Wednesday, December 12, 2012

GLOBAL CREDIT CRISIS: MAYHEM

The financial crisis brought the world to its feet!

Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, Merrill Lynch and American International Group (AIG), are all in a perilous state today. The Federal Reserve on its part has been adding every bit to the domino effect. Its loan of $114 billion to protect the creditors of Bear Stearns and the US Treasury’s backstopping of $5.2 trillion in Fannie Mae and Freddie Mac sent a wrong signal to the failing behemoths. Lehman Brothers, stating that it had debt of $613 billion (with an asset base was of $639 billion) opted for Chapter 11. Days later the Federal Reserve gave $85 billion loan to AIG for a 79.9% stake. Mark Zandi, Chief Economist, Moody’s Economy.com, avers, “The crisis began with sub-prime mortgage borrowers defaulting on their loans, driving many private lenders out of businesses and causing billions in losses for investors. A year later, the crisis has engulfed a growing number of prime borrowers as well, pushing them financial brink and costing investors billions more.” In hindsight a number of reasons can be attributed to the mayhem like lack of government regulation and poor judgment of credit-worthiness of borrowers et al. All-in-all though, this crisis shook all, across the world!


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

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Sunday, December 9, 2012

SCHOOLS: TEACHERS TRAINING

Would electric shocks be next?

The number of primary schools in India is around 650,000. Although in the 11th Five Year Plan, the government has decided to spend Rs.31,200 crores on various skill development programs across all primary and secondary teachers, it is still unclear how much money will be channelised for soft skill development. But still, seeing that the Central Government has been spending just around Rs 9 crores for various training purposes annually, the new figures is dramatically proactive and positive towards addressing the issue.

Human rights education in itself will be a key way of developing awareness of discrimination; it also could be conveniently integrated as a part of the current social studies curriculum. What remains unfulfilled is the setting up of a quasi-judicial national commission specifically for students that could address nationwide student complaints against teachers. Would the government act on this fast or would it wait till students start getting electric shocks?


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

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Friday, December 7, 2012

STEVEN PHILIP WARNER takes a closer look...

Do their M&A predictions really work? And is there some ‘secret learning’ even they know nothing about? STEVEN PHILIP WARNER takes a closer look...

research be damned!

We started with the yet to be published book titled, Winning in Turbulence, by Darrell Rigby of Bain & Company (thanks to Harvard Business Press). After statistically analysing more than 24,000 deals between 1996 and 2006, the book notes that, “acquisitions completed during and right after the last recession (2001–2002) generated almost triple the excess returns of acquisitions made during the preceding boom.” The book conclusively proves how those companies that are active dealmakers even during downturns, finally outperform those that are not, in the long run! Dr. Sotirios Paroutis, Asst. Prof. of Strategic Management, Warwick Business School, puts his thoughts in a few lines as, “Deals born in recession will be much more robustly constructed as reduced optimism should result in lower prices paid and more emphasis being placed upon certainty, scrutiny and cost-cutting efficiencies.” The ‘secret to success’ was revealed by Pankaj Karna, Partner & Head, M&A, Grant Thornton as, “To focus on strengths and core competencies and your target. Price of the deal is also important as typically deals during a downturn would be largely based on the fundamentals and with limited liquidity...” Well, strong words there, but they weren’t still enough to convince us. And who in the world will believe that deal making is sensible during downturns, especially when even shareholders have shed all optimism about stock-swaps?!

We took a first-hand look at numbers, and were completely taken aback by the difference in opinion... So what was our claim? That companies did not indulge in splurging cash for assets during recession? Well, here are some numbers that we analysed – if we told you that $1.25 trillion and $1.23 trillion are figures that represented deal totals during two equal time-periods, one of which was recession and the other one an upturn, which one would you associate with which cycle? Confusion prevails… but obviously, the higher investments should represent the crest of the macroeconomic wave, right?


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

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Thursday, December 6, 2012

Are you doing your ‘job’ well?

If you’re not the apple of your boss’s eye, don’t sulk! Ask the right questions, of yourself!

Chances are high, that, in this world of contradictions, you find a boss who’s not worthy of being a boss. Considering, www.badbossology.com is the very first search result of the keyword ‘bosses’ on Google, it is proof enough of the high incidence of this contradiction. So what should one do when the boss is somewhat like Dilbert’s pointy haired boss – ‘childish, immature, ignorant, and rude, yet also annoyingly cheerful and oblivious to his own actions?’ Quitting would be a bad option in these times of recession, but dealing with it certainly offers hope!

