Showing posts with label IIPM Think Tank. Show all posts
Showing posts with label IIPM Think Tank. Show all posts

Friday, May 31, 2013

A welcome judicial intervention

After years of political turmoil and uncertainty, things are looking up in Nepal as a new experiment gets underway there, reports Mayank Singh
Nepal's Chief Justice Khil Raj Regmi's decision to become prime minister has been by and large welcomed but its actual impact will be felt once the modalities are clearly enunciated between the political parties and the apex court. It will also help in allaying both constitutional and political fears.

For India, that can only mean good news. Since the dissolution of the Baburam Bhattarai government in May, 2012 after four years of wrangling and repeated extensions for the Constitutional Assembly, there appeared no solution in sight. The decision of the chief justice to head the non-partisan government came as a relief since when Maoists emerged as the biggest party in the 2008 elections, they lead the country into a state of terminal decline.

The Constituent Assembly failed to finalise a Constitution by 2010 and voted to extend its own term four times.

The experiment has proved to be costly – political turmoil with four unstable governments in four years. Nepal was without a functional government since May 2012, thanks to the stand taken by the country's two main parties, Nepali Congress and the CPN-UML, who continued to defy the Bhattarai government's every decision.

In a country where opinions are sharpy divided and voters deeply polarised, all decisions are likely to find more opposition than supporters. Now even the chief justice's move is under the scanner. Which is surprising because it has the blessings of all four important parties – the Unified CPN-Maoist, Nepali Congress, Communist Party of Nepal (United Marxist-Leninist) and the United Democratic Madhesi Front.

Some opposition to the plans are based on the failures of the Constituent Assembly to get their act together. That could be used skilfully to make a point and may guide the dynamics of the elections in favour of the Federal Democratic Republic Alliance, an alliance of Maoist and the Madehsi parties. Their calculations are based on typical vote bank politics: the Maoists are strong in the hills and the Madhesi parties in the terai. It is a potent combination which can form a government since their interests in no way clash with each other.

In the process, could the judiciary, sucked into a political vortex, loose its impartiality and credibility. Officials say this problem has been taken care of: the chief justice will temporarily vacate his position as head of the judiciary to head the electoral process. Once elections conclude, he will automatically be relieved of that responsibility. Until such time though, as a temporary charge, the Deputy Chief Justice of Nepal will be elevated to that position.

To remove the inevitable clouds around his motive, the chief justice has categorically stated that he has no personal ambitions but has just stepped in to resolve the political and constitutional crisis. Observers believe that his fairness and impartiality remains intact.

The more serious problems are political. The scale and intensity of infighting in parties like the Nepali Congress and the CPN–UML is a matter of intense concern. At the moment, it looks very difficult for either to keep their flock together. That is bound to lead to further fragmentation.

According to Nihar Nayak, research fellow at the Institute for Defence Studies and Analysis (IDSA), opposition parties have more grass root support. "Mainline political parties are scared of the opposition because of their poor performance while in the government. This is also because of their lack of grass root support,'' he says.

But there are others like defence analyst Major General (Retd) GD Bakshi who believe that there is a lot happening under the surface which may not be evident at the moment. "There is a long term negative effect which is eroding institutions and will divert Nepal from the path of growth and progress. The army and the economy have been at the receiving end of this political turmoil. While the army has conducted itself well even in the worst crisis, its much-required modernisation and training have gone for a toss as they have no help from the government.''

The inflation in Nepal is hovering in the region of 9 to 10 per cent which has made life for its people very difficult. Political uncertainty is one of the major reasons for the economy going into a tailspin.

Furthermore, Nepal's interim constitution bars judges, including the chief justice from assuming any role which is not of a judicial nature without the prior consent and approval of the judicial council – something Chief Justice Regmi has not done. That too will require a constitutional amendment.

Most believe that while the new appointment is a step in the right direction, it is not likely to ease political complications. Even if allowed by political parties to preside over the elections, it would require a herculean effort on the part of the government machinery to conduct elections in remote areas which could take days to reach. Time is clearly running out for conducting the elections before May-end or the first week of June, before the monsoons, scheduled to reach sometime in the first or the second week of June.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles

Friday, February 8, 2013

3G for dummies...

