Wednesday, February 24, 2010

“Ours is a tough industry”

B&E: You’re celebrating 100 million subscribers. What’s the status quo?

SM: We’re currently in the 15th year of operation and although Airtel has managed to be profitable, we’re yet to be cash flow positive. We recently announced the maiden dividend of the company after 15 years. Our stakeholders were actually looking at waiting for another year for us to turn cash flow positive. However, due to the de-merger of our private company, we had the headroom this year and hence were able to announce a dividend. One has to remember that Airtel has invested Rs.700 billion in setting up hard infrastructure. Infrastructure alone takes Rs.200 billion per year. It should always be remembered that this is a tough industry and one needs to keep on investing. This way, profitability is always measured along with investments.

B&E: What then would be the future growth drivers for Airtel?

SM: Well, we’re hoping that 3G would be available soon, which will lead to better data services. Music-based services are already quite popular and we hope that their popularity will continue to increase in future.

B&E: Are you in the favour of auctioning of the spectrum, or should it be allocated on the basis of subscribers?

SM: Spectrum is an issue that concerns all mobile operators in the country. We’re absolutely aligned to the government process even if it is the auctioning of licenses. All we want is a stable regime with a single process. The practice of allocating licenses on the basis of number of subscribers is not followed anywhere else in the world. We already have the lowest spectrum than anyone else in the world and packing more and more customers is becoming increasingly difficult. We have two of the largest telecom companies of the world in India and they too would endorse this point that as we go further, it would be essential to have more spectrum. The government is currently talking of auctioning the licenses.
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Source : IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Monday, February 22, 2010

It’s how you look at it, finally

infosys has been definitely hit by the global slowdown, but it is also learning valuable lessons for its future, say virat bahri & arun roy of B&E

Endless sessions of yoga, meditation or spiritual advice would be all in vain. If you want long lasting success for your organization, worry, by all means. Worry, even if your doctor gets on your nerves! That’s not us, that was Andrew S. Grove, Senior Advisor Intel Corporation in his bestseller book on management and strategy – Only The Paranoid Survive. If you go by his logic, paranoia is a necessary trait for a leader; a trait which he must inculcate in his people too.

If we were to speculate on the name of the one Indian IT company where Andy Grove would feel quite well at home, we would suggest – Infosys. The company has traditionally been a believer in traits like conservativeness, ethics, succession planning, exceptional customer orientation, et al. And, although badly hit, they are fighting the recession better than their ilk.

September 15, 2008, the day Lehmann Brothers fell, Infosys realised some bitter truths. As Kris points out in an exclusive to B&E, “The first lesson we learned was that the world has become very unpredictable. The second was that when even large companies fail, you do become more paranoid.” According to him, speed is very critical now w.r.t. anything you do, so is the manner in which you manage risk.

Strategically, there was obviously little room for manoeuvre. And the biggest problem was that the failing of financial institutions was like a body blow for them, as that is their main bread and butter business. Within this backdrop, the company did credibly well by posting net profits of Rs.58.19 billion for the year ending March 2008-09, a stellar growth of 30.2%, with revenues at Rs.216.93 billion.
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Source : IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Wednesday, February 17, 2010

A good quality of life truly challenging

Medical facilities are another area of concern in an area so remote. NMDC has tried to ensure quality medical care to its employees. Combined together, the two hospitals in Bacheli (in collaboration with Apollo Hospitals of Hyderabad) and Kirandul have a total capacity of just 200 beds and 41 doctors, but the mass they cater to is much larger. The hospital in Bacheli alone has treated as many as 101,264 patients since the beginning of 2009. And this excludes the 5,000 odd patients that they have treated through their mobile hospital facility that started in June this year. But what is more intriguing about these hospitals is that they not only provide free treatment, medicines and food to NMDC employees, but also extend the same benefits to the tribal people of nearby villages. Even the mobile facility is entirely dedicated to villagers of the surrounding area who can not come to the hospitals. These hospitals do lack state-of-the-art facilities, but NMDC has ensured that they are prepared for any kind of emergency with a blood bank, semi-sophisticated ICU and modern equipment. Ravi Sekhar Rao, Chief Administrator of NMDC-Apollo Hospital in Bacheli explains, “We don’t have any good hospital in a radius of 400 kms. So, in case of emergency, patients either have to go to Raipur or Hyderabad. That’s why we always keep ourselves prepared with all necessary facilities.” Even though NMDC has ambulances to send patients to Raipur and Hyderabad if required, it is obviously a situation that they would dread; considering the distance.

Early next morning, while walking on the well cleaned up roads of the townships and enjoying the parks and the greenery, I come across an area with a number of demolished houses. When I ask the shop owner at the end of the colony, he tells me that the company got these houses demolished a few months ago. Later in the day, while talking to a newly employed executive trainee, I also come to know that demolition of these houses (and hiring of trainees recently) has now given rise to a housing crisis in these townships and many employees are at present accommodated on a sharing basis. However, while conversing with Rakesh Ranjan, Manager (Personnel) and Estate Officer, Kirandul, I get to know that it’s just a temporary phase. The 300-odd quarters demolished were all temporary old quarters and the company now intends to build new multi-storied houses to replace those. New constructions have already started, but our trainee friend complains that the process is quite slow.

