You work for an organisation that has grown steadily by getting the fundamentals right – hiring and developing good people, instilling a strong work ethic, conducting solid analysis, and making smart choices. Yet, despite these efforts, your company is struggling to make ends meet. The economy has faltered, your reserves are dwindling, and your biggest clients are scaling back. It is time to make cuts, but where do you start?Many organisations currently find themselves in this situation. Recently, major cost cutting programs have been announced by Hitachi, BNP Paribas, Yahoo, Johnson Controls, Pfizer, and Air France, not to mention many of the world's national and regional governments.Contraction is a critical part of the business cycle. Unfortunately, most organisations are not very good at it. As a rule, we are much more comfortable expanding rather than contracting, buying rather than selling, adopting rather than discontinuing, and hiring rather than firing. Our research shows that spending reduction programmes tend to be dominated by an inward-looking focus, revolve around emotionally charged arguments, and result in uncourageous decision-making.In order for companies to succeed in scaling back, we uncover some of the most commonly encountered bad habits: Remaining A Slave To The Budget Cycle Too many organizations fail to adjust their budgeting process to changing market conditions. Budgets remain on annual cycles, where performance is measured 'to budget,' even after it becomes clear that budget levels are no longer reasonable or sustainable given competitive or market changes. At best, budgets are static representations of last year's reality; and at worse, reflect conditions that were relevant many cycles ago. In place of a planned and deliberate re-consideration of all options, many organizations simply try to 'cut the budget' and thus do less of their original plan. Instead, they should re-evaluate the entire budget in light of changing conditions, and proceed accordingly. Going For The Easy Wins When it comes time to make cuts, firms often look no further than the most obvious targets. Unfortunately, the best targets are not always those that are most visible. For example, since they tend to be large and distinct, capital expenditure projects are often the first to be cut. However, in most cases, the lion's share of expenditure (and inefficiency) is hidden in operating costs. Operating expenses should be examined with the same frequency and rigor as capital expenses, ideally on the assumption of zero base budgeting. Courageous decision making means going beyond the most visible targets, and attacking the real sources of inefficiency. Not Culling The Herd It is well known by vintners that in order to make great wine, vines must be pruned during the season so that the rich flavor is not spread too thinly among the grapes. Companies should follow the same practice, particularly during economic downturns. When times are good, companies tend to let a thousand flowers bloom; however, when performance falters, they fail to effectively go through rounds of pruning. Most organizations try to manage far too many initiatives. Only proven or promising projects that show a clear 'path to performance' based on well-defined metrics, and an unambiguous timetable can be spared. Initiatives that do not clearly demonstrate these factors should be considered for cutting. Across-The-Board Cuts A much too-common reaction to a downturn is to decrease spending across the board, perhaps by 10 or 15 per cent. Governments are the main culprits in this regard, although many large corporations have also been known to follow this strategy. CEOs have argued a need to 'spread the pain' so that 'no one will be spared the knife.' This approach to contraction is, in fact, the very absence of strategy! What it really says is that management lacks the courage to act; is disinterested in making the kind of tough choices that are necessary in a downturn; or is unaware of the real priorities and where value is created. Across the board cuts are destructive because they are based upon the unlikely premise that all areas of an enterprise are equally important. Indiscriminate horizontal cuts only serve to penalise managers who have actively and correctly managed their businesses. Rather, vertical cuts or strategic divestiture, based on clear priorities and rigorous measurement, should drive decision making during these periods. They provide a welcome opportunity to get rid of nice-to-have projects that offer little in the way of profits or synergy. So, how should executives approach strategic decision making during a recession? We believe that the first step is to define a clear strategic direction, and from this, to develop a set of high-level priorities. Each funding request, both for new and existing expenditures, should then be rigorously assessed and ranked against these strategic priorities. While there will always be exceptions, like for reasons of safety or compliance, forced ranking enables a stage gate hurdle process that winnows out non-conforming requests and allows management to compare opportunities and clearly delineate preferences. While priorities can be discussed in groups, we believe it is important that the rankings are analysed and assessed individually, in order to reduce group think and other biases. Only in the final stage should the results should be aggregated into an ordinal ranking. If managed properly, the objective of budget allocation is not so much to reduce costs as it is to prepare the organisation for a better future. This process turns on establishing priorities and ensuring that only activities that support these priorities are advanced.Due to decades of buoyant economic conditions, few managers today have experience with prolonged periods of contraction. It could be argued, in fact, that a true test of management is the effectiveness of decision-making during a downturn. We are currently in a shakeout period, where some firms will succeed while others will struggle and fail. In the future, we will associate this period with the rise of new global giants and the fall of others. To be successful in today's economy, managers need to carefully and strategically learn to avoid cutting flowers and watering weeds. (Michael Wade is professor of innovation and strategic information management at IMD. He teaches in IMD's Breakthrough Program for Senior Executives. Peter Tingling is an Associate Professor at Simon Fraser University in Canada)
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The Fronline magazine of the Hindu group has a re-launched on 20 Sep 2012 by Vice President, Hamid Ansari. In the era of real time news defined by the "breaking news" syndrome, there is still a demand for long form journalism that not only relays information, but also compels the readers to think and question, said Vice- President Hamid Ansari on Thursday, at the re-launch of the news magazine, Frontline."In today's age, the audio-visual media has emerged as a dominant medium for quenching the thirst of the target audience for real time news on current affairs, culture and entertainment. Despite this, there remains a real and popular demand for serious publications on topical issues which cannot be substituted by the 'breaking news' culture and short-attention span snippets in the domain of the electronic media," he added.N. Ram, former Editor-in-Chief said "Frontline was launched in December 1984 as an all colour fortnightly with plenty of visual content. The trigger for its publication was the acquisition of a colour printer from Japan and the then editor of The Hindu G Kasturi was clear that newspapers in India had to raise the game and no take readers for granted,".