The illogically costly 3G auction, evidently, has strategic implications for both Bharti and Reliance Communications. B&E does a snapshot 'dummies guide' competitive analysis primer on the two by Virat Bahri

When you speak of rivalry in the Indian telecommunication space, it is hard to imagine a discussion not commencing with a reference to two names – Bharti Airtel and Reliance Communications. The former was the player that pioneered the market, and the latter is credited with being the one that changed the entire dynamics of pricing and brought the mobile connection to the common man. Ever since then, their game of one-upmanship in the market place as well as in the lobbying arena has hogged the headlines for years. And it has flared up on a number of occasions - the GSM vs CDMA debate, lobbying w.r.t. spectrum prices being provided to each other, bidding for MTN poaching of top executives, et al.

So far, the game changer in the telecom industry has been price, a tool that RCom first used in the market with success and became almost like an industry norm. After all, the first decade of this century has been one of fast-paced growth, and price is the sure route to market share gains in a market like India. Players have gained inch by inch using this ploy through a variety of schemes. But the way ARPUs have been on constant decline, this strategy is now getting limited in its impact; particularly with the entry of newer players, which are taking the price barrier down further. 3G was a game changer that the incumbents were waiting for.

After a long and tedious wait, the 3G auction has been completed and the winners announced. And RCom, Bharti and Aircel (unexpected third winner) have led the rest in terms of circles, winning 13 circles each. Clearly, the playing field in the Indian telecom space has been divided again, and it’s time for Bharti and RCom to take their rivalry to a new dimension. The question that obviously springs up is – what should their strategies be and who would take the advantage in the post-3G scenario?


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, February 5, 2013

Voyages to lands of milk & honey

Steering the expansion drive by way of inorganic growth opportunities seems to be the latest obsession amongst home-grown FMCG companies. But is it a viable strategy? Savreen Gadhoke finds out

“And the sea will grant each man new hope . . . his sleep brings dreams of home,” said the master of exploration, Christopher Columbus about the joys of going beyond borders in search of new pastures.

After years of exploring products and markets (including rural) within home territoy, Indian FMCG players seemed to have inculcated a ‘Columbus’ spirit of late. They are now expanding their reach to overseas markets through inorganic expansion. And this acquisition drive has gained momentum in the last one year.

Consider this: In July 2009, Godrej Consumer Products Ltd. (GCPL) acquired a 49% stake in Godrej Sara Lee for Rs.2.14 billion. Marico recently acquired Malaysia’s third largest hair-styling brand, Colgate-Palmolive’s Code 10 for Rs.250 million and Wipro Consumer Care & Lighting (FMCG arm of Wipro) acquired the Yardley business from UK-based Lornamead Group for Rs.2.14 billion. Even other domestic FMCG players like Dabur, Emami, et al, are vying for overseas acquisitions. For instance, Dabur India has set aside a sum of $250-500 million for its foreign buy-outs, and Emami Ltd. is planning to spend Rs.8 billion for an acquisition in US. GCPL, too, has announced plans to raise a whopping Rs.30 billion (both through debt and equity) to acquire large & small firms in both local & international markets.

The valuations of international FMCG companies have gone down in the last two years, thanks to the financial tsunami, making them vulnerable to take-over attempts. Overseas buyouts do lead to faster and positive growth, drive shareholder’s value, establish presence in foreign markets, increase size of the customer base and enhance the product portfolio. But at the same time, these acquisitions may also put a strain on the balance sheets of domestic FMCG companies, as ROIs may not give desired results. So is an aggressive approach to such acquisitions apt?


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, February 4, 2013

The Chuckling Chaebol cheats!

They ignored the potential of ‘Clean capitalism’ ; they were wrong...