Such a challenging boss either doesn’t divide the work appropriately or favours certain employees (knowingly or unknowingly) or keeps developing new rules and policies for the employees or simply just doesn’t play fair. Though, earlier, such bosses were declared jerks outright, diplomatically speaking, they’re called bosses with low emotional intelligence.

Well, to deal with one of the most popular traits – favouritism – of such bosses, one needs to have three basic qualities; namely, patience, work ethic and a good sense of humour! The first thing is to be realistic; your boss is only human, so it is very normal for him to enjoy the company of some people better than others. If his preference is overtly visible, you can only forgive him for not being sharp enough. Of course, you must recognise if the favouritism is real or is just attachment with an employee due to longer association with him.


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

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Wednesday, December 5, 2012

Cinema on 18mm

Here’s a new avenue for individuals to unleash their creativity: Cell phone cinema!

Many people may argue that mobile phone radiation is harmful to one’s health. Some say it can damage one’s DNA; some put up videos on YouTube showing how it can cook an egg and even make popcorns! Worst of all, phones with cameras are often used by the disoriented and perverted minds to come up with scandalous MMS videos. However, Asian Academy of Film & Television (AAFT) has given mobile phone users a new direction, toward the art of movie making. So, as it goes ahead promoting this radiation-emitting monster, no one, as yet, is complaining. This year, on 21st January, 2009, it organised the 2nd International Film Festival of Cell Phone Cinema, which aims at providing a platform for creative individuals to create masterpieces by making use of this rapidly growing technology. Here, the competition was in the field of fiction/music videos, reality/electronic news gathering, and still images, wherein the participants are expected to use mobile phones only in order to take photographs, and videos are not to exceed the time limit of three minutes. The competition witnessed 500 entries from over 20 countries.

They were judged by a jury, which comprised a mix of Indian and international personalities such as Karl Bardosh, Master Professor, Tisch School of Arts, NYU and the pioneer of these awards; Kurt Inderbitzin, Hollywood Film producer/director; Rahul Rawail, film director; Pankaj Prashar, film director; and Arun Anand, still photographer. The winners for the video films were All Elements of Hand – Ek Kavita by Sachin Sreshta and Mukti Krishnan as well as Rainwaters by Sachit Sadanandan; which won US $1,000 and US $500 respectively.


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

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Monday, December 3, 2012

Your MNC, your cancer!

MNCs are hailed as national treasures in some countries; but their devil-may-care attitude results in many tragedies – both industrial and health – making them reasons for global shame

Globalisation is inevitable as we reside in a ‘global village’. And the entities which benefit the most, perhaps, out of this phenomenon are modern day centres of affluence and influence – MNCs. As they profit and in the process, enhance employment and production, what goes unnoticed is that their drive to profit, which leaves many in pain, is encouraged by their lack of concern and efforts towards safe working of their industrial units across the globe.

A McKinsey report has exemplified that the cumulative market value of top 10 Fortune 500 companies is equal to the combined GDP of India and Brazil or total forex reserve of six leading Gulf oil exporting countries in 2006; at the same time, the clearly irresponsible, greedy and biased business policies and activities of these MNCs – and we tread quite firm ground when we partake of such suppositions – without considering people, environment and legal aspects, have brought a quasi-apocalypse in the form of fatal industrial accidents, environmental hazards and pollution related health issues affecting millions in innumerable ways. If the Bhopal gas tragedy in 1984 (which we dare say has become a staid benchmark) can be considered the most horrifying industrial catastrophe in history, claiming between 3,000 and 20,000 lives, leaving thousands with serious diseases and injuries, what we consider worse is the knee jerk reaction of Dow Chemicals – the global giant providing innovative chemical, plastic and agricultural products and services and responsible for this industrial catastrophe – which publicly disowned its accountability. Consider the amount with which Dow tried to console affected families – a mere $300-$500.


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

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Sunday, December 2, 2012

Pride, prejudice & parachutes!

Despite the heroic 'parachute' attempt by the US government, Citi's landing seems hardly soft

Let us pay our humble tributes to all those unfortunate doomsayers (the list includes us too!) who doubted the optimistic presentation of Citigroup CEO Vikram Pandit on the announcement of Citigroups results for the quarter ending September 2008. His speech was peppered with innuendoes like "We are proud..." and "We are making excellent progress..." And our response to that, was a plain and simple "Bah!"