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In the absence of a downgrade and implementation of the reform process, the Indian equity market can be expected to touch a new high by March 2013, says Akshay Gupta, managing director & CEO, Peerless MF. He feels the equity market can surge 15 per cent from the current levels on back of FII flows. However, he is fully aware that there are a lot of issues that can spoil the party for the Indian markets. Efforts from the government will dictate the trend in the next year. “This time December and January FII flows will hinge on the government's implementation (of the reform process) and if that fails, FII money will not flow in next year,” says Gupta who feels all eyes will be on the winter session of Parliament which can be the next trigger for our markets. Excerpts from the conversation: What impact do you see on the overall P&L of the mutual fund with the new Sebi norm coming into effect that restricts MFs from having multiple plans in their schemes as well as on the expense ratio?On an overall basis, for the long term, these are changes that benefit the P&L of the MF industry in general. Obviously, since Peerless Mutual Fund is a sub-set of the industry, it will also benefit. In the short term, re-adjustment will need to be made for single plan structure. It is expected that loss of revenue will happen in the fixed income schemes, where multiple plans existed, which gave leeway to the AMCs to charge expense ratios more flexibly. What would be the strategy of Peerless MF to grow its AUM and investor base? How much are you investing in the business? So far how much have you invested in the business and when do you plan to break-even?Strategy of Peerless is very simple – “Customer is king”. From the inception, customer centricity has been our focus. Business numbers like AUM and investor base is a consequence of this broad strategy. Getting more granular, we are focusing on creating new customers in untapped geographies through vernacular delivery. We have more than 40% of our AUM in retail-oriented schemes from non-top 15 towns, which is also the focus of regulator. This has been our strategy since inception. On the institutional side, our strategy is to provide few and appropriate solutions of cash management and investments to customers. We do not believe in launching unnecessary products to confuse customers. Thus far, in the last 3 years, we have launched only seven products and all of them are doing extremely well. We have invested more than Rs 30 crore in the business and we have already reached the break-even in the last quarter. We shall reach a full annual break-even in the next year (2013-14). Peerless General Finance and Investments (PGFI) is also infusing an additional Rs 50 crore to make the capital Rs 100 crore. This makes our operations stronger and solid. PGFI has supported mutual fund operations at every step and will do everything to continue this support. Infusion of capital is one of the support measures. What is your view on the overall financial market? What are your concerns on the global environment and do you think it can be a drag on the Indian market? And why?Overall the financial markets do reflect the global economies eventually. Global economy will go through stress of deleveraging over the next 10 years. While, the pain will be felt more in the western economies, Indian economy has strong linkages to the western world. Hence, on an overall basis there is pain but I see that outsourcing theme can turn out to become an exception and will get a boost due to global pain. Sectors like IT, Pharma and Auto will benefit from the global pain that will result in work getting outsourced to skilled developing economies like India. What is your take on the Indian equity market and why? Do you see the rally sustaining near the 19000 mark? In your view what will be the next trigger for the Indian equity market? And why? When do you see it coming?I do expect the markets to rally from these levels by another 10-15 per cent till they become visibly expensive. We must remember that FIIs have been the reason for this rally. They are smart investors and gravitate towards wherever they find better value. So, 19000 may not be too far but the next trigger for the market will be implementation of all the announced reforms and also absence of any “downgrade” news. What is your view on the overall corporate performance of Indian Inc? Have the September-ended quarterly results that have been declared so far been in line with your expectation? Which are the sectors that you are bullish and bearish about?Expectations have been clearly met. In fact, I feel that we have been positively surprised in some sectors like