Friday, November 30, 2012

ASSEMBLY ELECTIONS: INSIDE CONFLICTS

For the upcoming assembly elections, parties face a tough time

That’s why BJP has already announced Prof. Vijay Kumar Malhotra as their candidate for CM. On the third side, BSP supremo, Mayawati has made Brahm Singh Bidhuri as the new state president and has entrusted the responsibilty of make election strategies on the shoulders of Nasimuddin Siddiqui.

Every leader wants more and more of his people to get tickets. And for the same all parties are facing trouble. They have to face opposition as well as unhappy people within the party. It makes them weak and that’s what is happening now. If candidates are selected on the basis of ability and performance, many names would get cut. A dilemma each party faces.


Source : IIPM Editorial, 2012.

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Wednesday, November 28, 2012

‘C’alumnious ‘S’currilous ‘R’apscallions

Are Corporate Social Responsibility acts really the way corporates portray it? Not really! A. SANDEEP, EDITOR, B&E does a reality check...

Oh yes, even I didn’t understand these words when I read them the first time? That’s the problem with many CEOs. They don’t understand many such words that start with C.S.R, or at least feign incredibly well not to. The protagonist of my editorial is clearly ‘Corporate Social Responsibility’... It was during the late 1990s that this concept of CSR started attaining prevalence within communities, spawning sporadic regulators who kept cribbing about the lusty profits being earned by the so-called “selfish” corporations, and advocating a dire need for society to “reign in” these “money making monsters.” Sadly, CSR is just a clever term that has been used by many CEOs and governments to mask their own under-performance, and worse, to ludicrously waste shareholders’ wealth – for the truth is that CSR should never be undertaken by firms sincere about their commitment to society! In a comprehensively researched paper sponsored by Oracle in 2005, the statement by David Gerald, founder of Securities Investors’ Association (globally one of the top agencies set up in fact to protect corporate governance), dramatically revealed the frittering away of precious shareholders’ wealth by international corporations, “(Company) boards should be given no mandate to give to charities.

If they want to do that... then they should put it to a shareholder vote.” Year 2005 reports by Fortune (of more than a hundred Fortune 1000 companies) and Economist Intelligence Unit (of more than 200 companies’ executives and investors, including in India) killingly revealed the pathetic double speak by global CEOs. While Fortune showed how 91% of surveyed CEOs regurgitated the ostensible statement that “CSR management creates shareholder value,” the Economist report correctly proved how, in reality, only a laughable 2% of investors globally said they’ll invest in companies undertaking CSR. The report also showed how one of the top two reasons for CEOs to undertake ‘corporate responsibility’ was, hold your breath, corporate scandals. Hilariously, “society” as a factor for undertaking CSR did not even find a mention in this list. Oh yes, NGOs did find a thoroughly insignificant mention in the list of who all are considered a firm’s “most important stakeholder”; they were ranked second from bottom (with the coveted last rank going to ‘none of the above’).


Source : IIPM Editorial, 2012.

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Tuesday, November 27, 2012

On the highway to perdition...

Allowing insurance companies to park investors’ money in VC funds will jeopardise their future

A healthy tan is the first sign of skin cancer. Who so ever has said this must have an experience of the sort. However, the brains at Insurance Regulatory and Development Authority (IRDA) are yet to realise the fact. But, never mind, very soon they are going to get their share of experience. Without any doubt (which will be horrifying) not only for IRDA and insurance companies, but also for the poor investors, who knock doors of the insurers to safeguard their future. And, interestingly, all these will happen only because of the desire to earn a little more.

As per the fresh investment guidelines announced by the insurance regulator, life insurance companies are now allowed to invest in Venture Capital (VC) Funds. IRDA has allowed life insurers to invest 3% of their total investible corpus or 10% of the total size of the fund, whichever is lower, in VC funds. For general insurers, the limit is 5% of their investment assets or 10% of the fund size, whichever is lower, thus providing the insurers another asset class to invest. Prashant Sharma, Vice President - Investments, Max New York Life Insurance avers, “This is a high risk; high reward asset class and the policyholders who have the risk appetite can opt for it.” But don’t you think this is going to jeopardise the safety of investors’ money? Certainly, this has left many in dilemma about the feasibility of such investments.


