Joseph V Tripodi, Chief Marketing & Commercial Officer of The Coca-Cola Company began proceedings on Day Two of AdAsia 2011 with a request to the audience to watch and balance between relevance and not try too hard to be seen as cool. After all, heritage brands like Coca-Cola have a mix of different age groups of consumers. Tripodi's message to an audience of 1,200 advertising and marketing executives: "Chase teens but also go after the adults." One of the most neglected audience in marketing is the 50-plus age group. And they are the people with money to spend.But that's not the only contrast that marketers have to grapple with. Other contrasts they deal with include, chasing consumption On The Go, while also attempting to increase At Home consumption; chasing modern trade as well as traditional trade. Then, especially in developing and emerging markets, they have to tackle obesity but also fight malnutrition as the Cola companies in particular can use their distribution strengths to penetrate deep into the interiors of every market they operate in. Hence the role of marketers is to be inspirational yet operational, Tripodi said.He warned that as consumer engagement is changing rapidly from the "spray and pray" models of the past to an inter-connected co-creation approach with consumers, navigating the new world of digitisation would be different as the content gets scale with social networks, spreads in real time and consumers get ahead of companies.He said that in such a dynamic environment, large companies tend to be very conservative, but companies like his were trying to find a way out.He said that the Coca-Cola company put 70 per cent of its investments on what works traditionally, 20 per cent to innovate on the 70 per cent and the remaining 10 per cent to innovate and stay ahead of the times. He quoted the Coke Studio attempt to create fusion music in association with music channels as one example of that.Tripodi also said that India remains a strategic market for the brand along with China and Brazil. The brand saw a 17-18 per cent growth in the last quarter, the company has also has seen 21 consecutive quarters of growth in the country. To ensure growth in a market like India, where coke's per capita consumption remains relatively low, the brand wants to ensure both availability, affordability and enhanced manufacturing of products in the urban and rural markets.
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The creativity on display here is quite awesome.You can see why I'm both honored and full of trepidation to have the task of wrapping up three days of fresh thinking.Especially because you've already covered the big issues of the day: the incredible pace of digitization, the emergence of Asia as an economic powerhouse, the shift from brand awareness by consumers to brand engagement.I'm not sure I can really add much to what you have heard.Instead, I want to take you back to the start.I want to sit back and ask, as a CEO, how do we navigate an enterprise through a time when uncertainty is the only certainty? Especially when we have not experienced the kind of volatility we have today in decades.Eighty years ago next fall, a German physicist called Werner Heisenberg won the Nobel Prize for Physics with a simple observation. The more we know about where a particle is now, the less we know about how fast it is going and what direction it's travelling.His insight is known as the Uncertainty Principle. It kicked off some intense debates between Nils Bohr, the father of atomic theory, and Albert Einstein, the father of relativity. At the end of one of their long arguments, Bohr said there was at least one thing they could agree on: "Prediction is very difficult—especially if it's about the future." Wherever you work - in business, in government or in the not-for-profit sector - the world we behold is uncertain."What's new?" you might say. Hasn't the future always been unknowable? Aren't human beings denied the gift of foresight?Well, yes and no.Yes, it's true that human beings have never known what lurks around the corner. But, no, I do believe there is something new and unsettling about the level of uncertainty we face today.Let's think back just a few years. Imagine I had come to speak to you five years ago.I am sure my main point would have been the wonderful ways in which the world had changed for the better.I would have congratulated us all for living through the most prosperous era in the history of the world.From 1990 to 2007, the global economy more than doubled from $23 trillion to $53 trillion.I would have looked back in delight at the agricultural revolutions in the East and the great gains from trade liberalization.I would have noted the wondrous truth that millions of people are alive today who could not have survived in previous eras.Here in India, 159 in every thousand children died in the year I was born. Now the rate is just one third of that.I would have been excited about