Capitalists often wonder why South Korea was nicknamed the ‘Land of the Morning Calm’; there’ve been wars, invasions & power conflicts over decades… So what exactly defines ‘calm’? Alright, for being the capitalists that we are, let us overwrite the follies of the South Korean nicknamers, and move ahead… calling South Korea, the ‘Land of Chaebols’. Yes, we’re talking about those capitalist armies, represented by names like Samsung, Hyundai, LG, Daewoo, SK Corp et al, which are neck-deep into making money, but totally submerged when it comes to attaining power. Now that admixture often leads to one final potion – corruption! And that’s what this tale is all about; about their ride down the path of ‘crony capitalism’... Over the past five decades, as the South Korean economy grew like wildfire, the Chaebols too expanded, gaining great control over almost all the sectors in world economy and today, are proud about being names that control codes to many treasure boxes [or Pandora’s boxes?]. Of course, diversification was most definitely the ‘magic’ key for the Chaebols, with all the big names enjoying multiple feathers in their caps: Samsung, has 63 companies under its umbrella; LG has 51; SK Group has 62 and Hyundai Group has 9. So how did these conglomerates dare to launch a full-fledged attack on Global Inc.? The answer is simple – under the garb of ‘crony capitalism’.

This confluence of capitalism and policies became the breeding ground for ‘dark secrets and financial manipulations’ by the Chaebols. Dr. Van Jackson of the University of Maryland, who is also the global authority on East Asian History explains how Chaebols should rather be blamed for holding back the South Korean economy, and eroding away fairplay by posing two grave dangers – unstable concentration of capital & corruption. “Both these dangers scare-off risk-averse international investors, which naturally limits FDI. In this sense, it is reasonable to blame the Chaebols for ‘holding back’ the Korean economy,” he asserts.

And so were the thieves caught, one after another. In 2000, the much discussed multi-billion Chaebol-cheat Daewoo, collapsed! Getting cheap credits from banks was never an issue, and Daewoo used this to snap up companies… [It’s not very known that founder & former CEO of Daewoo, Kim Woo-choong’s father had been dictator Park Chung Hee’s teacher.] The company cut several secret deals with the government to bail out his shipbuilding unit and it is also believed that during 1997-98, Kim masterminded Asia’s biggest accounting fraud that inflated Daewoo’s stock by $32 billion! Ultimately, post-Daewoo, he fled...


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, January 19, 2013

Science behind 21st Dec, 2012

The prophecies and science behind 21st Dec, 2012

The Yellowstone volcano in USA is supposed to blow up anytime too. Said to erupt every 6,50,000 years, it threatens to fill the atmosphere with ash, cloud the sky and throw Earth into a 15,000-year-long frozen winter.

Then there is the Bible that talks of the approaching Armageddon, where the final conflict between the Christ and Antichrist will occur. The Vedas say that this would be the time of the end of Kali Yuga, which had commenced in 3102 BC. Many other cultures are said to follow this chorus, and let’s not even start on the grim picture painted by Nostradamus…

NASA has been particularly dismissive of the 2012 prophecies. "There apparently is a great deal of interest in celestial bodies, and their locations and trajectories at the end of the calendar year 2012. Now, I for one love a good book or movie as much as the next guy. But the stuff flying around through cyberspace, TV and the movies is not based on science. There is even a fake NASA news release out there..." says Yeomans, NASA Senior Research Scientist.

There are as many theories about the world ending in 2012 as there are about the same theories being products of over-imaginative and psyched minds. On Facebook, an open party – Night of Mayhem – has been announced for everyone on Earth for 1st January, 2013, just in case the floods don’t occur, the earth doesn’t rip apart, and humanity survives 2012. As of now, 42,177 people have RSVP''d as ‘Attending’. Rather than worry about events we can’t really do much about, I suggest we take all these theories with a pinch of salt and plan for a grand New Year Party for 2013!


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.

Thursday, January 17, 2013

380 deaths daily!

The shocking Chinese coal mines

Fushun’s Mengjiagou coal mine had a gas explosion in 2003, with a casualty of 25 miners ­– that was not as much a bad news­ ­as was their relatives being beaten up to death asking for compensation! In 2007, the official figure of the number of deaths in coal mines stood out at around 5000 miners, although independent research agencies estimate the actual figure to be as much as three to four times of that. It is reported that many sub-contractors in China run their mines like monster task masters. And the province of Shanxi is a crying shame of an example for China in this regard.

If last year’s coal mine accident in Shanxi that killed 270 people – and resulted in the resignation of Meng Xuenong, Shanxi’s governor – made you open your eyes, perhaps you missed out the fact that a few years back, the Director of State Administration of Production Safety in China accepted that 380 people died everyday in the coal mines of Shanxi, causing a direct economic loss of $12 billion every year. The figure is a staggering 2.5% of China’s GDP!

