Friday, August 31, 2012

IT IS NOW FOOLISH TO COMPARE INDIA TO CHINA. RATHER, IT WOULD BE MORE SENSIBLE TO LEARN A LESSON OR TWO FROM THE CHINESE!

 Recently, in terms of Gross Domestic Product (GDP), China toppled Japan to secure the second position globally, after US. In fact, China was very close to achieving this feat the last year itself, but fell short at the last moment. As per reports, if China keeps growing at its current pace, then by 2025, it should topple the US to become the largest economy of the world. Who could have imagined that an economy, which was languishing till about three decades back, has put itself in such formidable position? What is even more amazing is the fact that at a point in time when the world economy is still recovering from the global recession, China kept on growing. The growth has been such that in 2005, it first overtook Britain and France; then in 2007, it surpassed Germany to secure the position of the third largest economy of the world. It is not that the growth did not bring in iniquitous distribution of wealth; but then, at the same time, China has managed to pull out a staggering 600 million people out of poverty – a record which no other country has achieved so far.

Going by media reports, it doesn’t seem that many experts are appreciative of the Chinese growth. In fact even now, most in the developed world still cannot fathom the fact that China can be a serious contender in the new economic order. Much of this is owing to the fact that irrespective of its number 2 position, China still remains a developing country, as its current per capita is still 10 times lesser of that of Japan. But then, what most miss out on is the fact that China is in no hurry to prove itself. China has moved step by step in terms of consolidating its position. They have never bothered about the criticisms that they faced on humanitarian issues, or the kind of global cynicism that they faced by keeping their currency purposefully undervalued. Their objective has been very clear – which gets reflected in the manner in which they have planned every step. From the very beginning, China has been extremely scientific and systematic in its approach. And more than that, the growth has come out of great sacrifice collectively made by the Chinese citizens. China has systematically moved people into manufacturing and today China manufactures almost half of the global produce. Thus today, a Walmart retains the topmost position in the Fortune list by selling goods that are being made in China. And all this has not come in a day. It has been an outcome of years of planning. China today boasts of an investment which is a mind numbing 40% of GDP! Even at its peak, the US managed around 18%. Even countries like ours are managing 18%. Additionally, the Chinese investment mobilization has been far more prudent than any other country’s efforts. They have systematically invested in infrastructure, which not only created jobs, but also helped in creating a world class environment for trade. But then, their biggest credit has been in terms of the investments that they made in education. As per reports in 1998, around 3 million students were undertaking Chinese higher education; this increased to around 8 million in a matter of just 4 years. And investments have just not been in higher education – starting from English training, to vocational training to the investments that they made in science and technology. Such has been the outcome that their investments in education alone add up to almost 6% to their growth; and this would be sustained over a period of time. Today, China produces patents, the number of which is only second to the US! Not just this, they received severe criticism from all quarters when they pro-actively went ahead with their engagement with Iran. They did so not just with Iran to but with Sudan as well, for they knew that energy security is key to their dominance in global trade.

In order to have a better understanding of what the Chinese have achieved in the last two decades, one needs to compare it with India. The Indian economy, which used to be almost 80% of that of Chinese economy as recent as two decades back, now remains a menial 25%! While the Chinese feel underachieved at a staggering $4 trillion plus economy, we celebrated our $1 trillion mark! While sometime back there, China created history by hosting the greatest sporting spectacle, Olympics, we all know what we are doing to the Commonwealth games! Increasingly, any comparison between India and China is getting banal! It is not that we do not have our own advantages, but the Chinese have gone far ahead and are increasingly going farther. If reports are to be believed, we too would reach the number 2 position economically by 2040; but that too, if we keep growing between 8 to 9% year on year, which in itself is a huge challenge.


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Thursday, August 30, 2012

What, how and why of GPM!

A benchmark index to measure relative well being of income classes
 Wish to know where you stand in your profession with respect to your global peers? Global Poverty Multiple (GPM, visit www.globalpovertymultiple.org) is an internationally comparable ratio developed by IIPM Think Tank in collaboration with B&E presents a comparative picture of the standing of various income receiving classes of a nation against the poverty line income (the latter decided by the nation and/or by international organisations).