Source : IIPM Editorial, 2012.

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The Pampas are drying again!

With bond buyback Argentina raises fears of another economic collapse

Dry winds are all over the Pampas once again! And interestingly it’s the same that swept away most of it in 2001. Remember the $95 billion default (largest by any country) by the Argentinean government on its bonds that led to the devastating financial collapse! The reminiscences of it still sends shivers down the spines of many! Well, the same doubts are growing over Argentina’s creditworthiness, yet again!

Though the Argentinean government is already into its third week of a debt buyback programme (has bought back $430 million worth of its 2008 and 2009 bonds) to bolster investor confidence, but it hasn’t been of much help. “Bond buyback by government has boosted some investors’ confidence. But still a lot more needs to be done to restore Argentina’s lost credibility,” P. B. Henry, Professor at Stanford University and an expert of Argentinean issues tells B&E. Certainly at 50% (an estimated $140 billion) of GDP (market exchange rate), Argentina’s public debt is still large.


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

TERRORISM: BIOLOGICAL WEAPONRY

Bio-terrorism adds to the global fear of organised terrorist attacks

But then, all that is, as they say, officially. It is well documented that Iraq was alleged to have conducted R&D to develop bio-weapons in the 80s, which – at a secondary level to WMDs – ultimately led to the Gulf war. In 1984, members of a quasi-religious sect of a spiritualist leader called Rajneesh were accused of using salmonella on local people in New Oregan to win a local election, which resulted in over 751 people falling sick. 1995 saw Aleph, a small terror group using Sarin gas in Japan, which killed twelve and injured over 5,000 people. In 2001, the US was frightened sick with several Anthrax attacks on US citizens.

Bioterrorism is becoming easier as agents are much easier to make. Any trained biologist can engineer it with comparatively lesser cash, but remain equally lethal. Only the US has been able to fight back bio-terrorism with strong regulation and with its capability to produce vaccines. Most of the remaining countries remain vulnerable to it. As the threat from terrorism is increasing, so is the same from bio-terrorism.


Source : IIPM Editorial, 2012.

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Friday, November 23, 2012

Stoned over sex

Gay pride surfaces on the streets of India and around the world...

“We are humans and are born like everyone else, but have feelings contrary to what is acceptable to the society. I am a guy and I love a guy, which means that people hate me and consider me to be different and weaker than others,” says Mayank, a front runner at the gay parade held in Delhi. On 29th June, 2008, Delhi, Kolkata and Bangalore played hosts to India’s first gay pride parades that drew a huge number of people. Holding placards with slogans like, ‘As good as you’, ‘Hindu-Muslim, Sikh-Isai, hetro-homo bhai bhai,’ the gathering marched peacefully through the streets, and was successful in making the Indian gays, bisexuals and transgenders surface and express their individuality.

Commemorating the Stonewall riots of 1969, which occurred in New York and kick-started the modern gay rights movement, homosexuals around the world came out on the roads holding high their rainbow-coloured flags. Like every year, parades were held in several countries and like India, Bulgaria and Czech Republic too held these parades for the first time ever. Though unlike India, those who assembled at Sofia and Brno were given a rather hostile reception. In Bulgaria; stones and gas-bombs were thrown at people attending the parade, while in Brno, right-wing extremists attacked the people with tear gas even before the march began! “I feel sorry to hear of such incidents where people do not respect people and cannot give heed to others’ feelings. I feel sorry for people who cannot accept us. At times we feel that we do not wish to be a part of this heartless society,” reacts Sachin, who had also participated at the parade.

“Hum honge kamyab ek din...” was the song on the lips of the people at the parade, and it showed the high spirits and firm belief of the activists that they would get their rights. All they want is that they should be recognised as a part of the society and people should not hurt their sentiments by mocking at them.


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

Mom, can I have a ministry too?

Is portfolio shuffling a born trait or can it be learnt? B&E’s deep review

A few months ago, a research done by the most prestigious Yale University revealed that Indian politicians are extraordinarily intelligent. Well, we should mention they prove to be equally intelligent as ‘fund’ (or should we say, ‘post’) managers to have learnt how to arrange ministerial portfolios to minimise political risk.

