If IIM Ahmedbad's Class of 1993 had been asked to predict who would be its youngest CEO, on Convocation Day no one would have pinpointed Ved Prakash Arya.Ved was neither an I-Schol (top rankers who got the prestigious Industry Scholarships), nor was he from IIT. In fact dorm-mate Gautam Gode remembers him fretting over mounting Cs and Ds in PGP 1 (the first and tougher year of the course). "We used to tell him to take it easy as we thought he had monumental people skills. And boy, were we right !"Ved's career took an unusual turn from the very beginning. He didn't even take a placement, but went to ESSEC in France on a scholarship for a year. On returning, he joined the little known Hathway Investments owned by Rajan Raheja, which at that time was in the cable TV business. When Raheja decided to enter the business of retail in 1998 with Globus, he picked Ved as his CEO. While shopping at the store - on more than one occasion - I bumped into Ved. Just moving around, talking to the sales assistants, inspecting display. I remember asking him, "You were never interested in fashion, so how do you manage a store like this!" He replied with a twinkle in his eye, "Dheere dheere seekh raha hoon (I'm learning the ropes slowly). Aur batao, how is everything… Family kaisi hai (And tell me, what else? How is the family?"Ordinary words, but when Ved had a way of asking, which made you feel like he cared. It was this kind of personal rapport which became the winds in the sails of Ved's career. Working with promoters, I suspect, came naturally and easily to him. Unlike the more 'intellectual' IIM types.After 6 years at Globus, Ved moved to the Future Group, where he became COO of Pantaloon Retail And a close associate of Kishore Biyani. In 2006, Ved was featured as one of India's 'hottest young executives'. Around the same time I remember reading a report about him getting into the one crore salary bracket. It was quite a surprise then, when in early 2007 Ved announced he was quitting Future Group to set up a realty fund - Milestone Capital. In a major coup Ved got both Kishore Biyani and Noel Tata to join the young company's board of directors. He also quickly managed two joint ventures - one with IL & FS, the other with Religare. Milestone's vision was true to Ved's small town roots. The fund invested in real estate projects in growth-hungry cities like Nashik, Nagpur, Coimbatore and Jaipur. In four short years, the assets under management grew to $1 billion. But that wasn't what I marvelled at when we met Ved in 2009, for the 15th year reunion of our batch on campus. "How did you become so fit, yaar!" was what everyone wanted to know.Never 'fat' but always on the plump side, Ved's nickname on campus was Golu. Well, Golu was now a dashing, camera-friendly CEO; appearing for interviews on business news channels and pink papers. The smile on his face, however, was typical - genuine and unchanged. On 25th August, 2011, all of a sudden, everything changed. In what can only be explained as the Cruel Hand of Fate, a coconut tree fell on Ved while he was on a morning walk in the neigbourhood park. He suffered severe trauma and internal injuries and died shortly after reaching the hospital. It's hard to believe that Ved is gone forever.Why he was snatched away by God at such a young age, we cannot comprehend. It was a short life, but a life well-lived.Filled with energy, vitality and love.Althoug incredibly busy, Ved always had a spare moment to chat up neighbours and kids in the colony. Give his mother morning insulin injections.Be a 'mahaan Papa' and caring husband to Rubi, Tanu and Dhruv. Bschool graduates - past and present - can take away this lesson from Ved Prakash Arya and all that he achieved: "Vyavhaar over vyaapaar" (Relationships come first, even in business).Goodbye, Ved. You will be missed very much by this world.Your untimely death is a reminder to all of us, to live a more meaningful life, to care more about each other. Because in the end that's all that truly matters. Ved had a pioneering spirit and was always full of energy. He was among the youngest leaders who shaped the domestic retail industry. —Kishore Biyani Ved was able to take really quick decisions that enabled him to get ahead of bigger, better endowed players. He attracted really competent people right from the board down to the trenches. —Prof Rishikesh Krishnan, IIM Bangalore, member of Milestone-Religare board There were also so many things in which I was not the slightest bit interested, but Ved being Ved, dragged me along to. Volunteering at the blind school, learning French....you couldn't say no to that energy level!—Gautam Gode, friend and dormmate, recalling Ved in his IIMA days Ved remained essentially the same person throughout his life even though he saw spectacular professional success. I have no doubt though that no person fortunate to have crossed his path would ever be able to forget him.—Prof Raveendra Chittoor, ISB Hyderabad, IIMA batchmate and colleague from Hathway
Read More
Depending on the side you take, when you stop to discuss the land acquisition controversy in Greater NOIDA at the eastern edge of the national capital region, you either come across as a callous social Darwinist or as a bleeding heart Fabian socialist. To add to the angst, you can agonise about what you think of the Supreme Court leaving thousands of flat owners in limbo. It doesn't help that this judgment — Devinder Kumar versus State of UP delivered 12 May, 2011 - has opened the floodgates to thousands of similar claims from other villages. When the wine flows more freely on a weekend as the evening progresses, party wags question the wisdom of the judiciary. As for me, I question the wisdom of those who think anything is fine just so long as urban elite participants of the new globalised India (i.e. people like us) can have whatever they want as cheaply as they can.Let the facts speak for themselves. The reality of land acquisition laws in India is considerably uglier than anything I have ever said (see Land Acquisition Angst). For instance, Section 17(1) of the Land Acquisition Act 1894 allows the Government to take possession of any land within fifteen days of a notice of acquisition without hearing the owners and without making any announcement of any compensation! The