GPM is a globally portable ratio that, on one hand, is easy to calculate, and on the other hand, presents a very clear and comprehensive comparative picture of economic well being of various income-receiving classes of countries across the globe. There are many globally accepted indices with a similar intention. GPM does not take life expectancy or literacy rate into consideration. It divides the population into various income-receiving classes and compares their annual per-capita income with the standard poverty line income. Since GPM is a ratio (per capita income/poverty line income), a GPM of “1” of an income receiving class indicates that his income is just on the poverty line, he is neither better off nor worse off. The higher the multiple, the better the economic well being of the particular income receiving class. GPM therefore further allows an inter-country comparison of economic well being of people in different professions by using the poverty line income as the base for comparison. Comparably, the PPP method and the GPM method are quite similar due to the fact that inter-country comparisons become easier.


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Wednesday, August 29, 2012

Water is my right!

The UN declares water a basic human right. You mean it wasn’t one till now?!

In a far-flung village in Africa, women wake-up every morning and walk for more than a kilometre to fetch the basic necessity of life – water. On some days they even get lucky and find clean water. Such is life for not only the people in Africa but about three billion people in the world, who have no access to running water within a kilometre of their homes. Alarmed by the scarcity of safe and clean water, which is responsible for claiming upto two million lives every year, the General Assembly of United Nations held a summit on the human right to water for the first time and declared that access to clean water is now a human right.

In the recent past, various attempts have been made to spread awareness of saving water and electricity, but with growing population and expansion of industries, it is estimated that by 2030 the gap between supply and demand of water will increase to more than 40% (according to a World Bank report). Let us take into consideration the Indian scenario. More than half of the population resides in rural areas, where let alone running water, even access to clean water is a luxury, and people dying of water-borne diseases is a common occurrence. The fluoride and arsenic content in groundwater endangers the life of more than 70 million people and 10 million people respectively. The so-called sacred water of the Ganges has now been contaminated to an extent that contact with it may lead to skin eczema, digestive and respiratory disorders. “In the last few years, I have seen that cases of water-borne diseases have risen to a great extent. And more people in the rural areas are being affected because they don’t have access to clean drinking water. We doctors are also helpless because we cannot provide them with this basic amenity,” laments Dr. Singhal, a medical practitioner in Delhi.


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Friday, August 24, 2012

Mohit Khattar

Managing Director, Godrej Nature’s Basket, talks to b&e’s angshuman paul about the peculiarities of the industry and the company’s future plans

B&E: Don’t you think the Godrej Group has been too late in recognizing the potential of retailing?
MK: I can’t comment on other businesses of Godrej group but regarding Nature’s Basket, yes. Five years back, the group didn’t have any intention to foray into retail. But during the last two years, the group has moved on and we are exploring all possible opportunities for growth; and one of the biggest opportunities in recent times is in the retail industry.

B&E: Ernst & Young claims that organised retail accounts for an approximate 4% of the total retail sector market, and players are in an inordinate hurry to capture the retail sector. Is this the reason that propelled you to join the retail bandwagon?
MK: We are not into the trading business and we don’t believe in doing something just because other players are doing it. Our retail brand was an initiative to offer everything that the Indian consumers’ palate would require. Most of these are gourmet retailing, which Indian consumers have never seen before. That was the reason we rolled out Nature’s Basket.

B&E: Gourmet retailing already has brands like ‘Le Marche’ functioning. Given that, how do you think your brand is unique?
MK: We are tying up with many foreign brands and will be providing a wide array of products related to food and beverages. Moreover, we have our own food products [of the company]. We started operations in 2005 and in five years, we have done our market-research, set up our logistics and supply chain. We are fully prepared to expand our presence now and we know we won’t come across a situation where we will have to shut down a store once we’ve opened it. We have ten stores while Le Marche has just eight.

B&E: Yes, you have ten stores, but the first store was rolled out in 2005. Do you think the pace at which you’re growing is relatively slow?
MK: The type of format that we are offering [in fine dining] is very exotic and we did not want to roll out stores unless we have done our ground work. Our conscious steps have paid off; we did not have to shut down our stores like other brands had to do in Mumbai. Nature’s Basket is different in terms of the products, offerings and services that are offered. Our target audience are the people living in metros and we can’t be expanding in every nook and corner of the country.

