Bank of Baroda chairman and managing director MD Mallya talks about past performance, forecasts and plans with BW's Tanushree PillaiWhy do you think the Current Account, Savings account (CASA) growth for Bank of Baroda is showing a decline in 2010-11?Our CASA has grown by about 22 per cent in 2010-11. In the context of the overall pressures on CASA, which the industry has been facing for quite some time, our bank has done better than its peers. Although CASA growth has been strong, our other liabilities have grown correspondingly. So, yes, there has been a marginal reduction in CASA, as a percentage of the total deposits (at 34 per cent). CASA growth has been sustainable, which shows that the growth has been positive. A larger number of customers have been added with varied profiles, from different geographies, which shows that the bank has been able to do well in difficult conditions.Our new marketing initiatives include Business Process Re-engineering which deals with converting branches into sales outlets and removing back office functions out of the branches.We would be happy to maintain our CASA percentage at 34-35 per cent for FY 11-12.Advances' growth also slowed in 2011-11. Have there been some concerns?Advances as a whole for the industry would have grown about 22-23 per cent in FY10-11, while we grew by about 25 per cent (domestic). There have been lots of initiatives taken in credit origination, in terms of segmentation. We were one of the first ones to launch retail, SME, corporate and rural verticals. We have opened centralized hubs, branded as loan factories in our retail and SME areas. There is very strong and qualitative credit origination from these loan factories. This segmentation has been our strength as far as credit is concerned. Our asset quality continues to be strong despite challenging economic conditions and our non-performing assets are amongst the lowest in the industry.Are you facing any stress on asset quality?In a scenario where interest rates keep on increasing, there will be concerns over asset quality. So, yes, there are challenges to be faced as far as protection of asset quality goes and ensuring overall asset quality strength is maintained. Our delinquency numbers were 1 per cent in the first quarter of this fiscal. Our gross and net NPAs have been stagnant too.You seem to have a good set of credit-deposit ratio numbers too.Credit –Deposit ratio for our domestic business is about 74-75 per cent, which indicates proper utilization of the funds mobilized. We need to ensure that we have resources to lend, but we should over-mobilize resources that cannot be deployed or we cannot have a shortage of resources when a lending opportunity arises. Both our domestic and global businesses have shown good growth in deposits. Our central sales unit ensures we appropriately tap customers, not just for deposits, but for lending too. The bank has a large number of corporate relations and we tapped that to get into the corporate salary account area.We also focus on pensioners to get CASA as well as term deposits. We refrain from over relying on bulk funds, and do not offer abnormally high interest rates. We ensure that overall asset-liability is maintained and the cost of raising deposits is also moderated to the maximum extent. What's your FY11-12 forecast for credit demand?Overall credit demand in recent months has been subdued, but has been the intended outcome of the policy initiatives which the RBI has taken. The intention of the rate hikes is to restrict overall credit flow of the system. With a fall in the credit growth for the industry, our credit growth is also slightly less than last year's.We expect our domestic credit growth to be around 21-22 per cent in this fiscal, when the industry might see a 18-19 per cent growth.How has the balance sheet growth (29 per cent in FY 10-11) been for the bank?We expect a growth of 23-24 per cent in this fiscal, due to lower credit growth.Are you expecting any stress on your treasury income?Government securities have been facing interest rate pressure for some time now and we are seeing what we call an increased bias as far as interest rates are concerned. So, trading profit on sale of bonds has come down drastically. So, yes, there will be pressure on our treasury income. But, this needs to be off-set by improving other avenues of fee-based income. Profit through forex transactions has shown very good growth, fee-income related to credit related activities like processing charges, syndication charges etc. the sale of third-party products like insurance, mutual funds are also avenues that need to be explored. Our overall fee-based income is growing at 15-20 per cent per year, which is a good growth.Are you planning to raise any off-shore funds?Not at the moment. We raised one tranche of Medium Term Notes (MTN) in February 2011 when we raised $500 million. Our asset-liability situation in the overseas market has been strong, so there is no immediate need to raise resources abroad. The bank is quite liquid, and the maturity profile of resources being raised abroad are quite favorable.However, we will keep an eye on the market and if resources are available at reasonable rates, we could think of raising funds abroad. But because of the various developments in the recent past, money market situation abroad is not favorable to raise resources.How has the bank's Capital Adequacy ratio been for the bank in FY 10-11?Our CRAR as of March 2011 was around 14.4 per cent, of which Tier-I was 10 per cent, which suggests it is quite strong. Substantial headroom is available to raise Tier-II and II funds, in case of need. Last year, the government infused Rs 2,600 crore which raised its holding to 57 per cent from 53 per cent earlier.How many branches are you planning to add this fiscal?We are planning to add about 500 domestic branches this year. We had about 3400 branches at the beginning of this