Another day, another car launch. And yet, this one was different. It was the revival of the iconic Datsun brand with the launch of “Go”, a five-door compact hatchback. BW Businessworld takes a look at the good, the bad and the ugly of the car:The Good:The price: Carlos Ghosn MD and CEO of Nissan promised the buyers a car under Rs 4 lakh. Company sources say that it would be priced closer to Rs 3.75 lakh, making it a lot cheaper than most competitors in the segment.The look: The styling of the car makes it look like the premium hatchback. It comes with plenty of slashes and cuts that are easy on aesthetic sensibilitiesRead Also: Fast Forward To The PastRead Also: Datsun 'Go' Priced At Rs 4 LakhThe Features: Plenty of the ‘cool quotient’ here with like a docking board for smartphonesThe Interiors: The rear has plenty of space to fit in three grown adults. Besides this the plastic doesn’t feel cheap. The interiors also have a mix of two shades of beige giving it a nice feelThe Bad:The Datsun Go will have to struggle with the Nissan dealership network which at the current 95 don’t compare at all with Maruti’s 200+ networkThe car only comes in a gasoline, which, given India’s current shoddy fuel pricing mechanism could well work against the carIt has been built on the Micra platform, which didn’t do as well as it was expected in IndiaThe Ugly:The dashboard is standard and the gear has been moved to it as well, creating a lot of space between the two front seats, supposedly making space for a child to sit in the middle. But Nissan forgot to place a seat here, or even a seating board making the gap look awkardThe gear which is part of the dashboard could well give you a tennis elbow if you are driving over 15 kilometres and are on the shorter side swati(dot)garg(at)abp(dot)inms(dot)garg(dot)swati(at)gmailTwitter: (at)swatigarg
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While top Indian ministers were preparing to jet off to the United States in search of that elusive investment into manufacturing, a surprising drama was unfolding somewhere near the Chinese capital, where a chief executive officer of an American firm was trying hard to negotiate his release from his own factory.As the story goes, Charles Starnes, the CEO of Florida’s Specialty Medical Supplies, was held by his Chinese employees for more than five days after a dispute over salaries and the company’s decision to move some of its production to…well…err…India.Mr Starnes, we believe, had good economic reasons to move business to India. It probably made sense to shift to a low labour cost country from one where wages have increased sharply, thanks to double-digit growth over the past 30 years. Eventually, it seems, he managed to cut a decent deal and make his exit.The bizarre development raises two key questions. One, what is happening in China? Second, can India turn whatever is happening in China to its advantage?For three decades, China built its economy on a foundation of cheap labour that produced cheap products, which found buyers in droves in both developed and developing countries. That model spawned double-digit growth in what was once an extremely poor country, lifted standards of living and eventually raised awareness and demands. Such was progress that by the early part of this century, China was seen to be the only challenger to the might of the United States.However, an export-oriented economy can continue to succeed only if its overseas markets continue to grow. So, as long as the West and the rest continued to buy, China progressed. Of late, the Chinese growth engine is beginning to sound tired. While the economy is still growing, the pace has slowed considerably, raising serious questions about the sustenance of the world’s second-biggest economy and its ability to keep a lid on potential social unrest that might erupt due to job losses.The latest numbers released on 15 July shows that China’s economy grew by only 7.5 per cent in the second quarter of this year against a slightly higher 7.7 per cent in the previous three months. Industrial output was sluggish too. In effect, the once-booming Chinese economy has contracted in nine of the last 10 quarters — a fact that financial markets have sweated over.The government, however, seems to be just fine with the pressure on the economy and doesn’t look like introducing any measures to boost the slowdown, as it did in the aftermath of the collapse of the Lehman Brothers back in 2008 when it piped in billions of dollars into an economy that needed to be kept stable. It is now targeting a GDP growth of 7.5 per cent for 2013, the lowest in more than 20 years, and seems keen to change the growth model from export driven to domestic consumer driven.In an environment where it is becoming expensive to produce, there will be many others such as Mr. Starnes who would want to shift their operations to cheaper destinations. The choice could be, like in his case, between India that is hungry for investments into manufacturing and other Asian destinations – or maybe take it all back to the United States which too is looking to create jobs.That brings us to the second question: Can India turn the Chinese slowdown to its advantage? It too is growing, though at a rate slower than China. Millions of youth who are crowding the streets in search for jobs can be pushed into the manufacturing sector if that picks up. On the face of it, it looks like a win-win scenario for India and its government that has struggled with reforms to provide that much-needed trigger to jumpstart its rapidly slowing