Pharma, FMCG, Cement, IT and Auto. Some sectors like PSU Banks, Commodities and Telecom have yet again not been up to the mark. We continue to remain bullish on 2 themes – Consumption and Outsourcing and in particular - FMCG, Pharma, Auto, IT and private banks. In current market condition, where will you advice investors to invest? Currently where are you investing your own money? And why?I am investing 70 per cent of my own money in Hybrid schemes (mixture of Debt, Equity and Gold) along with 30 per cent in diversified equity schemes on a systematic basis. My advice to customers would be to invest in short-term income and flexible income schemes on the fixed income side and diversified equity funds on the equity side or invest in hybrid schemes because they rebalance automatically and have asset allocations, which might benefit retail investors, who do not have much time to spend. As a fund manager what call will you take on the overall portfolio of the mutual fund? What will be your short-term strategy in the current market condition?We have kept maturities in the fixed income side at a conservative end of the range across various products and therefore have not been adversely affected despite the fixed income markets correcting in the last two weeks. Having said that, the fixed income returns since January 2012 have been substantial and the last two weeks may not be the barometer for investors to get worried. On the equity markets front, we have been stocking companies with good governance, sound cash flows and low impact of policies/ previous policy actions. What is your take on the 10-year G-Sec yields and why? Do you see it going past 8.30 per cent? Where do you see yields in the short-term (3M) and medium-term (6M)?Our forecast is that interest rates have to come down and despite temporary blips, the whole yield curve has to come down by 25-50 bps. We should see 10 year touching 8 per cent by April 2013. Fixed income, particularly FDs and bonds have become a flavour among investors, even equity fund managers are keeping a large portion of their money in FD and bonds. In your view is fixed income still a cushion for equity investors?Thankfully, it has and it should have been long time back. Trust deficit in the industry is largely due to the fact that fixed income funds were not sold in the right quantum to retail investors between 1998-2008. Fund managers can keep money in money market instruments only temporarily as a conservative call. Fixed income is the essential cog in the asset allocation wheel and financial advisors must incorporate 25-75% of any portfolio in fixed income funds accompanied by equity and gold. What is your take on the 1 year, 2 years, 3 years, 5 years and 10-years yields in corporate bonds? Will you be a buyer in corporate bonds and what would be the tenure?We are bullish on 2-5 year bonds – both PSU and corporate since there has been a correction recently. We have been buying opportunistically in the 2-5 year segment. However, on an overall maturity basis, we are still keeping lower maturity and duration in our funds. What is your view on gold? Should it take maximum share of ones portfolio as the world economy is still not showing signs of revival?Gold will have a good run for the next 10 years. Of course like any other asset class or investment, there are bound to be corrections and rallies. Like I have said previously, global pain will keep gold at firm levels. So, there is no indication of major correction in the global gold prices. Gold should ideally occupy 10-30% of one’s portfolio. If rupee depreciates with a higher ferocity, we will see gold prices touching new peaks in India. What is your take on the Indian currency? Do you think its heading towards the 60 mark and why? Where do you see the Rupee in the next three months before the budget?It is difficult to put a number on the rupee-dollar but there are 2 scenarios…First – if all goes well, dollar flows continue, then rupee can get back to Rs 50 and the second- if a downgrade happens or fiscal situation goes beyond control due to policy inaction then even 60 may be less for the rupee to stop. Oil is hovering around $110 per barrel, now with the US election over do you see the upsurge? And why? Will this be the dampener for the Indian market?Till monetary easing continues hedge funds and other funds (run by the ARAB world) will continue to tank-up oil futures. With US President, Obama getting re-elected, it is likely that oil will continue to hover above the $100 level. For India, the tight-rope walk will continue since Oil is the largest import item for India and till the prices come down significantly i.e below $80 per barrel, Indian economy will continue to be on the edge.
