Indian companies doing business in Europe, or those who have invested there are in for hard times. A FICCI Survey on "Current Economic Scenario in Europe and its Impact on Indian Industry' reveals that over 75 per cent of the respondent companies have suffered loss of business from the European region ranging between 10-15 per cent.As many as 53 per cent of the 30 surveyed companies, drawn from sectors such as textiles, consumer goods, construction, chemicals, IT/ITES, machinery, agro and food and finance, have reported that the ongoing crisis has already adversely affected their businesses prospects in the region. In order to keep their balance sheets stable, over 30 per cent of the respondents have begun to look beyond Europe at Africa, the Middle East, South Asia and even in North America.A worrisome feature revealed by the FICCI Survey is that over 25 per cent of the respondents feel that during the current economic turmoil, rather than facilitating foreign investments and businesses, the respective European Governments have made their processes more stringent in obtaining and renewing long-term visas, work permits, family and dependent visas and overall ease of doing business in the region.The survey indicates that despite the number of policy and regulatory impediments, India's outbound investments in the EU may see smaller deals but the activity will continue. Moreover, a number of Indian companies are viewing the current economic crisis as an opportunity to enhance their investments. To maximise their benefits and to alleviate their business losses in terms of reduced demands in European markets, Indian manufacturers are aggressively pursuing new business plans. This includes increased imports of high-end machinery and technology from Europe due to highly competitive prices being offered by European exporters. This could have long-term spin-offs for Indian industry in terms of added capacities and reduced capital expenditures. Indo-European bilateral trade today stands at over $ 67 billion, making Europe, India's largest and most important trading partner globally. The European Union of 27 countries clearly represents a large consumer base (close to 500 million potential consumers). Its economic, trade and investment policies and foreign investment-friendly regimes are seen as a means to promote employment and capital formation. Some of the other attractions of the EU are well developed capital markets, political and social stability, and established and transparent legal systems. Over 60 per cent of the companies surveyed have indicated that though as of now they have not encountered any barriers related to tariff/non-tariff, subsidies to domestic European companies, if the situation does not improve in the coming six months to one year, the situation might take a turn for the worse.Over 63 per cent of the respondents felt that prolonged over-spending by the governments, inertia in reaching out to new and emerging markets, stagnant manufacturing sector, declining populations, especially of productive category, are some of the reasons for current situation in these countries and beyond in Europe.While a number of surveyed Indian companies have begun to chalk out their international business plans with focus on looking beyond Europe, many companies which are trying to turn the situating to their advantage as the overall slowdown in EU has made valuations of companies there attractive. This will certainly be a positive factor as and when they consider further enhance their investments in Europe.The survey notes that the consistent performance of the Indian economy, clocking impressive growth rates in excess of 8 per cent in recent years at the back of good performance by its private sector, has fuelled the entrepreneurial zeal of India's enterprises. This has resulted in ever- increasing interactions and joint ventures with the European companies. SMEs in India have also played a pivotal role in forging new business alliances with European companies. This is being done to acquire the required technologies and operational expertise to become globally competitive. The skill upgrades and development has added a new momentum to the growing synergies between Indian and European enterprises.In this backdrop, the current economic crisis has far deeper ramifications on the business interests of Indian companies. This includes, holding on to their current level of businesses, furthering their footprint across the region, seeking a more pliant policy framework from respective European economies, easing the process of doing business and seeking easy movement of human resources to complete the existing projects and/or undertaking the new ones.