economy.However, there are problems — mostly self-created — and some that have only perpetuated the view that India is not keen on foreign investments. For one, India’s infrastructure sucks. For two, the government can’t make up its mind on policies. Three, looming general elections are holding investors back. Four, the Americans are generally fed up. Their patience is wearing thin and has been replaced with anger over what they see as India’s backward movement — away from reforms — and the government’s inability to make things happen.There have to be very strong reasons — size of the market and costs included - for somebody to shift manufacturing from China to India. Large multinationals — especially American — have been griping for the longest about the difficulty of doing business in India. And while various government ministers have consistently assured them that they would take action to restore confidence in the economy, little has been achieved. Too many past promises have yielded little.Unlike a few years ago, investors and large firms have other investment options. They might want to move out of China, but they may not necessarily want to shift base to India unless they are absolutely sure. India was once a story, now it seems a non-starter. But if it can go out and find more CEO’s like Mr Starnes and provide them with an environment in which it is easy to do business, New Delhi might do a world of good to itself. Somebody somewhere has to make a start.(The columnist, a former newspaper editor, is President, Public Affairs, Genesis Burson-Marsteller and co-founder of Public Affairs Forum of India. He has a keen interest in China and Southeast Asia. Views are personal)
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At a time when private equity players are facing the pressure of exits with their investment cycles nearing end and fund managers are complaining about the time to raise India centric funds going up, Kohlberg Kravis Roberts & Co (KKR) managing to raise a $6-billion pan Asia fund came as a welcome news. The American PE fund would invest a substantial chunk of the total fund in India, focusing on deals around $100 million. According to the data obtained from Venture Intelligence, a firm that tracks PE investments in India, the first six months has not been particularly good for inbound investments. “PE investments in the first six months of 2013 were $3.351 billion (across 163 investments) down by 19.1 per cent compared to the corresponding period in 2012 ($4,143 million invested across 238 investments),” said Arun Natarajan, managing director, Venture Intelligence. Amidst all the issues and problems faced by PE players in India, there are still some investments that have made families and individuals millionaires in the last couple of years. BW brings to you two such companies — A Velumani and his Thyrocare Technologies and the S Chand group — which made it big, thanks to PE investment. A Velumani Thyrocare Technologies A Velumani: Net worth Rs 720 crore While talking to A Velumani, promoter of Thyrocare Technologies, a Mumbai-based medical diagnostics services provider, one tends to get confused about whether they are talking to an entrepreneur or a social activist. Velumani, with a net worth of around Rs 720 crore, quotes American playwright Douglas Carter Beane’s play “As Bees In Honey Drown” and says most rich people also end up similarly once they become rich. Velumani, 56, while talking money, says something that is seldom heard from Indian entrepreneurs — social responsibility through wealth creation. “Since 1996 when I started Thyrocare, I have added one zero to the topline of the business every four to five years, I wish to add two more zeros in the next ten years. But I do not like the idea of judging people by the amount of money they have or the house they live in, my aim is to build a professional Indian company that serves 8 billion clients around the world,” said Velumani. Velumani, originally from Appanickenpatti Pudur, near Coimbatore in Tamil Nadu, was the first graduate from his village. But he had to remain jobless for four years before he moved to Mumbai with a job at Bhabha Atomic Research Centre (BARC). While working, he completed his masters and Phd in thyroid chemistry from Tata Memorial Hospital. On his way to the hospital Velumani would see long queues of patient and he felt he should try and do something about that. “I was no doctor, but I came up with the next best thing,” he said. After 14-years of service with BARC, Velumani quit, to start a small laboratory, with Rs 1 lakh that he had got as provident fund for his service. It is perhaps the hardships that Velumani has undergone that make him a little different from the nouveau rich promoters. “I somehow cannot identify with rich people who talk about buying jet planes and expensive cars,” declares Velumani who does not own a car, and often uses one of the 15 Tata Nanos that the company uses for brand promotion. “My employees often say that why I being the promoter use Nano, but I tell them that I do not judge people by the vehicle they use or the clothes they wear. Besides, I like the car.” he said. Velumani, whose father was a landless farmer in Tamil Nadu, says that Thyrocare’s focus is the bottom and middle of the pyramid. “We have managed to reduce the cost for our customers substantially, and we still try to reduce it every year. No company in the world has gone bankrupt when they sell products at lower cost, the other way around has happened however,” said Velumani. In 2012, Norwest Venture