chaos currently reining in GNOIDA is a direct result of the Government of UP deciding that the land was urgently required for the "planned industrial development of Greater NOIDA"without hearing the owners because (a) hearing delays would result in squatters may take over the land and (b) impatient entrepreneurs would go off to other states. To take the case of one particular group of villages as an example, the Government notified its intention (under Section 4) on 10 June, 2009 and made its proposal three months later. Within a month after that, the Industrial Development Departmentasked the Law Department for its opinion. Two weekslater,theIndustrial Development Department decided not to wait for an opinion, put up a note and obtainedthe Chief Ministerapproval in early November.The whole process took five months total in a world where the Government can't take out a notice inviting tender in a year! Why didn't the Government ask its own legal department if it could use Section 17? The records show that the government was afraid owners would obtain stay orders! That is not the worst of it. GNOIDA started proceedings to change the use of the land to "Builders Residential Schemes" in September 2009. Please note that in June, the land was notified for industrial purposes and by September the Government had already decided to hand it over to builders for residential purposes! The Government formally proposed the residential conversion scheme on October 30th 2009.The Committee constituted for that purpose considered it on November 1st, 2009, approved it the same day, and the Government notified it on November 9th. By December 30th, 2009, all procedures were complete and the land use had been changed.Now, we need to remind ourselves of several legal principles here. It is true that flats have to be built for workers in an industrial zone too but it cannot be legal to take land for industrial use and then build no industries at all. In law, this is called "colourable exercise of jurisdiction": when power is exercised in bad faith, with improper motive, to wreck vengeance, and so forth. Second, a Government cannot say that it will not follow administrative procedure because it doesn't want its citizens to seek legal protection. Third, a Government cannot take away a citizen's rights to be heard against an acquisition because it is afraid of squatters. Can any Government decide not to follow a law because it is incapable of dealing with a law and order problem?As it turned out, the original residential scheme did not get a good response because of the economic recession in 2009-10. GNOIDA now decided that the best way "to earn more profits" was to utilize the land "for multi storied housing complex, through abuilder's allotment scheme." So here is land you are taking from farmers on the cheap, without hearing them, without making a compensation award and then you are trying to make "more profit"? Surely, that is what in delightful Indianism would be called daylight robbery. The terms on which land was given to builders was scandalous. Plots no less than 60,000 square meters in size — one as large as 2 lakh square meter — was given over at a price of Rs 10,000 per square meter on a down payment of 5 per cent! Worse, the builders could subdivide the land and sublease the plots to third parties. If this is not unconscionable, what is? At any rate, this is not how the Constitution of India works, at least not when people like you and I lose our lands. No man can be deprived of his property without authority of law. When a governmentcompulsory acquires a property fora public purpose, the owner has a right to persuadethe Government to drop the acquisition. The land may be unsuitable, it may cause him grave hardship, other land may be available…who knows what he may have to say. You have to let him show cause and have his say. When the Supreme Court got into the specifics of the cases, the picture only looked grimmer. The record did not show that residential housing was urgently required in the area. The record showed that some land was released from acquisition because the owners had already built houses on them. A large chunk of land was not acquired because it was owned by a politician. In these circumstances, if you were the judge, what would you do?Before you answer that question, let us politically contextualize the issue. At all relevant times, Ms Mayawati was Uttar Pradesh's chief minister who we know is a dynamic lady given to reminding us that she is the "daughter of a sweeper". She started out as a teacher, joined a non-political outfit floated by Kanshi Ram in 1984 and by April 2007, while filing her assembly election nomination papers, had declared her assets at 52 Crores. By the time she filed her income tax returns for 2008-09, her income had risen to 60 Crores even though she had no know sources of income. In explanation, she famously stated that her income flowed as gifts and contributions of ordinary party workers and well-wishers who showered their love and affection on her! By the end of the year 2009, she had joined Shah Rukh Khan and Sachin Tendulkar as amongst the top tax payers in their respective fields. The entertainment did not end there. Since the Income Tax department didn't believe her and started an investigation, her income fell drastically immediately thereafter. In the following year, her income had dropped to a more modest one Crore. She now equally famously claimed that her income had fallen because as chief minister, she could not now accept love and affection gifts.Meanwhile, her depleted revenue stream has not prevented her from building a grand Mughal style pink haveli in the Greater NOIDA area on a 40,000 square meter plot owned by a family trust. The grand parks on both sides of her house - one called Gautam Buddha Park and the other one called Ambedkar Park - are both maintained by GNIODA to a standard that you wouldn't believe any public authority was capable. The pictures are all over the internet. If you had an ear to the ground in Delhi in 2009, you would have heard that builders funnelled large sums of money into political coffers to obtain quick allotments of land without complications. So now, as members of India's righteous and very enlightened elite in good standing, if you