China’s fatality rate per million tonnes of coal production was reported half a decade back to be 3,824. Compare this to the 0.1 figure in the US and even Australia, top coal manufacturers.

In 2006, Premier Wen Jiabao made commitments to improve the safety standards. Eventually, in the same year, he passed an order to close down any coal mine with an annual output of less than 90,000 tonnes. Shanxi’s coal mines still continue haphazardly. This year, the new Shanxi governor commissioned that by 2011, the number of coal mines will be reduced by 1500 (to 1000) and by 2015 to 800. The claim is that any shaft with an annual output of less than 300,000 tonnes will be closed and taken over by the government. Are the Chinese true to their word?


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
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
IIPM – FLP (Flexi Learning Program)

Monday, January 14, 2013

How the good became the greatest

ONGC has to still find a way to beat the oil volatility cycle without the help of subsidies, says ratan bhagat

To be number one on the B&E Power 100 list brings with it a crown of thorns embedded with huge responsibilities, high expectations, unexpected challenges, and continuous scrutiny, with a generous gift on the negative, from all stakeholders. And ONGC, this year’s leader on our list – with a profit of Rs.161.26 billion for the financial year 08-09 – is gifted with all the above embellishments that come with the throne.

But how did a company, which was pretty good previously, become the greatest in India, a jump that requires more than well implemented strategic intent? R.S. Sharma, Chairman and Managing Director, ONGC doesn’t play to the gallery and points to a straightforward fact, “ONGC’s story actually reflects the success of our well thought out strategy to focus on strengthening our core activity – Exploration and Production (E&P) of oil and gas.” In that order, we should say. The fact is that ONGC, in the past few years, has gone fanatically towards exploring newer positive fields in a manner never before seen in its history. The proof of the pudding comes in the fact that the figure of 28 fields discovered in the financial year ‘09 has never ever been achieved in the past. Moreover, by securing an in-place accretion of 284.81 MTOE (million tonnes of oil equivalent), an ultimate reserve accretion of 68.90 MTOE (both being the highest in almost two decades) and with a reserve replacement ratio of more than one for five consecutive years, ONGC has gone aggressive in a benchmark fashion.

But the truth is, the growth story of this PSU has had its fair share of luck – what with the crude oil price volatility from a never before high of $147 to its lowest at $37 per barrel, the ongoing economic downturn, the inflated subsidy burden of Rs.282.25 billion for the current fiscal and persistent bureaucratic interference playing their part in pulling ONGC down.


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
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
IIPM – FLP (Flexi Learning Program)

Tuesday, January 8, 2013

Chief Marketing Obstacles: The treacherous trail to CMO Success

A savvy CMO must be clear about expectations, selling the changes that need to be made, and clarifying how he or she needs to be involved in business decisions

Donald Richards (name changed) knew he was in trouble when the topic of brand reinvigoration was raised by a consultant hired by his CEO. “I was all in favour of a renewed focus on marketing and brand,” the former Chief Marketing Officer recalls, “But it was clear as we discussed the proposal that everyone was thinking of this as purely a communications and advertising initiative. At that point I realised my efforts to position myself as an organisational change agent had fallen short.”

It’s a failure that seems to infect the CMO suite, with chief marketing officers suffering an average tenure of less than two years, according to a much-discussed study by Spencer Stuart in 2004. Marketing executives have an image problem, and it begins with the very definition of the title.

What is meant by marketing?

“There are three basic types of marketing people in an organisation, and where the CMO fits in depends a lot on the viewpoint of the CEO,” says McCombs School of Business Professor Vijay Mahajan, who has studied the CMO phenomenon extensively. “You’ve got marketing, sales and communications; they are not all the same, obviously. How the CMO is positioned within the organisation has a tremendous impact on his or her power to influence major decisions in the firm.”

Pete Hayes, Principal and CMO at Chief Outsiders, agrees. “We see CMOs get stuck in a pure communications role versus one that is at the heart of the business. If you are just talking about products that are developed, it is only a shiny veneer, and the rest of the organisation won’t value that.”