data travelling the world in the blink of an eye, as the slowness of the old world became a distant memory.I would have remarked upon the spread of the rule of law. And I would have pointed out that, in the last 50 years alone, 65 more countries gave women the vote.I would, in other words, have been full of optimism. I would have described uncertainty as the source of creativity and the motor force of progress.Today, however, I think we have to face reality. There is a new, more negative, kind of uncertainty out there today.The financial meltdown brought the easy assumptions of the old world crashing down.Housing markets collapsed, unemployment levels soared, retirement accounts vaporized. Institutions, from banking to automotives, peered over the brink. Famous household brands just disappeared altogether.Creativity gave way to fear and risk triumphed over ingenuity. As a result, I think we are now living in the midst of three inter-locking crises.The first is a crisis of leadership. At the top of some famous companies, responsibility went missing. One of the great tasks of leadership is to prepare for events, to be ready for when the storm comes.On any measure, leadership failed that test.This crisis of leadership was compounded by a simultaneous crisis of governance. Accountability and oversight went missing too. Nobody said stop when bad practice was developing.Governance failed and it failed badly. The result of poor leadership and even worse governance is that we are now experiencing a severe crisis of expectations.Businesses, regulators and governments are now unsure what success looks like. This complex world feels out of control.We used to see lists of "fastest growing brands". In the past few years I have started reading "10 brands that may disappear this year".Governments are struggling to constrain issues within their national boundaries. Financial, political or social instability in one region spills over into another. Exotic financial instruments introduced complexity into markets which got way ahead of the understanding of regulators.Consumer demand changes in a heartbeat. Trust in established brands and institutions has diminished. Businesses are left struggling to keep up.This is the era of negative uncertainty.But we should be careful not to fall into pessimism. This is also a world abundant in opportunity, if we know how to navigate it. The global economy, which is $62 trillion today, is likely to be $300 trillion or more by 2030 and most of that growth will be powered in places like this.The middle class is going global.The huge increase in prosperity in the East means billions more people in the world will have better schools, running water, better sanitation and better homes. I am delighted too that so much of this growth is being powered by women who are emerging as great 21st Century leaders.Across the globe, women are the biggest emerging market in the history of the planet—more than twice the size of India and China combined.There is plenty to give us cause for optimism. But we need to know how to unlock the potential.Net, net: we now live in a world in which the only certainty we have is that the world is uncertain.The question is therefore: What can we do about it? How can we survive and how can we thrive in this new world?Let me put the solution first in a single word: adaptation. We have to adapt.One hundred and fifty years ago now, Charles Darwin published his classic On The Origin Of Species.Darwin's most brilliant insight, which has stood the test of time, was that it is not the strongest that survive but the fittest. Those who thrived were those who could adapt to the changing environment.I became CEO of Pepsico in late 2006. I have to say it is amazing how rapidly the world has changed since then. The boom of the first half of the decade quickly gave way to the troubled times in the second half. I've seen the importance of devising new rules as you go along.I certainly don't have all the answers – I only wish I did – but I do have five thoughts from what I have learned. I hope they will be useful to you.The first point is that we all have to explicitly recognize that we are in a new reality.From the top to the bottom of the company we have to accept that we are in a new era of uncertainty.We used to plan from a base of relative security. Uncertainty was always a scenario in our planning but we thought of it as something that upset our plans every now and then.Most companies did a one-year operating plan and a three or five-year strategic plan. Each assumed a linear process and, with a few adjustments, you tended to stick pretty close to the original plans.We can't plan like that any longer. These days, volatility is not just the way that our normal lives are disrupted. It is our normal lives.Economic progress is uncertain. Currencies are volatile, many times decoupled from macroeoconomic behavior. Commodity prices are unpredictable and they move quickly.The old fixed calendars