year, we would like to be at 3900-4000 at the end of the year. We already have RBI authorization. In the first half of the year – up to September – we have opened about 120 new branches. Overseas, we have 86 offices which include those of our subsidiaries. We plan it take it to 100 by March.Have you zeroed in on the locations?Yes. Many of these branches will be through the subsidiary route. We will have branches in Kenya (currently 11, planning to open 3 more), Botswana (currently 2, will open 1 more), Uganda (currently 12, planning to open 3 more), New Zealand (add 2 more to the current 1).We will be starting a joint-venture company in Malaysia (Kuala Lumpur), which may happen in November -December. It is a JV with the Indian Overseas Bank and the Andhra Bank, but 40 per cent will be held by us. There will be a couple of Electronic Banking Service Units (EBSU) in the gulf area.We expect the regulatory approval to come for Australia (Sydney) by the end of this year. What is your bank doing to keep a check on asset quality?Our credit origination is very strong to maintain the high quality of the assets acquired. Going forward, there could be cyclical upheavals hence it is important to continuously monitor one's portfolio, especially small ticket advances, including retail.Using technology, we reach out to retail customers in advance for their payments (like housing and vehicle loans). For mid-corporate and larger accounts, we have a credit monitoring cell which does a continuous follow-up.In case there is a need to restructure an account due to economic reasons, we do allow so. Is there any pressure on margins for you?The sector as a whole is facing a number of challenges given the current scenario - maintaining margins, asset quality and capital requirements. Our provisioning continues to be high at 83-84 per cent, and would like to maintain it above the regulatory requirement of 70 per cent.
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Suresh Vaswani earned his chops, by joining a then unknown company called Wipro straight out of IIM A campus, in 1985, to sell PC hardware. In the next 25 years, Vaswani grew meteorically within Wipro first as an executive assistant to its billionaire chairman Azim Premji, to eventually become the co-CEO of the company. Unlike several of its Indian IT peers, if Wipro today gets close to a quarter of its IT revenue from the domestic market, it owes it in no small measure to Vaswani. He is credited for building Wipro Infotech, the system integration arm of Wipro Ltd, which mainly caters to India, Middle East and other developing markets. Vaswani also built several global lines of business for Wipro like testing and validation as well as Infrastructure Management Services. In January after a surprising exit as the co-CEO of the company, Vaswani was wooed by Michael Dell personally to come onboard. Dell will be hoping that Vaswani will help him in ramping up the applications and BPO business of the company as he seeks to strengthen the services arm. A keen golfer, Vaswani sat down with Businessworld's Venkatesha Babu to talk about the mandate from Dell and how he intends to execute it. Excerpts:Why Dell? What do you intend to achieve over the next few years?It is true that immediately after January I had multiple opportunities including one to head the Indian operations of another large multinational. However I was excited by Dell's vision to transform the company to become an end-to-end player offering everything under a single roof. My brief is simple: to growth the applications and BPO business of the company. I have global profit and loss responsibility for it. I am also the Chairman of Dell India. I have an 80: 20 split for this. I spend about 80 per cent of my time in my global role and the rest for the Indian market. I think the team here has done a good job of helping us become the market leaders in the PC segment in the domestic market. We have a strong play in servers too. Yes, we can do better in services. You will start seeing some of those results in the near future.Indian IT vendors including the likes of TCS, Infosys and Wipro took on large multinational players and managed to carve out a niche for themselves. Dell, while it is known as a hardware seller, isn't late to the services game? How do you intend to differentiate yourself and grow the business?I don't agree with the contention that Dell is late in the services game. We already have close to $8 billion in revenues coming from services, which is more than several India based players. Yes, some of it might be around support services around the products we sell. However I think we have a different story in the services game. We will address the mid market segment (Small and Medium Business), make our solutions open, affordable and scalable. By emphasising on IP and platforms we will ensure that revenue is not directly linked to head count growth. Dell already has C-suite relationships which are the envy of the industry and not easy for a lot of standalone services companies to replicate. From PC's, servers, software, storage to services, Dell's integrated offerings mean that customers need not worry about making different technologies talk and work with each other. We will ensure all that happens seamlessly. Because of our Perot acquisition, Dell is already the leader in certain segments of the market like healthcare and public sector/government business. We have tremendous strengths which we will leverage. We will also strengthen certain other segments such as banking, financial services, insurance, energy and utilities, telecom, IMS etc. Are you following in the footsteps of IBM and HP in stressing more on services as the business here is more predictable and profitable?I think Dell usually leads rather than merely follow somebody else's strategy. We think we have a differentiated play and a compelling value proposition for our customers.