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Source : IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Tuesday, February 16, 2010

“Managing the crisis”

By increasing CRR, the central bank has explicitly shifted its stance from “managing the crisis” to “managing the recovery” (as Subbarao puts it), but then at the same time one should not forget that amidst concerns about rising inflation, the recovery is yet to fully take hold. As such we shouldn’t be surprised if strong anti-inflationary measures, while addressing one problem, may aggravate another, particularly by deterring private investment and consumer spending. “A tightening of monetary policy when the economy is beginning to get out of its downturn and credit growth and investment demand are anaemic will surely have an adverse effect on investment demand even if banks maintain lending rates,” agrees Rajiv Kumar, Director & Chief Executive, ICRIER.

No doubt Subbarao’s worry is understandable as food prices are rising at their fastest pace in the last one decade. From a low of 1.2 per cent in March 2009 (in between it also turned negative in August due to the large statistical base effect), the wholesale price index (WPI) inflation has accelerated to 4.8 per cent in November 2009 and further to 7.3 per cent in December 2009. Even the consumer prices have been rising around 13 per cent from a year earlier for months. In fact, weekly WPI data on primary articles indicate that primary food articles prices have increased by 17.4 per cent (y-o-y) for the week ending on January 16, 2010. But then, one should know that the food inflation can’t be contained via CRR hike directly as it’s purely a supply side phenomenon (thanks to last year's drought and poorly managed distribution chains). Therefore, that makes RBI’s this fight against inflation a little different from the previous ones.

Further, the reversal of monetary accommodation cannot be effective unless the government reduces its fiscal deficit in order to make way for better credit growth and help RBI in the tightening process. In fact, the combined union and state deficit is projected to be around 10 per cent of GDP during this fiscal. However, if industry sources are to be believed then RBI doesn’t seem to get the much-needed support from the government on this front. As per them, the government is likely to bulk up expenditure in the national budget due this month, which means more money getting pumped into the economy in the form of infrastructure spending, food subsidies, et al. If these arguments are true, then the CRR hike, as several critics too believe, is only a political response to the expectation that RBI should do something, rather than a commitment on its part that there would be any real impact to this monetary stance.
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Source : IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Monday, February 15, 2010

Between a pocket-size princess and a fat-alicious diva

Size zero isn’t supposed to be ideal for everybody. While this may sound elementary, it is ironic that what the West is reminding us – of health at every size – is something that our culture acknowledged since ancient times. “Being healthy at every size is an age-old concept of Ayurveda, in which they have defined that there are three sizes, which they call the Vata, Pitta, and Kapha. At each size, it says, you can be healthy if you do such and such things,” informs Dr Shikha. One needn’t empty their pockets over diet foods or fret over their BMI (Body Mass Index). The latter more so because it is widely known to be flawed today, as the 150-year-old method disregards the muscle content of the body, and incorrectly labels healthy, well-muscled people as obese!

“Obesity is a symptom; it’s related to infertility, hormonal imbalances, diabetes, high cholesterol, heart attacks, arthritis, skin problems, emotional problems, osteoporosis, blood pressure, and even cancer,” explains Dr Shikha. Yo-yo dieting (people with frequent weight fluctuations) is as common as the common cold in the West, and people who’ve been there done that speak of how diets only caused them endless urges to binge. Meanwhile, a study by University of California showed that people who followed the HAES principles exhibited long-term behavioural changes and improvements in health over those who toed the line of traditional diet techniques

A few weeks ago people in the US were raging against Ralph Lauren for using images of models who had been photoshopped to unrealistic proportions. Meanwhile, plus-size models are gaining popularity on the catwalk and on magazine covers, especially after Lizzie Miller posed nude for a magazine (see lead pic) and her little belly roll was, to the shock of some and happiness of others, not airbrushed away. However, every person needs to understand that neither are frail, bony ladies healthy, nor are the excessively plump ones in the pink of health (Miller being in the middle – beautiful and real).

Fashion magazines these days are going overboard encouraging ladies to be proud of their fat. It is entirely up to every individual to make educated decisions about maintaining their health. Swinging from one extreme ideal to another, the world is clearly missing the point. A balance is what the world needs to seek out and if necessary, idolise. Whether you fit into small, medium or large clothes or into sizes 4, 10 or 14, you have every right to feel proud and confident of the shape you feel the fittest and most comfortable in.

A hundred years ago they loved women with curves. A hundred years from now, people might just look back at our times and our glorification of diminutive figures with the same horror we now perceive the Chinese custom of foot-binding, which plagued women in their pursuit of beauty for years.

Love yourself. Stop the violence.
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Source : IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Thursday, February 11, 2010

IPCC Chairman R. K. Pachauri’s credibility is under attack for glaring mistakes

When the western media broke the story of email leak of the data, did you try to brush things under the carpet?