of the business year have to be rethought. We have to speed up. We need to start the next plan while the ink is still drying on the old one. We need to be sure that we have uncertainty built into our plans, from top to bottom.We have to think in a wholly different way. Responding to change is not the same as being fickle. We need to learn a wholly new skill.The skill of adaptability.The second point is that we have to lead for today and tomorrow at the same time.More than ever before, we are steering a course through rough seas. We are tossed on the tide and the journey can be difficult.The only way to manage is to fix our sights on the horizon and steer towards a distant point in the future.But, at the same time, we need to attend to where we are right now.Uncertain times require us to have a long term horizon. It is the companies with a clear long term mission that will thrive.But at the same time, investors are understandably more nervous than ever before. They need great performance, here and now.So we have to work on two time scales at once.A good return today and a long-term future; leading for both today and tomorrow at the same time. Not an easy task in a volatile environment.And so I think the companies that thrive in the new era will be those which define a compelling vision of the role they play in society.A good company is more than just an engine for the generation of profit. People want corporations and brands to stand for something.At PepsiCo, we have tried to capture that insight in the phrase "Performance with Purpose".Performance with Purpose is a marriage of the short term with the long term.We don't make the mistake of neglecting our investors. It is their capital that feeds investment for the long-term. It is their capital that enables us to grow. But those short-term results must be sustainable in the long-term.Speed and agility have become our best allies. The only way to function is to be lean and low cost. We need the maximum efficiency today so that we can deliver great performance and invest for tomorrow.That's the task. To lead for today and tomorrow at the same time.My third point is that, in these volatile times, we need to be ambitious. We must make big changes to big things.Great ideas have no borders. We need to be open to new thinking, from new places.The days of incremental thinking are over. The days when the future was built on the solid foundations of the past are gone.Cost structures are being shaken to the core by high commodity costs. Top lines are being threatened by weak economies. Growth is elusive.Competition is more severe than ever. There could be a business model around the corner that renders ours obsolete.So, this is not a time for small changes. We need to make big changes to big things.Innovation is not just about refreshing what you have. It's about rethinking and reframing your whole product offering, your complete service.It's about encouraging borderless innovation, where the clever practices of low cost countries are brought to places where costs are higher.Disruption is now our friend, not our enemy.So my advice is to disrupt yourselves deliberately. If you don't, the competition will.I don't have to tell you about disruption. You've seen it for yourselves.Think of the way that the internet is slowly closing down newspapers. The way that wireless telephony has replaced the landline. The way that new apps are replacing standard services. The way that mass communication has turned into mass customization. This presents a great opportunity to anyone who is prepared to rewrite the rules and learn new skills.We all need to establish internal disruption groups in our companies. Question every practice. Look in unusual places for ideas.The clock speed in this new world is extremely rapid. We need to adapt constantly. Only the fittest survive.What I've said so far is that volatility is here to stay. We have to manage for today and tomorrow at the same time and that we have to make big changes to big things.And, as the CEO, you have to do all this with your leadership team. You have to make sure they are capable of going on this journey with you.This is my fourth point. Attracting and developing the right talent is now perhaps the most important leadership task.Leaders in the new era will need courage, confidence, perseverance, accountability, openness to new ideas and the ability to manage rapid change. It's quite some person we're looking for.I know I have some fabulous leaders at PepsiCo and I am sure you all do too at your companies. You may even be one!Their experience is invaluable but we are constantly thinking how we retrain people in this age of change, so we allow experience to adapt.For example, a lot of our leadership talent grew up in the West, with Western models. We now need to expose them to the East and bring back its unique ideas. And we are looking for ways to export our Eastern talent to the West.We are also looking for ways to give our