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Thursday, March 28, 2013

B&E This Fortnight

INTERNATIONAL

BUSINESS & FINANCERIM – CAUTIOUS

In what seems to be a Catch-22 situation, Research In Motion (RIM) announced its financial results for the quarter and fiscal year ending February 26, 2011. Net earnings for Q4, FY2010-11, showed a 32% y-o-y increase (touching $934 million or $1.78/share, on revenue of $5.6 billion). But the market was disappointed on hearing the company’s expectations from the ongoing quarter, Q1, FY2011-12. While the company forecasted bottomline of $1.47-$1.55/share on revenues of $5.2-$5.6 billion, the market was expecting a much higher $1.65/share and revenues of $5.6 billion. As a result, its Nasdaq-listed shares lost 12% to close at $57.35 on March 23, 2011. 2010 was a great year for RIM, as Blackberry became the top-selling phone in US, Canada, Latin America and UK with record shipments of 52.3 million – representing a y-o-y rise of 43%. But RIM is expecting some goods from its new PlayBook tablet, which will go on sale starting April 19, 2011. About 20,000 retailers across US & Canada will test its desirability against Apple’s newly launched iPad 2. Cost of marketing associated with its new tablet and a risk of supply chain disruption arising due to the disaster in Japan are the biggest challenges for RIM in the short term. Hence the cautious guidance for Q1, FY2011-12.

OIL PRICES – SPIKE
As unrest continues in the Middle-East, and Japan & Asia struggle with a natural disaster and nuclear radiation problems, crude oil prices have started to become a worry. The per barrel price of crude oil breached a high of $106 for the first time on March 24, 2011 – the highest in two years. While 2010 ended with the price around $90/barrel, since February 21, 2011, the price has hovered around the $105/barrel mark. Even on March 25, 2011, West Texas Intermediate (the benchmark US contract) closed at $105.60 a barrel after peaking to $106.69 during the day. The benchmark crude for delivery in May peaked to $105.77/barrel in electronic trading on the NYMEX. Portugal’s debt crisis, US’ and China’s growing hunger for oil are among other factors that have contributed to this spike. Crude prices have jumped 25% since protests against Libyan leader Muammar Gaddafi began in mid-February and shut down most of the country’s 1.6 million barrels daily crude output. Experts claim that if all oil production is ceased in Libya, Bahrain and Yemen, prices could spike to $125 a barrel. Surely, this is an optimistic figure.

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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

2012 : DNA National B-School Survey 2012
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Ranked 6th Overall
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Tuesday, March 26, 2013

“Indian Management Education has to Make an Ideological Shift”

In an Interaction with B&E’s Ashutosh Harbola, Dr. Pranabesh Ray, Dean of XLRI, talks about problems afflicting The Indian Management Education System, The Need for India-Centric Management research, Corporate Governance, and The Importance of Industry Interface in B-Schools.

After gaining more than a decade of experience in the world of business – both in the private as well as the public sector – Dr. Pranabesh Ray began teaching at XLRI. That was 15 years back. Today, he has become an integral part of the faculty bench at the B-school. He has been involved in various teaching, consulting and research assignments in specialised areas of Human Resource Management; and his thoughts have been published through numerous papers in reputed journals. In an exclusive conversation with B&E, Dr. Ray talks about his efforts to contribute to the next evolutionary phase of management education in the country, and why it is high time that research takes centre stage in the Indian management context.

B&E: India so far, has been a home to some quality B-schools. That’s so far as general opinion goes. Only so far. Don’t you feel there are loopholes and objections to the system that deserve a pause and some careful corrections?
Dr. Pranabesh Ray (DPR): Yes. It is time for Indian management education to make an ideological shift – from lessons of slicing and dicing balance sheets to going back and contributing to society. If we can achieve this, it will be a great leap forward for Indian management education. The system has evolved, but there still is a marked dearth of high-quality faculty and high-quality institutes in the country. World-class management education is still not available to enough number of aspirants. This has to change.

B&E: Though considered to be one of the key ingredients of quality B-school education, many institutes in the country still treat “industry interface” as secondary. Is this right?
DPR: Surely not! India having become a truly globalised economy, the need for exposure and industry interface has never been more pressing. I think industry interface should be made a much more integrated part of the entire programme than it currently is. It can be done by bringing in more experts for classroom sessions initiating interactions with students, as well as ensuring that students not only go for industry visits but also work for some days as part of this program – whether global or local. What you need is at least that kind of training. This will ensure that industry interface is reinforced by default.