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Michael Saul Dell, 46, through his eponymous firm Dell Inc, defined the Personal Computer (PC) industry in 1984, by directly selling to customers from his University of Texas dormitory room, undercutting the middleman and in the process becoming a billionaire several times over. 27-years later, he has the chance to redefine the industry again, as it faces its biggest churn. While his biggest competitor Hewlett Packard (HP) Company has hung a 'for sale' sign on its PC business, signaling its intention to exit a high volume, low margin market, Dell is gung-ho about the prospects of the industry and his company. Dell who returned to the CEO role in 2007 to rescue a floundering company, after a brief flirtation with a Chariman's non-operational role, now seems keen on moving his firm away from being a low-cost, box pusher, to a solutions firm, which provides hardware, software, storage and services under one roof. In an in-depth chat with Businessworld's Venkatesh Babu from Dell's headquarters at Round Rock, Texas, he talked about the challenges facing the PC business in particular and the hardware industry in general, the rise of smartphones and tablets as well as the transformation journey to being a solutions company. Edited Excerpts :You were a pioneer in the PC industry. Is the PC industry dying or dead?Reports of death of the PC are greatly exaggerated. This year alone, globally around, 440 million PC's will be sold. Gartner for instance predicts that this year about 40 million tablets will be sold. I have been hearing these reports of the death of the PC at least since the mid 90's and even when the industry was selling a mere 100 million PC's. Some analysts project that by 2014, actually a billion PC's would be sold a year. Look, while nobody denies that the smartphones and tablets as a category have risen significantly in the recent past, fact is that the PC is not going to disappear anywhere. At least not in the near future. When a person buys a smartphone, it is not as a substitute to the PC. There is a continuous evolution of multiple form factors. Smartphones and Tablets are good at certain things like content consumption, while the PC would be good for content creation. In India and several other developing markets, I think the PC market is under-penetrated and there is significant room for growth. I think (the current market) can be described as PC plus rather than a Post-PC era. What do you make of HP's announcement which essentially means it is looking to sell its PC business?I personally think this is an incredible opportunity for Dell. We have a very good PC business. If HP or somebody else doesn't want to be in the business, it is just more opportunity for us. Customers of that company (HP) are concerned and confused. We have been talking to them and our channel partners. We will do all that is possible to help them to move over to Dell. We are the only player today that provides everything from the client (PC) to server, cloud and services. Every since you took charge of the company again in 2007, you have tried to move it away from a very efficient, low-cost, box pusher to a solutions company. How far do you think Dell has traversed along that path?I see this transformation as a kind of a continuum rather than changes (happening) in months and years. The key along the way has been that value has moved from hardware to software and now services. But that doesn't mean that hardware or software are going to go away. Dell has been adapting and leading some of these changes by investing and growing both organically and through acquisitions. In the last 18 months we have acquired 11 or so companies. Just in the last quarter our earnings per share grew by 71 per cent. Our offerings are open, scalable and affordable, and that is a message customers want to hear. I am happy with the progress we have made, though we have lots left to do.HP seems to be following the path of IBM in trying to strengthen its services offering and exiting low margin hardware businesses. Is that the path Dell would also eventually follow?Well, I have never been fond of stereotypes like that and won't comment on what others might or might not, be trying to do. What I can tell you about what Dell is doing, is that, unlike others, we are about open and not proprietary standards. We believe in the PC business even as we grow the smartphones and tablets space. I think you will see us approach (this transformation to be a solutions company) a little differently. Other companies might have legacy business built around proprietary standards and might not want to disrupt that. But we have no such issues and we will try and change the market in a way which is great for customers.Dell has had