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T.V. Mohandas Pai, for a long time was one of the key public faces for Infosys, first for a 12 year period from 1994, as its Chief Financial Officer and then for a 5-year stint as its Head of HR and Infrastructure. He was seen to be in the running to become the first non-promoter CEO of the company, before surprisingly deciding to move out, after seeming to have lost an internal power struggle. His ESOP's at Infosys have ensured that Mohan, as he is called by everybody, doesn't need to work for a living. However in his post-Infosys innings, as the Chairman of Manipal Universal Learning Pvt, Pai is as determined and driven as always, to help build the next major success story out of Bangalore. In his modest new office on top of a BMW showroom in central Bangalore, the voluble and charismatic Pai, in an in-depth interview spoke about life after Infosys, plans for Manipal's education business and his other interests. Excerpts :How has life after Infy been? You miss any of the old trappings of power?Look, Infosys is a great company and I was very happy to be associated with it. Played no small role in building what was a $10 million in revenues and 500 people organisation, when I joined, to $6 billion plus with 1.4 lakh employees. I am proud of what we achieved. The Infosys card undoubtedly would open several doors. But people move on for various reasons and I wanted to do different and new things. Also today I have a public persona of my own.At present I spend 85 per cent of my time on Manipal. Am also on various government committees and other activities like Akshaya Patra which consume the rest of my time. I am working with Ranjan who is a great professional and we share a fantastic working relationship. The best part: I walk across to my office from my home, instead of being struck in traffic for hours like in my old job. (laughs). You definitely don't need the money. How did the association with the Manipal group come about and what is your role in the group?Education has been an area of interest for me for a very long time. India with a GDP of $1.75 trillion is at an inflection point. The next 2 decades are going to be some of the most interesting times for growth in India's history. If we play our cards right, we could be a $9 trillion economy in the next 20 years. The one thing which can turn this into a reality is, if India invests in educating her children. We have 119 million children in schools, with more than a few million left out. The quality might be indifferent but important thing is, they are in school. Things like Sarva Shisksha Abhiyan over the last 10 years have improved things.Contrast this with higher education. Only 13 per cent of our youngsters between the age group of 18-24 are going to college. This should go upto at least 30-40 per cent over next 5-7 years, if we have to take advantage of the demographic dividend everybody keeps talking about. If we don't do this posterity will not forgive us. China has 30 million of its young people in colleges, but we have just 14 million. So I wanted to be involved in a sector which can make the maximum amount of difference to this country's future.I came across Ramdas Pai in 1995. Infosys was building its first campus in Mangalore and we had leased a 7500 square feet office space. Unfortunately there was no power. We looked for a place to put up a generator for power supply and the neighboring empty land belonged to Manipal Foundation. Ramdas (Kamat, the current Infrastructure head at Infosys) knew Ramdas Pai and we went and met him. He immediately said please go ahead and use our land, if it will help generate jobs for the local economy and wanted no consideration in return. Can you believe it that for a decade we ran the Mangalore Infy campus on our own generators?For years Pai invited me to be on the board of Manipal University and because of my other commitments I kept postponing. But once I did accept, I pushed him to double capacity at Manipal Institute of Technology. Also Manipal is probably the only university town in India which can be compared to an Oxford or a Cambridge. Was impressed by the Manipal group founders vision towards education and healthcare sectors. Manipal has built a brand name for quality education. Want to leverage that and in the next 5 years if we can provide higher education to 1 lakh more people, at least we would have done something. I want to achieve scale in anything I do, so as to have a meaningful impact. For profit universities are not allowed in India. We will start 5 new universities with an investment of Rs 2000 crore with seed capital from Manipal University. The first in Jaipur will commence this year. The work I do here is my small contribution back to the society.However I do own a 1 per cent stake in the educational services company Manipal Universal Learning Pvt Ltd which is a commercial venture and I also advise on their expansion plans in the healthcare sector. Currently we have around 4400 beds which we want to increase to 12,000 beds on the next 4-5 years.What are your other plans?Ranjan and I are working towards setting up a $100 million fund which will invest in mid-stage start-ups. This will not be at seed funding stage but companies which are looking to scale. We will invest primarily in technology and healthcare companies. We don't want to invest in too many companies because we intend to provide more than money to those companies. We will be launching this fund very shortly.