I am not at all trying to brush anything under the carpet. And as far these allegations are concerned, I have already made my position very clear.

How is it possible that in the last two years, neither you nor IPCC did even bother to test the veracity and credibility of the report presented by Husnain?

Because it did not come to our attention. To be honest, few weeks ago when it came to our notice, we accepted our mistake. At the same time, it is not possible for me to go through each and every word of the fourth assessment report which is 3,000 pages long.

It is very difficult to carry out research project on glaciers. So, what will be the next deadline for complete melting of some another glacier?

You are right. It is unfortunate that in our country there is a dearth of experts on glaciology and we need to enhance our capability in this regard. Understanding glacial dynamics is very important for people.

You talked about ‘rational people’. But undoubtedly you have given an opportunity to climate sceptics to raise questions against global warming. What is your stand?

I do agree with you. But climate sceptics are looking at anything and everything by which they can demolish the facts of the climate change. Whenever new knowledge emerges, there is always a body of people which stands to fight it tooth and nail. Sceptics are very powerful and they have support all over the world. All I can say is that the world would ultimately realise the truth about climate change.

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Source : IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Friday, February 05, 2010

Intolerance & authoritarianism

Strange as it may sound, this is a trait that Marxists seem to share with Fascists. And like the Fascists, the Marxists have an uncanny way to ruthlessly weed out dissent and free speech even within their own ranks. Many of you know how Prakash Karat and comrades expelled fellow Marxist Somnath Chatterjee for behaving like the Speaker of the Lok Sabha and refusing to vote against the Manmohan Singh government. But much before Somnath Chatterjee became a victim of such classic Marxist intolerance, comrades like Jyoti Basu had set wonderful precedents. Senior Marxist leader Benoy Choudhury was ruthlessly sidelined during the hey days of Basu when he criticised the government for encouraging traders and businessmen at the expense of the poor. He died a forgotten man. Another Marxist leader and former MP Manoranjan Hazra had to leave the party after accusing fellow comrades of promoting “promoter Raj”. His daughter - despite several High Court orders - simply failed to get even a school teacher’s job in Basu’s Bengal. Some of you might have heard of Nripen Chakraborty, a Marxist who became the chief minister of Tripura. He was perpetually sidelined after publicly criticising Basu's policies.

If Basu and his acolytes could treat ‘family members’ so ruthlessly, imagine the fate of citizens and activists who were not Marxists. Police firings, custody deaths and ‘raids’ organised by party workers were actually the order of the day in Basu’s Bengal. One of the worst is the Marichjhapi massacre where more than 3,000 Dalit protestors were killed. It is only during the Singur and the Nandigram agitations that the sheer ruthlessness of the Marxists and their police machinery came to light and became the staple for media. But it was perfected during Basu’s regime when any villager daring to vote against the Marxists automatically became a target for the Marxist goons. That kind of authoritarianism is now coming back to haunt the successors of Basu. And ask yourself honestly: with so many grievances, injustices and inequity, will India survive if the State displays such authoritarianism?

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Source : IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Monday, February 01, 2010

Global leaders have somehow found it difficult to crack the indian market

The fact that TKM has also postponed its desired aim of the double-digit market share by 2015, which was earlier slated to be attained by 2010, clearly shows how the Indian market is still a tough nut to crack for the company. Hiroshi Nakagawa, MD, TKM admits, “Toyota has been very slow in its approach when it comes to operating in the Indian market.”

However, he points out that the scenario at TKM is in a lot better state as compared to the headquarters and with the launch of its small car by end 2010, the situation is most likely to change very soon. In short, Toyota is planning to play the volume game. But will it succeed?

Toyota aims to produce around 70,000 units for this small car initially from a new plant and this will be ramped up to 1,00,000 units by 2011, 1,50,000 by 2012 and 2,00,000 by 2013. The fact that the company is very bullish on its success in the Indian market is clear. It has kept its investments intact and is investing around Rs.32 billion in setting up its second manufacturing facility in Bangalore to roll out the small car. However, recent news reports claim that the company has cut down on the proposed investments by one-fourth and now the company will invest Rs.24 billion in the second plant, near its existing factory at Bidadi on the outskirts of Bangalore, and not Rs.32 billion as announced in November. The existing plant has the capacity to produce up to 80,000 vehicles every year so one can definitely expect that capacity may not be a constraint for the company going ahead.

The company also plans to ramp up its dealership by as high as 65% by 2010 to increase its interface with its consumers. At present, Toyota has around 90 dealerships across the country and has firmed up plans to enhance the figure to 150 outlets, of which about 60% are expected to come up in semi-urban and rural locations. Keeping in mind the rising demand from semi-urban and rural areas, the company plans to expand to smaller cities, namely Allahabad, Srinagar, Shillong, Belgaum, Ambala, Tirupati, Meerut and Patna, before the launch of its small car.

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Source : IIPM Editorial, 2009


An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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