Partners (NVP) bought 10 per cent stake in Thyrocare for Rs 120 crore, valuing the company at Rs 1,200 crore. Earlier in 2010, CX Partners picked up 30 per cent stake in the company for Rs 188 crore. Based on the PE deal, Velumani’s net worth can be calculated at around Rs 720 crore. Ask him how his life has changed after the PE deals, he tells you that nothing has changed. “Luckily, my family members too never asked me to take them to a foreign vacation or get them an expensive car after the deal,” said Velumani. “The net worth of an entrepreneur is a notional value, and I do not focus on that. My only focus now is that my two sons who have joined me recently are able to make Thyrocare a company that becomes as big as the German companies which live for at least 100 years,” said Velumani. And when you ask him about how he likes to pass his time he is quick to say, “In my laboratory like always, the only difference is I am surrounded by MBAs and doctors” he said. break-page-break S Chand Group Gupta family, net worth Rs 367 crore Family. A word used by Indian film and television industry to dish out brainless soaps and discussed in business circles only when some billionaire brothers fight, is the foundation of the Gupta family of S Chand Group which is worth Rs 367 crore. The New Delhi-based Gupta family, that came into spotlight after Everstone Capital invested Rs 200 crore in the company, live under the same roof, in their sprawling Panchwati bungalow in Friends colony. S Chand Group (SCG) was founded in 1937 by Shyam Lal Gupta. It is one of the country’s oldest publishing houses specialising in education. The company publishes some 14 million annually mostly in the education space which includes school textbooks, technical education books and higher education books. The company has also started selling educational CDs and other digital content in last five years. At a time when digital technology is growing fast and lot of questions are being raised on the publishing business, SCG is also looking to establish itself as one of the major players in the space. The Gupta family “We want to expand in the education space as well as digital learning space. Our aim is to make the company a prominent player in the knowledge space,” said Dinesh Jhunjhunwala, vice chairman, SCG, and son-in-law of Gupta family. SCG has partnered with some international players to create content in the digital space for schools. The company has entered in to a joint venture with Houghton Mifflin Harcourt of the US for its digital play. The family as well as the group are headed by two matriarchs — Nirmala Gupta and Savita Gupta. Himanshu Gupta, a passionate golf player, and son of Nirmala Gupta is joint managing director of the company who has been actively involved in the business. While Jhunjhunwala, who is the son-in-law of Savita Gupta, has also been actively involved in the expansion of the business in the country. Everstone Capital picked up 35 per cent in the company in October 2012 valuing the company at Rs 571.42 crore. In 2012-13, the total turnover of the stated company has been Rs 340 crore. When asked if the PE infusion has changed anything for the promoters, Jhunjhunwala said: “The money raised through PE was infused in the business and utilised for our expansion plans. We are also in talks with another player for an acquisition which could be completed by the end of this year.” Earlier SCG had acquired Vikas Publishing, another major player in the education space, for undisclosed amount. The company in 2010 had also acquired Blackie and Sons’ Indian arm and a majority stake in BPI India, a well known children’s book publisher. The company has tied up with Google for selling digital versions of its books. “We are also in talks with Amazon and hope to expand in this space in the coming years,” said Amit Gupta, CEO, SCG. Since 2006, the company has also brought in professionals to head its different departments. “While the fundamentals of the company remain humane, professionals have to be brought in for the company to grow fast,” said Gupta, who is not part of the family and was hired by the company some seven years back. Yet, Gupta’s grandfather and father have been writers with the company. break-page-break Long-term Growth Story Intact Industry trackers say that while exits are going to be tough, inbound investments may make sense for some investors due to the weaker Indian rupee. However, the history of weaker exits and other problems not just in India but across Asia has made many investors cautious. “It took us 18 months to raise the fund and about 60 per cent of the limited partners (LPs) are the ones who had invested in our fund (first Asia fund) earlier. That said, it is a good time to invest in India as the long-term growth story remains intact,” said Sanjay Nayar, member and chief executive, KKR, India. Owner Company Networth LD Mittal International Tractors Ltd (Sonalika Group) 3500 Patu Kaswani, Ravi Jaipuria and Gopal Group Lemon Tree Hotels 4504 A Velumani Thyrocare Technologies 720 Binesh Chudgar and family Intas Pharma 6,700 Rajendra J Gandhi Stovekraft Pvt Ltd 400.4 Sanjay Agarwal AU Financiers (India)Pvt Ltd 523.6 Kedar Vaze and family SH Kelkar & Company 478.4 Chandrasekhar Gopalan Sutures India 310 Nirmala Gupta and family S Chand Group 367 C M Arun Vasan Healthcare 2600 (In Rs Cr * Source Grant Thornton PE deal tracker sachin581@gmail.com Sachin_vd@twitter