were confronted with these facts on a judge's chair, what would you do? On the one hand, you have farmers who have had the land wrenched out of their hands by a state government determined to enrich builders and act in utter disregard of its own laws. On the other hand, you have thousands of future flat owners waving their allotment letters in your face. Which side will you pick? Perhaps, like a trained judge, you will do what 99% of judges in this country do. You will close your eyes in contemplation and say, "a legal issue is placed before me and this is what I have to decide".That is what the Supreme Court of India did.It is another matter that the court did decide to do something about the allotment holders and ordered that their money be returned. This is still a ball in play. All the farmers who are now clamouring to have theirland returned haven't the slightest intention of putting on their dhotis and yoking themselves to an ox to go ploughing in the fields. We know it's about the money. We know that the politicians made their killing. We know that the builders always have and are going to still make a killing. Surely the farmers of all people deserve to make a small killing. If in the bargain, the costs of these flats rise a bit, you know it's all completely academic because in ten years' time, these same flats will still be worth ten times what it costs to buy them. The author is managing partner of the Gurgaon-based corporate law firm N South and author of the pioneering business book Winning Legal Wars He can be contacted at rcd@nsouthlaw.com
Read More
Michael Spence is a former chairman of the Independent Commission on Growth and Development, which focuses on growth in emerging economies. In 2001, Spence received the Nobel Prize in Economic Sciences for his work on markets with incomplete and asymmetric information. His recent book, The Next Convergence: The Future of Economic Growth in a Multispeed World (Random House) lays out a framework for how the global economy will develop over the next fifty years. In an email interview with Businessworld's Jinoy Jose P., Spence talks about the book and beyond. Your book says the recent growth in developing nations is leading to a convergence with their advanced peers. That sounds like an ambitious thought. Could you talk about how this idea came to you? To get there, that is to the convergence conclusion, one needs to think in terms of relatively long time horizons; several decades. I looked at the spreading pattern of growth accelerations with special emphasis on China and then India following. Recently, the significant effect China has had on sustaining emerging economy growth in the post 2008 period after the crisis. Emerging economy growth now seems sustainable even as the developed economies struggle with growth and issues that affect it. This is new and this degree of decoupling would not have been true even 10 years ago, I don't see anything insurmountable that will stop the EM growth. The global economy remains open and an enabler of technology transfer and catch-up growth.There will be sustainability challenges, globally and especially in Asia, (east and south) where most of the growth in absolute terms will occur. Asia will cause the global GDP to triple in the next 25 years. Asian countries (lead by China and India) will have modified the growth pattern of their predecessors in terms of natural resource impacts, in order to complete the journey. You can go country by country and identify these challenges, which are substantial and vary across nations. Perhaps to some they seem daunting. But developing countries understand the growth dynamics and required reforms and policies and have become very good at economic management and at implementing the required adjustments. So while it is not a sure thing, my best guess is that the major economies in the developing world and many more (in part carried by the large economies' momentum) will continue to develop and grow and will join the ranks of the advanced countries between 2030 and 2050, depending on where they are now.We now see how economies, at least a few, in Europe are in trouble. The US is also not a bright story these days. How would you link such a scenario to the central thought in your book?These economies are in serious difficulty. Europe has an immediate sovereign debt and contagion problem. Then they will need institutional reform and greater fiscal centralisation to produce a more stable structure in the future. All this has to be done by agreements among countries with different circumstances and perspectives. It is difficult.The US has dysfunctional politics, a big fiscal challenge and structural issues associated with unbalanced pre-crisis growth. I can elaborate on these. Roughly, domestic demand has declined as a result of the reduction of excess consumption. That means the non-tradable sector and part of the tradable sector are not growth engines. That leaves the part of the tradable sector that is participating in emerging economy growth. That part is growing, but the result is overall growth is weak. In addition, the tradable sector is not an employment engine, and has not been for a couple of decades. That means that the employment problem looks persistent and serious. But the effect will be to slow them down for some time. Both growth and employment challenges will be persistent if either one or both have a major downturn, which will slow the emerging economies but not stop them. Eventually the advanced economies will restore balance. But it may take five years or more. For the emerging economies, the big risk is not slow growth in Europe and the US but a huge downturn. The fact that they have slowed down, while slightly accelerating the rate of convergence. But that is not a first order effect. Do you think there is a structural problem in the way global economy has been managed? Yes. First, the extent of economic integration is much further along than any form of effective global economic management. That is not a surprise. Integration has been very rapid. Developing effective global economic management is difficult and will take time. It requires building institutional capability and trust. And it requires some delegation of national sovereignty. In the meantime there will be