as ambiguous as her traits. Tziporah means “little bird” in Hebrew. What we don’t know is that whether this little bird will turn out to be a hawk with claws or a gentle dove. 


Source : IIPM Editorial, 2012.

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Tuesday, November 27, 2012

He leaves behind much more than a defeated dictator in Iraq

He may be the most unpopular president in modern times: a reckless, unilateralist cowboy. But history will be kinder to George W. Bush than contemporary caricatures. After eight years, he leaves behind much more than a defeated dictator in Iraq. Closer ties to India, a pragmatic relationship with China, and the pressure he applied to Iran will pay dividends for years to come. By David Frum

Now, the values shared by the United States and India may emerge as the most important geopolitical fact of this century. Other foreign-policy legacies of the Bush years include signing of new bilateral trade agreements, the world’s first convention on cybercrime, the wise decision to give Hugo Chávez enough rope to hang himself, and the continued successful management of the US-China relationship. Conversely, if Iran is allowed to follow N. Korea into the nuclear weapons club, it could well be the failure to act against the other two thirds of the “axis of evil,” not the willingness to act in Iraq, that’ll be regarded as the most important decision of the Bush years.

“the iraq war has made america less safe”
Prove it. In the two decades leading up to Bush’s presidency, the United States and its allies were struck by a rising number of increasingly ambitious, aggressive, and deadly terrorist attacks. The hijacking of TWA Flight 847 in 1985. The Berlin disco bombing in 1986. The Buenos Aires bombings in 1992 and 1994. The assassination of Kurdish exiles in Berlin in 1992. The World Trade Centre bombing in 1993. The Paris subway bombings in 1995. The plots to attack New York monuments & Pacific Ocean jetliners in 1995. The Khobar Towers bombing in 1996. The East Africa embassy bombings in 1998. The USS Cole in 2000. And 9/11.

Now compare that with the period since the invasion of Iraq. Since 2003, former state sponsors of terrorism have behaved much more cautiously. Libya, for instance, has retired from the business altogether. Where terrorism has existed outside the Middle East, it has steadily declined in both effectiveness and sophistication. The Madrid bombing of 2004 was less sophisticated than 9/11. The London subway bombings in 2005 were less sophisticated than Madrid. And the plots foiled in Germany, in Canada, and at Heathrow Airport in the summer of 2006 were all less sophisticated than the London bombings.

The US homeland has enjoyed almost complete immunity from acts of international terrorism, and the plots that have come to light have been reassuringly amateurish in their conception and attempted execution. Even in the Islamic heartland, terrorism is waning. Abu Musab al-Zarqawi’s attack on a wedding at a Jordanian hotel in 2005 soured Arab Middle Easterners on the al Qaeda movement. Al Qaeda’s commanders in Iraq have publicly acknowledged that their bloodthirsty tactics have alienated local residents—and left their movement in dire straits. It would be absurd to attribute this improving trend line solely to President George Bush. But it would be equally absurd to deny that things are now improving.


Source : IIPM Editorial, 2012.

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Sunday, November 25, 2012

Which ‘part’ do you like?

Led by huge demand, the Indian auto components sector is all set for a glorious future

The auto components industry could be the next big thing for India after software, pharmaceuticals and BPO. Sounds astounding?! Digest this: As per the automotive mission plan 2016, the auto industry plans to attain a domestic turnover of $145 billion by 2016 and provide more than 25 million jobs. So, with such huge plans it’s only natural to expect a parallel growth rate for the industry if not more.

Certainly the auto components industry has been one of the fastest growing (at a CAGR of 20% since 2000) manufacturing sectors in India. In fact FY 2007-08 saw the industry soar with exports crossing the $4-billion mark and investments touching new highs ($7.2 billion). What more, the industry experts estimate the global sourcing of components from India to double from the current $2.95 billion to $5.9 billion in 2008-09, and touch $20 billion by 2015 (ACMA)! All thanks to the escalating demand from both within India, and overseas. “Indian auto component industry is today emerging as one to be reckoned with. With more & more global auto majors setting up manufacturing facilities in India the industry is poised to grow,” N. K. Minda, MD, N. K. Minda Group, a leading component manufacturer tells B&E. Certainly, it’s because of these factors the domestic auto components industry is heading for a whopping 18% growth in the near future. Even the export market is estimated to reach $2.7 billion by the year 2010 (ACMA). However, what is more striking is the fact that exports to OEMs and tier I suppliers now constitute over 75% of total exports as against a mere 35% in the early 1990s.


Source : IIPM Editorial, 2012.

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Saturday, November 24, 2012

Finally, the right brew?

Lavazza’s attempts to gain synergies from Barista seem to be working well so far

Just as Indians developed a growing passion for eating out, they have also developed a phenomenal penchant for coffee. The land of tea drinkers has indeed created an exorbitant café market of Rs.8 billion (according to Technopak Advisors) and the organised coffee chain in the urban market is growing at a breakneck 35% per annum. It is no surprise that the organised coffee chain has been brewing hot over the past few years. But interestingly, successive owners of Barista have failed to take the heat.

The company has been through three changes in ownership in a time span of just six years, and four CEO changes in a time span of five years. A coffee chain started by Amit Judge of Turner Morrison, Barista was sold off to Sterling Infotech Group (65% stake for Rs.300 million) and to the Tatas (remaining 35%). Maverick NRI businessman – C. Sivasankaran, who owned Sterling Infotech, has a penchant for acquiring companies but no intention to hold them for the long run; even the Tatas. So the Tatas sold off their stake to Sterling and finally Sterling sold it to Italian coffee major Lavazza.

“The Indian coffee market today is emerging as one of the biggest markets in Asia. We wanted to be here and our research team indicted that Barista is the best,” announces Dan D. Labar, President, Barista Coffee Co. Ltd. The market buzz is that Lavazza injected a cool $120 million in Barista for the acquisitions, though Labar refuses to officially comment.


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

WORLD FOOD CRISIS: EXPORT BANS

Food production across the world is higher than in the past two years; but export bans worsen the crisis

Fear and greed are two factors that are forcing many nations to keep food grains in their warehouses rather than bringing the same to the world market. This is creating a demand supply gap, which is raising prices to unnatural highs, a situation that could well sound the death knell for the poor in Asia and Africa who spend around 50-80% of their income on food. Media reports now reveal that food riots have already caused unrest in over 30 countries including Bolivia, Egypt, Indonesia, Malaysia et al. The situation is getting worse for the United Nations World Food Programme (UNWFP), which is fighting a clearly losing battle to provide food to more than 850 million estimated hungry people worldwide.

And the clear culprit is the concept of export ban, which is currently being exercised in more than 10 countries around the world; and this has also resulted in the cutting off of aid given to destitute people who mainly depend on UNWFP for their daily meal. The good news is that food production this year is expected to be better than in the last two years. But food prices have risen 83% in the last three years. And the ADB warns that, despite production increase, if the export bans are not taken away immediately, the crisis would necessarily worsen! Till then, get your appendix in order; they say the organ could help the human body in digesting grass. Oh, by the way, grass tastes better with pepper, eh!


Source : IIPM Editorial, 2012.

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