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“Here’s the irony — a company that we worked for all our lives took 112 years to get to 100 hotels in India. And we want to do the same number in just ten years,” says Partha Chatterjee, Executive Director at Keys Hotels. "Of course, times are different and growth is faster now", he adds hurriedly. Chatterjee is talking about the venerable Taj Hotels, where he and his managing director Sanjay Sethi spent two decades working, before they left to start up Keys for Beggruen Hotels. For a hotel company that started off in September 2007, Keys has already got a good number of properties signed up to get to the coveted 100 mark – 33 to be precise of which 12 are operational with an inventory of over 1,200 rooms. Funded by Berggruen Holdings, Keys Hotel was seeded to fill the gap that existed in the mid market space. “Bergrgruen wanted to build a hospitality company in the mid-market segment because there was a dearth of quality in mid market,” says Chatterjee, who oversees marketing and business development for the company. Since he was part of the team that had set up Ginger for the Taj group, he was a natural choice. Alex Joshi, Partha Chatterjee, Pradeep V - Senior management, Keys HotelsBut before it started building hotels, Keys did a smart thing – it hired Research International to find out what exactly the modern traveller wanted. “Our biggest USP is that we let you relax in our hotels, because we have built it exactly like you wanted us to build it,” says Chatterjee. It got in brand consultancy Chlorophyll to set the brand strategy and branding standards.“Through our research, we found that customers wanted business centres to be open 24/7 so we made a provision whereby they could open it with their key card. ““We found that business travellers chose a hotel not because it was comfortable to stay there, but it was comfortable to work there. So we made it convenient for them to work by placing ergonomic chairs and tables and providing wi-fi free anywhere in the hotel,” points out Chatterjee.The learnings and insights from the research were plenty. And each time a new need would be thrown up, Chatterjee says they would go back to their architects and give them the list of requirements that people wanted and said use it as a brief to build the hotel.“There are many simple things you will find based on customer insights. Very often guests forget to pack shaving creams and other items. But it’s a nuisance going to shop for those. So we created a dispensing machine which has everything. You use your room key, you swipe it. And whatever you have picked up will be charged to your hotel bill. The convenience of this is what the guest wanted,” says Chatterjee.But didn’t they end up opening Keys during the toughest period – the slowdown years ? Vending machineChatterjee admits that the occupancy has been lower than anticipated due to the slowdown and the breakeven target has been pushed back to eight years. But he says they were efficient in building. “See, the biggest thing we did was that the price at which we build our hotels, even at a low occupancy we can break even. Normally, we manage to build our hotels at Rs 30 lakh per key, which is very efficient, considering that we use international standards. “But not only did Keys run into the slowdown period, it also faced intense competition – with many other players entering the mid market fray. So how is it coping with the supply glut?“We are having low occupancy, but I see it going up,” says Chatterjee. And to back his optimism he lays out some figures. “Last year, the government announced that 450 million Indians were travelling. Travelling does not mean staying at hotels necessarily. But this data capture is getting more and more accurate. Earlier, the government could capture only train and air data. But now because of toll roads, you are getting road data too – and the projections are that 600 million Indians would be travelling a year.”Other mid-market chains in India have promised us affordable rooms but lost no time in opportunistically upping the rates whenever demand has risen. Will we see it happening at Keys too? “You won’t see us raising rates from Rs 3,000 to Rs 10,000 – at most we might go from Rs 3,000 to Rs 4,000,” says Chatterjee.Chatterjee also points out that Keys for its part is trying to induce demand by promoting Staycations. A concept where people residing in a city check into a hotel in the same city to enjoy a break. “It is very early stages of the trend still. But we are pushing it with a good hub and spoke model. That means a place to stay within four to five hours driving distance from a city,” he says.Chitra(dot)narayanan(at)abp(dot)inchitra (dot) narayanan@gmail.com(at)ndcnn
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Aspirational Tony Fernandas sets it perfect for the AirAsia take off in India. After his mentor-turned-advisor Ratan Tata joined the new low cost airline concept in the country, Fernandas successfully boarded in S Ramadorai, vice chairman of TCS, as chairman. Don’t forget, as a strategic investor steel barron LN Mittal's son-in-law Arun Bhatia is also on board with 21 per cent stake.But Tata Sons, another minority stake holder with 30 per cent interest in the venture, managed to get four top posts, including the appointments of R Venkataraman, former executive assistant to Ratan Tata and Bharat Vasani, chief legal counsel of the Tata Group, Tony got his man Mittu as CEO in the firm where Air Asia of Malaysia holds the upper cut of foreign investment of 49 per cent stake.When Tony tweets out full praises on Tata veterans, Bhatia's role fades out. Most importantly, Bhatia failed to rope in his