Who let the street down?

As Yet another turbulent year draws to a close, it’s time to see who quashed investors’ hopes on the street. Though the second half of the year saw share prices of a number of top companies coming back on track, some stocks still remained painfully low. B&E finds out the top value destroyers for the year among the BSE 100 constituents

Slow demand hits all

IT giant Infosys topped the chart biggest wealth destroyers (in %). Affected by a slowdown in revenue from Western clients remained the biggest problem for the company. Between Jan 2, 2012 and December 15, 2012, it lost 15.91% of its m-cap. ONGC stood second with 15.66% reduction in its m-cap due to slow oil and natural gas discovery in the new fields and poor yield from existing assets. Two companies from Adani group made it to this not-to-be-proud list. Adani Enterprises suffered due to increasing international prices and a forced 7% promotor’s stake sale to meet compulsory share holding norms, while Adani Power faced issues due to low margins. GMR infrastructure suffered various bottlenecks including sectoral and its own internal issues.

Western disturbances hit Infy

In absolute terms, Infosys and ONGC lost market capitalization to the tune of Rs.178.94 billion and Rs.106.60 billion respectively between Jan 2, 2012 and December 15, 2012. Among others Bharti Airtel saw its m-cap coming down by Rs.39.42 billion due to lower user base and less than expected average revenue per user. However, it is expected that the capex made by the company may soon bring a change in its fortune in the next financial year and a good recovery is on cards for the telecom giant. Rising non-performing assets troubled Punjab National Bank to a great extent during the year. During the given period, the bank’s market capitalisation fell by Rs.3.38 billion.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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

ExecutiveMBA

Has Russia chosen the wrong guy once again?

With inflation cooling down to a post-Soviet record-low of 3.8% and real wage growth improving, some may wonder why is there an expectation of growing opposition to Putin during his upcoming Presidency? His reluctance to implement structural reforms coupled with his refusal to openly tackle rampant corruption in Russia could be contributing factors – but election fraud in the recent elections, surely not

Almost six months ago (on September 24, 2011), while addressing his party’s members at a congress, Russian President Dmitry Medvedev proposed that his predecessor, Vladimir Putin, should stand for the presidency in 2012. Clearly, this wasn’t a bombshell by any quarters; in fact, the announcement was quite expected. But that day, post the announcement, two things were more or less certain – Putin would win the elections and the opposition would protest the results. The definiteness in the above certainties was not because Putin was expected to win the March 2012 Presidential elections through fraudulent practices, but ironically because he was expected to win despite such practices. In other words, Putin’s popularity had held strong at such high levels over the past few years and especially as of recent times, that even international observers had expected quite a reduced form of ballot fraud.

It isn’t that Putin himself wasn’t aware of his massive popularity. His decision to allow the installation of more than 182,000 web cameras at 91,000 odd polling stations and admittance of thousands of independent, international election observers during the March 2012 elections should have convinced even critics that the man was changing. This is not to say that irregularities did not occur – a Chechnya polling station even documented a 107% voter turnout – but Putin’s final overall vote tally of about 64% matches closely with exit polls conducted by multiple agencies (like Public Opinion Foundation and All-Russian Public Opinion Research Centre) that forecasted that Putin would obtain around 58-59% of the polled votes. If at all Putin’s supporters abused the election process, to be fair, it couldn’t have mattered beyond a few handful of percentages in the final tally. And one really would be strongly given to believe that Putin would not have undertaken underhand election practices for such a puny advantage.

It’s abundantly clear that Russians en masse are supporting Putin’s candidature, more for the way he has stabilized the country from the pits it had reached in the 90s Yeltsin era, than for his dictatorial prances. Then why is there an expectation of growing angst in the upcoming Putin presidency? Like we said, election fraud surely can’t be the reason.

And even peddling Russia’s ‘impending economic downfall’ as the reason may, on the face of it, sound quite eccentric – while Russian real wage growth has returned to near double-digits (9% y-o-y in January 2012), inflationary pressures too have cooled down to a post-Soviet record-low of 3.8% in February. With 4.3% y-o-y increase in GDP in 2011, Russia’s economy has broadly even recovered from the global economic crisis. But a deeper look, and some questions around Russia’s remarkable growth, led clearly by ‘black gold’ (oil accounts for nearly 20% of Russia’s GDP, over 66% of its exports and 50% of its government revenues) surely start gaining locus standi.

