IIPM - MEDIA: March 2013

Thursday, March 28, 2013

B&E Indicators

Global M&As on the rise

Global M&A deals in 2010 closed at $2.4 trillion, a 23% increase from 2009 after 2 consecutive years of 31% decline. Deal volume also increased, but only by 3%, suggesting that bigger deals were being concluded. Asia Pacific deal value jumped 31%, reflecting global interest in the fastest growing region in the world. In fact, Q4 2010, with $202 billion in announced deals, set a new record as the busiest quarter based on deal value.

A boom in Asia Pacific deals

Asia Pacific M&A deals (by target nations) closed 2010 at $574 billion. They grew by 33%, faster than the rest of the world and accounted for 23% of global M&A deals, up from 22% a year ago. Though Asia Pacific deal volume fell 1% y-o-y to 12,777 deals, the average deal size increased 33% y-o-y. Not surprisingly, China once again led Asia Pacific M&A with announced deal value of $135 billion, followed by Australia and Japan.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Tuesday, March 26, 2013

Steve, You just went too Soft there!

Ever since it began, Microsoft was Globally hailed for its Innovations, and even feared, Hated & Fined for its Anti-Competitive practices. But especially since Steve Ballmer took The Helm, Microsoft has only Moved Downhill, becoming a Pale shadow of its former self

Two childhood friends Bill Gates and Paul Allen, who had a strong passion for computer programming, started a company in 1975, which preliminarily developed interpreters for microcomputers. Since then, Microsoft has been the temple of innovation and a clear market leader under the leadership of Bill Gates. Great empires are built on foundations laid by great visionaries, and it is undeniable that Bill Gates and Microsoft were right up there among the harbingers of the software industry as we know it today. The magnitude of their contribution can be gauged from the fact that global IT spending touched $1.5 trillion in 2010 according to IDC.

But the true test of visionaries is the ability to create empires that last beyond them. In 2008, Bill Gates had declared, “We have achieved the ideal of what Microsoft wanted to become.” By this statement of Bill Gates, who stepped down as Microsoft CEO in 2000 (and Steve Ballmer took over) and as executive Chairman in 2006, one would like to believe that he crossed that rubicon as well. But is Bill’s statement a statement of achievement, or still one of wishful thinking? Well, they do say that time will tell. And to be frank, it has been doing so for quite a while, though we do not believe that Bill would exactly like to hear its verdict so far! To understand that, we need to look at what transpired since the time Gates stepped down and Ballmer stepped in.

It took Steve Ballmer 20 long years to become the top man at Microsoft, ever since he dropped out from Harvard to join the company. Incidentally, even his joining heralded a turning point of the IT industry with the dot com bubble bust, and ironically, the relations between Steve and Bill were also hardly the kind you would expect between a CEO and his succèssor. The Wall Street Journal reported the same and an internal source in the board clarified the entire issue. Steve was reported as having said, “Once Gates leaves, I am not going to need him for anything”. And he even reportedly added, “Use him, yes, need him, no.” In fact, Gates even stormed out of that meeting, according to sources. Two camps had been built since then, with respective allegiance to Ballmer and Gates.

With a start like that, the signs seemed quite ominous. In 2000, the company’s M-cap was recorded at a mammoth $586.2 billion, and was leading the list of top companies in the world. Even the conglomerate GE, which stood at second place was way behind with an estimate of $474,956 million. It’s almost a decade since then, and Ballmer’s leadership has come under scrutiny not once but on many occasions. The company’s M-cap in the fourth quarter of 2010 was only recorded at $238,784.5 million, almost one third of what it was in 2000 as reported by Financial Times Global 500. The decline is a clear indication of the pessimism of investors in the company. IT analyst Jeff Kagan comments to B&E on the company’s major problem, “Microsoft has happy customers and it is a natural for them to transform and lead the new industry. They have just not done that over the last decade”.

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Monday, March 18, 2013

The ‘IDEA’ For A Change

The Operator with the Punch Line ‘An Idea Can Change Your Life’ has felt its mark in The Telecom Space. The Company has fared well in FY2010 and now have High Hope with 3G and MNP.