young leaders experience across business geographies.And we look to augment that great experience with new blood. Because new people come armed with their new thinking. And we know that we need to be open to new ideas. We need a team that is diverse. A team that spans the whole range of ages, of nationalities, of ethnicities. We need to tap into their talent and recognize that because ideas recognize no boundaries, neither should we.And we need to develop and evaluate these leaders differently. We realize we need to recognize and reward the ones willing to go outside the usual conventions.The whole process of leadership development needs to be rethought.In the time of volatility and uncertainty, the way we buy, broaden and bond our talent will be the key to whether we atrophy, just survive or thrive.My fifth and final thought for the time of uncertainty is that it is vital to be super-visible as a leader. We need to communicate all the time.Every organization has to understand the vision. Every organization needs to know what the realities are. And everyone needs to know how they are moving forward.If the leader doesn't tell them, someone else will. There will be press speculation. Rumors will circulate in the workplace.Uncertainty breeds anxiety. It's natural for people to be concerned. The best way to deal with this is not to deny that it's true. It's to open the door and let people in.Talk to people and listen to them. It's always been good advice for leaders but now it's imperative.Leadership is not just a rational thing. It needs an emotional connection.Leaders need to remember that many of our colleagues have family members who may have lost their jobs lately or who are recent graduates with few prospects.Many of our colleagues thought they were on a straight career path. Now they find that they have to learn new skills, adapt to new circumstances.External stakeholders have to feel that they are part of the family too.And we have to make sure that Boards of Directors understand how companies are marrying the short and the long term.No leader can promise to make change disappear. But they can help to guide people through it. It is the only way to take people with you.I am conscious that I have spoken as a CEO and my main message has been that the answer to uncertainty is creative adaptability.That creative thinkers need to be liberated. And I want to say a word about the most creative among us—namely, all of you, the marketing and ad gurus.I would not dream of telling you how to do your job so I want to leave you with a few questions. I know this is the end of the conference, not the beginning, but it is always good to leave a conference with some important questions ringing in your ears.In an uncertain world, brands provide continuity and stability. But do the old methods of connecting them to consumers still work?I am constantly surprised that the tried and tested TV commercial is still the dominant ad mechanism even among all the new social media.Do big advertising ideas really still have the same impact that they did? Are they cutting through the noise on the airwaves? Are they working effectively in the digital space?In a world where mass communication has gone to mass customization, has marketing, as a function, adapted? Have advertising agencies disrupted themselves for their clients and their future?Your world too has turned upside down. And you have traditionally been the creative leaders. Ask yourselves too: have you changed enough?Have you really rewritten the rules yet?Outside, there is a lot of fear and trepidation around.But I do believe that we can generate opportunity from uncertainty. I retain great faith in the power of human ingenuity to overcome the problems that human beings have set themselves.This is your rallying call. This is your opportunity. Your chance to shine.The future has never been made by predictors or skeptics. It has always been made by dreamers and doers and innovators who embrace uncertainty, those who seize the day to shape the future and show us the way forward.Those businesses are the ones who are able to say they knew what they were for and they followed that mission, everywhere and at all times.I leave you with the words of the psychologist Erich Fromm:"The quest for certainty blocks the search for meaning. Uncertainty is the very condition to impel man to unfold his powers."