limited success in smartphones and tablets, at least till now. How do you plan to address this challenge?In the global $3-trillion IT industry, Dell has been very successful. Also what is worth thinking about is that each time somebody uses or accesses something on a smartphone or a tablet, they get on a network, they access servers and storage. Very high percentage of those (servers and storage) are powered by Dell. So whether it is somebody's else smartphones or tablets or ours, we still benefit. Of course we aspire to do more in the phones and tablets market. In phones we are excited about both Andorid and Windows Phone 7.In tablets, till now, only Apple has had success there. But it is very early days yet. We have certain exciting products and software in development, the results of which you will start seeing shortly.You have made several acquisitions in the recent past including Equal Logic, Compellant and Force 10, primarily to plug gaps in your portfolio. Perot at $3.9 billion was your largest acquisition. What is the strategy here.First of all if you look at the kind of acquisitions whether it is in, datacenter, storage, security or services, we have made there are a couple of common themes. Over 90 per cent of the engineers being acquired are in software. They fit into the overall theme of us being a solutions company. We have more than $16 billion in cash and depending on opportunities in the marketplace, we will use it appropriately.Recently you hired Suresh Vaswani. What is his mandate ?Suresh is a senior resource who wears two hats. One would be to grow our services business and the second as the Dell India, Chairman. India is an extremely important market for us. We have built a very good business in India where we have become No.1 (in the PC market). We are investing in the local market for the long haul. Our resources there are fantastic and key to our global success.
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Global uncertainties have been the biggest cause of concern for Krishna Sanghvi, Head of Equities at Kotak Mutual Fund, who feels the issues involved particularly those surrounding the Euro-zone crisis can have a long-term repercussion on the overall health of financial market and can damage sentiments and reduce risk appetite among investor. Talking to Businessworld's Mahesh Nayak, he feels it's the right time to invest in equities as worst seems to be over for India. Though he sees inflation and interest rates likely to play out in the next 2-3 quarters, he is clueless like many others over global factors like Euro-zone and commodity prices.Excerpts from the conversation:Is the worst over for the financial markets? (Globally as well as India) It is quite difficult to say that the worst is over as the global uncertainties and the issues involved are quite complicated and any near term solution may have longer term repercussions. Equally difficult is to estimate the response of various policy makers on the global front. However on domestic front, we seem to be better placed vis-à-vis the world. We are almost at peak inflation and interest rates and hence the expected moderation in these offers an opportunity going ahead. So in Indian context we are probably at a juncture where in the absence of any major mishaps globally, economy and markets are more likely to see an upturn over next 12 months.What is your take on the Indian equity market? Are we in a bear market?Indian economy with positive demography and vibrant domestic consumption offers a unique combination of growth as well as some insulation from the global turmoil. The resilience of Indian economy has already been proven in 2008-09. We believe that this resilience will continue to stay and attract investor attention and allocations from across the world. We do not think that India is in a bear market despite the current volatility. It is more of a consolidation that is emanating from a reaction to global uncertainties and partly a cyclical response to high inflation and interest rates.Food inflation has seen a sustained rise. Even in this scenario, the RBI governor has already hinted that he may not hike interest rates. How do you view this scenario for the Indian market?Yes, the food inflation in Indian context has been rising but it is more of supply constraint driven inflation and may take a bit longer to be addressed. The RBI's guidance that it may not opt for further rate hike is partly a function of their expectation regarding moderation in overall inflation (despite high food inflation) going ahead in FY12. Also, it is based on their assessment of the impact of past hikes on the demand and GDP growth.For Indian markets, the expected pause in rate hike is a positive development. However in the near term (2-3 quarters), we would