Monday, September 29, 2008

It’s the money, stupid

Commercial banks have aggressively extended loans to farmers. But the money is being used for purposes not even remotely related to agriculture. By ASIF AHMED
“A man, who has never sown seeds in the scorching heat in the month of June, will never know what real summer is. And a man, who has never watered his fields in the chilly winters of December, may never know what winters mean,” said the late Rajesh Pilot, a former cabinet minister, while addressing a rally of thousands of farmers years ago. The 60-year old Bhopal Singh, a resident of the fertile area of Khanpur village in the holy land of Haridwar district, remembers that speech quite clearly.

Pilot was right. For the Indian farmer, life had never been as tough as it is today. Ironical, I thought, as I gazed at the paddy fields in Khanpur, which were simply amazing. They were like green carpets or huge golf courses spread over bighas and bighas of land. But what was difficult to understand was the reason why the average Indian farmer is buried under huge debt even after 60 years of Independence, why can’t he send his son/daughter to a primary school, and why his annual crops fail to bring a smile to his face.

Even today, despite the rise of manufacturing and services sectors, agriculture has a dominant role to play in the Indian economy. Despite a decline in its share in GDP, it provides livelihood to nearly two-thirds of our population. Besides, agriculture provides raw material for industrial growth. Enough has been said on the issue, but not enough has been done to give a push to agriculture which, if accelerated, can actually propel the annual GDP growth to double digits. The 11th Plan document calls for agriculture growth of 4%, but the sector has hardly seen any capital investments and, over the past five years, the sector has witnessed a CAGR of a mere 2.3%.

One thing that Indian farmers need desperately is ‘credit’, and to the credit of the UPA government, it has considered it to be a top policy priority. According to the RBI’s latest annual report, the credit flow to the agricultural sector exceeded the target for the third consecutive year in 2006-07. Credit flow from commercial banks to the agriculture sector during the current financial year is likely to touch Rs.2,40,000 crore, as against the target of Rs.2,25,000 crore, union finance minister P. Chidambaram recently said that the figures were impressive even at the micro level. We decided to check out if this was indeed true.

“As the lead bank in Haridwar district, it is the responsibility of our bank to act as a coordinator between the bankers and government machinery. It is our responsibility to implement all the government-sponsored schemes, which are operating in the district as well as pinpoint and rectify any problems in the credit-delivery mechanism. Not only have we achieved the government objectives, in most of the cases, we have even surpassed the targets by significant margins,” says a bank officer, who’s in charge of the lead bank’s (Punjab National Bank) branch office in Haridwar district. In an attempt to give a push to credit delivery in India, the Punjab National Bank recently organised a loan mela (it was actually called a camp as the Reserve Bank of India has asked banks to refrain from using the word ‘mela’ as it diluted the event’s image) in Haridwar to clear all funds for the government-sponsored schemes that were pending in various branches. The idea was to help the banks in the region to achieve targets in different schemes before the closure of FY08. “The effort was worth it as a total of 450 borrowers were sanctioned loans worth Rs.3.5 crore,” the manager adds.

“The situation has improved, since manager sahib came to our branch,” feels Karam Singh, a farmer in his late forties. Short-term credit, which has a repayment period of one year, is disbursed through KCC (Kisaan Credit Cards), which has become the lifeline of small farmers. “Through KCC, we are now able to repay our debt, meet our day-to-day expenses, build pucca houses, and use the credit for marriage purposes,” was a constant refrain one heard from almost all the farmers we met in the area.

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Saturday, September 27, 2008

Programme is riddled with corruption

Of course, there’s corruption and there are issues related to misappropriation of funds, allocation, quality and speed of work under the scheme. In the case of Bihar, CAG observed that there have been cases of diversion and misuse of funds, inadmissible payments, ineligible beneficiaries, and incomplete construction. Over Rs.90 crore budgeted for the scheme remained unutilised, and the state failed to obtain an assistance of Rs.401 crore from the Centre. CAG also detected that 3,050 houses had been made at the cost of Rs.4.78 crore for ineligible beneficiaries, and around 7,000 houses were either incomplete or abandoned for the past 2-5 years. The same is true for other parts of India.

Another problem with the project is that the houses are allocated to female members of the household in order to promote women empowerment. Nevertheless, the CAG report suggested that in 17 States and two Union Territories, as many as 37.75% of the allotments were made in favour of male members, thus defeating the main objective. But everything isn’t bleak, and this was proved by our experience in Bihar’s Samastipur, where the locals seemed happy and satisfied with the Yojna.

In addition, officials from local bodies—and sometimes the beneficiaries themselves—come up with ideas that have redefined the project. For example, in Begusarai district of Bihar, beneficiaries collectively worked as labourers to build the houses of other villagers who, in turn, helped them later. The result: the village saved Rs.5,000 per house. This model—which is like an informal self-help group—was later implemented in others districts of India.