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Drug firm Elder Pharmaceuticals has announced plans to foray deeply into the growing personal and lifestyle healthcare sector by focusing on creating products for hypertension, diabetes, cardiac care, pain management, nicotine replacement therapy and other pharmaceuticals.With its recently added manufacturing plant in Navi Mumbai, the company has acquired a strong presence in women's healthcare, nutraceuticals, anti-infectives, lifestyle diseases and pain management. The company derives 95 per cent of its revenue from the domestic market and is presently ranked 27th by IMS ORG.The firm's main strength lies in marketing the women's healthcare product, Shelcal, a calcium supplement to prevent osteoporosis, and its extensions. In fact a major part of their products are oriented towards taking care of women's healthcare needs, including infections and the requirements of post-menopausal women. "Elder's focus is on creating a product in a therapeutic category and establishing brand leadership in that segment, apart from developing our own portfolio," says Alok Saxena, Director, International, Elder Pharmaceuticals, who informs that the company has the highest number of in-licence agreements in the domestic market. "Products are chosen based on research and licensed from companies that discovered the original molecules. We stay away from patent infringement, hence the need to acquire so many licences from companies abroad," Saxena clarifies. Elder also has an in-licence with Diawa of Japan for Imbran, an immunomodulator that enhances the body's immune response and is particularly valuable for patients with cancer, AIDS and swine flu. Carnisure, a cardiovascular product, is on a high growth trajectory and will be a major brand in its category. Other key brands include Somazina (for brain stroke), Hibor (low molecular weight heparin) and the recently launched own brand nicotine replacement therapy. Saxena explains that "we are now enhancing our presence in the field of pain management, where we have identified chronic diseases such as arthritis and cartilage disease and have a specific arrangement with two foreign companies to market the products." The company plans to stay in the chronic diseases segment, which requires knowledge and understanding; the products have to be extensively explained to the medical profession for their application. Two drugs, Sampure and Artodar, are specific to this disease. "We have extended our portfolio beyond oral medication to market rubefacients." says Saxena.Nutraceuticals is another area where the company is expanding its operations, catering to cardiac, diabetic and kidney disease patients. Phytomega, which was introduced in arrangement with Enzymotec of Israel, reduces the dose of statins over a period of time and is extremely effective in bringing down levels of triglycerides, the cause of various coronary blockages. It has been clinically proved to be effective and can be deemed as an essential product with statin intake. Ecozyme is a recent introduction. CoQ10 is a vital product for promoting cardiovascular health. The company has created six manufacturing facilities in Uttaranchal, Himachal and Maharashtra for different products. It also has a 61 per cent stake in Biomeda of Bulgaria, which has a manufacturing facility for tablets and is backed by a strong distribution network in that country. This move will fuel the company's growth in the European Union and CIS markets.
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With residential property rates falling, buyers can heave a sigh of relief! Going by the National Housing Bank's Trend and Progress of Housing in India (2010) report and the housing price index or RESIDEX (January – March, 2011) released on Friday, property prices in seven cities across India saw a fall of 2.63 per cent to 17.6 per cent during the January to March quarter. Another five cities are showing a marginal change in prices in the same period. However, three cities, Pune, Lucknow and Delhi, showed an increase in property rates by 2.6 per cent to five per cent.NHB RESIDEX covers the residential properties in different parts/locations of the cities. It estimates the value of the property to be financed and assesses the adequacy of security cover on the outstanding loan. The Residex for the first quarter of the 2011 calendar is a comparative study with the previous quarter. The latest NHB Residex results are in contrast to the previous quarter data. During October to December 2010, property prices went up in 13 out of the 15 cities surveyed, compared with the July to September 2010 data. In the remaining two cities, prices had either remained the same or dropped marginally. NHB is planning to add another five cities to the Residex this year, taking the number of cities being covered to 20.When asked about the possible range of property price correction in the coming months, NHB chairman RV Verma said: "We can't hazard any guess on property price correction as it may impact the market." He added: "There are blips in the property market." NHB's trend report has analyzed the impact (during the year 2009-10) of the operations of Housing Finance Companies (HFCs), Scheduled Commercial Banks and the co-operative sector on the housing sector and the housing finance in the country. ‘Affordable housing for all' --- the national policy of the government of India--- seemingly caught the attention of the stakeholders, builder community and the lending institutions. To support the cause of ‘Affordable Housing', NHB seeks to pursue its interventions and partnerships with National and State Governments in implementation of various financial sector-related programmes and schemes.The report highlights an exponential growth in housing finance during the last five years with the Compounded Annual Growth Rate (CAGR) around 28 to 30 per cent, due to the participation of banks in the housing finance sector.The Wholesale Price Index (WPI) measured inflation at 8.6 per cent in January, 2010 as against 5 per cent in January, 2009 on year-on-year basis. The bank credit growth on year-on-year basis was 15.1 per cent during 2009-10 compared to 19.8 per cent during 2008-09. The National Sample Survey Organization's (NSSO) Reports on Housing Conditions and Amenities in India based on the 65th round survey during July 2008 to June 2009 comprise of the report, with the focus on quality housing, ownership vs rental housing and the housing and the infrastructure conditions in the slums.The housing loans registered a growth of 20.79 per cent during the year March 2009 to March 2010. The Net Owned Funds of the registered HFCs recorded an increase of 26.41 per cent. The Regional Rural Banks (RRBs) have emerged as an important channel for rural housing in the report. NHB sanctioned Rs. 2.25 crore for Housing Micro-Finance (HMF) lending, during the year. Rs 70,640 crore worth home loans were disbursed by public sector banks during 2009-10 . This was mainly on account of low interest rates that prevailed during the major part of the financial year 2009-10 and teaser rates also played a part in that.At the end of March 2010, the outstanding housing loans of banks and housing finance companies stood at Rs 3.16 lakh crore and Rs 1.53 lakh crore.