unaddressed imbalances and as a result, risk and volatility. For much of the post war period, the US and then the US and Europe dominated and largely provided what global economic management there was. And there was by and large, stability, a functioning GATT, now the WTO, adjustments to the international financial system. It was not perfect but it did a lot of good.The governance and economic management challenge has become larger and harder because the major emerging economies are now systemically important and are rightly and necessarily part of maintaining global stability and balance. But there is now more heterogeneity in the group (particularly the g20, where over 85 per cent of global GDP resides. So we are embarked on a process (probably lengthy) of learning how to manage and regulate the global economy. There are a lot of challenges. It does not help that Europe and the US are preoccupied with their own problems. In addition, crisis and post-crisis policies have caused distortions in the global economy, like large capital flows into the higher interest rate emerging economies, requiring unusual measures to counteract them.break-page-breakWhere do you posit China in the whole thesis?China is the second largest economy in the world, but still has a relatively low GDP. It is entering the complex middle-income transition, with several important structural shifts on the supply and demand side of the economy, which are required to sustain growth. In addition, china is now systemically extremely important, dominating large parts of trade and with 3 trillion dollars of reserves. Their policies have a direct effect on others and on global stability. Thus far, china is handling the balancing of its domestic growth and development agenda with its growing international impacts and influence and responsibilities. India is rapidly moving toward the same position. At 8 per cent growth rates, a reasonable estimate that in terms of per capita income and GDP, India is about 12-13 years behind china. Recent setbacks to finance capitalism prompt many to say that the heydays of free market and finance capitalism are over. In your opinion, do these events show that economies lack proper regulation?One has to distinguish between the financial sector and the real economy. The lightly regulated and self-regulating financial market approach is clearly discredited and is being abandoned. This is the right approach. Financial systems left alone and unregulated, become unstable and do considerable damage to the real economy. That has happened in developing countries in the past and now in the developed countries. Capitalist dynamics and incentives in the real economy, however, properly supported by public sector policies and supportive investments (in education, infrastructure etc) have not proved dysfunctional at all. In fact, it is the dominating and only successful model of sustained growth. There are lots of variants across countries, but they have the common characteristics of price signals, market incentives, decentralisation, and the dynamics of entry, exit, innovation and productivity growth, and also over time, structural change.You say that information technology is one of the most powerful factors influencing growth today. Isn't this thought a bit aggressive?Well perhaps, but I don't think so. Information technology has been the basis of the integration and increasing efficiency of global supply chains, financial markets and multinational companies. It has reduced transaction and search cost. It has (especially in India) made valuable human resources accessible in the global services industries. With 4.5 billion cell phones, hundreds of millions of people have or will have access to information, financial services efficiently delivered, and a host of other services. One needs to remember that up until 15 years ago, most people didn't have access to a phone, let alone the internet, because of the very high fixed/capital cost of the landline system.That said, what according to you are going to be the most important factors that will define this era of global economic growth? Among the dominant themes will be the growing power and importance of emerging markets and related global coordination and governance issues. The shifting of the economic centre of gravity of the global economy to Asia (east and south) is important. So is the reduced dependence of major emerging economies on the advanced economies, the huge challenge globally -- but mainly in Asia -- of finding, over time, sustainable growth patterns that do not put excessive pressure on natural resources and the environment, and the management of the global economy for stability. There are some important advanced country structural challenges in terms of growth and employment that (with the exception of Germany and some of the northern European economies) have not been addressed; the evolution of Europe, either towards greater integration or the reverse. The status quo is not stable and it could go either way. Whether Europe is a unit or a bunch of medium-sized economies will make a huge difference in the global economy in the next twenty years, in all kinds of ways.On a lighter note, you quote Menotti, George Bernard Shaw and Paul Samuelson as a start to the book. That's a deadly combo! Tell us how this trio has influenced you. I just liked the ideas they expressed. Paul Samuelson was a great economist with a unique combination of technical virtuosity and a balanced view of the world. I thought that his reminder that efficiency is not the be all and the end all was an important message and a reminder that distributional issues and inclusiveness are inherently important elements of effective growth strategies, in all countries. The other two, GB Shaw and Gian Carlo Menotti in different ways, seemed to me the capture the importance of humility in the face of the kind of complexity that we face, in all countries, as we make this journey together. George Bernard Shaw captures the importance of flexibility of mind in response to new information and evidence. Menotti is more purely a statement of the kind of humility that leads to an open mind and effective decision-making. In the post-crisis period, humility seems to me an important starting point for reforms and regaining trust.