B&E: But then, even in metros, you are present only in Mumbai and Bengaluru. Will you continue to follow this retail penetration strategy in the future too?
MK: Not really. Of course, we didn’t expand in all cities across India as we didn’t believe in going places where we don’t have a market. And then there’s no point in opening stores unless you are financially or logistically prepared for the same. In gourmet retailing, we don’t have much competitors and we are the only one having presence in two metros. We will be rolling out Nature’s Basket in other metros too by the end of this year.


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Wednesday, August 22, 2012

An electric shock or a safe recharge?

Despite promises, Reva has been struggling over the past decade to strike gold when it comes to sales. But with M&M acquiring a controlling stake in the electric carmaker, much is expected to change in the near future. So has Anand Mahindra placed an electrifyingly winning bet? by Pawan Chabra

He was all of six when he surprised many by winning an award for having designed a remote-controlled toy car during one such competition at school. Chetan Maini’s love for machines had just started bearing its first fruit. Much water has flown under the bridge since then, but what has remained unchanged in the past 34 long years has been Maini’s (today the Chief of Technology & Strategy at Mahindra Reva Electric Vehicle Company) love for machines. He started Reva in 2001 and nine years later, has witnessed the change in ownership at the electric car manufaturing company. And just like every other journey, there have been times of thirst for Maini too. This mechanical engineer (from Stanford University) turned entrepreneur’s has been time and again running after banks to finance his business plan. He finally seems to have found solace in Anand Mahindra’s cash-loaded arms. On May 26, 2010, Mahindra & Mahindra (M&M) bought a majority stake (55%) in Reva. [Post-sale to M&M, Maini’s family will hold just 31% in the new Reva. It’s now called Mahindra Reva Electric Vehicle Company. The other large shareholder will be Lon Bell, the other co-founder, who holds 11%.] So, the question bothering many a well-wishing heart is – Is this really the end of problems for Maini? Seemingly, yes. But chances are, the Oracles might just be proven wrong this time.

Interestingly, for the lesser informed, Reva had joined hands with GM India in December 2009, for developing an electric version of Spark for the Indian roads. The final product was to hit the market in December 2010, and was to be sold via GM’s sales & distribution network. GM however called off the deal (most likely for information security purpose) once M&M entered the scene. So, while many are grieving over GM’s loss in the process, the more pertinent issue to mull over would be to question what the transaction brings to the table for both Reva & M&M.

“The deal between M&M and Reva is beneficial for both the parties in their own ways. While Reva will benefit financially, Mahindra can add Reva’s technology to complement its vast existing portfolio,” says Pankaj Karna, MD, Maple Capital Advisors. So for now, Maini’s footsoles can take some rest from rambling about in search of fresh fund infusion, as the stake purchase by M&M brings-in close to Rs.450 million for the electric carmaker. For M&M of course, the case is stronger. It gives it the much needed hybrid edge, something which it would have been eyeing for long now. Maini’s brainchild would further strengthen M&M’s electric vehicle portfolio, that as of now consisted of only a three-wheel vehicle called Bijlee apart from a yet to be launched ‘Maxximo’, an electric-powered mini-truck.


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Tuesday, August 21, 2012

generation X thought ‘family is foremost'

If generation X thought ‘family is foremost’, for generation Y, are parents a pest?
 
People all over the world look up to India’s culture, especially because of our strong family bonds, and it’s a sad sight when tiny tiffs lead one to an impulsive decision of walking out of home. Opines Dr. Sanjay Chugh, “Living on your own makes you learn new things about life and your own self. It makes you more independent, self-reliant and responsible, if the freedom is rightly used. All these are desirable qualities, that’s why, if there is opportunity along with resources, rarely would anyone like to ignore it.” But the days ahead might not turn out to be all rosy. “Separating is an important decision and so, the family’s mental preparedness is crucial. If both the parents and the child are mentally and emotionally ready, then the whole shift could be far more peaceful and stress free. If not, the chances of emotional breakdowns are high”, said Sanjay.