Every corporate houses posses a dream of becoming a part of the Great Indian Telecom Story. While giants like Tatas had realised the potential of the services long back and had become the part of the telecom growth in the early days, players like Reliance entered a little late. Corporate houses like Future Group, Unitech are latest incumbent in the race. But, making a dent in the high competition telecom market – having 15 players and ailing with falling ARPU, shrinking margins – has been a harrowing task for all of them. However, Idea Cellular is the one that has stood the test of the time and is the only telecom player to have made it to this year’s edition of B&E’s Fastest Growing Companies in India.

The $29 billion Aditya Birla Group had a fair amount of “IDEA” about the potential of telecom industry at the dawn of the sector in the mid 90s. The first telecom licence was awarded to the Group in December 1995 in the high ARPU Maharashtra and Gujarat Service Areas followed by the launch of services in the 1997. The company went slow with plans in the first decade of its inception, as during the period mobile telephony was the service of classes. However, Idea became aggressive in 2007 after getting the pan India licence. In fact, by the end of FY2010 it had rolled out its services across all 22 telecom circles in the country.

But, the company’s fortune took a north after it started rolling out services across all the circles. From a mere 12.44 million subscriber base by the end of December 2006, Idea Cellular services are subscribed by 74.2 million people today. It’s market share has also witnessed a significant jump with more than 10% market share already in its kitty.

Idea Cellular’s aggressive expansion plans also included M&As. In fact, in June 2001, it forayed into Madhya Pradesh Service Area after acquiring RPG Cellcom. Similarly, after acquiring Escotel Mobile Communication in early 2004, it started offering services in Haryana, UP (WEST) and Kerala. Spice Communications operating in Karnataka and Punjab was also acquired by Idea. It’s because of these organic and inorganic strategies that Idea today is the sixth largest telecom player in India.

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Tuesday, March 12, 2013

The Lara Workout

It’s fashionable to be fit, and after Shilpa Shetty and Bipasha Basu revealed their secret workout plans on fitness DVDs titled Shilpa’s Yoga and Love Yourself respectively, it’s Lara Dutta’s turn to enter the fray to become a fitness diva. Titled Yoga: Recovery and Rejuvanation, this is the first of a series of 3 DVDs she plans to launch. We wonder which Bollywood star will follow suit and try to rejuvenate their careers too!

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Thursday, March 07, 2013

Ancient Remedies For Spinal Maladies

Ayurveda Stands-up to Support Paraplegic Patients denied Hope by Allopathic Doctors

Rajinder Johar worked in KG Medical Hospital in Lucknow. He, along with his wife and a daughter, lead a happy and content life. Little did they know that an unfortunate incident would change their lives, especially that of Rajinder, forever. The family still shudders on recounting the events of the day when some burglars entered their home and on encountering fierce resistance from the family, they fired gunshots at Rajinder. This was March 1986. Shot directly on his chest and cervical spine, Rajinder was at the mercy of medical assistance for the next six years. “Being a paramedic person myself, I knew that the injuries were severe, which could render me invalid. Even years of treatment couldn’t help, and I had to accept that I would be disabled for the rest of my life,” said Rajinder. Rajinder has been suffering from paraplegia (paralysis of two limbs) and today, runs a charitable trust called ‘Family of Disabled’ to serve those with disabilities.

A recent study done by the Indian Spinal Injuries Centre revealed that more often than not, spinal injuries in India result in paraplegia. Road accidents and falls from a height are the most common causes of spinal injuries, and the report stated that 65% of people end-up being paraplegic. Moreover, 69.25% are declared failed cases (ie, “they can’t be overcome neurologically”) as opposed to 39.8% in the US. In such cases, it has been observed that apart from the regular medical treatments, patients also turn to alternative ways of healing; Ayurveda being the most desired of them all. Owing to India’s history of Ayurvedic practices, people from across the globe visit our country to seek aid for various kinds of injuries. To make this practice popular and to encourage researches on treatments through Ayurveda, Maniben Sarkari Ayurvedic Hospital in Ahmedabad has been granted Rs. 5 crore by the government and declared as a centre for excellence, and is now aiming at becoming the best Ayurvedic hospital in the country. The hospital intends to set-up a research and treatment facility especially for neurological disorders, especially hemiplegia (half body paralysis) and paraplegia.

