IIPM-Infrastructure

Wednesday, March 6, 2013

‘Slym’ing down is no more a priority for the ‘Beast’

GM has long realised that it cannot wish away India if it plans to stay in the Asian reckoning. But while it has been a leader in China, the intensely competitive Indian market is yet to take off for GM. Pawan Chabra drills and grills GM’s MD Karl Slym for a deeper look into how the company plans to change that orientation

Barack Obama’s entourage to India will include a whopping representation from 215 large and mid-sized American companies, who will seek to further the blooming American business interests in the country. Taking him around during his three day visit will be the Beast, a fortress that is disguised as a Cadillac, which is America’s First Limo. It is regarded as the world’s most advanced vehicle in terms of security, one whose myriad features are a closely guarded secret – held by its manufacturer and the US Secret Service.

As the Beast rumbles into India with the world’s most powerful man as its occupant, it carries a symbolic appeal for GM as well; being one of the many American businesses that have sought and attained welcome respite from their diving fortunes in the Indian market. And just like Barack Obama, GM’s expectations from its India connection are now reaching unprecedented heights, as Karl Slym, MD & President, GM India, would excitedly tell me.

In fact, the past three years that Slym has been in the Indian market have been full of action, both in India and back home in US. In his tenure, the parent company back in Detroit made its way to Chapter 11 reconstruction. For GM India – and for Slym personally – that time was perchance the worst as a significant number of prospective GM customers, worrying whether GM India would continue if GM global collapsed, either delayed their purchases or simply shifted their preferences. Slym smiles wryly as he reminisces to me the tough decisions he took to ensure that the business in India did not take a hit because of the problems back in the US. Be it the decision to be himself the brand ambassador of the company in the ‘There for you – There for India’ campaign or the host of other activities that the company carried out, Slym tells me he’s very much confident that Chevrolet now stands as one of the most promising brands in the Indian automobile circuit. Now that the bankruptcy woes are almost over and GM has made a comeback in both India and back home, the company is focused on larger objectives. After the company got the third cousin in the small car segment in January this year in the name of Beat, the battle for a much larger market share in India is very much on.

Numbers seem to flowing well for Slym. As per the J.D. Power Asia Pacific 2010 India Vehicle Dependability Study, the Spark and U-VA model of the company have topped the vehicle dependability index in their respective segments. As compared to the total sales of 87,000 that the company made in the financial year of April-March 2010, GM India has sold close over 51,000 vehicles in the first six months of this financial year. Slym is seemingly confident of the fact that he will be able to break the one lakh tag this fiscal year. “We expect to sell 2,00,000 units by the end of 2012 and 300,000 units by the end of 2013,” says Slym.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Ranked 6th Overall
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Tuesday, March 5, 2013

There will be no trouble

UPA hopes there will be no trouble once the verdict is out but is leaving little to chance, says B&E’s Pramod Kumar

UP Congress has cautioned the party High Command about the political tactics that might be adopted by the BJP to cash in on this emotive issue. The BJP might try to polarise voters in ensuing election in Bihar.

Pressure is mounting on the government to act in a decisive manner. The Congress is of the view that if peace is disturbed, the BJP will try to derive political mileage. The ruling coalition is already worried over alleged failure of the government in tackling inflation and it does not want to concede any more political ground to the Opposition. The onus now rests on Chidambaram. Intelligence chiefs have warned that Azamgarh, Mathura, Kashi, Bhopal, Indore, Raipur, Delhi, Nagpur, Gorakhpur and Ranchi are among the more sensitive areas. The Prime Minister wanted to know about preparations of the Home Ministry regarding UP's demand for 400 battalions of paramilitary forces.

The Home Ministry, in its reply, has said that it is ready to send 40 battalions of paramilitary forces and 15 units of Rapid Action Force. The government has also sought reports from home secretaries of different states. They have been told to remain vigilant and be ready to handle any situation.

Amid all this, the RSS has already started chanting Hanuman Chalisa in temples across India. The chanting will reach a crescendo on September 16. The BJP has called off its planned Jammu conference.

However, the apex body of the BJP is not in favour of a direct confrontation on the issue of building a temple at the disputed site in Ayodhya. It has even advised its front organisations such as VHP and Bajrang Dal to maintain peace even if the court delivers a verdict in favour of the Waqf Board and allots Hindus a piece of land near the disputed site. They have also sent overtures to Muslim groups to consider giving up their claims on Mathura and Kashi.