see moderation in GDP growth (expecting GDP to be around 7-7.5 per cent) as the impact of past rate hikes is felt on the demand. Post the next 2-3 quarters, we are likely to see softening of interest rates and then the growth resuming at higher levels.What are your concerns for the equity market?The Indian equity markets are currently impacted by both global economy as well as domestic economy related factors. The key concerns from a global economy perspective is how the sovereign credit issues facing some of the Euro-zone countries will be addressed; and how the losses (if any) will be borne by the investors. This is relevant as it can damage the investor sentiments and the likely reduction in the "risk appetite". Over a medium term the worries are more about the economic growth prospects in both, USA and the Euro-zone, and its impact on the global trade and the financial markets. Another key issue is whether Euro zone will continue to exist in its present form.From an India specific perspective, key worries are the high crude prices (impacting fiscal deficit and foreign exchange) and rising inflation and high interest rates (impacting growth).What is your view on the overall corporate performance of Indian Inc? Till when do you think this dismal performance will continue?The corporate earnings estimates for FY12 have seen reasonable downgrades over past 2-3 quarters. While the corporate performance on the revenue front has broadly been good it has not transmitted into profits as the profitability has been significantly impacted by the margin pressures as well as rising interest costs for many companies. Post the September quarterly results, we expect some further downgrades to earnings estimates for FY12 and similarly lower expectations for FY13.The improvement in corporate profitability requires moderation in inflation, lower interest rates and relief from higher commodity prices. We expect the inflation and interest rate to support in later part of FY13 while commodity prices remains a function of global linkages and hence difficult to estimate.In times of uncertainty where will you advice investors to invest? Currently where are you investing your own money? And why?Despite all the uncertainties surrounding the world economy, Indian economy, with positive demography and the domestic consumption as the driving force, continues to remain resilient and on track to remain among the fastest growing economies in the world even if we grow at 7 per cent. I think that individual investors should continue to remain confident about this long term growth story of Indian economic growth and the positive effects of it on corporate earnings, equity valuations and market capitalizations. In fact, it is these uncertain times that gives investors an opportunity to keep on accumulating equity assets either through mutual funds or directly based on their knowledge and time commitments. Even on a personal front, my allocation to equity markets (through Kotak mutual fund schemes) continues under systematic investment Plan (SIPs). I believe that SIP is an ideal investment avenue for investors at all times. As a fund manager what call will you take on the overall portfolio of Kotak Mahindra Mutual Fund? What will be your short-term strategy in the current market condition?The near term uncertainties in the economic environment put emphasis on portfolios with a defensive bias. The focus is on sectors/companies that have higher earnings visibility and/or healthy return ratios. Also the bias is on companies that are not highly levered and generating stable cash flows.As a fund house, we believe in the potential of equity markets creating long term wealth for investors. We believe that Indian economy offers the right growth opportunities to corporate to expand their businesses and create wealth for equity holders. Accordingly we advise our investors to keep on investing in equity mutual funds. We believe that for majority of investors, systematic investment plan (SIP) is an optimal way to participate in the wealth creation opportunity in Indian equities.In your view what will be the next trigger for the Indian equity market? And why? And when do you see it coming?The positive triggers for the equity markets are multifold. Globally it is the resolution to the Euro- zone crisis and return of investor confidence. From domestic perspective it is moderation in inflation, commodity prices and decline in interest rates and improvement in investment climate. Also, there are a few policy reforms that are expected to be unveiled over next 3-4 quarters and these can also act as a trigger. The domestic triggers of inflation and interest rates are likely to play out in 2-3 quarters while global factors like Euro-zone and commodity prices are anyone's guess.
