For most small and medium businesses (SMBs), buying a printer is often a matter of going and finding a multifunction device that suits their requirements in terms of print costs and speed. Over the years though, this space has not changed dramatically, with the core components -printing, scanning and copying -largely staying the same, except that print quality has gone up and prices down. Could the LaserJet Pro M275 a.k.a TopShot, HP's innovative 3D scanning multi-function device change all this? At its most basic, the device adds a second scanner, via an arm that sits above the device. The embedded camera then allows you to scan in any 3D object small enough to sit below it and fit in an area no bigger than an A4 sheet of paper.It's a rather novel concept, and a number of applications immediately come to mind. Want to show your friends the papier-mâché mask your kid made? Or how about the jewellery or handicrafts you produce? Or the product you wish to auction off on eBay? Just place the product on top of the M275 and hit scan. The result will be a high-resolution 2D photo of your device created by combining 6 different images that the camera takes from different angles. The image processing removes the background leaving you with a clean object image. You can then either print this image or instantly upload a scan to the web. The HP Topshot LaserJet Pro M275 will be available in Asia Pacific in early 2012, and pricing is yet to be announced. John Solomon Tushar Kanwar discussed the TopShot and HP's Imaging and Printing Group (IPG) at large with John Solomon Senior VP, Asia Pacific/Japan HP IPG at the HP Innovation for Impact Summit recently. TopShot is very novel and innovative for the space, but where do you truly see it being used?We don't know yet how broad the applications are going to be, we've launched one product and while we're excited about it, we want to see what the consumer reaction to it will be. The initial focus for us is that we think it has a great ability for a simple workflow, because while there is a wow factor (which is nice to sell a product), but what we want to look at is how do we make SMBs more productive. And since a lot of SMBs are in the business of selling and demonstrating their products and services, TopShot is not just a cool new way to capture it, but also from a workflow perspective, it enables them to showcase their products on a website very quickly. And going forward, much like we did with ePrint, we'd be interested in looking at how we can apply what we learn on this one model to proliferate such innovations (assuming it's well received) across other lines of our products.Let's talk about ePrint for a second. You've been in the market with ePrint for well over a year, what's the response to ePrint been like, especially in India?In general, the interest in ePrint has been extremely high. With this feature, every print job is sent through an HP server, so we actually know how many pages are printed and how people are using it. The thing with applications, especially on the mobile space and the Apple app environment, is that most people use it for a week and then they stop using it. We've found it's different with ePrint; consumers try it, they like and they continue to use it. They may use it less, but there isn't that steep a drop off because fundamentally it is such a useful utility, and in my case as with many others, they've incorporated it into how they use their printer in their workflow. You will also notice that we've lowered the price point of ePrint, particularly looking at a market like India, which is a price sensitive market on the hardware side. And we've seen a high propensity in metros like Delhi and Mumbai where you have a lot of mobile users - iPhone users, BlackBerry users -use ePrint a lot. HP's LaserJet Pro M275 a.k.a TopShot One criticism that has been made about ePrint is that while the apps are a strong component of the offering, the printing itself is a very rudimentary interaction with the printer. For instance, I can't send instructions for two-sided printing, or print with photo paper. How do you plan on addressing that? You're absolutely right. What we looked at first was basic printing, and what we decided in the first generation was to make simplicity our first goal and give up some of the features. But now what we've done with this current introduction of ePrint is to bring back some of the features you typically had through your printer driver. With the downloadable app that we're launching, you will recover many of those features, such as selecting number of copies, the print mode, the media type and you'll even be able to use scanning functionality from the printer to your mobile device. Speaking of apps for ePrint, the discussion hasn't really happened and HP has maintained a silence on the app space when that could well have been the centrepiece in this app-aware economy. When will see a shift from hardware to apps? If you think about it, ePrint initially was the core app; it's different in the sense that you don't pay for the app and it comes with the printer. I think beyond that what you will see us doing and what we're announcing are apps for education, and we're going to talk a lot about that, invest in that because we think that is so critical to growing the market in India. We're at 70 per cent in the inkjet market in India, and a key way to grow the market is via the education sector. At