Mahajan defines CMO power as the ability to influence allocation of resources and other major strategic decisions within the top management team. “It isn’t just about leadership style or personal strength,” he says. “I’ve seen smart, dynamic executives falter in the CMO position when the job itself isn’t structured for power.”

Four sources of CMO power
In his most recent study, Mahajan and co-author Pravin Nath identify four critical factors impacting CMO power, regardless of the personal strengths of the executive:


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles.

Friday, January 4, 2013

More than just incentives

Export driven industries need some basic changes to make the incentives work for them

Socialist economy has stifled the creation of wealth in India for more than four decades. Foreign trade never became the cynosure in the upper echelons of government till the advent of the era of economic liberalization in 1991. Since then, the removal of a plethora of barriers to trade not only led to wealth generation but creation of millions of skilled and semis-skilled jobs. But, then came the global recession and the tide turned. A continuous decline in the year-on-year (yoy) merchandise exports for last eight months with declining percentages hovering around 30% and above have cast a gloomy picture for the highest employment generating sector of the economy. The worst hit has been the labour intensive textile and handicrafts with demand plummeting by 30-40% over last year. The next worst hit has been the gems and jewellery exports resulting in a cumulative loss of around three hundred thousand jobs. A recent PHD Chamber survey covering 104 entities revealed that 80% of the export-oriented industries have registered a drop in order size and volume. Estimates show that around 5 million jobs have been lost.

The only saving grace in this tumultuous hour has been the reduction in the import bill though close scrutiny will reveal that this has been due to the reduction in oil prices more than anything else (oil import bill has dropped by more than 50% while the non-oil imports have risen). The recent spurt of excitement in the markets has sparked a new hope for all the sectors of the economy but for the millions of blue collar and semi-skilled workers in the export linked industries.

A new ray of hope can be shown only if certain policy initiatives are taken on war footing and a long term framework is made for the sustained growth of merchandise exports.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles.

Tuesday, December 4, 2012

How is Mallya even sustaining the unbelievable losses quarter after quarter?

As if the problems with global fuel prices weren’t enough, Kingfisher has gone ahead and undertaken strategies that only seem a do ‘and’ die effort. How is Mallya even sustaining the unbelievable losses quarter after quarter? B&E’s Shashank Tripathi and Angshuman Paul meet Vijay Mallya and other top Kingfisher executives and investigate...

And one cannot forget that Mallya had spent a huge Rs.975 crore approximately of his invaluable cash to purchase 46% stake in Air Deccan in FY 07-08! All airlines in India, for that matter, are in losses and are bleeding bad. Where Jet has been facing a daily loss of almost over Rs.9 crore, Air India is expected to post well over Rs.4,000 crore losses in the current fiscal year as compared to net losses of Rs.2,144 crore in FY08.

All this has badly affected in-flight services and airlines are now even planning to charge for the water they serve on board. Would such process moves help Kingfisher? We found the question pretty hilarious. The per passenger loss for the combined entity of Kingfisher and Deccan is a confounding Rs.2,400! What help can charging for one bottle of water or even a meal help? So why can’t Kingfisher simply increase ticket prices? That’s the Devil and the Deep Sea conundrum. Competition ensures that the highly price sensitive consumer today has minimal loyalty to any airline [and is even ready to switch to the Indian Railways: read 4Ps B&M cover story, June 20-July 3, 2008, ‘Laloo has the last laugh’]. The initial 3Gs are no big help in increasing switching cost of the customer, neither are promo tactics like frequent flyer or advertising various quality awards.

The worst part is that the Kingfisher combine has seen passenger market share grow to close to 30%.That is simply fabulous! But if fabulous gets fabulous losses, then any self-respecting CEO should close down the business model. Air India has cancelled around 30 flights, Jet Airways 20 flights, SpiceJet over 17 while even Deccan has cancelled 50 flights due to mounting losses. To their credit, Kingfisher, which used to operate 218 flights on 38 destinations, pruned 10 percent of its flights and also sent 47 expatriate engineers back home to cut the operating cost.


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

For More IIPM Info, Visit below mentioned IIPM articles.