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I must confess to feeling a certain sneaking sympathy for the prime minister. Here he is, the leader of the single largest party in Parliament with 206 members. He has a good understanding of economics, and has taken some economic decisions that were sorely needed at this time. But now the future of his government is in jeopardy because an ally with just 19 seats in Parliament and an extremely poor understanding of economics has pulled out. Even if the government survives with the help of some other allies, it is likely that the latter will demand their pounds of flesh – and the PM will probably have to make concessions that will be galling to him personally, apart from being bad for the central government coffers.But to a large extent, the predicament the prime minister finds himself in today is of his own creation. Before to we get to that though, a quick look at the decisions that are causing the government so much grief currently.Despite the widespread protests from the left, the right and all manner of other parties against the measures announced by the central government, it is hard to argue that these were not necessary. India does not have vast reserves of petroleum, unlike a Saudi Arabia or a Venezuela. It pretty well buys almost the entire amount of oil it consumes from global sellers. And therefore, it cannot afford to subsidise diesel even while crude oil prices keep rising globally. If India’s economy were a bit stronger, and the government’s finances in a better shape, it could possibly have held on to the diesel prices for some more time. But even then, it would have been poor economics.The same applies to its decision to cap the number of subsidised cooking gas cylinders that a family can get in a year. The difference between what the gas actually costs to produce and the price it is being sold for has been rising – again because of the rise in global crude prices. So beyond a point, the government simply cannot continue to give all cylinders at subsidised rates.Regarding the announcements for foreign direct investment in aviation and retail, well there is no protest against the first one. Aviation is a lousy business and no party can claim that lots of Indian jobs will be lost if foreign investment comes into the airlines sector. In fact, given the current state of most Indian aviation companies, a fair amount of jobs will be saved if some of them get a few foreign investors.The FDI in retail has become an emotive issue for most parties, and all these parties claim that big foreign retail chains will cause the loss of livelihood to thousands of small grocers. If that were true, then even the big domestic retail chains would have had the same effect – but no one has yet protested against setting up a Big Bazaar or a More or a Spencer's or any other big retail chain in their states. Moreover, organised retail – whether domestic or international – actually creates jobs, and also improves price realisation for many suppliers. It also could help in bringing retail inflation down – given that organised retail tends to sell most goods at more competitive prices than smaller shops. At any rate, the central government has left opening up of FDI in retail to individual states – so a state which feels strongly against it can always prevent the Walmarts of the world from setting up shops in their territories.But if the prime minister feels that unreliable, temperamental and opportunistic allies are the sole cause of his problems, he is wrong. If he did a bit of soul searching, he would realise that he had the chance to do a world of good in a host of areas, without any interference from his allies, but he frittered away all his chances. In fact, if he had actually tried to do things properly, he would have been in a far stronger position currently – both in terms of image, as well as bargaining power.Consider all the areas where the prime minister did not need support from Mamata, Mulayam or Mayawati. The first is the power sector. The power ministry has been headed mostly by Congress ministers in the past few years, and it is a sector crying out for some action. It also is one sector where it could probably count of support of allies if it tried to bring in FDI. Yet the government did nothing on the power front – even the states the Congress rules missed all deadlines when it came to improve power. Delhi is a prime case – despite being the capital and seat of power, and despite being ruled by the Congress government, it has not managed to build enough power stations to ensure uninterrupted supplies to its citizens. The Delhi chief minister had said that the state would be power-surplus before the Commonwealth Games were held. Two years post the games, Delhi still scrabbles to get enough power to meet peak demand in summers and winters.Then take the case of roads. Again this is one ministry with a Congress minister. The country needs better highways, and improving roads in the country would do wonders to our economy. Petrol and diesel wastage would come down, which in turn would save precious foreign exchange and help strengthen the rupee. Wastage and spoilage of goods would be reduced. More importantly, roads dramatically change the economy of villages near them. This has been proven in study after study. Building good roads would give the kind of boost that the economy sorely needs. But the government just sat on the roads opportunity, shifting one minister out and brining another in, but without doing anything to accelerate road building in the country.Then there was the UIDAI project which would have assigned a single identification number to each and every member of the country. This in turn was supposed to then help the government move to a direct transfer subsidy system, which would dramatically cut down the wastage in the current subsidy distribution methods. It is assumed that much of the money the government spends on welfare schemes is siphoned away by middlemen – one reason why the poor stay poor. Getting the UIDAI project right, and using it to ensure direct subsidies to the target groups would have both cut down the government spending on schemes such as NREGS and also improved the life of the poverty stricken. But the Congress allowed turf battles to take place between its own luminaries, and the initiative finally went nowhere.Then there was also a chance to better monitor the NREGS schemes to make sure that some assets were really being created in the rural areas. But again, though millions have been spent, few assets which can actually improve the economy of rural India has been created.Finally, there was the enormous amount of money siphoned away during the Commonwealth Games preparations. It happened right under the prime minister’s nose, and a prominent member of the Congress party was the lead actor in this drama. Again, the prime minister and his best ministers let this happen, even when there were enough warning signs and enough evidence that money was being stolen without infrastructure being built to the standards necessary.Finally, there was the Coalgate scam and the 2G scandal. Sure the 2G ministry was headed by a A Raja from ally DMK. But there was nothing to prevent the prime minister and his cabinet from keeping a closer eye on how he was indulging in crony capitalism. Even if he couldn’t take a hard stance against a valuable ally, there was no excuse for the Coal block allocations to fairly dubious corporate entities. Surely, the prime minister needs to take the blame for not ensuring that the screening committee did a proper job of scrutinising recommendations before the blocks were actually handed out. The figures the CAG worked out in the coal scam might be fanciful, but no one can deny that several extremely shady companies did manage to get coal blocks along with some deserving ones.If the prime minister had even focused on the sectors and ministries directly under the control of the Congress, and managed to ensure that these ministries performed transparently and efficiently, he could have taken a higher moral ground. He would also have improved the economic growth of the country even without having to lock horns with allies on steps such as FDI in retail. The prime minister and his colleagues from the Congress party are as responsible for their current problems as anyone else.