Read More
On 10 June this year, Bharti Airtel International BV competed a year of its operations in 16 countries of Africa. The last 12 months have been an interesting journey for the company and its top executives. The journey has not ended. Manoj Kohli, CEO (International) and Joint Managing Director, Bharti Airtel is confident that his team will capture significant market share in many countries where it operates. Speaking to Team BW, he took a walk back into last 12 months of Airtel in Africa and shared some of the challenges, opportunities and vision for the company. Excerpts:How is Africa as a market for telecom?Africa is fantastic and an outstanding place as a future market. A continent that is one billion today will be 2 billion in next 30-40 years. It will be more than India and China as a single market. The best thing about Africa is, the median age 17. It is the youngest population of the world; in Indian it is about 25. In the US, Europe, China, Japan—every geography, is graying. But India and Africa have the youngest population. Africa is therefore, younger than India and that is where we come in. Not many companies have taken this bet of $10.7 billion. We have taken a very big bet; no other company in the world has made this kind of an investment. This proves that this continent (Africa) is very critical for us. Globally it is seen as a last frontier of global market growth. What has Bharti realised after a year of operation in Africa? A Fantastic global outlook; it is very clear that Bharti Airtel will be a global corporation, global brand, with a global outlook, global culture, very open and aiming to transform the global ethos. This is a commitment that Sunil (Sunil Bharti Mittal) I and my other senior colleagues of Bharti Airtel have given to ourselves. Why shouldn't a global corporation germinate from India, why only from US, Europe or Japan? It is one mission that we all have and are confident that we will achieve it.After one year, my conviction is that we have taken the right step at the right time as a company. We are digging our heels deep in a continent which is the biggest future market of the world. For telecom, a market is equivalent to its population. If China is going to be 1.3 billion in next 30-40 years, India is going to be 1.6 billion and if Africa is going to be 2 billion, India and Africa will be 3.6 billion markets. Add Bangladesh and Sri Lanka, and Bharti Airtel will have a coverage of 4 billion. This is the potential that we have to leverage and convert into revenues and profits. Both (India and Africa) are youthful markets. What are the five critical lessons you have learnt in this time period?I had set five goals for myself before I went to Africa. The first was that the integration of Africa with Bharti Airtel and Bharti Airtel to Africa, should be seamless and fast. We completed that in 90 days. This must be one of the fastest integrations after an acquisition; a large and multi-country, cross cultural acquisition anywhere in the world. What did it involve?It involved all systems and all processes. We met all the stakeholders, employees, dealers and distributors, government officials, banks and key people and institutions in the 16 countries. We shared with them what Bharti Airtel is and how India is coming to Africa in the form of our company.How did the process of branding go in Africa?Psychologically people in Africa love the red colour. Luckily there were already two good brands using the colour red: Coke and Toyota, 80 per cent of the vehicles in Africa are Toyota. We are the third red and when we launched our brand, people loved it.Was the brand made for Africa?No, but it was made for the youth. It is a youthful brand. We had all the 16 launches in November 2010, our commercials had R Kelly and eight African musicians, singing together and it topped the charts in Africa. The second was a commercial of a boy playing football and third was a joint ad with Nokia on bundling scheme. People loved the brand and the initial products and services that we launched. The Airtel brand was very well accepted and recognised within six months from its launch. It was not easy, since in India and South Asia, Airtel was a known brand but not in Africa. The India connect (in Africa) went to up to Airtel connect. The learning was that the consumers are the same, anywhere; we have to build bond emotions and bond of trust has to be built in with the customers in Africa or India, it is the same.What was the next big challenge?The challenge was to implant our unique business model (managed service) in Africa. It took us about 8 years to do that in India and we are trying to implement it within two years, in Africa. The entire network has gone to our three big partners, Ericsson, Nokia Siemens Network and Huawei. The information technology aspect has been given to our three IT partners, IBM, Avaya and Comviva. BPO and call centers have gone to another three big partners, IBM Daksh, Tech Mahindra and Spanco. We have also taken a huge number of partners for passive infrastructure, such as Kirloskars and Mahindra. About 1500 employees have been transacted to our partners some more will go in the next couple of quarters.Can these employees come back to