some time in the future, we will also publish the SDK for apps for ePrint, and at that time, we will be able to talk more broadly about apps rather than just the focus on specific segments like education. A broad complaint has been that while the initial cost of the hardware is low, the recurring costs of cartridges is what keeps people away from printing as much as they'd want to, and from printing in general. Could you speak to what you're doing to address that?This is something we've been focusing on for some time now, right from the "everyday" cartridge in India to the InkAdvantage product we've announced. With InkAdvantage, we're looking to change the model - we'll charge you a little bit more for the hardware, but charge you much less for the supplies. We ran a pilot in Philippines and we believe a lot of consumers self-limit their printing, and this is proven by the fact that people who bought the InkAdvantage product printed a lot more than people who didn't buy it. We're seeing that if you lower the cost of supplies, people print more. InkAdvantage, we feel, is a huge breakthrough in getting people to print as much as they need. VJ (Vyomesh Joshi, EVP of HP's Imaging and Printing Group) mentioned that enterprise is a big focus, and a lot of HP's messaging seems to suggest that enterprise is a large part of their future direction. Where does HP's consumer business stand in this? There are open fears about it being hived off as a separate business, much like HP's consumer lineup in PCs. We're extremely focused on the Imaging and Printing business, and the consumer business is a huge and relevant part of that. Something that is not that well understood is that we have huge leverage in IPG in enterprise and consumer, because the inkjet technology in publishing is directly scaled out from what we used in the OfficeJet Pro lineup of printers. IPG is fully committed to technology innovation that we can deploy and the fact that we can do it in enterprise is enabled by our consumer business. We need that scale of making millions of printers to be able to leverage that technology into the graphics and enterprise segments. For us, we have got to be in all these segments. Unlike HP's PC line-up, we are a vertically integrated company where we develop our own technology, so for us the scale comes from R&D, development and manufacturing.
Read More
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.
Read More
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.
Read More
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
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
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
Over the past 20 years, India's urban infrastructure has improved a lot. Yet, the pressure on power supply, road connectivity, water, and housing has increased. Some of that is because urban development issues have been tossed around between the states and the Centre. Speaking to BW's M. Rajendran, the Union minister of urban development and poverty alleviation, Kamal Nath, points out that the challenge is to clear the backlog. Excerpts:The infrastructure in India's big cities has not kept pace with their growth and rising affluence. How does the government propose to address these issues?The big challenge in India is the massive urbanisation that is taking place. Yes, there is a huge urban infrastructure deficit. It has risen because of the speed at which urbanisation has happened. This has been accelerated by the youth who are moving from villages to towns. Economic growth has also hastened urbanisation, because 60 per cent of the gross domestic product is generated in urban centres. Also, 60 per cent of employment generation is happening in big and small urban centres. This has also led to the infrastructure deficit. What shortcomings does the govern-ment need to rectify?Capacity building has to be an integral part of any programme. Unless you have skilled people who have the abilities to do it, it will not happen. Our programmes are focused on bridging the infrastructure deficit, which means catching up with the past and not building for the future. There are various schemes that our government (at the centre) has formulated. We are only supplementing state governments. They will have to formulate schemes and use their own resources for it. Will the government follow the NCR model of satellite cities in urban renewal in the future too? It is important that we have a strategy not only for urbanisation, but also for suburbanisation. It has to happen by planning and design. We have asked every state government to come out with projects. We will then find various ways to support them, financially or otherwise. The gap between the big cities like Delhi and Mumbai and others is growing. What do we need to do in the cities as urban migration continues to rise?There is no other way than to meet demand today. In a democratic country like India, there is no way we can stop migration to the cities. The pressure of migration is also in the Tier-1 and Tier-2 cities. There is migration from panchayats to municipalities and from the municipalities to the mega municipal corporations.What is the future of planned cities in India considering that there are major land acquisition issues?You have to realise that land acquisition per se in not opposed. What they are opposing is unfair land acquisition. There is a difference between the two. The farmer