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The last week of October saw the launch of the Businessworld SME Whitebook 2012-13 at a glittering event at the Le Meridien in New Delhi. The evening, attended by the who’s who of the SME industry, was an ode to the 3 crore-plus SMEs in the country which form the backbone of the economy. In fact, the same was reiterated by Prosenjit Datta, the editor of Businessworld, in his opening remarks. “While big business often takes up a disproportionate share of media attention, it is the over 3 crore small and medium enterprises in the country which provide crucial fuel for economic growth. By some estimates, small and medium enterprises account for over 35 per cent of Indian manufacturing output and almost 40 per cent of India’s exports.” In the course of his address, he said that while SMEs had to contend with a challenging environment in every aspect, the picture was not totally bleak — factors like cloud computing were helping to level the playing field. The theme of the book this year was small and medium enterprises in the new world order and this was also the topic of discussion before the eminent panel to mark its launch. Remarking on the three-year association with the SME Whitebook project, Reliance Commercial Finance CEO K.V. Srinivasan (also one of the panellists) said that the greatest need for an SME today was information and handholding on its journey from a ‘small’ to a ‘large’ enterprise. While lamenting the lack of institutional support for SMEs, he praised Businessworld for its initiative in this respect and for its choice of subject for the panel discussion, which he added was “very topical”. The panellists represented a cross-section of opinion across the SME space. Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small and Medium Enterprises; Manish Pant, managing director of Luminous Power Technologies; Dinesh Agarwal, founder and CEO of IndiaMART.com; Ramesh Pandey, joint development commissioner, Ministry of Micro, Small and Medium Enterprises; and Srinivasan, were joined on stage by Businessworld executive editor Rajeev Dubey, who moderated the dicussion. To a question from Dubey on what it takes to make SMEs force multipliers, Pant listed skill development, technology and efforts from the government as well as large enterprises. Bhardwaj painted a more gloomy picture, drawing attention to the fact that India ranked a poor 132nd in the World Bank’s ‘ease of doing business’ report, but went on to list finance, roads and policy initiatives such as Goods and Services Tax as some of the measures needed. Srinivasan’s prescription was that more players were needed to extend finance to SMEs as 93 per cent of them remained financially excluded. Click here to view slide show on SME Whitebook 2012-13To a question on whether small enterprises were open to collaborations, Pant was categorical: not enough. He called on industry associations to facilitate greater collaboration. Bhardwaj rued that knowledge was flowing vertically; not in a horizontal fashion. Agarwal, while emphasising that SMEs were smart and adept at acquiring technological prowess, said the need of the hour was simplification of procedures and better infrastructure. He signed off his argument with: if Tata has to run around to set up a business, what chance does an SME have? Pande, from the ministry, responded by saying that the government was pushing the cluster model in a big way to promote tie-ups. On FDI in multi-brand retail, Bhardwaj said the government should have taken a more nuanced approach, bargained harder for greater inflow of technology and information from foreign players. Pant, on the other hand, said he favoured any move that brought the consumer value. SMEs, he insisted, would be partners in any such value chain. Asked about the high cost of funds, Srinivasan said with mortality among SMEs being as high as 50 per cent in the first five years, there was a crying need for more sustainable models of business; this, according to him, would inspire greater confidence among lenders. The panellists were upbeat about technology improving the lot of SMEs. Srinivasan said social media provided a viral platform at zero cost for brand creation; Pande highlighted his ministry’s cloud computing project — Project Badal — a national portal to link entrepreneurs and suppliers; and Bhardwaj urged large software companies to come up with solutions tailored for SMEs. The discussion was rounded off by the audience’s lively interaction with the panel during the Q&A session. This was followed by the launch of the Businessworld SME Whitebook 2012-13 to thunderous applause. Reliance Commercial Finance was the title sponsor, Airtel and Airfrance KLM were the associate sponsors, Black Dog was a partner, Mercedes Benz Financial was the mobility partner and NDTV Profit was the television partner for the event. (This story was published in Businessworld Issue Dated 19-11-2012)
