Elon Musk, the founder of California-based Tesla Motors, plans to build his next car in China. Scheduled for a 2018 release, the high-end car will be sold in the US. Despite shipping costs, Musk reckons that manufacturing in China will cut production costs by a third, compared to manufacturing in the US. The news put an end to the buzz that Tesla may set up a factory in India, after Prime Minister Narendra Modi visited its facilities in San Jose in September. It would be a challenge to muster the expertise in India to set up a plant and vendor ecosystem that meet the requirements for cars as sophisticated as Tesla’s. The price tag on a Tesla is around $75,000 compared with $10,000 for our desi Reva — the electric car made by the Mahindra Group. India could also be an expensive manufacturing destination in tax terms because of interstate taxes and duties on imported components such as the lithium-ion battery. But for Tesla, there’s still some hope; Musk could still turn to India to develop software for the cars.
HR Lesson: It Pays To Pay Wellback in April, when Dan Price, the 31-year-old CEO of Seattle-based Gravity Payments, took a pay cut and raised his 120 employees’ minimum wage to a generous $70,000 a year, many were delighted, but others warned that Gravity was in peril. Some of the staff were upset that the longest-tenured employees got tiny or no raises. A few customers also left, unnerved by Gravity’s ‘ideological’ move. And Price’s brother, a minority shareholder, sued him. Gravity was hit with legal fees just when the pay raise had shrunk its margins.
Six months on, it looks like Price, with his Brad Pitt looks, may have the last laugh: Gravity’s revenue growth and profits have doubled. If anything could hurt the company, it’s not the pay raise, but the lawsuit. For now, business is great.
— Uma AsherA Change of HeartIt’s no secret that Twitter is in real trouble. With its investors, that is. Its existing users like it just fine, and would be like fish out of water without it. They have the freedom to speak, to troll, to vent their outrage. But the Facebook-like performance is expected from Twitter, and that is unlikely to happen. In tinkering to make it seem friendlier to new users — important, as Twitter is under pressure to acquire users in large numbers — it changed the star that favourites a tweet into a red heart. It may seem like a small change but users are up in arms over the change. “You Facebooked my Twitter” says one user, alluding to Facebook’s ‘Like’ button. Perhaps what Twitter needed to do was ask users what features and changes they wanted. The little blue bird that symbolises the service might have gone down better with users than the heart, which reeks of desperation.
— Mala BhargavaLong Live the Bureaucracy!If you ask a retired babu for suggestions, chances are he will bat for creating more babu-led institutions. The Central government is chalking out a comprehensive bankruptcy code that it hopes will meet global standards and improve the ease of doing business in India. A Bankruptcy Law Reform Committee headed by former law secretary T. K. Viswanathan has submitted its report and drafted a bill that brings together the insolvency laws that are scattered across various legislations at present. If these suggestions are implemented, bureaucrats may get opportunities to prolong their service. The draft bill discusses the creation of several institutions such as an insolvency regulator, an insolvency adjudicating authority, a debt recovery tribunal, and a debt and recovery appellate tribunal. Then, the yet-to-be-formed National Company Law Tribunal is mooted as the Adjudicating Authority, with jurisdiction over companies and limited liability entities. More power to the bureaucracy!
— Ashish SinhaHealth Tripinvestors may be increasingly focused on new sectors, such as e-commerce, but health care hasn’t gone out of style, at least for private equity investing, and mergers and acquisitions. Some health-care chains are also gearing up to hit the bourses with initial public offerings. These include Aster DM Healthcare, Thyrocare Technologies, Dr Lal Pathlabs, and Narayana Hrudayalaya. In terms of PE activity, Grant Thornton data shows investors pumped $1,015 million into this sector between January and September this year – more than twice the amount invested in the same period last year. Health care is a safe bet for fund managers. After all, it is not as vulnerable to a slowdown as other sectors that rely on domestic consumption. So while mobile and Internet investments hog the headlines, there’s much action in the comparatively low-profile health care industry. Watch this space!
– Paramita Chatterjee(This story was published in BW | Businessworld Issue Dated 30-11-2015)