We admit, our game is up. Citigroup's latest bailout from the Fed is definite 'progress' and Citi deserves to take 'pride' in it too! US Treasury (which itself seems to be a likely bailout candidate as it tries to water down recessionary fires here and there with buckets of cash!), Federal Reserve and FDIC have agreed to a $326 billion bailout package for Citi Group. The Treasury will give $20 billion in loan and $306 billion as guarantee for Citi’s toxic assets. In return, Citigroup will issue $7 billion in preferred stock and warrants to the Treasury and FDIC for approximately 254 million common shares of the company at a strike price of $10.61. Besides, Citi has agreed to halt dividend payments for the next three years and agreed for scrutiny on executive compensation.

But are Citi's demons truly licked? A few days earlier, on November 18, 2008, Citigroup announced that it would cut down more than 50,000 of its jobs across the board. The biggest problem for Citi is its huge size which is based on ‘the diversification of financial services model’. In terms of revenue per employee, Citi registers some $488,000, after factoring the job cuts, way below Bank of America’s $568,000 and JP Morgan’s $644,000.


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

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Friday, November 30, 2012

100th year of Mills & Boon

The 100th year of Mills & Boon brings more spiced-up sweet nothings!

I was almost able to foretell the developments in the plot… the thoughts that would pace in the minds of the protagonists during their first meeting; I could anticipate a conflict and would also know when they would lock lips and make up.

This sense of predictability gradually made me drift away from M&Bs, which brings me to the question – do these novels only appeal to girls of a particular age group? “Well, there might be a possibility,” says Sakshi, who is 27 but still hasn’t shed the M&B fixation. “During my teens M&B was perpetually the topic of discussion. Although I graduated to other kinds of reading but I don’t think I can give up M&B. I still have a few of them by my bedside and I just don’t mind escaping from reality and visiting that dream world whenever I have the time.” And on enquiring about the reaction that she invites on revealing that she still is a die hard M&Bs fan, Sakshi concedes, “You know, there will always be those who would denigrate these novels and you would always get criticism from them. It’s true that M&Bs are popular only among a certain age group but I’m also sure that there will always be those who enjoy it, regardless of their age.”

On the completion of its 100th year, with its sales figures assuring the presence of plentiful readers, Mills & Boon promises to transform and bring to you more spice and sparks within those pages. So women, those intense intimate moments which would end with a sensual kiss and perhaps a little more, would now transcend to the next level… So, till you pick up the next series of the new Mills & Boon, let me just leave it for your imagination to take over!


Source : IIPM Editorial, 2012.

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Thursday, November 29, 2012

A piece on Israeli grandmothers!

And on why mothers and grandmothers of this great nation play a critical role in the Israeli-Russia spar

Since August 28, 2008, almost all western media in some or the other form, are criticising Russia’s decision of recognising the independence of Abkhazia and South Ossetia [once considered part of Georgian influence] by considering it Russian-occupied territories. Not only have both Fortune and Economist featured Russia’s growing influence on their cover stories in the last few weeks, even global leaders have suddenly started recognising that Russia still exists. In sarcastic criticism, US Secretary of State Condoleezza Rice expectably showed her support to Georgia and warned Russia, “In contrast to Georgia’s position, Russia’s international standing is worse now than at any time since 1991...” How interesting dear Ms.Rice that you use that year as an example, for we believe that for the first time since 1991, Russia is finally regaining its rightful position on the world platform. And please Ms.Rice, neither you nor your favourite ‘Kiss Army’, of whom you are a self-confessed die-hard fan, are even an iota interested in what happens in Georgia, are you ma’am?

But what we wish to impetuously implicate out here, and what has been missed out by a majority of media in the process has been the emergence of a strange spar between Israel and Russia over the Georgian war! Analysts and experts in both Israel and Russia are bombarding each other with anti-Russian and anti-Israel statements respectively. Even in the media, while on one hand, Israeli press is accusing Russia of increasing its arm trade with the Middle East, on the other hand, the Russian media is leaving no stone unturned to prove the presence of arms and Israeli training hubs in Georgian land. And now, gravely serious political leaders allege that Russia’s nuclear fuel supply to Iran’s Bushehr nuclear plant is an initiative against Israel and Georgia. The question is, why is Israel suddenly getting into the benign act of protecting Georgia?


Source : IIPM Editorial, 2012.

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Wednesday, November 28, 2012

General in the cop’s seat

Odierno needs to smartly balance policing with pacification

So the war that began on the pretext of denuclearising the Iraqi arsenal and dethroning a warmonger has now toned down to policing Al Qaeda. The recent change of guard in the coalition forces saw one learned General handing over the command to the other. With Saddam out of the picture and forces loyal to him either obliterated or incorporated into the Iraqi Army, General Raymond T. Odierno has responsibilities that befit a police chief. Analysts emphasise that as the Commanding General of Multi-National Force – Iraq (MNF-I), Odierno’s primary responsibility is to tackle Al Qaeda gangs.