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When Gautam Sinha was appointed as the director of IIM Kashipur in May this year he inherited a fair share of challenges and responsibilities. A make-shift campus situated within an idyllic but relatively ill connected town in Uttarakhand, undergoing teething troubles— from faculty recruitment to establishing academic infrastructure — where the “show was being run” by mentor institute IIM Lucknow. Sinha believes the functioning of IIM Kashipur is akin to running a startup: there are no fixed working hours and there is always a lot to be done. Yet it is a startup that needs to live up to the reputation of a Fortune 500 company in this business allegory. Starting from scratch is always tough; it gets tougher when a formidable reputation as the benchmark in business education precedes your existence.Among the newest of the new IIMs proposed in 2009, IIM Kashipur commenced operation from July 2011 and is the thirteenth IIM to be set up in the country. Even as all the IIMs are “same yet different,” autonomous yet united, the categorisation between the new IIMs and the old hasn’t and isn’t likely to be dissolved yet. The six new IIMs are, however, allied in their ideological standpoints and bound in pragmatic solutions. One of the strategic decisions has been to jointly conduct interviews for the 2013 batches of PGP aspirants for all six institutes. “We don’t have the vast resources; the fairly high amount of faculty involvement required in the selection process and none of us has the wherewithal, so it makes sense to pool, aggregate and conduct the (admission) process together. It saves us the time, effort and maybe if left to ourselves, we won’t be able to handle it,” Sinha reasons.When it comes to drawing up admission criteria, ensuring diversity is certainly part of the design, although, overdoing diversity could result in a whiplash of some other kind, says Gautam Sinha who believes that even this non-diversity (the overwhelming majority of engineers) within business schools in India today is rooted deeply within the larger socio-cultural context that exists. “We can’t run away from the realities of the education scene in India. Unless one is very convinced at the age of 12, 13 or 14 about what one wants to be, everybody wants to be an engineer”, he says while describing how mothers in upper middle class houses across India’s are acutely aware of the sectional cut offs in IITs while fathers draw up extensive excel sheets to compare and contrast the different branches in various IITs their son or daughter should analyse. The ‘holy grail’ of middle class India’s aspiration, all pervasive he calls it. “Changing the admission process will not necessarily change the world outside”, Sinha claims even as he passionately asserts that one willing to change careers can always do so provided (s)he has the talent and zeal for it. Case in point, Sinha left his successful career in the steel and engineering industry to teach In IIT Kharagpur’s Vinod Gupta School Of Management and then moved on to become the director of The Lal Bahadur Shastri Institute of Management in New Delhi before his stint in IImM Kashipur began.Then there is the issue of gender diversity. It made headlines when the 2010 batch of IIM Kozhikode’s PGP programme comprised 30 per cent female students. “Ideally I would like 50 per cent girls in the institute but in order to achieve that I will need to tweak the admission criteria in a manner that would deny many others who deserve to be admitted to the program,” Sinha explains as he goes on to talk about how there are a number of industries where hardworking, sincere women may not want to work. “Would a girl like to go work in a coal mine or a steel plant?” he asks. It seems like a rational question considering there are very few women who opt for such a career. It will still take a few years before that kind of parity becomes a reality, he opines.Opening doors to more students to be a part of the IIM family may be changing the intra-personal dynamic between the premier business schools, but one thing it isn’t resulting in is the loss of exclusivity or brand dilution: Sinha is beyond confident and shirks of opposition to the idea with force and fact.“Around 2 lakh people apply for CAT every year, out of which we select 2,000 which is 1 in 100. When it comes to selectivity, there may be 5 students who fall within the 99.99 percentile rank; when you move to the 99.98 would be 200 and by the time you reach 99.7 the number would have risen to 5,000. If I start counting from the top and stop at 2,000, I will have to do so because of the lack of seats. No matter which process of shortlisting we employ —alphabetical, random selection based on registration numbers or date of birth—there will always be so many people in that percentile rank whom we will not selecting,” Sinha states as he explains the predicament of the number game in the admission process. Therefore it is more than welcome to induct more students from a qualifying percentile ranks in the IIMs and by extension other business schools as well. As for exclusivity being compromised, “ the Chinese president came to India to look at the IITs and said there should be hundred IITs in China,” is his taut response to the subject.Learning From GeographyGautam Sinha expresses how every (physical) location comes with its set of pluses and minuses: it is matter of attitude and innovation that can turn the tide when it comes to terrain. Having lived and taught in IIT Kharagpur for over nine years, he informs how because of its peculiar location as a small town with virtually no social life, it provided students the fillip to spend their time more by engaging in activities as varied from water polo to English drama. “This may not have been the case if a PVR was located nearby perhaps,” he quips. In the case of IIM Kashipur, it is located about 250 kilometres from Delhi but reaching the place isn’t very easy. What makes Sinha