nominations. Is Bhatia's representation in the joint venture based purely on financial interest?The feel in the industry is that Tony wants the clout — read as political or industrial clout — of Tatas and financial muscle of Mittals. (There are reasons that Tony knows better that Mittals failed completely in India while they conquer the other parts of the world. And Tatas are the best friends any day here. Also, Tatas have pioneered in airline in India through Air India.Stuck At The TopThere are many reasons why Pidilite is the darling of stockmarket. The company had never fallen back in their top and bottom line numbers in the last 13 years and showed consistent growth. They have created solid brands like Fevicol, Dr Fixit, Fevikwik, M Seal and Fevicryl hobby ideas. But the reality that everybody agrees is that the company needs to generate new cash streams to maintain the upswing, especially on a larger base numbers.The company’s revenue has reached Rs 3657.90 crore in the last financial year compared to Rs 500 crore in 2000-01. The PAT grew to Rs 460.80 crore from Rs 47.90 crore. Eventually, the financial downturns failed create an impact on Pidilite in all these years. The share price of the company has risen about 75 per cent in the last one year. The company is valued more than Rs 14,000 crore in the market.Anil Jayaraj, chief marketing officer, Pidilite industries, says the company has had a long term focus on the brands and its business, irrespective of the recessionary conditions. The company has always tracked the needs of its consumers. Understanding it they launched products like Fevicol Speedx, a fast- setting white adhesive. When other adhesives take 6-8 hours to set, Speedx takes just 2 hours, claims Jayaraj.Pidilite’s product research potential is unmatchable. But they need to find new markets. The company is already exporting to 80 countries. But their revenue from export was just $53 million — less 10 per cent of the total. They have 14 overseas subsidiaries with relatively low incomes. Pidilite needs to create its opportunities.
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The noise over mandatory rotation of auditors just rose another notch this week, with the US Senate banning the idea floated by the US Public Company Accounting Oversight Board. PCAOB, an independent accounting regulator for US-listed companies, had argued that forcing companies to routinely change their auditors would break up the cosy relationships between the auditors and the companies they audited.This assumes significance in India in the light of the Companies Bill, which is expected to be discussed in the Monsoon Session by the Rajya Sabha (Lok Sabha had passed the Bill in December), mandating that auditors of Indian companies should have a maximum tenure of ten years, with the partner signing the report being changed every five years. The Ministry of Corporate Affairs has refused to budge from it's position in spite of several representations from the Institute of Chartered Accountants of India. Meanwhile in Europe, both the European Union as well as UK Competition Commission are expected to make auditor rotation mandatory soon, with lobby groups working hard to dilute the proposal.“There has to be rotation”, says corporate governance watchdog Amit Tandon, whose proxy advisory firm IiAS studied trends among Indian companies with respect to audits last year. It found that some of the largest Indian companies have had the same auditors for over 15 years. Hindalco has had the same auditor — Kolkata-based Singhi & Co — for over 50 years; RIL has had Chaturvedi & Shah as its auditor for over 35 (jointly auditing with Deloitte since 2005); and Larsen & Tourbo is a client of Sharp & Tannan for over 30 years. “It is good to have somebody looking at the accounts with a fresh pair of eyes”, he says.The US Senate’s move comes after heavy criticism and lobbying by the biggest accounting firms, comprising mainly of the Big 4 — Deloitte, PwC, EY & KPMG. In Europe, several industry bodies are said to have rejected the idea of rotation, saying it will only increase costs, and impact the quality of audits. In India, ironically, the accounting regulator ICAI has criticised the move saying that rotation will lead to more concentration of audits among the Big 4, rather than the other way round. The IiAS survey found that 55 per cent of the audit market was held by the Big 4.“The question should be about independence of the auditor”, says Nikhil Singhi, partner at Singhi & Co, which is a member firm of Baker Tilly International, the eighth largest network in the world. “Longstanding relationships could lead to the auditors being too comfortable with the management, but a mandatory rotation of the signing partner should take care of that issue”, he argues.Whereas Motilal Oswal, Chairman of Motilal Oswal Securities says that rotation gives a healthy choice to the shareholder. His argument is that quite often, the shareholders don’t have a say in the re-appointment of the auditor, hence requiring the law to mandate rotation. In fact, he says, even the Audit Committee (part of the company's Board), which proposes the name as well as interacts with the auditor, should also be mandatorily changed so as to ensure maximum transparency for the shareholder.abraham(dot)mathews(at)abp(dot)inmatabrahamc(at)gmail(dot)com (at)ebbruz