feels cheated when land is acquired from him for Rs 100 and sold for Rs 5,000. So, while land acquisition for urbanisation will be required, it must pay, has to be fair and valued at the market price. The market price should take into account the rehabilitation and displace-ment costs of the farmers.How has JNNURM helped mitigate the problems in the urban areas?We launched the JNNURM (Jawaharlal Nehru National Urban Renewal Mission) programme for provisioning of basic service through the development of an enabling infrastructure. We have made good progress, but it was only the first effort. There are various lessons that we are learning from the JNNURM-I, that will be incorporated in JNNURM-II. There is a dedicated sub-committee in the National Development Council, specifically to deal with urban issues. Within this committee, several sub-groups have been formed which are looking at the governance, finance, sustainable development, poverty, capacity building and transport. We are in the process of preparing a roadmap for the next plan.(This story was published in Businessworld Issue Dated 22-08-2011)
Read More
Most people take life easy after retirement. But Elattuvalapil Sreedharan, 79, has been on the job since he retired from the Indian Railways in 1990. The managing director of Delhi Metro Rail Corporation (DMRC) will hang up his boots at the end of the year. He will leave behind a legacy that is quite hard to replicate. The Metroman, as he is also known, has redefined the way large projects are implemented in India. He spoke to BW's Anup Jayaram and M. Rajendran on urban transportation and the way forward for a country that is urbanising at a frenetic pace. Excerpts: Where do you see urban transportation heading in the future? Will metro rail transport meet travel needs of people in cities over the next 20 years?I am also the chairman of a working group set up by the Planning Commission to advise it on urban transport in the 12th Plan. We have been debating this issue at length. Generally, if the threshold limit of the volume of traffic in a particular corridor is more than 15,000 passenger car units or PCUs (by 2021), a metro is necessary. Otherwise, it will not be possible to manage the traffic. Any city with more than three million people must have a metro system. We are yet to get the latest census numbers, but even with the current estimates, at least 20 cities will have a population of more than 3 million. Each of these would require a metro. CROWD SERVICE: DMRC estimates that ridership will touch 2 million by end of the year (BW pic by Tribhuwan Sharma) As a planner, my approach would be to ensure that when a city's population reaches 2 million, we should start planning for metro. In a country such as ours, a metro is a desirable service. It should be the backbone of transportation in a city. The main corridor should be a metro, the feeder services to the backbone can be in the form of BRT (bus rapid transit), normal bus services, even trams if a city can afford. Various combinations are possible. There cannot be one single formula for all cities — it will differ from city to city.A comprehensive transportation study should be done for each city to identify major corridors, depending upon the demand. If the volume of traffic is less than 8,000 PCUs, BRT can be a solution — but a temporary one. When the volume of traffic reaches 15,000 PCUs, a metro will be a necessity. If the BRT is at the ground level, switching over to a metro is not a problem. But if you have an elevated BRT corridor, it will come in the way of future metro projects. We have to be very careful even to suggest such an idea. Because once you have an elevated BRT, as some states are proposing, you cannot have an overhead metro on that route. That leaves us with just the option of going underground — which is very costly. Is that the reason why monorail projects have not taken off in India?No, monorail is not being thought of as an option because the cost of a monorail is equal to that of the metro. Mumbai is executing a monorail project and the cost has come to Rs 165 crore per km. That is the cost for a metro. But then the metro can carry more people. Further, the cost of operation and maintenance (of a monorail) is double (that of a metro). The monorail is not a viable option for urban transport. It may be a good option for an isolated area such as amusement parks to attract people, or a connection within an airport where the traffic is not very high.If that is the case, why do so many states in India want a monorail?This is mainly because of pressure from the monorail lobby. The Malaysian lobby is very active. That is why Jayalalithaa (chief minister of Tamil Nadu) has suddenly started speaking about monorail. But Kuala Lumpur has very good monorail and metro projects.Yes, but all of them are running into losses. They all have been taken over by the government. They have got two private metros — both of them ran into losses and threw up their hands in despair.You spoke about a comprehensive transportation study. Can you please elaborate on this?This is as per the stipulation of the ministry of urban development. It says that before you start planning on urban transport, do a comprehensive study, which will bring out what is the best mode of transport for the city.Do state governments have a role in preparing this study?Yes, state governments will have to ask for the study and pay 50 per