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30-year old, Pankaj Jain, working in a leading IT company in India, is currently in Germany on an assignment. Like most of his colleagues, he feels more stressed out working in India rather than in Germany.For Sucheta Kerkar, an IT professional in her twenties, who has worked abroad and is now back in India, the managers, the mentality, and the working environment abroad are far better abroad than in India.Dwaipayan Nath, 29, Senior Associate, with Cognizant Technology Solutions says, " abroad you have to be generally more responsible and accountable as you face clients while in India you have to deliver the assignment only." The stress factor can rise more if the client is "too finicky"Akash Goyal, a 24-year old working with a leading MNC, simply did not wake up from his sleep one morning. He had passed away of a massive heart attack, leaving behind grieving parentsHas the Indian workplace turned into a stress-filled minefield? The booming Indian economy seems to have added to the stress levels of those making the boom possible. Almost six in every ten corporate employees in India say they have experienced stress at workplace.A recent survey released by the US-based Regus Group, a corporate consultancy, found that 57 per cent of Indians thought that their stress levels had become "higher" or "much higher" since 2007. What lies behind the stress that seems so typical of today's corporate world?For Pankaj Jain, currently in Germany on an IT assignment, the extended office hours in India is stressful. "In India, we work more hours than in Germany. In Germany, we work from 9.00 to 6.00. In India, we reach office by 9.00 but we don't know when we will go home." Long work hours often lead to high stress levels. Dr. Suddha Sharma a Delhi-based consultant psychologist says "it is difficult for any employee to concentrate for hours on solving a critical problem. The human brain does not support it continuously. But with strict work hours, one is bound to meet stress in life."Today's globally competitive business ambience has also added to the soaring stress levels. While MNCs looking for cheaper human resources to serve their European or American clientele mean more jobs for countries like India, it also means new stress inducing elements. Nishit Arora, 28 year old senior consultant with Cap Gemini in Kolkata says:. "I am working in a US project from India, therefore I have to follow the US clock. This is very difficult at times, as my body clock goes for a twist, I no longer feel like a normal human being, my personal life is disturbed completely." Nishit's plan of getting married is also taking a back seat as his personal and official life is now fully imbalanced. And geographical location of the client is not the sole reason for mounting stress levels. From flexi time and 'remote workers' to dealing with extended supply chains… knowledge work is rarely confined within office hours. "The dimension of work has changed," says Piyali Ghosh, Project Manager, with a global IT firm. "You can't really say when you are at work and when you are at home. With your blackberry and laptop you are always hooked into the system and whenever the client demands, you need to be there." Piyali, a mother of two young kids, says being promoted to a senior position has meant she has little time for personal life.A few MNC employees give thumbs up to 'work from home' policy. "You are somehow stress free when you can escape the long travel time to office," says Pune-based Samir Gathe, 26, senior software developer with IBM. "You just log on to the system and function accordingly, only when an emergency issue comes up, then you need to be brisk in providing the solutions." Work Atmosphere Is Vital Sucheta Kerkar, an IT pro who is back in India after a stint abroad, says the working atmosphere is important. "If you get a project with a lot of work pressure, then obviously you will be stressed out, whether you're in India or abroad."Human resources experts say that companies in India should start training managers to reduce corporate stress. It is important to "encourage people to find joy in the work they are doing," says Professor Abhishek Kumar from the Bhartidarshan Institute for Management in Trichy. "This can only be done by bosses and managers.""If boundaries of time and personal space were respected in India, it would also contribute to a reduction of stress," adds Abhishek. Psychologists insist that if a scheduled and balanced life is maintained, then professionals will be more stress-free and find work more exciting. Dr Bharati Bose, Consultant psychologist with Calcutta Medical College says, "In India most companies grade the attendance of their employees based on the number of hours they work in office, and not the number of calendar days. Getting scheduled leaves sanctioned is a big issue. Thus many tend to work extra hours and balance the office attendance structure to earn the leaves. This attitude leads to serious health hazards, too." Fear Intensifies StressSaurabh Lapalkar, a 28-year old Senior Software engineer with Cognizant technology Solutions in Kolkata, says stress is exacerbated by the fear of not being