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Source : IIPM Editorial, 2013.
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

BBA Management Education

Bid adieu to these 10 WMDs!

The only thing that can perhaps be worse than hiring the wrong employee is hiring the wrong leader. In this incisive analysis, Prof. Arindam Chaudhuri, Honorary Director, IIPM Think Tank and Prof. A. Sandeep, Group Editorial Director, Planman Media, identify 10 CEO traits that are an agglomeration of bad news for the companies that they lead.

It’s the position that makes the most bucks. But then, it is also the position where the buck stops rolling. The CEO is answerable to every stakeholder imaginable for the success or failure of any operation/division; be it marketing, HR, operations or finance. He takes decisions, sets the direction and sets the organisation up to execute on his strategy; and can be the critical difference between a company that ups the ante and one that falls of the cliff.

The traits that define a good CEO have been the subject of scrutiny and debate over several years, but it remains largely unresolved. That’s certainly bad news for corporate boards, who would want to go to any extent to ensure that they have the right man. Based on exhaustive research and industry interface over the years, we present an expansive primer of 10 typical traits of unsuccessful CEOs, which should act as red flags for any company.

#1 the best one-trick pony you met

To be true, multi-tasking is a way of life today, but one really wonders if it is the trait that should be associated with CEOs. If you look at expert analysis, CEOs looking to specialise in one area, with the belief that it leads to better efficiency and performance, need a very urgent reality check. Dr. Louis Csoka published a benchmark report titled ‘International Communications Research in December 2006, which proved that multi-taskers were not only more educated in comparison (78% more) but were also better paid (200% more!). It is also affirmed in a research by Dr. Levenson (University of Southern California), Dr. Gibbs (Chicago Graduate School of Business) and Professor Zoghi (Bureau of Labour Statistics) titled, ‘Why Are Jobs Designed The Way They Are?’, that in world leading organisations, ‘multi-tasking’ “leads to greater productivity” as compared to specialisation. One case in point is highlighted in the NHS Report from Institute for Innovation and Improvement, which wrote of Microsoft founder Bill Gates, “Gates is the original multi-tasking man...” In fact, Gates’ belief in multi-tasking is so supreme that “once, Gates hung a map of Africa in his garage, so he could have something to occupy his mind for the precious seconds spent turning on the engine of his Porsche.” In other words, there is a significantly high probability that single/limited tasking CEOs would easily find their way into the ignominious list of worst performing CEOs.

#2 let’s be history together!

Does your organisation revolve heavily around one power figure, with his immediate deputies leading the rest in following his cue blindly on every occasion? If that be the case, you must delink from this organisation at the earliest opportunity. The right CEO is one who identifies potential insiders and grooms them relentlessly into leadership positions, and keeps a list of potential successors ready. The wrong CEO, simply put, is one who does not do that. Global HR consultancy Heidrick & Struggles reveals an interesting research finding, which states that “merely announcing who your next CEO will be, can move the market value of your company by 5% or more!” Centre for Economics & Business Research also proved in its benchmark research of 350 FTSE firms in 2005 that firms with unplanned succession planning for CEOs underperformed their counterparts, who had proper succession planning in place.
 

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

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

ExecutiveMBA

“I want Chhattisgarh to scale new heights”

He claims that Chhattisgarh has been witnessing an unprecedented growth ever since he took over its reins in 2003. In this exclusive interaction with B&E’s Sray Agarwal, Chief Minister Raman Singh defends his claim apart from discussing what all is he doing to make Chhattisgarh the most developed state in India

B&E: It’s been over eight years since you took charge as Chief Minister of Chhattisgarh. How would you rate your governance when it comes to the economic development of the state?

Raman Singh (RS): There are certain norms to scale the growth of the state. You will be happy to know that we have been maintaining a double-digit growth rate for the last seven years. A remarkable growth rate was registered in FY2009-10. In that year, the Gross State Domestic Product Growth (GSDP) rate was 11.49%, which was the highest among all states. Even the average GSDP rate of the past seven years was around 11%. In FY2010-11, Chhattisgarh has again proved the strength of its vision, policies, programmes and schemes. Sustainable environment of development has increased the state’s GSDP rate in FY2010-11 over FY2009-10. In fact, as per a recently issued report, Chhattisgarh was among the three fastest growing states in the country – Bihar (14.79%), Tamil Nadu (11.74%) and Chhattisgarh (11.57%).