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Godrej Consumer Products MD, A. Mahendran, discusses the path ahead with BW's Suneera Tandon and explains how the company plans to double its revenues in the next few yearsPost multiple acquisitions, what is next for Godrej Consumer Products?The last three years were the years of acquisitions; 2011 will be the year of consolidating acquired business, interchanging process and policies between domestic and international businesses. 2012 onwards (i.e. 2012-2015) we will look at a long-range plan for the next three years. Our target is to double revenues in the next three years from Rs 3000 + crore to Rs 6000+ cr. Over the next year we are also looking at the organic growth of our acquired businesses. What are the most dominant categories for Godrej Consumer Products?Currently household - insecticides comprise 45 per cent of our revenues with brands such as Good-Knight, Hit and Jet; personal care constitutes close to 30-32 per cent revenues, with Godrej No1 and Cinthol as dominant brands. Hair-colour comes third with a 15 per cent share in the business, whereas non-core categories comprise 7-8 per cent. Currently hair care and household insecticides remain growth oriented categories, since the market for them is still in their growth phase. In Q1 2011 we launched two variants under Godrej expert hair colour, Care and Advanced (gel based variant). Soaps on the other hand remain a highly penetrative category (at 90-95 per cent) both in urban and rural, so it is purely a market share game (currently Godrej is behind market leader HUL in soaps with 10.1 per cent market share). In the household insecticides category, rural is a buoyant market. Currently penetration for insecticides in the urban market stands at 75 per cent while in the rural market it is 25 per cent. We are working towards developing a lowered priced product to cater to the bottom of the pyramid consumer. Good Knight remains a dominant brand both for Godrej and the market, followed by Hit (market-leader in the aerosol category). What price-hikes have you as a consumer company taken over the past 1 year?Commodity inflicted category is only 1 Vis-vis price points the most affected category has been the personal wash (ie soaps category). Since we import our palm crude oil from Malaysia, price hike has been inevitable. On an average we took a planned price-hike of 10-11 per cent across categories over the past 1 year. Since we are not the market leaders we cannot go beyond what the market leader (HUL) decides. But Q2 has seen commodity prices a softening, the trend is looking good. However the volatility of commodity price is unpredictable. Will there be any cross-pollinisation of products from the acquisitions?We have recently taken our powered hair-colour Expert (under the Renew brand) in South Africa. We are considering taking products to markets, maybe Indonesia. Vis-versa we will also look at bringing acquired brands into India.Any new product launches in the pipe-line? We will be entering the air-care category soon. For now it is a very small market at an embryonic stage. (Godrej sold rights of Ambi Pur to Proctor and Gamble last year, as part of Sara Lee selling global Ambi pure rights to P&G)
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Rajiv Mody, chairman and managing director, Sasken Communication spoke to Businessworld's Venkatesh Babu about how he is fixing the company. Excerpts:While your profitability has grown, your revenues have shrunk by a fifth in the last two years. What has gone wrong over the last couple of years?Over the past 3-4 years what have changed significantly are two things. The first is network equipment companies like Nortel, Alcatel, Lucent etc. we used to pride in having great relationships with and the deep technical knowhow have undergone a lot of pain because of changing market conditions. Some of them have gone bust and others have faced challenges. They passed on the pain to us and there is no escaping that.On the devices (handsets and semiconductor companies) side, players who were market leaders have fallen, all the software standards have gone away. Symbian has faltered. All this happened within a short period of time. Texas Instruments for instance decided to exit the wireless modem business in which we were majorly associated with them. Pace of change has accelerated dramatically. It takes time to build know-how in the newer areas. What we did not see coming was the advent of applications and cloud in a big way. We were linked with some of our customers so strongly we did not see this coming. Reminds of an HBR paper which said how a company could fail by listening to customers too much also. It is not too late to fix that. Also we should have limited our dependence on certain limited verticals. That is the transition path we are on.How are you fixing these shortcomings?We are broad basing our revenues, getting into newer segments like automotive, consumer electronics, retail and other areas. We are providing solutions for Smart TV and energy management for telecom networks. We are betting big on Android and its ecosystem. We are closely working with major handset vendors in this space. We have had significant success on this front. From being just a component player we have moved to becoming an end to end system integrator. We will start seeing material impact of all this stuff during the tail end of the current financial year and only accelerate going forward. We will be back to our growth ways.(This story was published in Businessworld Issue Dated 10-10-2011)