able to advance in one's career or of losing one's job. His company has a gym and ping-pong tables to reduce stress but there is one slight hitch: "You don't get any time to go there and play or go for a workout."However, Sumit Chatterjee, 26, a senior network engineer with Airtel in Delhi, says regular working hours help him. "We have defined work hours and after office we can utilise time for self development which eases stress to a great level."For Madhumita Saha, a young IT professional, stress increases when there is a sudden change in expectations from employees. "When I joined my company, I was told that I will be handling clients from the UK or US. But after a few months I was suddenly given the charge of clients in Africa. I faced a lot of problems, but I had no option as the job was important to me.""Competition to perform well continuously under pressure, facing major escalation issues from client and/or management, performance-based grades are enough reasons to build stress", says Samir. "The more you worry about your career, the higher your stress levels go up". Implications Of Corporate StressMost experts agree to the fact that corporate stress has opened doors to high divorce rates. Delhi High Court is the only place where Mohit, who works for a successful IT firm, now gets to meet his wife. " We were working for the same company and fell in love soon. Parents negotiated and got us married. But soon after marriage we could not hold on to the love as office work became more essential, and workplace stress just landed us where we get to meet today," sighs Mohit. Adrija Chatterjee was married to Debdeep Ghosh, a 32-year-old senior Executive with a global BPO. "Ever since our marriage, we hardly got time to enjoy our union as he was mostly spending his time in office and even when back home, office remained his priority," says Adrija who is now divorced. It is not only divorce but also physical ailments, broken relationships, and growing suicide rates are also some of the effects of "corporate stress". Sanjay Goyal, a 58 year old Bank Manager with a leading private bank recounts the tragic death of his only son Akash Goyal, a 24-year old working with a leading MNC. "He used to come home often exhausted and dead tired. In the beginning we used to dine together but then he started coming home late and even kept working till the wee hours of the night. And this kept continuing for months, then one day we finally discovered early morning that our son was lying on his bed but he was not waking up. After incessant calls we barged into the room and found him dead. The post mortem said he had a heart attack." The risk of heart attacks and high cholesterol levels are high among young professionals working in IT companies, BPOs and other corporates where work hours are very demanding. The alarms on health hazards led the health ministry in India to finally think of drafting an exclusive health policy for the BPO sector. Change In Policy?Abhik Ghosh, 28, a HR executive with a global MNC thinks HR policies needs to be changed to fight out this problem of 'stress'. "We have lost some best resource this year and post mortem reports says they faced heart attacks. Therefore, our company has now started monthly health check ups for all executives and counselling sessions are introduced."But Anupama Dasgupta, Head HR, Skytech Solutions in Kolkata, does not think "employee engagement activities will help reduce stress." According to her "fair policies from the company and flexible work hours, good interaction among the seniors and juniors will be better instruments to reduce stress."While Ashmita Ghosh (name changed on request) a senior HR personnel with Cognizant Technology Solutions think stress handling is absolutely personal. "People who come to work with us are not school kids who need to be counselled. Matured people should be able to handle the work properly which will therefore help them manage their stress. One should not carry home the workplace attitude or bring the family tensions at work." Ipshita Ray, a senior HR personnel from a global MNC says "Stress factor even if it is there is mostly among freshers and juniors. And this hardly comes to the HR level as a complaint."Good Communication Can Lower StressIf the work is well organised, stress levels seem to be lower. Dwaipayan Nath, says proper communication between management and staff also plays an important role. "If you give a clear task as well as some freedom and liberty to fulfil it and give constructive feedback then I don't see any reason for stress," he says. Psychologist Dr. Bharati Bose says, "relaxation techniques, meditation therapies and yoga exercises should be encouraged among professionals in office". "Biofeedback machines need to be installed in each departments for employees to use them frequently. Some stress reduction workshops need to be conducted and employee participation should be made mandatory so that all may benefit." Experts say corporate stress has grown with global crisis. Some managers might think that it's about the "survival of the fittest", but others believe that only somebody who feels comfortable at work will be able to perform well for the company.