Bharti Airtel?We have made commitments to these employees that in the next two years if they do not like it, they can come back. But we are confident that will not happen, because we have done this successfully in India. Not even one employee came back. So there is nothing wrong in giving a commitment that will make an employee happy and assured.So this is part of your minute factory…Yes this is part of it.How do you define a minute factory?We define it as, we will do what we know and we know five things: branding, employee motivation, smell of the customers, financing and regulation.Our partners will do what they know the best. It is about domain knowledge; it is not about core and non-core. A lot of people confuse Bharti's model as core and non-core. The BPO call centre business has gone to IBM Daksh and network to Ericsson because they know it best, not because it is non-core.break-page-breakDid you get any help from the Indian government?Luckily the Prime Minister's announcement of $5 billion credit for Africa was timely. And we are very eager to utilise this Indian government's support for our vendors from India. So the vendors will get help from government and us. Local US, German, Japanese and Chinese companies have been helped abroad by their respective governments. It is good that the Indian government is also doing the same. I would say it is a joint venture between the Indian government and Bharti to help medium to large companies to grow beyond India.Will there be a change in the business model…Africa needed a structural change in the business model and Bharti has initiated that structural change. Africa's business model was more Western, a high cost model. We are now introducing this model that is unique, innovative and is lower cost. So sharing of fibre, tower etc. is a very important goal for us to change the business model, not only for Bharti Airtel but for the entire industrial sector. Tower sharing is at the initial stage but every month, hundreds of towers are being shared.Do you think the India model will work in Africa?I want to clarify that this is not an India model being replicated in Africa but a model that has been customised for Africa. A lot of customisation is taking place that is different from India. It may take another 6-12 months to reach perfection, but it will be an Africa model.You said that Indian government has been supportive, what about countries in Africa?Unlike India where you have one DoT and don't have to deal with states, in Africa each country is different with their own the rules and regulations. But the good news is that within six months we have started on a positive note, built joint agendas with the government. We have had exchanges on what each others' needs and requirements are and are jointly working towards the goal. Joint agendas take care of the objective of the government and Bharti Airtel. Today, governments are promoting sharing of infrastructure and asking why are you building new towers? The Tanzanian government for example, said, that we should build a fibre network together; Vodacom, Milicom and Bharti, four of us will build the network. I am confident that we have started a long term commitment with all the governments.So what is for the future?Three big plans for future: first are tower companies. We have already build tower companies in all 16 countries. They are registered as separate companies and in next two months we will start building towers in those tower companies and start moving towers from the existing companies to those new companies. Sharing has already started. Some companies did hesitate in the beginning which is normal, but when we offered our towers market suddenly opened up.Second is broadband internet plans, HSPA, 3G service. As I said Africa has a large youth population and they will love to work on internet and download music. Spectrum has been given in for 3G in 10 countries and the balance we will get it in 1-2 years.The third major plan is M-commerce. India has not yet seen the power of m-commerce. This is a big strategic move that Bharti is taking. Central Bank approvals are in place. By next year we would have launched this in all 16 countries.Have you taken forward the CSR initiative in Africa as you have done in India?As in India, we give free education and books to poor children. The hearts of the governments have been touched by this initiative introduced by Bharti. We have taken special efforts in training youth.Is there a fear and fright of losing out?There is no fear or fright. When we took over in the first few months, we corrected the premium that Zain maintained, which was 30-40 per cent on price over normal price in each country. It was not sustainable and so we corrected it and brought it down to competitive levels. There was no price cut, if the price was Rs 2:80 we brought it down to Rs 2. At no point, Bharti as a culture and philosophy, will go under and start price cutting. Prices are now stable; we would like to utilize the pricing power of Africa. As our costs go down because of the restructuring etc., we will see how we can bring in more affordability. I believe the last few quarters from Africa have been good. Our revenues have also grown and margins have increased.