“It’s Al Qaeda in Anbar province that Odierno will be dealing with,” affirmed Theodore Karasik, the director (research and development) at the Institute for Near East and Gulf Military Analysis (INEGMA), Dubai. Odierno lacks the brilliant academic credentials of General David Howell Petreaus but has a career replete with pragmatic accomplishments. As the commander of 4th Infantry Division, he quelled violence in the non-complying Sunni strongholds where Saddam drew his closest Baathist comrades from. His troops captured Saddam Hussein. He was called in to crush violence whenever and wherever it surged in the country.

Former ISI chief Assad Durrani had told this journalist earlier that Al Qaeda is an invisible force and is not tangible. If it’s a force, it’s a dreaded one. It has the shrewdness to elicit violent reprisals from the Shia community and maturity to understand that killing its own cadres only fulfills its objective. It has struck missiles in Iraq's neighbouring Hashemite Kingdom and has the potential to direct them to the richer Gulf Emirates.


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

The red letter day

Privatisation will benefit India Post and also uplift the rural economy

Change is the only thing constant in the world. Ironically though, we have a natural tendency to fear it. The same is true for India Post. Economic liberalisation and the resulting competition has blessed many industries by pummelling the domestic players into shape. However, India Post remains a stark exception to this trend, and there is no doubt that this anomaly has to change very soon. It has become imperative for Indian Post to exploit fully within its limited resources. We proceed to analyse how reforms in Indian Post can bring a paradigm shift in India. Consider this: India’s largest commercial bank, the State Bank of India (SBI) achieved a total turnover of approximately Rs.9 trillion (over $200 billion) with only 10,000 branches and the largest private commercial bank ICICI, with a mere 1308 branches, exceeded the total turnover of Rs.12.10 billion in 2007, whereas Indian Post, with over 1,55,000 branches, remains one of the biggest loss makers among state run giants. Instead of being a pride for the nation, it remains more of a predicament for the country.

The concept of postal services was posted in India as early as 1884, but even after over a century of trials and tribulations, Indian Post is still waiting to take off. Since its inception, Indian Post has launched a variety of services from mail handling to banking, insurance, small savings and remittances and has been of great service to the nation, but in none of these fields has it succeeded as expected. Instead, Indian Post is just another example of the stark failure of some of India’s legacy state-run corporations.

India Post comes under the Department of Post, which is a part of the Ministry of telecommunications and Information Technology. With the economic liberalisation, the Indian telecom sector, which also comes under the same umbrella (under the same Ministry), has seen robust growth thanks to privatisation, while India Post is yet to fire. Thus the IIPM Think Tank proposes that the government corporatise, deregulate, and bring more public-private partnerships into India Post to make it a success.


Source : IIPM Editorial, 2012.

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Sunday, November 25, 2012

Good business plan in India

B&E’s Savreen Gadhoke argues why manufacturing cars for the fairer sex does not make for a good business plan in India... [and the lady is serious!]
 
In India, still, experts comment and research agencies like HighBeam concur that at the lower level, women make up 10% of the total sales of even top mass market brands. Though India comprises a 200 million strong middle class, for whom a car is even now more of a luxury, which is bought after great discussions and compromises and generally driven by the man of the house, introducing a car exclusively for a woman belonging to this segment of society is just not a viable proposition.
 
Vivek Srivastava, Joint MD, Innocean Worldwide states, “Specific models being offered to the female buyers as a practice or an approach to market segmentation is not a wide-spread practice.” However, by mapping the needs of the middle class, manufacturers have launched 2-wheelers like Hero Honda Pleasure, TVS Scooty Pep, Kinetic Flyte, et al, which have been received well by females from this strata of the society and have performed well in tier-2 & tier-3 cities, mainly because of poor conditions of the public transport & low cost of ownership. Harshul Verma, Automobile Analyst, Khandwala Securities asserts, “Females generally prefer compact cars over bulky vehicles.” Would that make Tata’s Nano more a woman’s car than the people’s car? Comparing with the western world, in USA & UK, bulky vehicles like Volvo S40, Mazda 3 & Volkswagen Jetta are the first preferences of female drivers.