optimistic is that fact that “ there are about 50 large industries in a 50-kilometer radius around the campus: from Tata Motors , Mahindra and Mahindra, Bajaj Auto, ITC , Britannia among others.” This creates huge scope for industry interaction as well as students’ involvement in understanding local businesses, which is a mutually beneficial process.The integration of local business and culture into designing new courses and centres is something which has led IIM Udaipur, for instance, to set up a centre for tourism and in IIM Kashipur, Sinha feels the setting up of a centre for sustainable development, which takes into account environmental concerns as well as manufacturing (given the host of industries). The possibility of eco tourism also emerges thereon given the lush greenery that is characteristic of the state. “Just because we are IIMs we can’t be situated in our ivory tower; we have to find a way to give back as well,” Sinha maintains.Problems of perception, however, plague IIM Kashipur to some extent. “When it comes to (IIM) Rohtak vis-a- vis Kashipur, the former can be reached in 2-and-a-half hours from Delhi and it takes about 4-5 hours to reach the latter. Yet for a visiting faculty from Mumbai, Rohtak is still Delhi but Kashipur is far away,” Sinha informs. These are some real problems that can’t be intellectualised to a great extent. Yet, well in the way of recruiting new faculty and hopeful to admit a batch of about 70 students this year (the current batch size is 40), Gautam Sinha is well on the way to make IIM Kashipur a name of its own.
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Shopping, it is said, has a tranquilising affect on women. For men, it is more of a mission. But come the festive season, and irrespective of gender, people get into the mood for it, surrounded as they are, with attractive discounts and tantalising deals. FMCG giants also look forward to the Diwali season for giving the ultimate boost to their sales figures. While the white goods giants, Haier, is cashing in on the season’s vibes with ‘Get blessed this Diwali’ campaign selling its eco-friendly range, FMCG major Godrej is betting on discounts to drive its sales among the middle class. In televisions, Videocon is going the DDB route of digitisation, whereas LG is driving home the “Big size effect” to boost its TV sales. “Some of the products lined up for Diwali are the three-floor refrigerators..., front door automatic washing machines. For the first time, we are also launching 21’’9 android-based television and solar heater to do our bit for environment. Our annual revenues have grown from Rs 970 crore to Rs 1,250 crore per annum. This year, we are eyeing a sales growth of minimum 50 per cent (Rs 1,600 crore) as compared to the last year,” Says Eric Braganza, President, Haier India. Haier’s range of EcoLife products include EcoFresh refrigerators, EcoClean washing machines, EcoSmart LED TVs, EcoComfort ACs, EcoDiet for ovens and EcoSafe for spa water heaters. With assured gift offers and super warranty of up to 11 years on various products, the company is providing more finance options with zero per cent interest rate throughout the season. With implementation of digitisation from 01 November’ 2012, Videocon has been concentrating on its new range of multi-functioning DDB (Digital Direct broadcast) LEDs. These LEDs will be available at discounted rates with free home delivery along with discount on its subscription for 1 month. “Videocon has a sales target of Rs 2,000 crore, which is a target of 20 per cent growth over last year’s festive period . We also have a marketing and branding budget of Rs 100 crore which will be integrated into our advertising campaigns,” said Anirudh Dhoot, director, Videocon. Samsung also follows the same route of ‘Smart’ advertising and has come up with Samsung slim LED TV ES8000 along with ES6200 and ES6800. Samsung ES8000 come with voice and motion control features justifying the Smart TV concept of the company. “The strengthening of the rupee and disbursal of festival bonuses are leading to an improvement in the festive sale of our product. Several offers on Samsung phones are also expected to add on to the overall festive sales of our products,” says VP Mahesh Krishnan, Samsung India.Panasonic and LG have also joined the discount deal bandwagon by offering discounts for their different lines of products, ie, television, home theatres, AC, microwave ovens and washing machines. “To make Diwali more prosperous for our customers, LG is offering a zero per cent finance scheme on certain products to encourage them to shop more.” says LK Gupta, VP, marketing, LG India.Shopping OnlineOnline portals are giving tough competition to shops with lucrative deals for customers. Tradus.com is offering exciting discounts up to 80 per cent on home appliances, kitchen accessories, home decor, gadgets and more. “With no retailers in the middle, our customers get wholesale prices on branded products.” says Krishna Motukuri, MD, Tradus.com.“As Diwali is a festival of shopping in India and thereby a time to hunt for the best assortment at the best price available in the market, we have not only increased our catalogue but is offering it at more competitive rates and express shipping of 48 hrs,” says Nitin Raj, VP Marketing, Yebhi.com.If Dusshera marks the victory of good over evil, Diwali might just be the time to replace old stuff with new ones. So get ready to loosen your wallets, this festive season!