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One of the most spellbinding sights in the world is of the incredibly majestic and powerful Cheetah taking after its prey in a blur of speed and silk. Most times, it wins, but sometimes, it doesn't. Potential ‘prey', such as the crafty deer, know that if you can give the cheetah a good runaround without getting caught, the feline beauty will stop in its tracks. Because it doesn't have the gas, the stamina to sustain its breathtaking run.For Toyota, the world's biggest car maker, stamina equates with the ability to produce cars at breakneck speed to meet skyrocketing demand for its products in India. And it has been left panting in its bid to snare its prey (read market share). In the turbo-boosted automobile market growth of last fiscal, the company was among the few that used its installed capacity to the hilt. Yet, demand for its Etios sedan — a huge hit since its launch in December 2010 — was so high that the waiting period for an Etios stretched up to 04 months. Given its stamina (current capacity), Toyota looks destined to pant for a while. That's because in 2010-11, Toyota India's ‘hilt' was just 83,812 cars; comparatively, Maruti Suzuki produced 1.27 million cars, Hyundai, 594,601 and Tata Motors 363,250 cars.Unlike the Cheetah, though, Toyota can increase its stamina. And that is just what the company announced at the launch of its most ambitious product, the premium hatchback Etios Liva. At the launch, Sandeep Singh, deputy managing director for marketing at Toyota India, said the company will increase the capacity of its first plant — which manufactures Innova, Corolla Altis and Fortuner, all winners — from 80,000 to 90,000 in the third quarter of 2011. And the capacity of its second plant — dedicated to the Etios and the Liva — will be upped from 70,000 to 120,000 units by the second quarter of 2012.Will a combined capacity of 210,000 help the Cheetah fell its prey? Hardly. According to Singh, Toyota hopes to sell 30,000 Livas this fiscal. Given the initial response — 1,500 bookings in the first two days of launch — it already looks too little. Plus the small fact that Liva will square up against the most formidable competition in the Indian automobile market — Maruti Suzuki's Swift and Ritz, Hyundai's i10 and i20, Ford's Figo, General Motors' Beat, Volkswagen's Polo, Nissan's Micra and Tata Motors' Indica. Last fiscal, Maruti sold 8,08,552 cars in this segment, Hyundai 3,23,538 cars, Tata Motors 97,845, and Ford 78,116 cars, according to a report by Society of Indian Automobile Manufacturers.Liva will also have to overcome another handicap; there is no diesel offering. Toyota's logic is surprising. During the launch, Singh said that Toyota's research indicated consumers in this segment drive 2,000 km per month on average, a distance that does not require diesel cars. The logic may be sound, but the fact is that around half the cars sold in this segment are diesel. And its share is rising, given the increasing disparity in the prices of diesel and petrol. It's not that Toyota doesn't have the wherewithal. "We are technically ready with Liva's diesel engine," said Singh at the launch. "But we will analyse the market first and then bring in a diesel variant."Liva, of course, has several factors in its favour, too. The price tag — Rs 3.99-5.99 lakh — is hugely competitive. The ‘Toyota' tag has immense brand value, and will certainly draw in the first lot of customers at least. The company will hope the success of Etios will rub off on its smaller cousin. Then, despite the market growth slowing to 11 per cent in April-May 2011, Toyota sustained high growth at 42.3 per cent. That is even before the Liva has hit the road.This cheetah needs far more gas to sustain its run that it has bargained for so far.