Tuesday, November 27, 2012

EU: RECESSION FEARS

It's the policies... obsolete, superfluous & unpractical policies

The main reason, according to Dr. Nick Bloom, Associate Professor, LSE is that “Europe has worse management and organisational practices, which mean it is very inflexible.” Much of this inflexibility is the result of lack of clarity between the EU (as a central entity) and member nations on policies. Take the labour market for instance. Countries like France have not yet benefited from labour market regulation and with their stringent internal policies, the day is still far. High oil prices are eating into the earnings of people and the lopsided monetary policy of European Central Bank (ECB) is killing whatever economic sentiment is left, thus maintaining a constant level of unemployment and constantly lower levels of growth. Records show that EU has built assets which have under performed. The biggest being the Euro. The growth rates haven’t changed much pre and post Euro. Putting all the blame on the Lisbon agenda is like blaming the thermometer when one has the flu. A recent survey done by New York Times shows that people are unhappy with the way EU is handling the economy. Problems are more internal than external and need to be addressed soon enough.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.

Monday, November 26, 2012

Bad times be damned!

Interest rate hike and mounting inflation has put the brakes on the speeding auto financing industry in the country. Bad times be damned!

 India is undergoing unprecedented change and auto financing is no exception. Earlier 80-85% of auto financing was undertaken by the banks and financial institutions, but with rising interest rates and higher disposable income, more people are opting for an outright purchase using their savings. This seems to be logical to some extent as auto loans are costlier today by 2-2.5% since the beginning of the year. This implies that an auto loan of Rs.5 lakhs for a three year period will get expensive by a further Rs.10,000. And as lenders still account for 70% of auto financing, a rise in interest rates, which subsequently implies a hike in EMI instalments further aggravates the problem, thus leaving the buyer confused! “The high interest rate is very negative for the auto industry,” asserts S. Ramnath, Analyst, SSKI to B&E. However interestingly even in such a scenario there is some good news. As for auto loans (for new car) fall, an increase in sales of second hand cars is bound to happen.

However, auto financiers are on their toes to increase their profit margins. While, a few have shut their financing operations, others are now approaching customers directly instead of routing through intermediaries. Certainly, the economic activity (the high interest rate & burgeoning inflation) has had a knock-down effect and unless these are resolved, the predicament will continue to haunt the auto industry. Screech... Heard those giant brakes?!


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.

Thursday, November 22, 2012

What Russia wants

From Gorbachev to Yeltsin to Putin, every new Russian president has drastically altered his country’s relationship with the world. How will President Dmitry Medvedev change it again? Here are the clues that reveal what the Kremlin is thinking, and, more importantly, what it really wants.

This much we know: In the two decades since the collapse of the Soviet Union, Russia has transformed itself from a one-party state into a one-pipeline state – a semi-authoritarian regime in democratic clothing. At the same time, Russia has grown increasingly independent and unpredictable on the international political scene. And now that Vladimir Putin has successfully installed his handpicked successor, Dmitry Medvedev, is nowhere near relinquishing his grip on power. Putin’s foreign policy is here to stay.

But there’s so much we can’t know about the direction Russia is heading. It is, at once, a regime that offers its citizens consumer rights but not political freedoms, state sovereignty but not individual autonomy, a market economy but not genuine democracy. It is both a rising global power and a weak state with corrupt and inefficient institutions. The Kremlin’s regime seems both rock solid and extremely vulnerable, simultaneously authoritarian and wildly popular. Although Russia’s economy has performed well in the past 10 years, it is more dependent on the production and export of natural resources today than it was during Soviet times. Its foreign policy is no less puzzling. Russia may be more democratic today, but it is less predictable and reliable as a world player than was the Soviet Union. The more capitalist and Westernised Russia becomes, the more anti-Western its policies seem. The more successful Russia’s foreign policy looks, the more unclear its goals appear.

Russia’s contradictory development has succeeded once again in capturing the world’s political imagination. Putin’s tenure has left most people confused about what role Russia now wants to play in the world. In recent years, for example, Moscow has orchestrated a noisy and confrontational return to the international scene. It decided not to cooperate with the West in taming Iran’s nuclear ambitions or in settling the final status of Kosovo. Last year, the Kremlin unilaterally suspended the Treaty on Conventional Armed Forces in Europe. It blocked the work of the Organisation for Security and Cooperation in Europe. Gazprom, Russia’s gas monopoly, aggressively tries to control the energy supply throughout the region. The country’s military budget has increased six fold since 2000. Russian planes are patrolling the Atlantic. Moscow’s intelligence network is creeping into all corners of Europe. Not since the hottest days of the Cold War have so many wondered just what was going on behind the Kremlin’s closed doors.
 

Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.

Tuesday, November 20, 2012

TERRORISM: CENTRAL ANTI-TERROR AGENCY

The lack of a central anti-terror agency is hitting some countries too hard

One still well remembers what happened in the Beslan school terror attack where more than a thousand students were made hostage by a Chechen rebel group, or the Moscow Theatre crisis where more than 700 hostages were taken by similar guerrillas. The special anti-terror force called OSNAZ of FSB, the Russian version of FBI, did what it had to do, without worrying about short-term implications [that is, they killed most of the rebels without negotiating]. Though it can be argued whether this was an intelligent move, the fact is, in cases of national security, individual states take second place.

Ireland, Switzerland, Norway, Sweden, Australia, Denmark and many others have wiped themselves clean of terror attacks. The case is surely ripe for setting up similar central agencies even in countries like India. So has India moved ahead? We hear they can’t even decide on a central active commander for their defence forces (who continues to be the non-executive titular head, the President), what to talk about their intelligence agencies. What’re they waiting for? We know the answer – Bruce ‘Die Hard’ Willis! He always ends up saving the world!


Source : IIPM Editorial, 2012.

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Monday, November 19, 2012

Yes, Dr. Singh! It’s a huge crisis that looms in front of us; yet, it’s an excellent opportunity to display great leadership and become a statesman!

 It seems that the ruling United Progressive Alliance (UPA) is all set to gift away a comfortable victory for the Bharatiya Janata Party and its allies in the forthcoming Union elections, with the latter doing nothing much to earn it. Looking at the way things are happening, it is as if history is repeating itself. It was not very long ago that onions had taken away the sheen of whatever good work that the then National Democratic Alliance had done. The electorate had then ruthlessly stripped them of their power, showcasing the crude fact that the Indian electorate posses extremely short memories, particularly when it comes to elections. And this time, no one else is realising it more than the ruling UPA. They realise that gone is the euphoria they created by gifting the huge Rs.60,000 crore loan waiver for farmers in this year’s annual budget, and that too barely two months ago. And gone along with it is the positive sentiment that was created by the increase in the non-taxable income from Rs.1 lakh to Rs.1.5 lakh. Also gone is the populist Sixth Pay Commission, which was clearly to woo the Indian middle class.

In less than a few weeks’ time, all that the UPA (and not just the Congress) had tried to prove – as being the representative of the aam aadmi – has been withered away by a phenomenon that is taking catastrophic proportions not just within the nation, but globally. The inflation figure, which is hovering at around 7.33%, has been giving sleepless nights to most governments across the world, including the UPA. In fact, UPA should remember quite well how, around a decade back, BJP had to pay dearly by getting routed in three state assembly elections, simply because the prices of onions had skyrocketed. And this time, it is not just onions; prices have shot up across each and every basic commodity, making things extremely difficult for the Congress. And out of nowhere, a disorganised opposition led by BJP, has found a major poll plank to avenge its earlier defeat. And if the UPA fails to reign in the prices, then it is needless to state that it would all be over for them, at least in the forthcoming elections.

It is a fact that other than certain climatic disruptions, most of this crisis has been primarily driven by the US, with their policy of diverting corn towards extraction of ethanol for bio-fuel being a major reason too! In addition to this, there has also been a sustained increase in the consumption of food in many of the developing countries, especially India and China! Moreover, China’s insatiable demand for steel and other basic commodities has anyways led to an increase in the general price index all across the world. But then, the simple fact that price rise is a global phenomenon, need not be excuse enough for not taking positive actions in India; on the contrary, this is an opportunity for India and its leaders to lead from the front and augment credibility not only for themselves, but for the nation as a whole. Not only that, if it were an Indian problem alone, one could still afford to be relatively complacent (as the world would always be there to help during a real crisis). But this time, it’s a global problem; and if we get into a crisis, there would be very less help coming our way, as all countries would be busy saving their own economies. So it becomes nothing less than imperative for the government to take urgent and proactive measures to solve this crisis.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.