Read More
The latest innovation in the smartphone arena has come from HTC. The leading smart phone designer has come up with its 3D smart phone called HTC EVO 3D which not only captures and views the high definition videos but also share them at a faster rate. The multimedia phone comes with a 5 MP camera and a much faster processor called the Snapdragon. Qualcomm's Snapdragon S3 1.2GHz dual-core processor enables an immersive glasses-free 3D experience. "EVO 3D is the first smartphone available in Indian market offering a 3D viewing experience without glasses," said Faisal Siddiqui, Country Head of HTC-India during the phone's launch. "This latest addition in HTC's smartphone segment will set a benchmark for 3D viewing."Built on the latest Android technology called Gingerbread (2.3), EVO 3D features the 4.3 inch display and a resolution of 540x960 pixels. The new smartphone is priced at Rs 35,990 and is available at all authorised HTC dealers across the country.
Read More
M&A is going to be the way forward for the BPO industry. Last week, at a summit organised by the National Association of Software and Services Companies (Nasscom),top BPO executives said that the increasing focus on verticalisation or vertical specialisation in the IT and BPO space will see mergers and acquisitions as growth drivers of the industry."Growth companies will look for M&As more than stable ones," said EXL Service Holding Chief Executive Rohit Kapoor. Noting that the industry will witness a bit of acceleration in acquisition activity, Kapoor said reasons for firms going for acquisitions include entry into new geographies, bid to attain size and scale, accessing new customers, and acquiring technology. Kapoor said that EXL Service was in talks with six to eight industry players for acquisitions that could total $130 million."Expectation of a seller and price value of a buyer will match more than ever in this environment," Kapoor said, adding that difficulty in customer acquisition, low cost of borrowing and surplus cash will help companies to snap up strategic fits. Explaining the trigger points for its seven acquisitions in last eight years, Hinduja Global Solutions (HGS) Chief Executive Partha DeSarkar said that the 'hunger for expertise' or vertical specialisation was one of the key driving factors as it is the most practical approach for strengthening presence in a particular vertical.The CXOs observed that creating a new green-field set-up is very expensive in the BPO space, and said that the industry will see more consolidation as it is much more fragmented than the IT industry. DeSarkar said that telecom is an interesting sector and has been evolving continuously. "It's not the easiest vertical to make money in but it's an evergreen growth vertical," he added."BFS (banking and financial services) sector is the new whitespace for the BPO industry, and companies will compete strongly to win clients in the sector," Kapoor commented.The top executive of the BPO arm of the Hinduja Group, which has announced two acquisitions in August, also said that integration of a buyout is as significant as the acquisition itself. HGS entered the human resource vertical by acquiring 3i lnfotech's HR outsourcing unit HCCA Business Services for an undisclosed sum. Earlier, the company had acquired On Line Support Inc, a Canadian customer relationship management company, for about C$75 million. These two acquisitions are expected to add annual revenue of about $68 million to HGS. The company had reported revenue of $242 million in FY 2011."Margins have risen five to six per cent due to verticalisation," iGATE-Patni's Senior Vice President and BPO Head Sanjiv Kapur said. He added that the clients today are focused on outcome-based pricing. "It helps them to evaluate the total cost of operations," he says.iGatePatni, which focuses on insurance, banking-financial services and manufacturing, believes in limiting its focus on few verticals by providing clients a full-range of services. Kapur added that the company will not charter into the territories (verticals) it does not understand as each vertical has its own competencies. The company has operations in the US, Canada, Europe, and Asia-Pacific and provides multilingual support including English, German, French, Spanish, Japanese, Chinese, Italian, and Mandarin.The executives had gathered for industry body summit on BPO Strategythis week. Some of the key topics discussed included globalisation of services, niche opportunities, technology in BPO, virtualisation and consolidation.One of the most talked about topic at the event was the impact of the current slowdown in the market, to which industry leaders gave mixed responses. While TCS' BPO said it saw no immediate impact on its business, others like Infosys and Wipro raised a voice of caution and said that they fear that the sector could suffer due to the turmoil in the western markets.Nasscom sees the Indian IT industry growing at a rate of 16-18 per cent in 2011-2012 despite uncertainties in the US and European markets.