cent of the cost of the study. The Centre or the city would bear the balance. Once the system is finalised, say, if the state opts for a metro, various alternatives are available then. One option is to go for a complete government-sponsored project. The second is to have a public-private partnership (PPP) model such as Hyderabad or Mumbai. Even in a fully government- sponsored project such as Delhi Metro, where central and state governments are fully involved and are responsible for profits and losses, they are equal partners. Then, there is the Chennai metro model where the company is a joint venture. Here, losses and the cost overrun becomes the responsibility of the state government — which is not desirable.Do you feel the PPP model will work in India?The PPP model has never been a success anywhere in the world, so far. But in India, we have started it in Mumbai, Hyderabad and the Delhi airport line. I have always advocated that a PPP model can be successful if the project can levy very high fares on customer, like in the airport express model in Delhi where the fare suggested is Rs 150 per journey. In a metro, the average cost is Rs 14-15. If the fee can be hiked 10 times that of normal metro, then the PPP model can be successful. In Mumbai, the work has been on for the past 6-7 years and it will take another 2-3 years for it to complete. In Hyderabad, work has not even started physically, though the contract was awarded two years ago. It is not a very happy experience. Ultimately, private concessionaires will find it so difficult to manage that they will ask for hefty subsidies, and the government will be forced to give it. break-page-breakIn the case of our own airport express model, the airport traveller can pay a high fare. The work has not been completed; it has taken so much time, and it has not come to the shape or standard that we wanted. But the airport express model may ultimately succeed because it can charge Rs 150 for each journey, provided the ridership increases.Today, Delhi Metro services are quite congested. So, did you get your planning right in terms of capacity?Yes, it is very crowded. It is a very good sign. We have touched the highest ridership of 1.83 million. We are taking steps to ease the overcrowding. On busy routes, all trains would be converted into six coaches by the end of the year (DMRC is planning to induct eight-coach trains by end 2013). Already, busy lines have six-coach trains. Every week, we are adding one coach in busy routes. We are also adding more trains. Overcrowding has come down now. When people find that they are able to travel more comfortably, more people will come. We estimate the ridership will touch 2 million by the end of the year. In retrospect, do you feel the overhead model is better than the underground model for metro transportation? If you do not want a metro to be a financial liability to the government, there should be a judicious mix of the under-ground and the elevated. In Lutyen's Delhi, no one will allow you to go elevated, so you have to go underground. An underground metro costs almost double or 2.5 times of an overhead model. There is nothing wrong in having an elevated metro rail. Many cities have it. Even the posh Dubai metro is elevated. That country can afford underground anywhere they want. Further, from the country's security and passenger's safety point of view, an elevated metro is better. MODEL PROJECT: DMRC has started reaching standards of metros in Hong Kong and Singapore (BW pic by Subhabrata Das) The risk in an underground line is 4-5 times that of an elevated one. We should go for an elevated route wherever possible. Operational maintenance cost (for underground) is also 50 per cent more than that of an elevated line. If we have a fully underground metro, we will not be able to make any operational profit. But the original metros globally were totally underground…Yes, but they are heavily subsidised by the government. Even the operational and maintenance are subsidised. The entire capital cost is given by the government. In DMRC, the government has given 40 per cent and the rest is loan. We are servicing and repaying the loan to the Japanese, and we are not taking any subsidy from the government for operation and maintenance. Globally, which city has the best metro rail transit system? Why?Each metro has its own good points. Some of them are very modern and some of them are very comfortable. But if I were to choose from India's point of view, I would say the metros in Hong Kong and Singapore are giving very good service. DMRC has started to reach their standard.The Delhi metro has spawned a metro rail culture in the country. Do you see privately funded metro projects taking off in the future? DMRC has been a good model and an inspiration for new metros coming up in various cities. They are at an advantage as they can pick up many examples from us. But for us, it was work from scratch. But I would say, in spite of this advantage, metros in Bangalore, Chennai and Kolkata are not being completed at the same pace as DMRC. These projects are going slow and their pace has to be improved.Do you see smaller cities adopting the metro rail culture quickly?Unless there is sufficient traffic, a metro rail will become a financial burden on a city. That is why I have been insisting on a threshold limit of a minimum 2 million population and 12,000-15,000 riderships. How would you define urban