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Sugar is becoming a bitter business for its manufacturers and the sugar industry is seeking reforms in policy. But before that the industry needs to get its house in order. Currently they are a fragmented lot speaking in different voices. As the first chairman of the Sugar Committee of the Confederation of Indian Industry (CII), Ajay S. Shriram hopes to convince the government to introduce changes in the licence raj era, subsidiaries, rules and regulation and policy decisions. Speaking to Businessworld's M. Rajendran, he highlights the hurdles in the sugar industry that need to be resolved while focusing on the importance of effecting policy changes soon to end the cyclical ups and down in sugar prices.Excerpts:The sugar industry is a divided lot, what gives you the confidence that the government will agree to the charter of demands? Why isn't there a single platform to debate issues such as change in controls and multiple governing authorities?The CII National Committee on Sugar was formed to pursue policy actions with the government. The sugar industry needs some impetus to survive since it requires support from all stakeholders especially the government. The industry supports 50 million farmers and their families, provides direct employment to millions of people, helps the entire nation by providing sugar at reasonable prices and moreover aids the government in terms of revenues, rural and economic prosperity. The issues raised by this committee have also been discussed and deliberated with the Indian Sugar Mills Association (ISMA) and other members of the CII.Can you give an estimate of the financial status of the sugar industry in India: the total number of companies that exist, among them how many are loss making, profit making, in brink of being shut down and already shut down. Let us consider a ten year period.The Indian Sugar Industry is highly fragmented. There are a total of 651 mills (as estimated in 2009-10) out of which 62 are public, 269 are privately owned and 320 are co-operatives. In my opinion, all sugar mills are running into losses as of now because prices are ruling much below the cost of production.You therefore suggest that the consumers will not mind a hike of Rs 5 in the price of sugar as it would help the industry achieve better financial results? But people will mind any hike especially when the inflation is on a high.The consumption pattern of sugar shows that two third of the usage is for bulk and industrial consumption and one third for household consumption; thereby making the commodity less critical to calculation of the Wholesale Price Index of individual buyers. The share of sugar is only 2.4 per cent and 1.5 per cent of the total consumer expenditure for rural and urban India respectively. Also, the below poverty line (BPL) population is covered through the public distribution system (PDS) system. From the point of view of household consumption, even for a low income household, a 10 per cent increase in sugar price would result in less than one per cent increase in the monthly food expense.What are key policy issues on which you are seeking changes from government?The key policy issues which need to be addressed the decontrol of the Sugar Industry include a number of points; the first being the removal of levy obligation as the industry is required to bear 10 per cent levy sugar obligation for providing sugar to the government for PDS .This will reduce the financial burden of the sugar industry by around Rs 3000 crore. The second issue is concerned with the linkage of sugarcane prices to sugar prices. A proper and transparent pricing mechanism for sugarcane will help the industry as well as the farmers in strategically planning demand-supply in the market, and thus reduce volatility in availability of sugar as well as prices. The removal of release mechanism and stock limit is also a crucial point. The monthly release scheme should also be dispensed with and the government should itself maintain a strategic stock of sugar. Another major issue deals with packaging. The industry should be allowed to use any food grade material for this purpose to cut down costs and organise its sale and stock handling in a more effective manner. The government prohibits packing in any food grade bags except Jute bags. The industry however wants to bring the best technology to India provided we are allowed to pack sugar in any food grade bags.Stable exports policy under the open general licence (OGL) will help maintain reasonable sugar prices which in turn can be passed to the farmers. At present there are multiple departments and ministries which control the industry. For establishing a level playing field and for removal of regulatory distortions, such conflicts need to be resolved.Is the decontrol of sugar the tonic needed to revive the Indian sugar industry?There are a number of industries such as cement, steel, telecom, etc. that have flourished post decontrol. These industries today have dynamic competition and even consolidation which benefit all the stakeholders. Decontrol of Indian sugar industry will lead to operation of market forces and bring in efficiency across the value chain. It will also lead to self sufficiency and reduction in cyclicality with further diversification of the value added products i.e producing green power and also addressing the energy need of the country through ethanol. Decontrol is also imperative for the prosperity of all stakeholders - farmers, consumers, the government and millers.Where can the Indian policy makers look to find a successful sample?Brazil is a great example how decontrol can lead to prosperity in the industry. It started in 1990 with the elimination of public production and export controls as well as a public centre for sugarcane R&D. Today Brazil is the largest manufacturer and exporter of sugar as well as the largest manufacturer of ethanol for blending with petrol, which has helped in reducing their dependence on fossil fuelsIn India, mechanisation in agriculture has not been a uniform phenomenon. Is the industry concerned about it or is the decision left to the farmers?The sugar industry is continuously upgrading itself technologicall. The industry is working towards implementing farm mechanisation but is still in a nascent stage. For example, In South India, mills have around 100 cane harvesters. This development is primarily driven by the shortage of farm labour and the system of maturity based harvesting organised by the mills in South India. North India has not yet started this process as the farmers harvest their own fields. But companies such as DSCL sugar and many others have taken up mechanisation in the form of trench planting to help the farmers. The industry requires support from the government to disseminate such technology to the farmers on a mass scale.What has been the contribution of the industry in developing crops that can give higher yield with lower input costs?Yields in sugarcane have remained constant. Individual companies are working with farmers towards the process of yield improvement as it in the interest of the miller to work with the farmer to increase productivity. The government and the industry need to work together in researching and developing new varieties of sugarcane which can give yield more and sucrose content.