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Noida-based StoreMore.in's business is unique and quite apt for Indians who have an affinity for hoarding old objects that hold emotional value. A pen that grand father gave on graduation day, a trophy won in the fourth grade and a stereo bought from one's first salary which every mechanic has refused to repair. This website offers to store all those at a rupee a day (along with other packages) at their warehouse.StoreMore.in was founded by Amit Wilson and partner Nitin Dhawan in June 2011 — as a second thought soon after they launched Star Records Management in May 2010 — an office documents storage business for entities such as law firms, marketing companies or government departments. The service is currently available in Delhi and the NCR.The concept of self storage is very common outside India especially in the United Sates but to Wilson's mind, self storage in India is unworkable. He has a valid point! Indians are service oriented people looking for services at doorstep. Whether we order a pizza, a refrigerator or a kg of potatoes we want it to be delivered as per our convenience and that too for free!Wilson twisted the self storage concept and came up with an idea where you could store anything that can be fitted in the (15 x 12 x 10) inch box. All you have to do is place an order and a pick-up person turns up at your doorstep collects the boxes and takes it to the 3500 sq.ftwarehouse. Should you need any of the items, mail the company with the bar code number ofthe box, it would be delivered at the doorstep for Rs 200 every trip.The warehouse is fire proof and is secured by automated locking systems. Pest control is conducted every 15 days."The business concept sounds interesting to many and a lot of people tell us that our website looks great but when it comes to placing actual orders hardly one per cent of the total inquiries materialize into business," says Pooja Kothari, Wilson's business as well as life partner. StoreMore.in gets about 87 unique visitors and 156 page views everyday, according to hypestat.com.Currently, StoreMore does not store items that might be bigger than the size of the standard boxes on offer and Wilson is still in the process of deciphering a business model. "The challenge with household items is their varied shape and sizes, storing them require much more storage space and you cannot stack them one over the other like in the case of boxes," Wilson explained.He gradually wants to start storing steel trunks that are commonly found in Indian houses since they are huge and sturdy to store on one over the other, but he hasn't yet thought about storing big items like spare furniture or a spare television.The business concept is unique and since there is no competition in the industry, Wilson has the first mover advantage. He is already exploring opening franchises across India and is also in process of finalizing funding for the business. Storage has been a concern and will continue to be a major problem for businesses and also for individuals as real estate prices shoot up, and StoreMore business model can tap on to that shortage.However, StoreMore has taken long enough to narrow down to a business model – what to be stored, how to be stored and what prices to be charged for items that cannot be fitted into the standard boxes. Looking at international models of store houses or studying the packaging and shipping standards of US's fedex could come in handy for the company.
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If you are interested in any fast driving activity and want to try some advanced driving techniques on a fast car then consider this: You can now drive the Lamborghini Aventador LP700-4 on the Formula 1 track at Buddh International Circuit. Powered by 12 cylinders and 6.5 engine, the Lamborghini Aventador can accelerate from 0 to 100 km per hour in just 2.9 sec and vaunts a top speed of 350 km per hour, which makes this machine one of the fastest street-legal cars in the world. Hence, this is not the type you would see whizzing by on a regular street. The Italian luxury sports car-maker Automobili Lamborghini SpA in partnership with Exclusive Motors, the official importer of the luxury cars, plans to conduct owner-training programmes on the Formula 1 track at the Buddh International circuit very soon. This will give an opportunity to the near-fanatical owners to try their hands in various driving stunts like drifting etc."We have various driving academies in Europe and China and we used to take our Indian customers there, but we can do it here now. We are definitely seeing that option," says James Page, marketing manager South East Asia and Pacific, Automobili Lamborghini SpA on the sidelines of the Lamborghini Aventador LP700-4 launch today. The car has been priced at a whopping amount of Rs. 3.69 crore (ex- showroom, Delhi). Exclusive Motors already got 20 bookings for the Lamborghini Aventador so far, however the waiting period for this car would be 18 months. Worldwide, almost 1,500 units of the same model have been sold since its launch in March this year. "India is an emerging market for sports cars, which is quite evident from the successful Formula 1 race event. We want to double the booking amount next year," says Page.At present, overall as a luxury sports car category, at around 100 units are being sold in a year in India. "Sales are beginning to pick-up now and we can clearly see a growth of 30 per cent in this category," says Satya Bagla, managing director, Exclusive Motors.