Indian automobile manufacturers are just not ready to take the risk of launching cars targeted exclusively at women. The foremost reason for this is that they do not wish to restrict their target audience. And as the well publicised Experian August 2008 research shows, men are better and more regular ‘re-buyers’ and repeat customers than women. Well, though my lady-like composure permits not, I have to accept, women are worse when it comes to the market place! 
 


Source : IIPM Editorial, 2012.

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Saturday, November 24, 2012

FANNIE MAE & FREDDIE MAC: CRISIS & RESCUE

...and teach all Fed officials to do just that. Your ‘proactive’ revival might just work for sometime, but it isn’t enough to clean-off the mortgage mess! Right, Henry?!

So how serious is this twin-corp (Fannie & Freddie) issue? Imagine this – the duo control over $5.2 trillion worth of the US’ mortgage market; a thundering 43.3% of the total pie! Imagine them crashing!!! The Q1 FY 2008 net loss for Fannie Mae and Freddie Mac, pegged at $4.3 billion & $151 million respectively. So what’s the credit influx needed? As per Lehman Brothers, Fannie needs $46 billion while Freddie needs $29 billion! The eroding residential mortgage quality, alarmingly high debt-equity ratio (as high as 75 times!) and investor panic, all indicate that this downturn is likely to be prolonged & severe; and that companies would have greater capital needs as Mark Zandi, Chief Economist, Moody’s asserts, “Fannie and Freddie require some support from the Federal Government to shore up their liquidity positions...” The Fed has consistently been ‘reactive’ in its response to earlier crises but plans to swallow the ‘proactive’ pill this time with Henry Paulson on-board the Fed as it Chief Treasurer. However, the Fed should look for a more mid-term policy rather than adopting short-term strategies, which would only double its deficit and cause a further collapse of the dollar. Sadly, this intervention will only postpone the bottoming of the housing downturn and delay recovery. Worst, there will have to be many more outflows from Fed’s pockets, and at regular intervals. Watch out for this space! 


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

Technopak Advisors Pvt. Ltd. writes...

Prashant Agarwal, Vice President, Technopak Advisors Pvt. Ltd. writes...

There is a need to create large capacities and invest big in this industry to be able to produce and achieve the targets set by Government and industry, if we don’t have capacities we can’t expect to achieve the targets. Big players in the industry have to invest in a big way to create capacities and then go to large scale acquisitions of brands and manufacturing capacities in innovative product and design in Europe or US. It is important that the players are present in a complete value chain to avoid huge price pressure of sudden change in raw material prices or other costs.

Buyers are looking to source from India in a big way with long term perspective but they don’t find the capacities to cater to their requirements. The mantra is to have a perfect balance between scale of operations and product differentiation. This will help cater to buyer’s requirements like quick turn around time, assistance in product development, better quality and most importantly a long term strategic relationship. The service levels have to increase to an extent that the buyers do not have option to go to other vendors. Business should be based on the long term factors like scale of operation, buyer satisfaction, product differentiation, R&D, innovation not on short term factors like variation in raw material prices, currency fluctuation and other input costs. To get ahead of the others, we need to define a clear mission and vision, create our own niche and product differentiation, work towards better operational efficiency and capacity utilisation, provide best customer service, look towards complete value chain and believe in our country’s competitiveness.


Source : IIPM Editorial, 2012.

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Barbie doll will love!

Presenting the new male every Barbie doll will love!

In general, one can expect to be ‘socially presentable’ in about 10 days. The bruises fade away in one to three weeks and the incisions in one or two months (but they are made in the natural creases of the face and may be indiscernible much sooner). Healing continues over the next 12 to 18 months.

Men are also frequenting hair salons instead of barber shops, going for face packs and other skin toning treatments, shopping at cosmetic counters, getting facials and using moisturizers and sunscreens. They are often seen around the spa’s and also using and hunting for new beauty and cosmetic treatments.

“Truly men these days have been hovering around cosmetic surgeons for surgeries. Earlier there were fewer men, but now with the changing world, men have become a lot more concerned about their looks. They mainly come for nose jobs, gynaecomastia (development of the breast in the male) or liposuction.” But here’s a word of caution, “People seeking surgeries should be realistic and not expect miracles. Some come up with vague ideas to change their appearance completely, which is difficult to accompolish,” says Dr D.V. Chibbar, Consultant in Plastic Surgery, Fortis Hospital, New Delhi.

Cosmetic surgery is purely aimed at enhancing the appearance of a normal body part for cosmetic reasons. The trend is booming alright, but the procedure could prove to be costly, both psychologically and socially.


Source : IIPM Editorial, 2012.

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