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Supply chain operations' has been an evolving science throughout the last century and the evolution continues. Going forward, the supply chains of future will exhibit some key transformations. Among others, these will be more transparent, geographically distributed but digitally connected based on equitable-sharing of risks/rewards, innovative and responsible. The focus is gradually shifting - from supplier secrecy to supplier transparency (e.g. HP makes public the list of all its key suppliers, from squeezing greater discounts from suppliers towards sharing profits with suppliers (e.g. Nicholas Piramal India and Eli Lilly's risk reward sharing alliance for drug development) and promoting innovation throughout the supply chains (For e.g. Nestle's open innovation model) Accelerated globalisation has made supply chains geographically distributed. A laptop you are using could be carrying a processor manufactured in Malaysia, display LCD manufactured in South Korea, Battery made in Japan and rest assembled in China running an American software suite. Even this level of distribution is also only a simplification given there are numerous lower level supply chains involved at each stage. While the geographical distribution in itself does brings greater benefits but there is also a corresponding loss of information due to this distribution. This makes the supply chains opaque to both end manufacturers and customers. Opacity increases operational difficulties. According to Ford motors "Knowing what you have and where it is within the supply chain at any given time should be straightforward… But consider an enormous manufacturer, such as Ford Motor Company, which must manage tens of thousands of items, and suddenly the seemingly simple task of knowing what you have-and where it is-becomes staggeringly complex".Further supply chain opacity reduces accountability and allows legal and ethical violations within the supply chain. These violations can lead to financial losses. For e.g. the recall of cadmium contaminated children's jewelry in 2010 caused a revenue loss of around $ 1.6 million to retailers in US which included Wal-Mart (based on LA Times report). The use of cadmium in jewelry was tracked to the jewelry supplier's supplier. The supplier's suppliers were supplying the alloys- zinc-cadmium alloys containing predominantly cadmium- used in these jewelries. While zinc is not toxic, cadmium is considered toxic . For a business like Wal-Mart which depends on a large number of suppliers-100,000 in case of Wal-Mart as per them- keeping an eye on your supplier's supplier is a long shot.In 2010, McDonald's was forced to recall 12 million 'Shrek' themed drinking glasses due to cadmium contamination in the glasses. While the glasses came from the firm ARC international which manufactured the glasses, the Cadmium was traced to the paint enamel used in the glasses. The paint used in glasses further came from the supply chain of ARC international . The supplier's supplier of enamel probably had no visibility that the enamel is finally going to be used in jewelry that will be sold to kids. On the other hand the final retailers had no visibility of the environmental standards of enamel supplier.Therefore greater transparency within supply chains will allow deeper visibility of supply chains to end manufacturer. This would equip them with information required to optimise supply chain and de-risk supply chains further. Finally it is the consumers also who want to know more about the origins of the products they use. The outbreak of suicides at the Foxconn facility which manufactures products for Apple caught sudden headlines. It has been compared to the Nike moment in 1990s when the plight of shoe workers in Asian factories of Nike led to consumer displeasure for Nike products as Businessweek reports. Transparency will lead to greater accountability which will also minimise such branding risks. Responsibility within supply chains will also be improved as they become more transparent to customers.The focus is also shifting from squeezing out lower costs from suppliers towards sharing risks and rewards with suppliers. According to a PWC survey 40 per cent of the CEOs globally expect most of their innovations to be co-developed with their suppliers. Co-development i.e. a collaborative effort between the supplier and end manufacturer inherently shares the risk and rewards of a deal. In fact the recent souring of a supply deal between telecom operator Telecom New Zealand and Brightstar over pricing issue has led to a renegotiated deal. The renegotiated deal brings risk and reward sharing into the contract as stuff reports. Co-development model also allows the end manufacturer to promote innovation throughout the supply chain. In fact some of the most cutting edge innovative product lines are being taken up by companies through co-development process with suppliers like Tesla motors and Toyota motors are cooperating on electric vehicles as msnbc reports. Ford co-developed with WhereNet a wireless vehicle inventory management system that will optimise Ford's supply chain operations and save Ford $200,000 - $500,000 per facility as reported here.Globally the companies have begun to realise these trends and are moving towards creating such future ready supply chains. There are both early movers and late movers. Movers like Nokia which discloses its supplier assessments and targets or Apple which recently came out with its supplier responsibility report have also figured in the top slots of Gartner's top 25 global supply chain ranking. It is important in this scenario that more and more companies figure out how transformations such as these can add more value going forward.Yash Saxena is a sustainability consultant with Emergent Ventures, a climate change mitigating consultancy. He also works on innovation evangelism with Techpedia
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