B&E: How is Chhattisgarh tackling the fiscal deficit?

RS: Initially, when the state came into being we faced the problem of fiscal deficit. But the whole scenario changed when I took over as Chief Minister. There has been a remarkable improvement in major financial indicators of the state. Our revenue deficit turned into revenue surplus. In compliance with the 12th Finance Commission recommendation, the state’s fiscal deficit has been within 3% of GSDP since FY2005-06. While plan expenditure has increased by around seven times, non-plan expenditure has risen less than three times. All targets mentioned in the FRBM Act have been achieved. In fact, Chhattisgarh has never resorted to ways and means advances (WMA) from RBI due to better financial management.

B&E: Chhattisgarh has been at the forefront when it comes to agriculture. How has it been possible?

RS: Right from the beginning we were clear that for the all-round development of Chhattisgarh condition of the farmers needs to be improved. We therefore took various practical measures to reduce the production cost. Firstly, we reduced the interest rate on farmers’ loan from 14-15% to just 1%. This automatically encouraged farmers to take loans. Earlier, farmers in the state used to avail loan worth Rs.100 crore in all. Now, our target is to distribute loan to the tune of Rs.1,700 crore. For the last 60 years, there were only 72,000 irrigation pump connections. Today the number has gone up to 2,90,000. In fact, we provide free electricity supply of 6,000 and 7,500 units for pumps up to 3 and 5 horsepower respectively. Farmers using these pumps are exempted from fix charges, meter rental and other fees. The paddy procurement at support price is also going on at large scale. Last year, we procured almost 60 lakh metric tonnes of paddy, and stood second in paddy procurement behind Punjab in the country.

B&E: About a decade ago, Chhattisgarh lacked quality roads and highways which are essential to development of any state. Even the power scenario wasn’t that good. What has your government done to improve the situation?

RS: Chhattisgarh has been a backward state for various historical and geographical reasons. We had crisis in electricity, road, drinking water, housing and other sectors. Breaking the deadlock of over two decades in the power sector, we established two thermal power plants of 500 MW capacity. Simultaneously, we decided to make Chhattisgarh a power hub. At the time of the state’s formation, the total power generation capacity was 1,360 MW, which went up to 1,925 MW by the end of 11th Five Year Plan. In fact, a couple of new power plants, with a collective capacity of 1,500 MW, are nearing completion. Moreover, some more power plants, having total capacity of 30,000 MW, would be installed during the 12th Five Year Plan. We have targeted to contribute more than 30% of the country’s total power generation by the end of the 12th Five Year Plan. The infrastructure is being developed accordingly for the distribution and transmission of the expected capacity of power generation. Through such initiatives, we have already become one of the few states in the country to have 24-hour power supply. Our per consumer electricity consumption has also gone up from 354 units to 1,547 units, which is the highest in the country. As far as roads are concerned, the situation is far better than what it was a decade ago. When the state was formed, the density of roads was 17.5 Kilometer per 100 sq. km., which has now increased to 21.40 km through various efforts. Apart from the general schemes, we have also launched special schemes for villages, which includes Chief Minister Gram Sadak Yojana for human habitats. This scheme does not come under the Pradhan Mantri Gram Sadak Yojana. About 4,100 km long roads have been proposed under this scheme an outlay of Rs.2,000 crore. We wish to touch the national average very soon in the area of road construction.

Read more......

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

 

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

ExecutiveMBA

Can India rise to the challen ge of its solar potenti al?

India’s National Solar Mission is helping create conditions for the rapid scale-up of solar capacity and technological innovation. But although it appears to be going great guns in some states like Rajasthan and Gujarat, it will need greater push and deployment across the country in order to meet its overall objective.