Similarly, under another scheme in Patna district, the beneficiaries are given a loan of Rs.20,000 each at 4% interest to be repaid in 84 months at an EMI of Rs.275 per month. This was to prevent the beneficiaries from taking external borrowings at exorbitant interest. “Following this, the banks have come up with a scheme to assist them,” says Atul Mishra, Project Officer, DRDA. “The idea was an instant hit as it impacted the local moneylenders,” he adds.

With the national elections due next year, the UPA government would like to take electoral advantages from the Indira Awaas Yojna. Regional parties would do the same, as would local leaders. Nevertheless, the UPA hopes to gain all the brownie points by taking credit for the scheme, and blaming the states for not doing enough to implement the scheme. It is a smart move and the UPA believes it can get away with it.

But as we saw in Samastipur and other districts of Bihar, it won’t be a cakewalk for the ruling party at the Centre as other politicians and political parties have already convinced people that they had built the houses for the villagers. Each leader will claim the credit for building the houses, for giving a roof over the heads of the poor households. And it’s the voters who will finally decide.

The Snapshot
The Centre is responsible for policy, planning, finance, implementation, guidance, monitoring, and evaluation of the scheme

At the state and district levels, the responsibility rests with SLCCs, DRDAs and ZPs

The block development officers and panchayat samitis are the grassroots implementers of the rural housing blueprint

The Problems

Against the target of 109.53 lakh housing units, less than half were constructed or upgraded

CAG observed that there have been cases of diversion and misuse of funds, inadmissible payments, ineligible beneficiaries, and incomplete construction of the houses

Over a third of the houses were in favour of males defeating the purpose of empowering women

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Thursday, September 25, 2008

The SP’s triple ‘A’ effect

The most visible, vocal and vituperative face of national politics

In Uttar Pradesh, Amar Singh, the enfant terrible of Samajwadi Party (SP) has devised a new strategy for his party and party supremo, Mulayam Singh Yadav. Lie low in the face of oppression unleashed by Mayawati – for instance the tactical attacks by the police on rallies led by SP leaders in Lucknow & elsewhere in the state – and use political issues to climb back on the bandwagon. Instead of consolidating on its own base in the state, use this opportunity to work on expanding the Third Front. These are Amar Singh’s pearls of wisdom.

So the Rajya Sabha member, Amar Singh, a close buddy of Amitabh Bachchan & Anil Ambani, has been maintaining a low profile since the SP lost in UP elections, is inching his way back. Being involved in the Third Front affairs has meant fending off attacks on Big Bachchan by Raj Thakeray and offering comments on the ‘Chat’ festival for all people of eastern Indian origin.

The question being asked here is what role would Amar Singh play for Bachchan? He has already introduced Amitabh in the same Barabanki village where Big B had purchased land controversially and which the great actor has now donated to the village. A school for girls has been established there, named appropriately after Aishwarya Rai. He is paving the road for the Big B to resurface into politics’ electoral arena. More importantly, Amar Singh was instrumental in launching a loose Third Front on the stage by no less than Bachchan himself with leading heavyweight politicos like Chandrababu Naidu in attendance.

A casual observer watching the meeting would have deduced that Bachchan had joined the Third Front informally. Mohan Singh, SP MP, told B&E: “There is no doubt that Amar Singh has a big role to play in the Third Front. The way he has raised issues, certainly the party will benefit in UP and the Third Front in the rest of the country.”

Amar Singh is also playing an important role in getting together the likes of Naidu, Farooq Abdullah, Omprakash Chauthala and other rather disparate elements of the so-called Third Front together, no mean task that. In addition, Amar Singh is good friend of the Leftists, whose support will be critical in the eventuality of a Third Front forming a government. “The next general elections will be categorised by the emergence of the Third Front, so we remain optimistic,” TDP’s Yerran Naidu, told B&E.

Some questions seek answers. While the man is planning so many things in the rest of the country, what about Uttar Pradesh? In Amar Singh’s schemes of things, the caste arithmetic has already come into play, never mind, if there is no election on the horizon.

There is an all out attempt to tie up with the Thakurs to develop an OBC-Thakur alliance on the lines of Mayawati’s Brahman-Dalit tie-up. To that end, attempts are made in to rope in a Thakur each from as many families as possible by giving them primary memberships of the party. To have Bachchan on your side would mean roping in Kayasth votes, or so thinks Amar Singh. Clearly, the portly little man is not sitting idle.
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Wednesday, September 24, 2008

It focuses more on performance

Budget process governed by 3Es - economy, efficiency & effectiveness
One more form of budget, which has great significance is performance based budgeting. It is a unique and most advanced way of budgeting, in which the ultimate goal of policy makers becomes a set of performance factors – and developing strategies to achieve them. There are three pillars of this form of budgeting, which are often called 3E! Economy: focusing on cost of inputs with appropriate quality and quantity of financial, human resources. Efficiency: evaluating the relation between output and input. Effectiveness: what is the extent to which goals have been achieved. The speciality of performance budgeting is that it sets up targets to be achieved, comparing the country with the international arena using a few key performance indicators (KPIs) to relate performance with available resources; added to this is the performance scorecard approach, where KPIs are examined and the connections between causes and effects are established.