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For 24-year-old Tabish Ahsan, 2009 was not the best of years. The student of business administration was hoping for a well paying job in a reputed MNC but the aftershocks of 2008 meltdown left him without a job.After six months of struggle, Ahsan and his friend Saral Budhiraja came up with the idea of starting theshoespa.in and by July 2010 the site was up and running."Back then starting this business was more about necessity rather than passion," says Ahsan. "We had heard of such a service in Mumbai but no one offered it in Delhi-NCR. The investment required was not very high so we went ahead with the idea."Ahsan always wanted to get into a restaurant or café business but that he felt was too risky and required a lot of capital. A budget constraint and an easy marketing strategy drew him towards the idea of an online services business.Six months into the business, Budhiraja found a job and decided to quit the business. In the initial phase, both the business and the partnership found it rough going and Bhudhiraja opted out. Ahsan on the other hand was convinced that this unique business idea will click, though he too was often flooded with doubts. Ahsan held on to the business by buying off his partner's stake for about Rs 6 lakh – 50 per cent of the initial investment.Today Ahsan's revenues fluctuate between Rs 65,000 and Rs 2 lakh a month but he is still six months away from breaking even. Ahsan has come a long way since the early days! "There were days when I used to collect shoes on my own from customer's doorstep, repair them in my backyard," he remembers with a smile. "Then there were days when I had no orders at all," says Ahsan, who still takes all orders by himself over the phone, though for collection he has recruited three boys.The business has fluctuating margins complaints Ahsan. Collecting shoes from the doorstep, repairing it, paying the hired staff of 13 people and then dropping it back to customer doorstep is quite a burden on company's fragile shoulders. Not to forget the marketing expenses the business has to afford."One round of a certain place in Delhi could sometimes fetch us two pair of shoes or sometimes 10 or more," Ahsan says. After being in business for almost one year now, theshoespa gets monthly orders between 500-700.Though the company makes some money at the end of every month, Ahsan believes once the scale comes in, the margins will improve and that will be the time when Ahsan will start accepting a salary. Currently, he chooses to put back everything that he makes into the business.Though Ahsan survives without a fixed monthly salary for himself, he has hired 13 people and pay them salaries anywhere between Rs 6000 and Rs 10,000 a month, depending on the work profile and experience.Ahsan believes skilled workers, who specialize in chemicals and leathers, are hard to find and hence even in the early stage of business he had to keep the basic salary high for technicians fixing the shoes. "About 60 per cent of the job is still done by hand and thus more than a technique, the job is about skills," he says.Learning about repairing shoes wasn't an easy job for Ahsan as well. "This is such an unorganized field. You can't find a book in the market or a set formula on how to repair a shoe, it comes with experience and so we keep experimenting."Ahsan spent his initial few days observing and meeting experts who repair/ dry clean leather accessories in Agra, in Delhi's Karol Bagh area etc."Initially it was really disheartening to see our customer being disappointed even after doing everything possible we could have done on the shoe," Ahsan adds.The business is still restricted in and around Delhi and Ahsan is going slow on scaling up. Even though the idea is unique and there are only a handful providing this service in an organized way, there is still a need for rapid expansion. Ahsan now needs to stretch out to other areas and other markets of the country before someone replicates the idea.
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Google India's challenge — to set up in ‘15 minutes' a free functional website for each of the 76 lakh Small and Medium Businesses (SMBs) in the country. In India, only about four lakh small and medium businesses (SMBs) have a website, out of an estimated 80 lakh SMBs. The initiative is designed to bridge the information gap that exists online due to the lack of local Indian businesses on the Internet. SMBs in India often believe that getting online is too complex, costly and time-consuming; this perception prevents many SMBs from taking the first step towards building an online presence. But Google India is confident that it will be able to change the perception. "We have received tremendous response to this initiative in other countries," says Nikesh Arora, Senior Vice President and Chief Business Officer, Google Inc.This huge potential business is expected to be tapped by a nationwide initiative from Google India — ‘India Get Your Business Online'— that offers a free website, personalized domain and hosting. The domain is free for one year.Its immediate target is to capture five lakh SMBs to get them online in next three years through this programme. Google India will work with web hosting provider HostGator in this initiative. V.K. Agarwal, President, Federation of Micro, Small and Medium Enterprises (FISME) said: "It is going to be a game changer." FISME with its network of 730 MSME associations will help the Indian Small businesses to make the most of this opportunity and benefit from this program.Encouraging the SMBs to adopt the online medium to expand their business, Jairam Ramesh, Union Minister for Rural Development said: "SMEs are the future business leaders of India," and for them to grow to become recognized Indian brands globally, presence on the Internet is absolutely essential.Dinesh Agarwal, Founder & CEO, IndiaMART.com, welcomed the Google initiative saying it will certainly help in bringing more and more SMEs to test online shores and benefit from it. In addition, it will further build credibility of internet among them.He said this will enable SMEs to look beyond the traditional geographical boundaries of their local market, city, region or country. Even with paid options, these are still much more cost effective than traditional routes. Such initiatives will eventually build a stronger SME ecosystem. THE ONLINE MOVE Free: It's free to set up your website. The domain is free for 1 year, and it's free to maintain your website for 12 months. Quick: The website tool takes 15 minutes from sitting down to being found online Easy: You don't need to be a tech whiz to get started. All you need to start is your address, phone number, TAN/CIN or PAN to verify you as a business The website is simple because customers are looking for simple information online If you want to make your website work harder, you'll have access to steady stream of free tips and tools from the Getting Indian Business Online team and a free coupon of worth Rs. 2500 INR advertising trial from Google AdWords to help promote your site. Gives you your own .in domain You get a Google Apps account - free personalized email ids Other features include photos/logos, integration with social media platforms After the first year, SMBs can choose to pay a monthly pay-as-you-go to maintain their website using HostGator. At the end of the first year, they'll have to pay a nominal charge if they wish to renew their domain name. They can cancel their website at any time.