transport?Urban transport is actually a social service. It is not a business proposition. But governments tend to take it as a business proposition. They want it to be profitable. It will never be profitable. If the government does not have to subsidise it, that is a great achievement. So we (the working group under the Planning Commission) are suggesting that since urban transport has to be a social service and the fare has to be kept low for common people, we have to make the metro system low cost. One of the suggestions is to give complete duty and tax concession to the public transport system. DMRC had this advantage in Phases I and II. In Phase III, the government has suggested that it will give grants instead of duty and tax concessions. The cost of travelling in public transport bus is very high because the road tax and registration fee and others account for more than 30 per cent of the cost of the bus. With such a cost system, how can you make a public transport viable? So we have suggested that bus transport should be declared an infrastructure project. That will give them access to infrastructure fund. Today, our country does not have a good urban bus model. We should have sleek and narrow low-floor buses. Not the ones what we have on Delhi roads. They are more expensive, but desirable.You want urban transport to be a social service. It is the same argument that the government gave when private telecom services were launched. Don't you think this will create a mess in urban transport as it did in telecom?In the case of telecom, the transfor-mation of technology led to a drop in cost. It cannot happen in urban transport. But we can still make the system low cost, if we go for large-scale indigenisation and standardisation. We should not depend upon import for everything. In India, Chennai, Bangalore, Delhi and Kolkata all have different specification of coaches. This will not help lower cost, unless there is standardisation followed by indigenisation.(This story was published in Businessworld Issue Dated 22-08-2011)
Read More
Sunlight has been around long before humans arrived on earth. However, it had not been harnessed for power till recently. As the world heads towards a shortage of fossil fuels, everyone is looking to tap solar energy. India is among the countries that has the highest solar radiation. For solar to be a mass energy source, costs have to come down substantially. That's what James Abraham, managing director and CEO, SunBorne Energy, is banking on. He spoke to Businessworld's Anup Jayaram on the potential of solar energy in India. Excerpts: The government has set a target of 20 GW (gigawatts) of solar power by 2020. Do you see that being achieved? Achieving or exceeding that is based on getting solar power costs down. If costs remain as they are in the next 10 years, we won't get anywhere near that number. Our forecast is that by 2016-17, the cost should get to Rs 7 per kilowatt hour. So I should be building plants. If we get to that number, then 20 gigawatts will be blown out of the water. KPMG's estimate is 66 gigawatts by 2022. So it is linked completely to the achievability of the cost target. If it is achievable, then we can get to 66 GW. Most people who bid in the first round of the Jawaharlal Nehru National Solar Mission have looked at technologies around the world, and how much we can make in India. The plants being built in India today are already 20-30 per cent lower in cost than the best plants globally. To achieve the next level, we need to innovate — not imported innovation, but local innovation. I am not talking of R&D, but practical applications engineering like how do you make structures that hold mirrors, how do you focus the energy, how do you make the materials and construction methods simple. That is the innovation we need.You have joined hands with Suntech Power for solar power. Could you give us some details on this project? We have an agreement to source 100 MW from Suntech over the next set of projects. It is based on continuously decrea-sing prices from their side. They will help meet some local content requirements. Suntech's panels are high on quality. If we can build demand, they will come and manufacture panels in India. We built our first 10 MW out of that in Gujarat. We will source the rest over the next two years. Our total target in the next 30 months is to do 200 MW. Suntech will be a part of it. Our focus is on Gujarat, Rajasthan and parts of Andhra Pradesh. Gujarat and Rajasthan have the best solar radiation. As solar power tariffs will be high, State Electricity Boards (SEBs) will not be in a position to buy power. How will it reach the consumer? The National Solar Mission scheme goes through the NVVN (NTPV Vidyut Vyapar Nigam) and is sold as bundled power to SEBs. If you look at SEBs payments to the central government, their records are unblemished. Coal import costs are rising and there are availability issues. So we'll get covered. Next year, solar power will get parity with diesel power and will start to get parity with distributed power. By 2017, we should be able to compete with gas-based power and by 2022, with coal-based power. By then, the price of coal-based power will also rise from the current Rs 2.5-3 per unit to about Rs 5 per unit. The focus of the government in renewable energy is largely on solar power. Your comment?I am not sure if they are looking more at solar than others. Solar is more