Some months ago, when UPA coalition partner, DMK leader Karunanidhi, called back Minister of Communications and IT, Dayanidhi Maran, who was replaced by another party loyalist and Environment Minister A. Raja without any stated specific reasons, even the Prime Minister had no say on it. And Minister of State for Home, S.Rogupathy, another loyal DMK leader, was brought to the Environment Ministry. Similarly, in the era of the NDA government, Suresh Prabhu, who was the then Power Minister, was also forced to leave the Ministry and was replaced by another party leader Anant Geete, a protege of Shiv Sena Chief Raj Thakeray.


Source : IIPM Editorial, 2012.

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Wednesday, November 21, 2012

Not at war?!?!

Unbelievably, Balkans improve...

After the break-up from Yugoslavia, the decade long internal disturbance seems to have settled down. Recently, a UN report on ‘Crime and its Impact on the Balkans’ concluded most positively that the Balkans have become a low-crime region and also are gradually trying to get into the league of some of the world’s most peaceful places. Nevertheless, the report further also warns that politics and organised crime will continue to hamper the region’s path to stability. Crimes like smuggling of drugs, guns and human trafficking is quite rampant. Over 100 tonnes of heroine are traded each year. Creditably, local murder rates fell by almost 50% in the last eight years [from 2,185 to 1,130].

The report further compares Romania with Switzerland in terms of safety and proves that the number of prisoners has gone down dramatically.

Human Rights Watch has also encouraged a country like Kosovo to cooperate with the EU to deploy a sensible rule-of-law mission, which may eventually reform the criminal justice system of the country.


Source : IIPM Editorial, 2012.

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Tuesday, November 20, 2012

INVESTORS: TRUST

Losing faith in Indian market

India is also the only one among the BRIC nation’s where economic growth is forecasted to slow down again in 2008. Analysts estimate 2008 earnings to be lowest among the BRIC. Even the industrial output growth slowed to a 6-year low and thus further lowered the trust of foreign investors.

The ray of hope among these dark clouds is the latest Business Week report. In its ranking of 50 most innovative companies, two large India-based conglomerates (Tata & Reliance) figure prominently on the list. Moreover, no other BRIC country had even one entry into the Top 50 list. This should encourage India polity to pay heed to investment related issues and boost industrial growth or will it?


Source : IIPM Editorial, 2012.

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Monday, November 19, 2012

Maximum m-cap for shareholders!

Which companies eroded the maximum m-cap for shareholders! B&E’s Gyanendra Kashyap investigates...

IT companies, which contribute to around 11.2% of the Sensex profits, were the worst hit. The BSE IT index has gone down a massive 24% (yoy). Ironically, the quarterly results of these companies have been better than the market expectations but not delightful enough to restore the much needed investor confidence. For the last couple of months, the direct correlation between the BSE index and the rupee-dollar rate is all the more visible.

Allow us to show you the chain reaction: the weakened dollar caused the decline in the top line growth, pressurised the bottom-line thus leading to a fall in the stock prices thereby the market capitalisation too. But there’s another side to it too. “In order to hedge their open position, the export oriented sectors [including IT] hedged themselves to forex derivatives and suffered losses there too,” opines R. K. Gupta, MD, Taurus MF.

The free fall of the Sensex in the last quarter of the financial year (post 18th January 2008, after having touched the 21K mark on 10th January 2008) further dampened the market dynamics. It is an irony that FIIs, who were net purchasers to the tune of $17 billion till the end of 2007 have become net sellers to the tune of $2.62 billions till date, (it is no wonder that during the free fall in the month of January, the FIIs were net sellers to the tune of $3.18 billion). The market has corrected by approximately 23% in Q4 and the earnings, though on a positive note, have been below expectations. In the same quarter, the Indian market has underperformed most global markets by a significant margin. The BSE delivered returns of 19.7% and at the same time, 8 out of 30 stocks delivered negative returns; pharma behemoth Cipla had a negative return of 6.8%, while IT giant TCS topped the list with a negative return of 34.1%. Auto majors Tata Motors and M&M posted negative returns of 14.3% and 10.8% respectively. India perhaps is the only country where stock falls never result in CEO kickouts. Will it change in this coming year? We’re rolling on the floor laughing at our own question... We’re sure you’re too!