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India Factoring and Finance Solutions — a joint venture NBFC between Punjab National Bank, Malta-based credit institution, FIM Bank Group, Italy-based Banca IFIS and Blend Financial Services of Mumbai — is in the business of ‘factoring' - providing trade finance services for small and medium enterprises (SMEs) and small-scale industries with a special focus on the ever-increasing international (export and import) and domestic factoring.India Factoring CEO Sudeb Sarbadhikary talked to BW's Tanushree Pillai about what ails the SME sector and what needs to be done.Excerpts from the interviewHow did India Factoring come into being?Ours is a Joint Venture between FIM Bank, with 49 per cent stake, Punjab National Bank with 30 per cent stake and other minor investors (Banca – with 10 per cent stake), Blend Financial with 1 per cent. The rest 10 per cent is held in Employee Stock Options (ESOPs).The MoU was first signed in 2009 and we went to the RBI for a license in March 2010 and we have been in the business since October 2010. India Factoring operates its business from Delhi, Mumbai, Chennai, Bangalore, Kolkata, Ahmedabad and Hyderabad.What is it that India Factoring does?We do what is called ‘factoring' – which is essentially receivable financing. In a B2B environment, typically, there are credit invoices (across the table payments are rare). Large corporate procure from smaller vendors and the vendors mostly get paid about 3-4 months later.Effectively, the receivables are assigned to us and we finance these suppliers and we collect the money from the final buyers. These small vendors mostly have small balance sheets and do not have the adequacy to get banking finance. With us in the picture, they get the flexibility to raise resources. That's the principal benefits for these small vendors and hence, our aim is to provide liquidity to the SME sector, although our risk is on the larger corporate.SMEs are always challenged for funds and have to raise funds from elsewhere. This sector plays a vital role in the growth of our economy by contributing 45 per cent of the industrial output, 40 per cent of exports. It also provdes 42 million jobs. Less than 20 per cent of bank finance goes in to the SME sector, so there is a huge lacuna there.The interest is charged from the SME. We are pre-paying the invoices. Sometimes, there are deductions – like a back up cover (typically 20 per cent). We currently have 100 clients on a pan-India basis. Our focus will remain on the SME sector and we aim to triple our client base by March 2012. Our stockholders give us a committed capital as and when we hit different milestones.We are investigating possibilities of reaching geographical areas where there is a huge SME presence – like Coimbatore, Pune, Chandigarh. We recently forayed into Punjab and Haryana as well.What is the basis of this geographical area selection? For us it was important to have a pan-India presence from the beginning. My client could be in Mumbai, but it could be providing receivables to his client in the south. We recently received permission to do export factoring, which will help SME exporters. We are also part of IFG – International Factoring Group – we can use their skill sets to assess buyers in different countries - which helps us support Indian export to these countries.Most of our clients are from the manufacturing side, although we do have exposure in auto, textile, IT, hardware and software companies. Our association with PNB has helped us a lot in reaching out to clients in rural India too.How big is the factoring industry here?Current turnover for the India factoring industry would be about Rs 200 crore. There are five independent companies, and some banks are also present.There is SBI Global, Canbank (Canara Bank subsidiary), IFCI Factors, Bibby Factors (UK based), along with India Factoring. HSBC, DBS and Standard Chartered banks too have an embedded factoring desk within the bank.There isn't much awareness about factoring here. Currently, there is a bill that is being tabled in Parliament. We are hoping once the bill goes through, there will be more players, more education.Globally, factoring is a huge industry. About 60-70 per cent of procurement for