B&E: One of the most important factor that makes management education in the West so authoritative and practical is the fact that they rely on homegrown, cutting-edge research. Almost all the top global management schools have an in-house university press. India has failed on this front. Your views...
DPR: If one were to undertake a comparative study of how Western management theories have been applied by Indian businesses, it would easily lead to the conclusion that most of them do not apply to businesses here. It is something that needs to gather momentum collectively, if not change completely. We at XLRI emphasise on research orientation amongst our faculty and we have our own journal on management and labour studies. The journal comprises of research papers and articles from various parts of the world and India as well. I believe all B-schools should have such a policy in place which encourages serious in-house research. It is high time that we talk about India centric research which can serve the Indian business environment.

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Monday, March 18, 2013

Mastering all Laws of High-Speed Motion?

Maruti’s Adoption of a New Three-Pronged Strategy fuelled its Topline Growth in FY2009-10. Can it Manage a Repeat this Year?

It was meant to be a huge loss for Maruti. The month: February 2010. The event: phasing-out of the Maruti 800 – the original people’s car of India – from 13 top cities across India, as the newly applied BS4 emission norms disallowed the company from selling the vehicle in those cities. The news made headlines, threatening to damage Maruti’s topline to a great extent. But it turned out be only an emotional loss for the company. The 800 meant no more than a trophy, a symbol that Maruti had “once” become the #1 in the domestic circuit. It still is. Most critically, the Indo-Jap has other cards to bet on. Actually, Aces.

The 20-year-old JV between Maruti and Suzuki, has never failed to spring sweet surprises. Launches like the SX4, the Swift, the Ritz et al, have taken handsomely to the roads. In fact, the carmaker, for delivering “just what the Indian consumer desires” has never failed to make it to the top of the recall list. Result: Maruti’s financial scorecard has always read pretty. Even for FY2009-10, in terms of absolute increase in revenues, amongst all Indian companies, Maruti features at #3 (after RIL & Tata Motors), with a y-o-y increase of Rs.86.45 million (growth of 42.27%). So what bet paid off to produce the numbers for it?

Maruti began FY2009-10, with a three-pronged plan. It started focussing on the rural market, tied-up with PSUs and appointed resident local marketing executives in tier III & small towns. For instance, the company launched an offering in the A2 segment called the ‘A-star’, which was originally meant to be sold primarily in Uttar Pradesh.

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Tuesday, March 12, 2013

In The Hubby’s Footsteps

Aamir Khan has used various marketing gimmicks to make his films the talk of the town, and his wife Kiran Rao, whose directorial debut Dhobhi Ghat is set for a 21st January release, seems to be inspired by him. She’s sending hand-written postcards to invite the media for the film’s screening, and will write personal notes about her experiences in Mumbai. It sure seems an apt promotion for a film about Mumbai and its people.

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Wednesday, March 6, 2013

Enlightening Kanyakumari

The Tip of Our Country was where Swami Vivekananda reached the tipping point, And could also be where you Rediscover Yourself and Your Spirit

Surrounded by sea on three sides, Bay of Bengal in the East, Indian ocean in the South and Arabian sea in the West, Cape Comorin in Kanyakumari, comes to life early in the morning. Tourists throng the beach every day by 6 am to witness the sunrise, one of the beautiful attractions of this place. Among the crowd that stood facing the East, braving a chilly early-morning breeze, I too stood in silence. After a few minutes, the silence broke. Someone from the crowd whistled. Somebody else clapped. An elderly couple bowed towards the East. Yes, the reddish-orange Sun had risen, seemingly from the ocean, far off at the horizon. One needs to be patient and pay attention when waiting for the sun to rise, for even if one shifts their focus for a second or two, one could miss the ethereal scene. Though one can always catch this very sight here the next day as well! But on full-moon days, this place, which is at a distance of 700 kms from Chennai, gains special significance in the evening. For at the very moment the sun sets, the moon rises at the horizon, as though their timing was planned by prior arrangement!

Kanyakumari, the southernmost tip of the country, attracts many tourists from all over india. On working days, on an average, 1500 tourists come here. If it is a holiday, the number rises eightfold. Vivekananda Rock Memorial, Thiruvalluvar Statue, Gandhi Memorial, Kumari Amman temple, as well as watching the sunrise and sunset, are all important attractions here.

Vivekananda Rock Memorial and Thiruvalluvar Statue are located in the sea. One has to reach them by passenger boats. One first reaches Vivekanada Rock from where the boat takes us to a mammoth, 133 feet Thiruvalluvar Statue, recently built by the Tamil Nadu government in the memory of the great Tamil poet Thiruvalluvar.

Forty years ago, Vivekananda Memorial was built upon a rock island in the sea where the great Swami Vivekananda, meditated and is believed to have received enlightenment. This Memorial was a blend of various architectural styles of India. As I tumbled out of the boat, and went in, the sea was rough outside. But inside the meditation room, everything was calm.

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Tuesday, March 5, 2013

End of an era, fertilizers again!

After a decadal starvation of investments, Indian fertilizer industry is hot again in the books of investors and seems ready for a great run in the days to come. Before that, it will have to deal with its chronic problem of lack of feedstock.