Source : IIPM Editorial, 2012.

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Thursday, November 15, 2012

Burning the midnight oil

MNCs are lining up procurement plans, but only an aggressive retail strategy will enable them to make inroads

This genre of oil draws quite a few parallels with crude oil currently, only, it is of the edible kind. For one, it is becoming a critical component of the Indian economic scenario, with projections of the sector reaching a phenomenal annual turnover of Rs.980 billion in 2015. And then, just like crude oil, India faces a critical problem of rising prices and demand-supply gap currently. Demand is increasing at 20% per annum (as per All India Food Processors’ Association). Part of the problem is that around 45% of edible oil is being imported. In response, the Government has imposed a ban on export of edible oil till March 16, 2009. “We must meet the demand of the country first and at present, edible oil has a big market in our country,” feels Subodh Kant Sahai, Minister for Food Processing Industries.

Considering that the Indian domestic market is teeming with potential, there are clearly visible trends showing an optimistic response by companies within and beyond our borders. The $88 billion Cargill from the country of Uncle Sam seems to be bent on living up to benchmarks in India too. “We will be venturing into new segments and we will be leveraging a lot of our global strength, which has enabled us to create an edge,” reveals Siraj A. Chaudhry, ceo, Refined Oils India, Cargill. Leveraging its global strength and bucked up by its phenomenal set up, which includes three state-of-the-art refineries; Cargill, with its brand Nature Fresh, is on a spree to double its turnover in the edible oil market. And the group believes that to cash in on India, it becomes necessary to bank on its global outsourcing model, like 50-60% of raw material is outsourced by Cargill from their parent company, which has enabled them to produce at a very low cost. With the Government not imposing any restrictions on import of raw material, players from usa, like Cargill & Agro Tech (of Sundrop fame) are scouting for raw material outsourcing destinations in places like Indonesia and Myanmar.


Source : IIPM Editorial, 2012.

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Saturday, November 10, 2012

The silence of the lambs...

While the West is both excited and paranoid about India’s potential, the average Indian is still not empowered as the polity continues to wither India’s intrinsic potential...
 
As the first decade of the twenty-first millennium is nearing end, it’s time to take stock of a nation which in less than one and a half decade has travelled a long distance from the verge of bankruptcy, to be among the most promising economies of the world. Probably no other country has travelled such a long distance in such a short period. In less than two decades’ time, the perception of many of the First World countries about India have changed from pity for a starving Third World struggling nation to respect and awe for one of the fastest growing economic and military powerhouses who has an insatiable appetite for energy and cross border acquisitions. Probably it doesn’t take much time perhaps for perceptions to change.

Very few sitting in India would not hold countries like France in awe. And even fewer sitting in this part of the world would believe if one is to say that an average Frenchman or a British is today as much paranoid about the increasing clout of the Indian economy and Indian Inc as outsourcing to India is becoming a key issue in the US presidential elections. Out on a casual walk on the streets of Paris, chances are high that an average Indian would first of all be asked if he is a Pakistani or a Bangladeshi. Even before the shock and the sheer disgust of being equalled with a Pakistani or a Bangladeshi overwhelms one, the realisation dawns that however much India might go ahead in the race, racially the Indians, Pakistanis and Bangladeshis would still be the same for an average European. So when one visits those places, quite often one has to take the pain of explaining that ‘we are Indians and not Pakistanis.’ Prompt would come the reply, ‘What are you doing here then? There’s so much happening in your own country!!’ If your are on an educational trip, the sarcastic smile would be complimented with a shocking reply, ‘Thank God you are not here for a job’ or ‘What is there to learn from France or Europe? Don’t you see how they are busy splitting it all up in the name of unity?


Source : IIPM Editorial, 2012.