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When Lord Krishna advised Arjun to follow the warrior' dharma and kill his uncles because they were ranged against him on the field of battle regardless of blood ties, he raised a fundamental question about the nature of personal morality that we are yet as a society to resolve. I found myself leisurely mulling this question over summer vacations as the IPL match fixing controversy raged back home in India.Let's acknowledge the Bullshit Quotient of 20-20 cricket for a start. The rise of consumerism in India in the last 20 years has resulted in reconfiguring cricket from a sport to pure entertainment. The format has been mutilated to a point where it doesn't represent the skills of either team: the "glorious uncertainties of cricket" has become a euphemism for roulette with an asymmetric ball. So much is played and with so many unexpected results, that it can't but be fun, games, merrymaking and a little bit of skulduggery. You would have to admit that it is ultimately a spectacle, like professional wrestling, the pay-off being in the process so to speak and not in the perfect fairness of the outcome. Once that perception seeps into the collective unconscious, it is inevitable that matches would be fixed. It helps that cricket is a game uniquely easy to fix because, unlike football, you don't need to fix many to make a lot of money.Now that cricket as entertainment is here, can cricket as a source of fast irregular bucks be far behind? Neither players nor team owners are immune to the financial implications of this radical shift in the point of the game so to speak. Years ago, I once sat on a meeting where it was argued that the business case for IPL was poor at best and that you would need a substantial revenue stream from the outcome of each match for it to be worth your while to have a team. But there's cricket aplenty out there with owners aplenty too. So why would anyone buy a team? The viewer side of the equation is not so different. Once you acknowledge that cricket is entertainment, why should you, or the police, care whether someone made money under the table to provide the entertainment, or how? Do the vast majority of spectators believe the game is fairly played? Considering that a cricket scam hits the headlines more often than it rains in the plains of Spain, is that a fair belief to have and to hold? I would think not and the proof of it is in the fact that Sreeshanth and his merry men have been granted bail and the freak show on TV and print media has moved on. As with the game, it seems revelations of skulduggery in the game are also ultimately a spectacle designed for entertainment!So where does that leave all the high pitch shrieking and breast beating about the horror and the depravity? I would argue that the vast body of cricket lovers don't actually care about the "immorality" of what goes on in the game. I would argue that the public condemnation and nervous breakdowns are a unique type of national group therapy: spiritual cleansing through emotional purgation, or some such. I would also argue that this is so because the 'Indian' definition of morality bears no relationship to morality as it is commonly understood in many other cultures. Let me explain this by a scenic route. I had a fascinating illustration of Indian morality at work last month when some of the residents of our colony got together to put up a community generator in one of the common spaces in the colony. There were subscribers aplenty to the scheme but no one wanted the machine within 50 yards of their own house. Bonhomie and camaraderie gave way to hostility and ugly exchanges of letters in no time. Clearly, socially cohesive action and the promotion of the larger interest of the community are laudable goals just so long as they take nothing away from what we have as individuals, even if what we have is a public park fifty yards away that doesn't particularly belong to us. Worse was to follow from people who wanted generator power but found it unaffordable: they opposed generator installation anywhere in the colony's public spaces. Some of the high pitch opposition was pretty vile. These are the same people who stand around in Gucci clothes, Mojito in hand on any Friday night in Gurgaon bitching about the self-serving perversion of politicians. I can confirm that Indian elites don't do irony! But it does raise this question: where does one draw the line between self-interest and the larger interest of the largest number? Nearly as I can tell, the line is drawn at that point where the individual begins to suffer the slightest inconvenience because of the larger societal interest. Clearly, no individual believes he has a moral or ethical obligation to care about the interest of his neighbour in excess of his self-interest. So why should Sreesanth or any team owner for that matter, care how squeamish a cricket fan may be about match fixing? Players have girlfriends to spoil, and owners have a business to run, and that is their dharma!Last week, the newspapers were a wash with a report put out by the Save Life Foundation disclosing that 88 per cent of the people in most Indian towns won't help an accident victim. Why not? For one, if you take a victim to hospital, the police naturally suspect that you hit the guy. Second, once you have the battered victim on your hands, you then have to pay his registration charges and so forth before the hospital will take him in. This is, of course, quite apart from the time you invest in this common decency, time that could stretch indefinitely if the police decide to investigate you more closely. The same basic construct informs the actions of those we accuse of windfall money making amidst the debris and the cries of lament of