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B-SCHOOL SURVEY PANEL MEET, 2010

August 12, 2010, saw Planman Media and Business & Economy magazine play host to eminent corporate personalities of India, in a Panel Meet discussion, for Business & Economy magazine’s highly coveted annual issue – India’s Best B-Schools Special Issue 2010. The most unique element about the B&E B-school ranking is that in this particular ranking, the B-schools are ranked by renowned industry leaders (please refer to ‘List of 20 Panel Members’ section for the names of panelists). The final list of 30 B-schools, which is handed over to the panelists for their individual ratings, is chosen from an initial list of 150 B-schools (the initial ratings are obtained from 5,000 respondents across the cities of Delhi, Mumbai, Kolkata, Bangalore, Chennai, Pune, Hyderabad and Ahmedabad, using a structured questionnaire). Considering the importance of the meet, four distinguished industry leaders – Dr. Wilfried Aulbur (CEO, Mercedes-Benz India), Mr. Michael Boneham (MD, Ford Motor Co. India), Mr. Naresh Gupta (MD, Adobe India) and Mr. Brian Tempest (Former CEO, Ranbaxy and presently, Independent Director, Religare Hichens Harrison) – sent their comments and discussions through the audio/visual format. The round-table discussion revolved about the parameters on which B-schools are judged today, and means by which such ranking can be made more transparent and just. Professor Arindam Chaudhuri, Editor-In-Chief of Planman Media expressed his views on how “faculty and course contents” are the two most important elements to deliver overall knowledge in B-schools. He also stressed upon a need for a constant focus on personality development and communication skills. Mr. Sandeep Aneja, MD of Kaizen PE, elaborated on why a “right student base and world-class faculty” is mandatory for any B-school, adding that his most valuable learning during his Stanford days was from a course that prompted students to question who they were, sociologically. Mr. Girish Vaidya. Former Director, Infosys Leadership Institute spoke about why B-Schools should be ranked on the basis of “curriculum, global exposure and cultural stability, along with the extent to which entrepreneurial programs” are encouraged. Mr. Dhiraj Mathur, Exec. Director, PwC gave a strong argument on why “a strong orientation towards ethics” is important for a B-school. While K. M. Nanaiah, MD, Pitney Bowes India, also highlighted the need for a “globalised curriculum and industry interface”, Mr. Sumeet Nair, Chairperson of Fashion Foundation of India justified the need for “encouraging an entrepreneurial zeal” amongst the B-school students. The event was a huge success and all the participants concluded that much more needs to be done to arrive at the ideal B-school of tomorrow. [The aggregate of ratings given by the 20 panelists will be released in print in the November 26, 2010 B-school Special Issue of B&E.]

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Saturday, March 2, 2013

“There is a need of innovative wrappers around existing products”

Jaideep Bhattacharya, Chief Marketing Officer of UTI AMC in an exclusive interaction with B&E

Following growth in the MF industry, UTI AMC has outlined vision to simplify innovation for investors and to further augment equity assets, which is predominantly retail. Jaideep Bhattacharya, CMO of UTI AMC spoke to Mona Mehta on the ‘realistic investment’ challenges the AMC would want to overcome with an aim to enable retail investors reap the benefits of diversification. Excerpts:

How critical is innovation for the Indian mutual fund industry and how is UTI AMC dealing with it?
UTI AMC has various products catering to varied risk-return profiles. Regulations allow MFs to invest in assets viz equity, debt and Gold ETFs. There have been various permutation combination when it comes to MFs using these assets. What is required now is to narrow down on the existing products and help investors to invest in focussed products to enable them to achieve their financial goals. There is a need of innovative wrapper around existing products for various life stages of an individual.

What is UTI’s investor education initiative all about?
UTI AMC has launched the largest investor education initiative called “Swatantra” for creating awareness about the concepts of financial planning and benefits of investing in MFs. As a part of this initiative three UTI Knowledge Caravans will travel through the length and breadth of the country for spreading financial literacy. ‘Swatantra’ is the largest investor campaign in the country which will cover over 300 cities in 100 days. In fact, the initiative will be conducted in 10 languages. During the journey investors meets along with training through online platform, street plays, puppet show, et al (which are being used for the first time in India) will be held in various centres for spreading financial awareness.

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Thursday, February 7, 2013

Lost in LONDON

The results of UK’s General Elections were a forgone conclusion, but this long drawn out impasse might throw some strange bedfellows, reports James Landale from London

In 1974, Ted Heath famously asked the question, “Who governs Britain?” It is not a bad question to ask the day after the 2010 general election.

The first decision has come from Gordon Brown. Despite losing seats, despite coming second, he has chosen not to resign. He has instead paved the way for cross-party negotiations to begin by allowing civil servants to “support” the Conservatives and Liberal Democrats in any talks they may have.

If Brown had resigned, Cameron would have gone directly to Buckingham Palace and a minority government would have been formed.

The prime minister’s aides and ministers are making it very clear that they believe some kind of deal with the Liberal Democrats is possible, a kind of anti-Tory “progressive alliance” with an agreement on electoral reform at its heart.

The ball thus moves to Nick Clegg’s side of the court. He says he will stick by his campaign promise to allow the party with the most seats and votes – thus the Conservatives – to have the first right to seek to government.

He says, “It is now for the Conservative Party to prove that it is capable of seeking to govern in the national interest.” In other words, what are you offering, David Cameron? Clegg is not saying that he will never talk to Labour or do a deal with them, just that he will talk to the Tories first. He will listen to what Cameron offers him and take it to his party tomorrow. He will not move fast.