An hour’s drive from Amritsar, the border city between India and Pakistan, lies the small village of Awan. At first glance there is nothing that makes this village any different from the others in Punjab. But walk a little farther from the village and you come across the imposing gates of Azure Power Pvt. Ltd. This sprawling solar power plant is spread over almost 15 acres and its hundreds of installed solar panels feed the electricity needs of more than 20 neighbouring villages around. The plant produces 2 megawatts of electricity, which gets fed straightaway to the local grid and is then distributed to the villages all around. The chunk of land on which the plant sits has lost its fertility and has been obtained on a 20-year lease from the village panchayat. Besides paying the panchayat a one time fee for the land, Azure Power has also created a few employment opportunities in the village. In short, a win-win situation for all the stakeholders.

Another village also situated on the Indo-Pak boundry – Dhoodsar – in Jaisalmer district of Rajasthan plays host to one of the country’s biggest solar power generation plant. The 40-Mw photovoltaic plant, which spreads over an area of 140 hectares, is set up by Reliance Power Ltd. However, it is not the only attempt towards utilizing the immensely available solar energy in the state. There are projects worth about $19 billion to set up solar power generating capacity all around the country by the year 2020. The examples of Awan and Dhoodsar typify India’s growing strides in the field of solar energy generation. If one takes a closer look at the trends over the last 2-3 years, solar energy production has risen year on year. In the past two years, India’s solar power production has grown from 20 Mw to more than 1,000 Mw. Under the country’s ambitious solar program, the National Solar Mission (NSM) launched in January 2010, India has jumpstarted its solar energy industry, fostering growth in both photovoltaic (PV) projects and CSP, also known as solar thermal. Before the Mission began, CSP projects only provided 8.5 megawatts of energy. Two years later, the large-scale CSP projects now underway in India will provide a projected 500 Mw of clean, reliable energy under the NSM. Given the short time frame of the Mission, these numbers are impressive.

The objective of the Mission is to establish India as a global leader in solar energy, by creating the policy conditions for its diffusion across the country as quickly as possible and reduce the cost of solar energy. The Mission aims to install 20 million solar lights and 20 million square meters of solar thermal panel, generating 20,000 megawatts by 2022. With lots of untapped potential just around the corner, solar can contribute majorly to our energy security and power development. Consider the facts: The average intensity of solar radiation received over India is 200 Mw/km square (megawatt per kilometer square) with 250–325 sunny days in a year. India receives the solar energy equivalent of more than 5,000 trillion kWh/year. Depending on the location, the daily incidence ranges from 4 to 7 kWh/m2, with the hours of sunshine ranging from 2,300 to 3,200 per year. Recent research has shown that India has a vast potential for solar power generation since about 58% of the total land area (1.89 million km2) receives annual average global insolation (solar radiation) above 5 kWh/m2/day. The research adds that, given the present efficiency of 11 TW = 1012 watt or 1 trillion watt levels, 1% of land area is sufficient to meet the electricity needs of India till 2031, using current solar technology.
 

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Source : IIPM Editorial, 2013.
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

BBA Management Education

Iran's Electoral Strategy

It’s clear that Iran will not negotiate seriously on its nuclear program until it sees a convincing approach that addresses both Iran’s ambitions and Israel’s concerns

Negotiations over Iran’s nuclear program have again hit a wall, but the country’s Supreme Leader, Ayatollah Ali Khamenei, appears unconcerned. Indeed, Khamenei seems convinced that neither the United States nor Israel will attack its nuclear facilities – at least not before the US presidential election in November.

Ironically, while Khamenei is no fan of democracy, he relies on the fact that his principal enemies are bound by democratic constraints. Khamenei controls Iran’s nuclear program and its foreign policy, but the US and Israel must work to reach consensus not only within their respective political systems, but also with each other.

Iran’s leaders, who closely follow Israeli political debates, believe that Israel would not launch an assault on their nuclear facilities without America’s full cooperation, because unilateral action would jeopardize Israel’s relations with its most important strategic ally. Given that an Israeli offensive would need to be coordinated with the US, while an American assault would not require Israeli military support, Iran would consider both to be American attacks.

But Iran’s leaders remain skeptical of either scenario, despite America’s official position that “all options are on the table” to prevent Iran from developing nuclear weapons capability. So far, they simply do not feel enough pressure to consider a compromise. In fact, Iran’s leaders continue to deride Israel from afar, calling the country an “insult to humanity,” or a “tumor” in the region that must be eradicated.