To avoid reaching a crossroad of heartaches, both parents and children need to realise that where there’s love and understanding, a little adjustment can definitely be accommodated.


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Tuesday, August 14, 2012

Dependants of jawans killed by Maoists struggle to stay afloat. A report from Orissa by B&E’s Dhrutikam Mohanty

A few days after the surgery, not only did her department pester her to report back to duty, she also received a phone call claiming that she had taken a loan of Rs . 40,000 from the PWF and that the amount would be recovered from her. She was totally stunned. Pratima alleges that an additional Rs. 20,000 was withdrawn by the SP, Cuttack against her name. Says Pratima, “While the government has promised to bear the complete cost of my medical treatment, it is painful that people from the department are fraudulently withdrawing money in our name and then trying to recover it from us.”

When the doctor treating her learnt that the police department wasn’t going to bear her expenses anymore, he stopped taking proper care of her. He discharged her even though she had not recovered fully. She continued to receive notices from her department to join back.

At her tether’s end, Pratima met the then Director General of Orissa Police, Gopal Nanda, as a last resort. He not only waived off her loan but also ordered that she be assigned an office job. She could now see light at the end of the tunnel. But Pratima is still nursing the wound in her leg. It hasn’t healed because of the unseemly haste with which the doctor discharged her from hospital. We ask her how much she has got by way of compensation. She replies, “What compensation are you talking about? I haven’t received a single penny.”

Pratima points out that it has taken the government two years to set up a board to prepare a detailed report on those who were injured in that Maoist strike. She adds, “As for my own case, one of the two board members who examined me was the same doctor who discharged me untreated. I, therefore, don’t have must expectations from this board.”

Now meet Jayakrishna Bardhan, a superannuated government employee who resides in the outskirts of Bhubaneswar. Though he retired in 2004, he still does the rounds of government offices. Sometimes he is in the provident fund section of the police headquarters requesting the dealing assistant to push his file. At others, he is seen in the pension section inquiring about the release of his family pension. It isn’t his own retirement benefits he is chasing. Jayakrishna’s policeman-son was killed in a Maoist attack and all he is asking for is the legitimate compensation for an irreparable loss.

Bardhan and his family reside in a single-storey building in Gadakana area of Bhubaneswar. It has neither a boundary wall nor a proper approach road. The entrance has no door bell. So we knock on the grille. The family’s pet dog, Blackie, barks in response. Jayakrishna is soon at the door to usher us in.

His elder son, Ajit Bardhan, was an Orissa police sub-inspector posted in the Maoist-infested Sundargarh district. While on patrol duty, Ajit was overpowered by a group of Maoists and abducted. The very next morning – the date was July 16, 2009 – his body was found near Jharbeda. Darkness descended on the slain cop’s family. Unable to withstand the shock, Jayakrishna suffered a heart attack. Ajit’s widow, Rosalin, who was expecting her first baby on August 7, experienced acute labour pain even as arrangements were being made to take her husband’s body to Puri.

The Orissa chief minister, Naveen Patnaik, came down to Ajit’s residence to express his condolences to the bereaved family. When he learnt about the condition of the cop’s father and widow, he immediately instructed senior officers to make all arrangements for them.

But nothing moved after that. Say Jayakrishna, “I am still wandering from one office to another for the release of my son’s provident fund amount and family pension. They haven’t even paid a small amount of Rs. 17,000, which I spent on my treatment after the heart attack. The CM had declared the government would bear all the expenditure. I have been to the Rourkela SP’s Office and the IG Operation’s office on several occasions, but nothing has been done. It is humiliating. It is as if they are going to do us a favour. Did my son lay down his life in vain?”

Ajit Bardhan, in a letter to his wife Rosalin, had once written that it would be the happiest moment of his life if he were to die serving the nation. If only he knew what would be in store for his family after his death, he might have changed his view. Rosalin, who recently got a police job under the rehabilitation scheme, is still waiting to get her other dues. She says, “My father-in-law has taken much pain to get my husband’s legitimate dues and I couldn’t help him because of my job and daughter Arushi.” Arushi is only eight months old.