For the past couple of months Indian fertilizer sector, which was almost missing from newspapers for around a decade now (except for the burgeoning size of government subsidies, shut down of fertilizer plants one after the other, and of course increasing import bill for fertilizers) has been all over media again. While a new plant set up by Chambal Fertilizers and Chemicals in 1999 was the last time something positive had hit the headlines (believe it or not, since then the country has not seen a single new large fertilizer plant till date), now there is a flurry of announcements (be it Oman Oil pumping in investments to the tune of $3 billion into India’s fertiliser sector or analysts forecasting that the investment-starved industry is now set for a wave of Rs.470 billion) indicating that the whole scenario has changed. What is more surprising is that even the existing ones, which had gone into their shell are now acting bullish and are set to expand their capacity in a jiffy. So, in short, the tables have turned and Indian fertilizer industry is hot again. But the million dollar question is, why now? How is it that a sector, which did not receive almost any investment over the past decade, has suddenly topped the chart of many investors?

Two of the clear cut reasons are no-brainers: basically, the rising demand and higher dependency on imports. As per the latest data available with the Department of Fertilizers (Ministry of Chemicals and Fertilizers), over the past decade while the country’s total consumption of fertilizers has shot up to 24.9 million MT in FY 2009 from 16.7 million MT in FY01, the country’s total production of fertilizers has actually gone down by 2.7% from 14.7 million MT to 14.3 million MT. As a result, in FY09, 21% of the urea, 67% of phosphorus-based fertilizers, and 100% of potash-based fertilizer sold in India was imported resulting in an import of 10.15 million MT of fertilizers during the particular year. This clearly indicates the fact that domestic manufacturers now face real low-volume off-take risks and this has been one of the major reasons for fertilizer manufacturers to gear up their production plans in India. S. Garg, Director, Fitch Ratings India, says to B&E, “The government has historically tried to match fertilizer manufacturing capacity with domestic demand, but a large gap has emerged between demand and supply as no large greenfield capacity has been added in the last 10 years. This has clearly resulted in a higher dependence on imports.”

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Friday, February 8, 2013

“The equivalent of two Valdez spills is gushing into the Gulf, per week!”

John Hocevar, Oceans Campaign Director, Greenpeace USA, talks to B&E’s steven philip warner about the damage done and the consequences thereof of the most recent BP Oil spill holocaust

B&E: The most recent BP oil leak disaster in the Gulf of Mexico is estimated to lead to great ecological disbalances. What are you estimates of the damage?
John Hocevar (JH): The impacts of the BP Horizon disaster on the Gulf of Mexico ecosystem and coastal communities are going to be felt for decades. It was terrible seeing oiled birds, dolphins swimming through oily water, and tens of thousands of dead hermit crabs. Of perhaps even greater concern is the impact on habitat, which will have long-lasting effects. Mangroves and grasses that have been covered in oil will die, and many low lying islands will wash away completely once the vegetation that holds them together disappears. Some of the islands which will be lost include some of the most important bird rookeries in the Gulf. Unfortunately, this is just the beginning. No one seems to know for sure how much oil has been spilled, but the estimates keep increasing. Some scientists are now saying that the equivalent of two Valdez spills is gushing into the Gulf right now, per week. So far, most of the oil has remained below the surface, offshore, and out of sight – and so have the impacts to marine life.

B&E: The Obama administration is acting first hand to take charge of this situation that already looks beyond control. It has been estimated by Credit Suisse that the cost of the clean up act can touch upto $49 billion in the four years to follow. Even BP is taking huge steps to accelerate its clean up acts. How far do you think will the mission be successful?
JH: The effort to clean up or mitigate the impacts of this disaster is considerable, but has already proven insufficient to protect sensitive areas. The oil has entered the wetlands, where it will be impossible to clean. Even under the best of circumstances, at most 15-20% of the oil can be recovered. In this case, I would be surprised if they could recover more than 5%. The harsh truth is that the only way to avoid disasters like this is to prevent offshore drilling from happening in the first place.

B&E: So you think BP is the culprit in the spotlight or is it Tony Hayward who is the criminal in the crowd? Or are we to condemn the whole concept of deepwater drilling?
JH: It is not a question of BP or Tony Hayward being a particularly bad apple, or even of deepwater drilling being much more dangerous than shallow drilling. Many big oil companies have had major accidents in the past under various circumstances, and more recent blowouts have occurred in shallow water than deep. Part of the problem with assessing what the spill is doing to Gulf species has been a lack of transparency by those doing the assessing. BP has hired contractors to test dead animals, but what we’ve seen from them so far has been a bit dubious. When contractors tell the media that the number of dead dolphins is no cause for alarm, or that there is no link to the spill, it doesn’t exactly instill confidence.

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