flood ravaged pilgrims caught unaware by the cloudburst in Uttaranchal in June. If my business is selling biscuits so that I can feed my own family, what is wrong in selling them at a twenty times mark up to very hungry flood victims? And so it is with taxi operators asking for half the price of a car to transport a starving just-rescued pilgrim from Rudraprayag to Delhi. If profit is my dharma, and I do a good job, what is it that I am accused of? Forget natural calamities, whoever makes super profit anywhere in the world without overpricing something that someone needs for good reasons or bad? Unless we are prepared to place the larger interest of society above our obligation to feed our family, and perhaps the girlfriend too, I don't see how generic social altruism at the cost of immediate family obligations is morally defensible.This should lead us to question the unfair moral indignation in which our public discourse is generally structured. I will not repeat the argument about the blameless casting of the first stone but I will contextualise it in the corporate commercial space where a great many readers probably find their karmic compulsions. To cut to first principles, the corporation is a brilliant vehicle designed to maximize profit while radically limiting risk. Coincidentally, it is also an ideal vehicle to avoid moral responsibility because the law doesn't easily lift the corporate veil, nor do we. Our colleagues in the pharmaceutical industry for instance don't equate the price of AIDS or diabetes drugs with the price of biscuits in Uttarakhand after the cloudburst. That a corporation may engage in conduct we would not accept in an individual is now tacitly and widely accepted. After all, it is unfair to expect any corporate entity to do anything but maximise profit. Indeed, the shareholders — people like you and me — will tear it limb for limb if it doesn't. Come to think of it, we are entirely comfortable with the idea that a corporate may, in pursuit of its objectives as set forth in its Memorandum of Association tear other people's lives up limb for limb. How else would any mining company make a living without chucking masses of people off the land and then ripping the land asunder in search of minerals? We never ask if we are responsible for this. When the corporation acts with blatantly perfidy — like establishing a private army to terrorise local residents (read Salwa Judum) — we blame it and we condemn the politician for supporting it but we never stop quietly enjoying the dividend the corporation sends us… or the product it sells. I am yet to hear of an India company that was boycotted to its death because as a society, we didn't agree with its policies or actions.Now that I think about it, I also don't know a single guy who was socially boycotted because he made his money by dodgy means. How could we? Most people are doing dodgy things around us. If anything, the strutting fat cat showing off his Ferrari (which he managed to import duty free through a travel agent) is an object of envy and admiration, not derision. Dodgy guys get groupies, not social sanction. Heck, we don't even socially boycott the pervert who won't pay the Resident Welfare Association's dues. When a society is structured around an undeniable admiration for acquisitive jiggery-pokery, where is the argument that it is wrong to engage in immoral conduct? Clearly, everyone cares about the final result of what you do, not the process by which you got there. To me the conclusion is obvious: in our hearts, we don't really buy into the moral platitudes we mouth: our dharmic obligations march to the beat of another drummer.The net-net of this rant comes down to this. When social elites endorse immoral conduct, society cannot have moral underpinnings. When social elites don't act on their professed ethical constructs, pointing fingers at politicians and celebrities at best comes off as part of weekend time pass. If we want a society that genuinely strives to a better and higher moral standard, we will have to put the interest of the group taken as a whole above our dharma, as a warrior, a corporate executive or even as a father. That is a huge cultural shift and till we can all get there, all the indignation and the hysterics is just purgation.The author is managing partner of the Gurgaon-based corporate law firm N South. He is the author of Winning Legal Wars and Bullshit Quotient: Decoding India's corporate, social and legal Fine Print. He can be contacted at rcd@nsouthlaw.com
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Over the years, we have heard countless stories of multinationals struggling to take advantage of their global scale. However hard they try, they never quite manage to move away from the business unit and functional silos, and gain the desired economies of scope or scale. More recently, we have started to hear a different story. Spurred on by enterprise IT initiatives and process standardisation programs, many firms are now feeling leaner and more efficient, but these benefits have come at the expense of local flexibility and agility. This tension between local flexibility and global efficiency is a central dilemma facing most large organisations. The optimal balance between these two objectives is highly dependent on the industrial context in which a firm operates as well as a firm's particular strategic direction. But must firms choose one objective over the other? Through our research, we have uncovered a series of steps through which some firms have managed to implement strategies that are