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Monday, August 13, 2012

A B&E EXCLUSIVE INSIDER

As subhash chandra plans a gradual exit, B&E catches up with him and his two sons to discover more of what’s going on at work

If you thought that that sounded much like the veteran Chandra, you would be right, as even Punit says, “We both focus on profits!” But that’s where the similarities (on the business front) between father and son end. Vanita Kohli Khandekar, an independent media consultant and writer, tells B&E, “Chandra is a visionary and no one can match him at that. But a big problem at Zee was execution. Chandra is very good at spotting business opportunities, while Punit is more of a hands-on operational guy. He gets involved with the nitty gritties and that is what the channel needs today.” Amit Goenka gives a similar feedback between his father and elder brother as he says, “My father is a great visionary, while Punit is a perfectionist.” After fixing up the group’s GEC, Punit is now focusing on expanding the regional and sports channel portfolio. The company has acquired the remaining 45% stake in Taj TV and as few know, its management is in the process of restructuring the entire sports business under the Ten brand. The sports bouquet of Zee will be made a separate entity and will function as a subsidiary. Also, Zee Sports will be renamed Ten Action (the proposed name) and a new golf channel (Ten Golf) will be added to the sports bouquet. So what’s the rationale behind this restructuring? Punit says, “We believe that Ten Sports is a formidable brand within the sports genre in the country, and garners the highest viewerships in the genre on any non-cricket day. And since Ten Sports and Zee Sports functioned as separate entities, we could not club the two channels and offer it to advertisers. Therefore, Zee Sports was not able to piggyback on the popularity of Ten Sports, either on the distribution or the ad-sales front.”

Apart from that, niche content is on Punit’s priority list. Zee is exploring the opportunity to launch niche channels in genres like action, sports (pool & golf), home shopping and the likes. The company is also going to launch two high definition channels soon. Industry experts say that the Indian market is not ready for niche channels as of now. But Punit counters, “If you wait for it to become viable, you will never be in the game. We have always been ahead, because we see an opportunity before anyone else can.” The niche channel business will bloom once the number of digital TV homes grow. Punit projects that there will be around 45-50 million digital homes in the country over the next five years. Thus, they plan to invest in the niche category over the next few years.

But the wine has not been sweet forever. Chandra’s elder son has had his fair share of disagreements with his father, and he candidly admits that and offers, “I am a firm believer of the saying that by the time you realise that your father was right… you have a son who thinks his father is wrong!” He cites one example: During his early days, unlike Chandra, Punit strongly believed that it was important to rope-in celebrities and go for high buzz programming to remain competitive. However, time and again, he felt that his belief was being proven wrong and that his father was right after all. [That explains why Zee TV has mostly stayed away from roping-in celebs and high buzz programming, even if such a strategy had worked well for other channels.] But that had also created a disconnection between the channel and the young audience, whose importance had been gradually but steadily increasing in the TV space. Till date, Zee doesn’t believe in high buzz programming. But Punit is not the one to give up, as he says, “One phenomenon cannot determine that it will work well in general, forever... After all there has never been a second KBC.” Surely, when Punit takes ‘total’ control of Zee, you will witness one big change. Take a guess.

Till date, Punit has managed to pump life into Zee, while his younger sibling Amit, has built a Rs.24 billion business in the gaming space, almost out of nothing. However, their lottery business has had to face a lot of regulatory issues and Amit feels that is the biggest challenge for Playwin in the years to come. Like his father and elder brother, Amit too never loses his focus on the bottomline; as he shares his continuing worry about slowing growth and falling margins in the gaming business. He says, “Playwin is profitable but not as profitable as other businesses of the Zee group. Margins are low, and not more than 2.0-2.5%. In terms of revenues, we expect a slow growth of 7-8% over the coming year.” Amit is also keen on other businesses. He shares, “Currently, there are few areas in the media vertical, where we are either not strong or absent as a group. One of them is the interactive space, and I am interested in getting personally involved with this space soon. Over the next six to nine months, many new events will unfold...”


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