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Friday, November 09, 2012

BUDGET: PERFORMANCE-BASED BUDGETING

Budget process governed by 3Es - economy, efficiency & effectiveness

The world’s most successful countries like Australia, New Zealand, Singapore, Malaysia, UK, France, US, Canada etc. use quality/efficiency/effectiveness indicators to prepare government budgets. Most importantly, international institutions like the World Bank and IMF provide technical and training support to countries that want to adopt performance budgeting. For India, the largest democratic nation, it is high time we incorporate such a model. India then can aptly compare itself globally with key indicators, the way most developed countries have done so. Setting key social, economical and political achievements, it can frame strategies at a micro-level to attain them. In the present conventional budget, where there is no link between budget appropriations and outputs delivered, India can identify its desired outcome by preparing appropriate approaches incorporating a path to progress towards the budget.


Source : IIPM Editorial, 2012.

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Thursday, November 08, 2012

Indians than a mere price leader

With a unique convergence strategy, RCOM now means much more to Indians than a mere price leader. By shashank shekhar

Over due course of time, RCOM has successfully tried out innovative services and to say that it is amongst the world’s foremost VAS providers and that too, to over 10 million subscribers won’t require much authentication. “The number of games downloads that we do everyday creates history on a daily basis,” puts in Durbha. Amongst other models, to penetrate into a larger market, Reliance has introduced a unique concept of sachetisation of game downloads, which Durbha calls as its second innovation, the first being introducing multi-player games on handsets. “We’ve introduced sachetisation as we’re very clear of the fact that in a market that is essentially pre-paid, people would not prefer downloading games for Rs.50.” And thus emerged the concept of “pay per play” that is usually about 2-3 rupees. On the content end, the company has encouraged a large amount of content development on mobile, since RCOM initiated its own Reliance Developer program on the lines of Microsoft. Social networking, the latest from the RCOM stable is creating waves too. Already, networking website Big Adda has been a phenomenon with some 1.5 million users within 6 months of inception.

Another point of focus in RCom’s agenda is to provide more regional content in its offerings. “The more local content you give, the more people will consume,” is the mantra on VAS. While at present, entertainment runs through its very veins, the shift towards utility services in near future is seen as a potential driver for growth. “We’ve gone wide. Now we need to grow deeper,” adds Durbha. Indeed, usage has only gone up with increasing regional content, as people are more comfortable in their native language, especially in case of voice based services.


Source : IIPM Editorial, 2012.

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Wednesday, November 07, 2012

De(education)

Lack of fund may raze MDGs

When the UN came out with Millennium Development Goals in 2000; with universal primary schooling for all boys and girls, as one of its goals, alongwith seven other similar goals, UN members and leading institutions which participated, were over-excited and over-confident over accomplishing it. But at halfway of 2015 deadline, when poor countries are in need of additional $11 billion for spreading education, major developed powers are lackadaisical.

‘Education for all’ is one of the imperative goals to uplift a vast section of global society. Poor school children, specially those who don’t go to schools, are used as low-paid labourers in hazardous occupations, vulnerable to trafficking and often sexually harassed just like oppressed women. On the urge of the World Bank, many underdeveloped countries like Ghana and Kenya have devoted 10% of their national budget for education. Countries like Norway, Sweden & Netherlands are generous to the mission but the US and Japan, like many others are reluctant and stingiest for it. A meeting in Dakar, Senegal, recently, is a pointer towards North’s denial to fund South further.


Source : IIPM Editorial, 2012. An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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Who will witness s(elections)?

World may not witness a major transformation in 2008

Election has always been crucial for the future of any nation. Though 2008 is a crucial year because there is election in most of world powers or dominating countries but estimations show that there will hardly be any major change in their leadership. Ramifications of elections in major countries may remain skeptic and theatrics.

Inspite of much hue and cry, election in the US will be worth watching closely. The US election seems to be more of a race between many bright leaders than two political parties. And in rest of the countries, it will be selection, rather than election. Russia, Zimbabwe, Cuba are also going to have presidential elections in 2008. Putin might replace himself with a new face but leadership will remain with him. Castro is thinking of retirement but he or his legacy will remain to dictate Cuba’s destiny.


Source : IIPM Editorial, 2012.

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