Read More
Bangalore-based e-commerce startup Flipkart is speculated to be raising a $150 million from private equity investor General Atlantic Partners. The four-year-old company has so far raised $31 million from Accel Partners and Tiger Global. Flipkart's co-founder and CEO Sachin Bansal elaborated on the company's growth plans for the current year in an email interview with Businessworld's Snigdha Sengupta. Excerpts:Are you in the market to raise a fresh round of funding? How much and why?We are not commenting on speculation regarding any future rounds of funding.As of March 2010, as per Registrar of Companies (RoC) filings, Flipkart had revenues of Rs 11.6 crore. What were the company's revenues as on March 31, 2011? The cumulative revenue for 2010-2011 under RoC will be in the region of Rs 50 crores. However, we have exited the year at the running rate of Rs 80 crores for the last quarter of 2010-2011.What are the company's growth targets for the current financial year, both in terms of revenues and profits? Did the company report profits as on March 31, 2011?We will comfortably exceed the revenue target of 600 crores that we had set for this year; currently we are clocking sales of more than 1 crore per day. Flipkart became profitable within six months of launch and at a per transaction level, we are still profitable. However, at an operational level we are investing aggressively in scaling up all aspects of our business (technology, supply chain/logistics, customer support & marketing) to cater to a much larger customer base. These investments will keep us in the red for some time to come. We plan to continue investing for growth till we continue seeing a 100 per cent growth year on year.How many book titles does the company offer on the site at present? How will this grow in the current fiscal?Currently, we offer over 10 million book titles on our website. We are already the largest importers of books into India and are among the largest buyers from several leading publishers in the country. We are also actively pursuing tying up with international suppliers in order to make more and more international titles and editions available to our customers. What percentage of your revenues come only from books?While books remains the largest category and Flipkart the biggest online retailer of books in the country by far, it now contributes less than 50 per cent to our revenues. The new categories we have introduced over the past few months are seeing remarkable growth both in terms of customer base and revenue generated. What percentage of your transactions are cash-on-delivery?Almost 60 per cent of our transactions today are cash on delivery.What percentage of the book titles that you offer are discounted? What is the average discount? How are you able to protect margins with a sustained discount policy?We offer discounts on almost all the titles that we offer. The average discount is around 25 per cent on the cover price. The online business model (with low overheads and larger volumes) means higher cost savings, which we pass on to customers in the form of discounts. Amazon.com is set to make an India entry. How do you propose to counter the competition from such as large and dominant player?E-commerce in India is at a very nascent stage. The categories are evolving fast and this growth will only escalate with the entrance of serious players. We do not view this as a development impacting Flipkart's plans to a great extent. We have met all the benchmarks that we had set for ourselves and will continue to do so in the near future.
Read More
When Sachin Bansal and Binny Bansal, founders of online book store Flipkart, set out to raise their first round of venture capital (VC) in 2009, all but two VC firms turned them down. Today, the Bangalore-based e-commerce startup is the toast of the VC fraternity. Since 2009, it has raised $31 million in funding, from Accel Partners and Tiger Global. But this is small change compared to the $150 million that the company is reportedly in line to raise from private equity investor General Atlantic Partners.When BW asked CEO Sachin Bansal about the reported fundraising, his response was a predictable, "We are not commenting on speculation on any future rounds of funding."Further enquiries within the VC community reveal that a deal is indeed in the offing though the quantum raised will likely be $100 million or less. Even so, it will still be the single largest investment in an Indian e-commerce startup till date.If the company does raise the reported $150 million, it will do so at dizzying valuations. For the financial year ended March 31, 2011, the company's cumulative revenues, as filed with the Registrar of Companies, were in the region of Rs 50 crore ($11.22 million), says Bansal. E-commerce startups have been wildly pursued by VC firms in the first six months of calendar year 2011, with over $200 million already invested. Concerns of an investment bubble are not unnatural. That makes Flipkart's ability to execute and scale very important. "Flipkart's success lies in its core technology and execution," says Prashant Prakash, partner at Bangalore-based Accel Partners, the first VC firm to back the company. Tiger Global came in later with $30 million over two tranches. In just four years, Flipkart, which currently offers over 10 million book titles, has sold 2 million items across categories and claims Rs 1 crore in sales per day. It has also diversified its revenue base, with book sales contributing less than 50 per cent. The remainder, claims the company, comes from categories such as music, consumer electronics and personal care. These numbers have been built up using a two-pronged killer go-to-market strategy. First, while the company positions itself as an ecommerce company, more than 60 per cent of its transactions are cash-on-delivery. Online payments are still not as popular with consumers in India as they are in markets such as the US and Europe. However, this also means that the company has to spend more on field staff and logistics to deliver merchandise and collect payments. It currently employs 2,500 people overall. Second, the company offers an average 25 per cent discount on the cover price of every book its sells. Bansal says that the company's low-cost, online model allows it to absorb the discounts without hurting margins.The next eight months will see Flipkart's founders aggressively ramp up its technology, supply chains and logistics and customer support and marketing. Their ambitious target is Rs 600 crore ($133.9 million) revenues by March next year. The speculated $150 million being raised on the back of these growth projections. It could be the deal that defines the future of e-commerce in India.
Read More