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In face of escalating input costs, stiffer competition and a struggling global economy, chemical industry executives will start using the significant cash on their balance sheets to pursue strategic acquisitions and new product development to spur company growth, according to a recent survey from KPMG International. In the KPMG Global Chemicals Industry Outlook Survey of 156 senior level chemical executives in the US, Europe and Asia-Pacific, 72 per cent of industry executives indicate that their companies have significant cash on the balance sheet - up from 70 per cent in KPMG's 2011 survey - and more than half (51 per cent) say their companies' cash positions have improved from last year. As per the survey, the emerging-market growth by region, China and India were cited as the two greatest areas for market growth. However, West Asia was placed ahead of Brazil, perhaps reflecting recent weak economic performance of the Brazilian economy combined with strength of the Real.Vikram Hosangady, head of transaction services, KPMG in India, says: "India remains a key consumption market for global chemical players as demonstrated by recent expansions announced. We are also witnessing increasing demand for specialty chemicals especially around end user industries like pharmaceutical, cosmetics, and food,"."Despite economic headwinds, the chemicals sector has experienced some positive momentum in the past year," said Mike Shannon, Global leader of KPMG's Chemicals and Performance Technologies practice and a partner in the US firm.Sixty-three per cent of all executives plan to increase capital spending over the next year. For the second year in a row, 100 per cent of the respondents in Asia-Pacific predicted an increase in capital spending, versus 79 per cent in the US and 58 per cent in Europe.Investing in GrowthThe highest priority investment areas are new products or services (35 per cent), and the acquisition of a business (33 per cent). US executives (42 per cent products; 45 per cent acquisition) indicate that they plan to be much more aggressive investing in these respective areas than their Asia-Pacific (26 per cent products; 23 per cent acquisition) and European (36 per cent products; 32 per cent acquisition) peers."Overall, chemical executives are telling us that they intend to put their money to work and boost investment in key areas" added Shannon. "With the struggling global economy, organic growth is a challenge and input prices continue to impact production costs. All of these factors set the stage for aggressive M&A and product development strategies as companies look to gain an edge." 71 per cent of executives indicate that their companies are likely to be involved in a merger or acquisition in the next two years - up from 62 per cent in KPMG's 2011 survey. Once again, respondents in the US were most bullish on being buyers (48 per cent) while European respondents were the most likely sellers (52 per cent).Executives also identified technology (29 per cent) and geographic expansion (27 per cent) as significant areas of investment for their companies. Respondents in Asia-Pacific had the highest expectations for investment in technology (42 per cent), and European executives (32 per cent) plan to increase investment in geographic expansion the most.Fragile Economic FundamentalsDespite the strong focus on growth and expansion, the macroeconomic environment is far more of a worry for executives than this time last year.Paul Harnick, KPMG's global COO for the chemicals and performance technologies practice, said, "Executives in Europe and the US are more concerned about the state of the global economy than their counter parts in Asia. Balancing potential global economic risks with the need to expand into new products and markets to capture growth will be key to success."Less Optimistic Views on Revenue and Hiring68 per cent in the 2011 survey. Executives in the US were the most bullish in their revenue projections, with 73 per cent expecting revenue to increase next year, down slightly from 77 per cent in 2011. Expectations for increased revenue among the Asia-Pacific and European executives decreased substantially in the 2012 survey - Asia-Pacific (69 per cent vs. 96 per cent in 2011) and Europe (60 per cent vs. 82 per cent in 2011). "Ongoing business challenges such as the prolonged economic crisis, volatile input prices and increased pricing pressures are dampening executives' expectations," added Harnick.Executives also appear less optimistic on hiring, with 64 per cent saying headcount will increase next year - down from 71 percent in 2011. Asia-Pacific was most bullish, with 77 per cent expecting to add headcount, followed by Europe at 58 per cent and the US at 56 per cent. In the US 21 per cent of executives actually expect to decrease headcount in the next year (up from 14 per cent in 2011).
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