big retail brands is through factoring. The reason why this industry is so huge in developed markets is because of laws clearly defining the industry. For a factoring company, the biggest challenge is whether it has a right on the receivables. Here, in India, there no clear laws which explain what a factory company can do in the event of a non-payment.What happens when no payment is made to the factoring company?In that event, we would recourse it back to the SME – which is the reason we are not aggressively pitching to extremely small enterprises. We need to be comfortable about the fact that the SME will pay us even if there is no final buyer in the end. This in a way has inhibited the growth of SMEs. What is forfaiting?Vendor forfaiting is a trade finance where financing is done on a completely non-recourse basis. It involves purchasing of credit instruments like letters of credit etc on a non recourse basis from the seller of goods.These instruments are supported by buyer's bank and hence have an obligor risk which is mainly a bank/financial institution risk. The forfaiter deducts interest (in form of discount) and pays the residual proceeds to the seller on non-recourse basis.How it works is that the seller ships/provides goods/services as per its contract and submits necessary documentation to us or to our bankers. Trade documents are transmitted to the importer's bank for acceptance and/or assignment of proceeds to us. On receipt of such confirmation, we pay discounted proceeds to the seller on a non-recourse basis and we assume payment risk of the importer's bank.The letter of credit is the responsibility of a third party. This product is engineered for exporters who typically work with developing countries. Forfaiting is a service-based business and it's mostly our factoring clients who use the service.
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Information and Broadcasting minister, Ambika Soni has advocated the need for the Advertising Standard's Council of India (ASCI) to speed up its mechanism to review consumer complaints on misleading advertisements, thereby making the self-regulation machinery more effective. Addressing an audience of the advertising and marketing fraternity, at a conference organised by ASCI on 17 November, the minister stated that, "Self regulation is an evolving system in response to the growing aspirations of the consumer or the common man. Advertising is the principle motivator of growth in consumer demand, thus making the role of a creative person extremely significant. The current self regulation mechanism has evolved as a result of the concern shown by the consumer". Also, present on the occasion, Chairman of Advertising Standards Council of India, I. Venkat highlighted the various initiatives undertaken by the ASCI in recent times. "As part of our evolving self-regulatory system, we have increased the frequency of our Consumer Complaints Council's meetings to twice a month since November. The Fast track service announced recently has already received a positive response. CCC has already reviewed 8 advertisements until now under the Fast Track system. The support we expect from government will ensure that ASCI continues to create global standards and international benchmarks in self-regulation of advertising content," he stated. Rajiv Takru, Additional Secretary, Ministry of Information and Broadcasting further highlighted the need for advertisers and the ASCI to create mechanisms that "don't put society in to a situation of a back-lash, where in the government setups have to step in". He urged for a need of transparency and ethics to be followed by advertisers. Alan Cullaco, Secretary General, in response to the Minister's appeal, seemed content with the Government's, "we are being supportive of what the minister has said. The strength of ASCI lies in the fact that our Consumer Complaints Council remains fiercely independent". The Advertising Standards Council of India (ASCI) is a self regulatory voluntary organization of the advertising industry working towards the cause of self-regulation in advertising. The council routinely looks in to consumer complaints regarding unethical or provocative advertisements.
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