Meanwhile, Iran’s citizens – including clergy in the holy city of Qom, near the Fordow nuclear facility – are deeply concerned about the consequences of an attack. Ayatollah Yousef Sanei, a former attorney general and a religious authority (marja’), has asked the government to refrain from provoking Israel.

Indeed, critics of the government believe that its incendiary rhetoric might lead to a devastating war. But, from the perspective of Iran’s leadership, the taunting has tactical value to the extent that it reinforces the view among the Israeli public that Iran is a dangerous enemy, willing to retaliate fiercely.

In fact, anti-Israel rhetoric reflects Iranian leaders’ confidence that Israel will not attack – a view that is bolstered by the situation in Syria. They are convinced that, even if Syrian President Bashar al-Assad’s regime falls, Iran will be able to destabilize the country in such a way that would pose a major security threat to Israel. According to this view, it is Israel that has an interest in refraining from further antagonizing Iran, not vice versa.

Recent editorials in Kayhan – the hard line Iranian newspaper that serves as a mouthpiece for the Supreme Leader – indicate that Khamenei is looking forward to the US presidential election. Regardless of the outcome, he foresees no threat of military action, at least through next year. A victory by Obama would reinforce America’s unwillingness to attack Iran and renewed efforts to rein in Israel. And, if Republican challenger Mitt Romney is elected, he will need months to form his national security team and assemble his cabinet, leaving him unable to attack Iran immediately.

That said, since the Islamic Republic’s emergence in 1979, Iran’s leaders have generally preferred Republican presidents to Democrats: despite their harsh rhetoric, Republicans have been more willing to engage with Iran in practice. Indeed, given that Iran has so far survived severe international sanctions, its leaders believe that they could get an offer from the US after the election – particularly if Romney wins – that recognizes their right to enrich uranium.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

 

For More IIPM Info, Visit below mentioned IIPM articles

IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face

BBA Institute

“You cannot start suddenly if you are not ready”

Dr. Gopichand Katragadda, MD, GE India Technology Center, believes that companies have to be far more patient with reverse innovation opportunities

B&E: GE has been a pioneer in applying a reverse innovation philosophy. How does GE prioritise vis-a-vis reverse innovation and glocalisation?
Dr. Gopichand Katragadda (GK): The progress of technology is great, and you need to leverage what has happened. There is no point in inventing everything. So I think this is where we falter in a big way. We talk of indigenisation, and we study for 30 years trying to catch up with where other countries have taken off. By the time you are there, other countries are 70 years ahead, because that is the pace of innovation. So you need to leverage what is already there and then move forward from there. For instance, a gas turbine is the same gas turbine and an aircraft engine is the same air-craft engine, whether it is designed for the western market or the Indian market. So why do I need to develop a new aircraft engine for Air India, or for any other airline? There is no unique need that is driving that. On the other hand, in the field of healthcare, TB is a need that only India can articulate the best, because we have an unresolved issue there. So who else should solve the problem other than those who are here on the ground? So let’s not worry about the aircraft problem and let’s solve the TB problem, where there is no solution in sight so far.

B&E: Could you elaborate on some more areas where the Indian market needs new solutions?
GK: Since we were discussing health-care, I’ll continue on that. I talked about TB. The information systems in India are not so robust. So when it comes to my insurance, I can’t go from one place to another, just quote a number and be set. So I should be able to carry a smart card that contains all my medical information and doctor’s advice. It’s a unique need that offers a lot of opportunities. When it comes to ultrasound, you cannot do a sex determination for the baby in India. But if you are doing an examination and you are smart enough, you can make a guess at some stage of the pregnancy. How do you mask the sex of the baby while providing all the clinical information for the doctor, is another unique area in India. Diabetes and cardio-vascular diseases might be there elsewhere, but we have a higher incidence of them. So talking about and working on obesity, these are some of the areas that India needs to work more on as we have a higher incidence of these diseases at a younger age. When you have a life span exceeding 80 years in US, it is unfair to compare that cardio vascular disease ratio with ours, because we are getting these diseases at the age of 50 or so and it is constantly moving down.

Read more....

Source : IIPM Editorial, 2013.
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

BBA Management Education