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You wouldn't think of it as a cooperative bank, but Netherlands' Rabobank Group's beginnings were in the cooperative movement, and it still runs on cooperative principles. Sometime before the end of November, the bank will open its first branch in Mumbai (the Reserve Bank of India issued the license in April 2011). The group provides a range of financial services: from banking through asset management and insurance to real estate and leasing services. In the Netherlands and internationally, food and agribusinesses have been principal focus areas for them.Rabobank has been around as a non-bank finance company (NBFC) - Rabo India Finance. Adrian Foster, Head of Financial Markets Research, Asia-Pacific for Rabobank International who was travelling through Mumbai - perhaps in preparation for the branch opening - sat with Businessworld's Tanushree Pillai and shared his views on a range of topics: from what we should expect from the RBI in the next couple of months and how the Eurozone needs to find a solution for its present crisis. Excerpts:What are your projections for India's growth?India has proven itself as a bit of a super-tanker, the analogy of turning around relatively slowly, when it sailed relatively comfortably through the global recession (2008). The positive is that it is a demand-driven economy while the negative is the fact that it's not quite that well-integrated with the global manufacturing chain and the global financial sector as well. You could view these things as weaknesses in normal times, but on the positive side, India did not participate much in the global volatility because of these very reasons. We look at the global environment now and clearly there are concerns, dangers and risks of a double-dip recession in the US. While we are worried about double-dip, we should certainly be concerned about third-quarter contraction. We have become too complacent with our performance story for the Asian region, including India, so if it has achieved about 8 per cent growth in the last couple of years, this year it could be a percentage lower. The disappointing global environment will be reflected in this region.The RBI raised its repo rate for the 12th time since March 2010. What can we expect going forward?The RBI has been more aggressive than I would have thought in the last couple of month; the inflation situation in India has actually been relatively flat. It is clearly high and worrying, but with oil prices likely to be lower in the next couple of months, and of course against the global backdrop with so much uncertainty, I would think the RBI has got the luxury of sitting back and assessing these global risks for a little bit longer before thinking about hiking rates again. The rationale for rate hikes will be much less convincing in the next couple of months.Why do you think inflation will ease?There are two main drivers of inflation: If you look at food prices, they peaked a couple of months ago. The pattern is that they certainly bounced sharply from their recessionary lows a couple of years ago, they are supported by robust demand regionally, but they have been relatively flat and bit off their peak for the last couple of months. As you go forward, the year-on-year changes in food prices roughly flatten out to about zero, so by the end of this year, the year-on-year change should be about zero.The other one is oil prices, which peaked in April after the tension in Libya, have been lower since then, and projecting it at today's price, the year-on-year change will be zero by the end of this year. So we have clearly seen a readjustment.Do you think gold has peaked out or will it continue to shine? I agree with the fundamental demand story. If you look at the competition between India and China on who is the major buyer of gold, they have changed places a couple of times and so the demand continues to support the price. If you look at the risks that are impacting markets and investor sentiment, equity market volatility, liquidity provided by central banks, these are areas from where gold will continue to find.A lot is being said about Greece and its near-default status. What do you think is going to happen?We think it probably is going to default. Its deficit levels are much bigger than what the world probably knew about. In a weak global environment and given the lackluster environment in its (Greece) neighborhood, it is difficult to get out of debt problems. The question is not whether it will default the question is when it will default. The debt of these countries (Eurozone) is held by the core banks, so supporting Greece will be the obvious choice for them. It is important for Europe to kick the can down the road which will buy more time, so beyond a certain point Greece's debt problems will be so much less systemic risk for the Eurozone.Does that mean it already is a systemic risk? It definitely is. What we recognise as a peripheral debt crisis, is actually a core banking crisis in disguise, because these banks at Europe's core hold such large amounts of fiscal debt.So what do you think can be done to stop this from spreading like a wildfire?There is a lot of political opposition in that region to unify fiscal measures. The measures come in bits and pieces. The danger is the bigger decisions to solve this problem will probably be taken when there is massive amount of weakness and at that point there will in fact be a series of crises which will galvanise politicians to take measures and in about six months' time there will be integration in Europe. That's when everyone will be comfortable with Eurobonds, which will be backed by Eurozone and will provide a cheap source of funding.How will the bonds help?If you look at debt-GDP levels and budget deficit-GDP, the Eurozone is better than US. The problem with the Eurozone is, unlike the US where there is one fiscal authority and one central bank, it is not integrated in that sense. Europe has a lot of competing decision-makers, so there's no integrated response. The solution over time for these obligations (debt) will be Eurobonds. Do you think a central treasury or a fiscal authority is needed for Eurozone?The issue with Europe is that everyone maintains their national identity. There is a lot of resentment over Germany supporting Greece and this issue of fiscal transfer has become a political hot potato. The only time we think Europe's politicians will be forced to break through these issues is when they will be standing at the precipice looking over a Eurozone breakup. It is primarily a political battle rather than a financial one.
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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.
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