both locally agile and globally efficient. Faced with contradictions and misalignment between local and global interests, organisations must determine how to gain the commitment of local units to fully implement a new global practice or IT solution without compromising adoption. We have identified five key guidelines that tend to be associated with implementation success. Start with processes before moving to data and then IT The first phase of the journey should revolve around understanding in detail how processes are managed across the organisation. The evaluation and rationalization of organisational processes should precede any large scale IT system implementation project. A common temptation is to move too quickly into system implementation mode without first having a full understanding of the process landscape. Furthermore, processes are not the only component that should be standardized and rationalised before the IT solution is implemented. Data should be formatted and structured in a similar manner to allow for sharing across the enterprise. For most organisations, ensuring data consistency is not a trivial matter. Implement A Strategy Of Smart Piloting We advocate the use of appropriate pilot markets to test and manage the implementation. Piloting is the process of testing a system or solution in one setting before rolling it out to other locations. We noticed that the firms that successfully managed the efficiency journey were the ones that made extensive use of pilots. The converse was also the case. Firms that made little use of pilots or implemented 'big bang' implementations tended to be less successful. Pilots are useful for a number of reasons. First, they allow for a setting where approaches can be tested, evaluated, and learned from. Inevitable problems are addressed during pilot installations. Second, successful pilots serve to build credibility and legitimacy for the change effort. They are an important tool to overcome natural resistance from other operations that are in line for change. While markets and business units don't necessarily see the benefit of a global process or IT solution at the outset, they start to see the benefits more clearly as an increasing number of markets adopt the solution. Ensure Top Management Support: From Push To Pull Any large-scale standardisation or IT system implementation initiative will inevitably encounter resistance at the local unit level. Be cautioned! We have observed that it can take substantial time to find the right local and global balance — a timeline for which the financial markets will likely have little patience. Overcoming resistance requires time and patience. Proper preparation, as described above, with processes preceding data and systems is important. Smart pilots can also prove to be invaluable. However, neither of these approaches will be enough to overcome stiff resistance, particularly from influential markets or business units. Thus, we have observed that strong top management commitment is critical for implementation success and, conversely, the lack of this visible support leads to sub-optimal results or failure. Institute Strong And Robust GovernanceThe next contributing factor to be associated with a successful journey from a siloed structure to one that is more globally efficient is strong governance. The purpose of strong governance is threefold. First, it ensures that there is a mechanism to decide which processes and systems should become the global standard. Second, it provides a mechanism for exceptions to the standard to be identified and authorised. Strong and clear governance is critical to ensure that the right balance is established and maintained over time. The third purpose is to identify processes or systems that should be discontinued because they do not fit the global template. In the multinationals we observed, governance was usually provided through a combination of head office personnel, functional leaders, and individuals at the interface between business and IT. When this triangle works effectively, governance is more likely to be successful. The dangers of poor governance are clear. It can lead to a set of processes and systems either too large or too small. The fixed set can become too large if it becomes full of rarely used, redundant, or duplicate processes and systems. In such cases, which we have seen on multiple occasions, an organisation might have the appearance of being globally rationalized, but upon closer inspection, its bloated core makes it bureaucratic, inefficient, and slow. On the other hand, if the fixed set is too small, the organisation may never completely abandon its silos. Too many local exceptions can easily serve to negate the benefits of a global standard. Sequence Functionally From Back To Front OfficeWe see an additional factor that appears to be an important component of a successful journey — the correct sequencing of organisational functions. We found that firms that tend to have successful outcomes begin with back office functions, like accounting, finance and procurement. These functions are typically process driven, and have the most to gain from standardisation and efficiency programs. By following these steps, leaders can find a balance that is globally efficient while still maintaining the local flexibility that is necessary to compete in highly dynamic markets. Bettina Buechel is Professor of Strategy and Organisation at IMD, Michael Wade is Professor of Innovation and Strategic Information Management at IMD
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