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Wednesday, March 06, 2013

Deal with its chronic problem of lack of feedstock

After a decadal starvation of investments, Indian fertilizer industry is hot again in the books of investors and seems ready for a great run in the days to come. Before that, it will have to deal with its chronic problem of lack of feedstock.

Moreover, with the food price inflation still pricking the government and the demand for food grains increasing faster than ever, the government has now started taking keen interest in agriculture related sectors including fertilizers. One can understand the same from the very fact that in FY09 the government fully met its humongous subsidy obligation of Rs.1 trillion that accentuated due to a sudden and unprecedented rise in input prices. In fact, explains N. Raju, Analyst, Fitch Ratings India, that in order to keep fertilizer prices under control at the pick of the price cycle and check it from hurting the demand scenario by any means, the government paid for almost 90% of the cost of many categories of fertilizer recovering only 10% cost from the consumers. In a way such secured environment has also contributed to the resilience in the particular sector. As a result, apart from all plans for new plants and capacity expansion, the existing players have started operating at a higher efficiency level than what they were operating earlier. As per reports, on a cumulative basis (including private, public and co-operatives), the Indian fertilizer industry increased its capacity utilisation to 76.9% of installed capacity (84.1% in case of private sector) from 61.2% in the previous financial year (67.1% for private sector). This in turn has resulted in a total production of 16.3 million MT of fertilizer in FY10 (estimated), a surge of 14% over FY09.

Meanwhile, adding an impetus to the on going resilience, the government itself is attempting to revive 5 closed urea plants with an installed capacity of 2.2 million MT. Praising the move, Manoj Gaur, Executive Chairman, Jaypee Group, which has recently joined hands with Duncan Industries to revive the latter’s urea plant in UP, explains, “In order to ensure food security for the country’s 120 billion people, good agri-production has now become mandatory for us. And in this scenario, fertilizer will play a very critical role. Every year we import nearly an average of 7 to 8 million tonnes of urea, while our own plants here are closed. So, revival of these plants and their modernisation for better output is the need of the hour.”

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Monday, March 04, 2013

Ford's new outlook towards India

Ford India President & MD Michael Boneham has worked tremendously hard on his India basics since appointment. In an exclusive interaction with sanchit verma, Boneham talks about Ford's new outlook towards India

B&E: How is Ford applying its One Ford strategy; do tell me about the brief given to you about the strategy while coming to India?
MB: The brief was all about ensuring that the products we are going to deliver to the Indian market are sourced through the global market platform, global product engineering, global development strategy that also meets local needs. And some of the local needs we see with Ford Figo are to provide outstanding value for money, great fuel economy, great technology available to differentiate the product from the competition. You must be seen in the 70% market in India because if you are not, you are not a major player in India. We utilized the resources of the Ford global team; the one team which we have had, to deliver an outstanding launch of Figo and put together a strategy that we use in the global platform as we move Ford. We are not going to have legacy brands any longer for India. We will have the V-car platform, C-car platform and we are going to utiize them across the globe, utilize the economies of scale to get the costs down so that we can price it efficiently and use outstanding engine technology to give outstanding class leading fuel economy. In India, that is a tremendous selling point and if you don't have fuel economy, you are not in the race. If we look at the Ford global strategy, it fitted beautifully with India's strategy plan. The better India plan!

B&E: With major players like Maruti, Tata already having a major share in market, what are Ford’s plans to become a major player?
MB: Firstly, we are going to be 'in' the segment. Secondly, we will be delivering outstanding value for money. This is not something which happens overnight. It is something which grows when customers start to accept your products in this segment in which we have just got in. So you have to ensure that you have great value for money. Cost of ownership is a positive story where we needed to work and we have done a lot of work. Cost of ownership for Ford Figo is very light as compared to big players. We have worked very hard on component cost, part cost when there is replacement, we have worked very hard on what we call the ‘child part’ strategy in which you can buy one small part rather than buying the whole assembly. For instance, you can buy the skin of the door panel if you meet with an unfortunate accident and someone winches your door away. You can just change the skin without changing the whole door. It’s the 1st in the Indian market and no else does that. Unfortunately, accidents are a reality of life in Indian roads, so that was an unbelievable level of creative thinking. So we worked hard on that body strategy to ensure what could we do so that the vehicles were in the great quality range while retaining low cost of ownership.

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