expensive, so the government is providing more subsidy. They are doing this with the idea that one day it will cost less. If you aggregate all the renewable (power) available today, it is just a fraction of the potential of solar. Just 5 per cent of India's desert can power all of India. If you take 5 per cent of India's desert and cover it with currently available solar technology, then you can shut down every other power plant in the country. That is the sheer abundance of solar power. The government has approved over 800 MW of grid-connected solar projects this year. Do you see all that happening? They approved 500 MW of solar thermal and over 200 MW of photo voltaic (PV). All of these have apparently gone through financial closure. I think things are moving. That they have achieved financial closure is a big, big step. This is the year of execution. At the start of the year, India had 10-15 MW, at the close of the year you will have 200 MW.(This story was published in Businessworld Issue Dated 22-08-2011)
Read More
In 2007, Sachin Bansal and Binny Bansal, both IIT grads and in their late twenties, started Flipkart with a seed capital of Rs 4 lakh. Having worked with Amazon previously, both have followed the Amazon and eBay model of selling books online. Flipkart which has revenues of Rs 25 crore now, plans to take the business beyond selling just books. BW's Suneera Tandon met Flipkart CEO Sachin Bansal to ask where will Flipkart go from here. Excerpts.What is the potential of your business model ie of retailing books online?Online book retailing is a volume-based business. Since the profit margin is as low as 10 per cent, volumes matter more. In the digital space only 1 per cent of the entire book retail business worth Rs 10,000 crore is carried out, we identify potential of Web as huge. Set-up costs are not very high, but services and logistics take about 10-15 per cent of the revenues. We broke even within 6 months of having started the business and are earning a gross profit of 10-15 per cent, thereafter.While 2008 revenues for the company were Rs 2.5 crore, 2009 saw a quantum leap to Rs 20-25 crore.In November 2009, we raised venture capital funding from Accel Partners. Rs 20 crore of this amount will be allocated towards strengthening back-end and technological operations. Advertising accounts for 5 per cent of the portals' revenue.What are the challenges you faced as a start-up in the e-commerce business?Getting people to trust the online payment mode was quite a challenge initially. Also building trust in suppliers as a start-up took us some time. Once the popularity of the portal grew, transactions increased.What is the customer base and title capacity of Flipkart?We started with 50,000 titles in our catalogue and have expanded to half a million as of now. So far 250,000 customers have purchased books from Flipkart. Our business is only restricted to the Indian territory right now.With other bigger players such as Infibeam, Rediffbooks, Indiatimes, how do you keep afloat in the market and battle competition vis-vis pricing of books?We offer free-shipping on all purchases. Although our pricing is at a premium, we are working on more volumes. The higher the sales, the lower the prices. Timely delivery is our key focus and keeps us ahead of competitors. Prices of books range between Rs 95 and Rs 20,000.How does your back end work — from putting books online to delivering? What are the logistics involved?We have about 100 people working in the back end, which comprises ordering, stocking operations, packaging, shipping, vendor management, etc. We work with 300 book distributors in 5 cities from whom we procure books as well as 4 International publishers. There is a 50:50 ratio between the books stocked by our office and those procured from vendors directly. We function from 3 offices presently in Bangalore, Mumbai and Delhi. Apart from which we have a strong technical team that looks at catalogue management, stock checks, web-updates, etc.Are you looking at expanding the product base offered by your portal?As of now, we are only focusing on retailing books, we still feel there is a lot of potential in expanding the business of books on the Web. We are looking at expanding to more local publishers, regional books as well as more international publication houses. However, in the next two years we plan to add music CDs, low-cost mobile phones, movie DVDs etc., to our portal.What category of books generate the maximum sales for the portal?Fiction and non-fiction account for 50 per cent of the total sales. Apart from which medical, technical, management books too result in high sales.What kind of marketing and advertising initiatives are carried out by Flipkart?As of now, the marketing budget is minimal; we are only focused on digital marketing. Use of social forums and blogs works well for us. We also offer pre previews of books, signed copies to our customers. Soon our website, which is presently very simple, will be revamped to a more interactive one, allowing for discussion forums, book reviews, polls, etc.How do you plan to allocate the funds for future expansion?Opening more warehouses is on the agenda, along with expanding the existing Bangalore office. We also plan to expand our supplier base from 300 to 1,000 and increase our total title strength to 4 million. We expect to touch Rs 100 crore in revenues by 2011.suneera dot tandon at abp dot in
Read More