The Liberal Democrats will not want to do much with the Tories unless proportional representation is on the table. Remember that Clegg will have to take his party with him; he cannot operate alone in these talks.

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Wednesday, February 6, 2013

INDIAN RETAIL BANKING: NEW ENTRANTS

After many years of waiting, Pranab Mukherjee says RBI will issue licences to new banks. Is the RBI on the same ground as Pranab Mukherjee? Evidently not!

Ever since the banking sector was opened up in 1993, the regulator has given out just 12 licenses (of which 10 were given in the first year, while two were given in 2002 to Kotak Mahindra Bank and YES Bank). Therefore, this announcement comes as a good tiding to many public, private players and NBFCs (of the likes of Shriram Capital, Sahara, Reliance Capital, the Aditya Birla Nuvo group, Bajaj Auto group, L&T Finance, Tata Capital, Indiabulls, Religare, Exim Bank, IFCI and SIDBI), who have for long, worked on blueprints to make a name in the Indian retail banking arena. To represent the joys at the bourses in numbers, at the end of the Union Budget day, the Religare stock (an NBFC) had inched up by 3%, Aditya Birla Nuvo gained 4%, Reliance Capital grew by 8.1% while Bajaj Auto Finance surged 5.3%. Expressing his intentions in this regard, Sunil Godhwani, CEO & MD, Religare Enterprise, says, “Banking is a natural progression for any integrated financial services player...” As a company official says, “Religare is currently waiting for a banking licence, and at present, talks are on with the ministry.”

The entry of these new players in a sector which at present has 96 scheduled commercial banks [27 public sector banks (which hold over 75% of the total assets of the banking industry), 31 private banks and 38 foreign banks], with a combined network of over 53,000 branches, will not only increase competition and dilute PSU involvement, but will force some change in the functioning of the banking domain as a whole. But despite hopes that these new banking aspirants will increase penetration of banking services in the country (only 6.4% of the branches of new private banks are in rural areas), the question is: are they prepared yet?

Under the current guidelines, a new private sector bank should have a minimum net worth of Rs.3 billion, and no single entity or group of related entities can hold more than 10% in a bank. There is a distinct possibility that RBI may increase the minimum net worth limit to at least Rs.5 billion, but many participants are confident of making the cut; one of whom is Ajay Srinivasan, CEO, Birla Financial Services, who says, “We welcome this initiative and will definitely apply for a licence. We are confident of meeting any eligibility criteria that might be set.” While talking about the change in the eligibility criteria for these new entrants, Usha Thorat, Deputy Governor of RBI says, “We have to work on it. It’s a long process and will take some time.”

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Tuesday, February 5, 2013

CITIBANK: VIKRAM PANDIT

More so when it wears the Citi crown! Is Vikram Pandit drowning in a vicious cycle? by Deepak Ranjan Patra

Pandit has made some progress to help Citi avoid slipping into oblivion last year by slashing a great chunk of its non-core assets and businesses. Moreover, Pandit has also managed to cut Citi’s payroll bills by almost 20% to $25 billion, by downsizing employee strength from a high of 375,000 to 265,000 globally. But then, it’s a competitive and comparative world. So when Vikram Pandit says, “We have made enormous progress in 2009... We greatly improved Citi’s capital strength, reduced the size and scope of the company, and refocused our business strategy to take advantage of our unmatched global network,” in a press statement, it raises a lot of eyebrows. From a loss of over $27 billion in FY2008 to just $1.6 billion is surely an enormous progress for Pandit, but it’s prone to questioning from the rational observer for two basic reasons. First, Citi’s peers are at a healthy profit; and second, Pandit’s excuse for the loss, $6.2 billion in debt repayment, is just a small part of $50 billion that the bank has taken from the government. Investors are concerned that the bank, wishing to return to the top of the tables, is still a clear laggard.

With the heat rising against him, Pandit has now decided to play new cards; by reshuffling the top honchos. Some of the moves are clearly well thought of. The most critical of the list is the replacement of Terri Dial, Chief Executive of Consumer Banking for the Americas by Manuel Medina-Mora, head of Citigroup’s Latin American businesses. The move, as believed at the Citi headquarter, is expected to bring in an overhaul in the retail banking business. But Pandit hired Dial amidst similar sentiments among his first major hires after joining Citi. Also, Medina-Mora has absolutely no banking experience in the hyper competitive North American retail market. Is this just a plain shot in the dark?

However, Pandit has received a little cushion from rating agencies like S&P, who left Citi’s ratings unchanged despite the weak Q4 results. The agency finds Citi’s financial performance stabilising. Scott Sprinzen, Primary Credit Analyst, S&P tells B&E, “Citi has completed a number of major actions during the past 18 months to offset the impact of net losses on its equity base, increase its total capital, and bolster the quality of its capital.” Also net additions to the loan-loss reserve ($802 million) were the lowest in several quarters and total allowance for loan losses stands at a satisfactory level of 5.9% of total loans. Adds Tanya Azarchs, Secondary Credit Analyst, S&P, “Cost-cutting efforts continue to yield results.” (Citi refused to comment).

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