The world’s most successful countries like Australia, New Zealand, Singapore, Malaysia, UK, France, US, Canada etc. use quality/efficiency/effectiveness indicators to prepare government budgets. Most importantly, international institutions like the World Bank and IMF provide technical and training support to countries that want to adopt performance budgeting. For India, the largest democratic nation, it is high time we incorporate such a model. India then can aptly compare itself globally with key indicators, the way most developed countries have done so. Setting key social, economical and political achievements, it can frame strategies at a micro-level to attain them. In the present conventional budget, where there is no link between budget appropriations and outputs delivered, India can identify its desired outcome by preparing appropriate approaches incorporating a path to progress towards the budget.

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Tuesday, September 23, 2008

Fear of Flying

India has a unique opportunity to leverage one of the fastest growing aviation markets in the world. As the EU and North America clamour for market shares, policy makers in India can give huge concessions, says shashank tripathi
The human rights lobby in Washington – a sanctimonious body at best – during the Clinton Administration was going hell for leather and chastising the Chinese regime for human rights violations. Mired in the Monica Lewinsky scandal, even Clinton started making noises about the same. China dropped the bomb shell and literally brought Washington down on its knees. It blithely announced that aircraft orders will not go to Boeing but to its rival Airbus from Europe. As the Indian aviation market grows explosively, even Indian policy makers have a huge opportunity to do something similar – leverage aircraft purchase orders and bilateral agreements with other airlines, to extract concessions in other spheres – economic, political & even strategic. According to Director General of Civil Aviation (DGCA), annual air passenger traffic in the country grew by 46% & 49% in the last two years, respectively. And if the estimates of International Air Transport Association (IATA) are to be believed, this growth has played an important role in boosting the world’s aviation business, which is expected to grow to $5.6 billion this year from $5.1 billion a year ago.

Moreover, Centre for Asia Pacific Aviation (CAPA), has forecasted domestic traffic to grow by 25% to 30% per year until 2010 and international traffic to grow by 15%, taking the overall Indian market to over 100 million passengers by the end of the decade. Meanwhile, DGCA has projected domestic traffic growth rate between 22% & 25% for the next couple of years.

Looking at this whopping growth in air traffic, one can easily foresee the huge demand of commercial planes in the times ahead, which Ministry of Civil Aviation (MOCA) anticipates to reach somewhere between 1,500 & 2,000 in next 10 years. Moreover, demand for aircraft is further expected to grow, as barely 0.8% of India’s population travels by air at present and this figure is going to increase many folds for sure.

If the above numerical evidences are not enough for anyone to comprehend the scope in the sector, then consider this. With increasing air traffic and demand for planes, need for a huge chunk of well trained pilots, flying schools to train them, ground staff, Air Traffic Controls and Maintenance Repair & Overhaul (MRO) facilities, would also escalate. Currently, India needs some 6,000 pilots to cope with the mounting demand that would be created in the next couple of years.

As for the big aviation behemoths coming to India and investing out here, no one wants to miss this opportunity. Especially with Indian economy growing at over 9% and the country inviting private players to contribute in the best possible manner for developing its overall aviation infrastructure, which entails $375 billion.

Boeing & Airbus have already established a sort of stranglehold in the Indian market, with most of the country’s airlines opting for either of the two. Boeing 747/400 & 747/400 ER jets, which are maximum used amongst its existing family of aircrafts in India, come at price tag of anywhere between $228 million & $260 million. While one of the most successful planes of Airbus family, which has given tough competition to United States’ Boeing, is A320 & a single aircraft is priced about $400 million.

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Monday, September 22, 2008

Industrial infection

MNCs are hailed as national treasures but their devil-may-care attitude results in tragedies, making them global shame

globalisation is inevitable as we reside in ‘global village’. And the entities which benefit the most, perhaps, out of this phenomenon are modern day centres of affluence & influence – MNCs. As they profit and in the process, enhance employment and production, goes unnoticed is that their drive to profit, which leaves the rest in pain, is their lack of concern and efforts towards safe working of their industrial units, across the globe. While a McKinsey report has exemplified that cumulative market value of top 10 Fortune 500 companies is equal to combined GDP of India & Brazil or total forex reserve of six leading Gulf oil exporting countries in 2006, but their irresponsible, greedy & biased business policies and activities without considering people, environment & legal aspects, have brought apocalypse in form of fatal industrial accidents, environmental hazards, affecting millions in myriad other ways.

Start with Bhopal gas tragedy in 1984; which is the most horrifying industrial catastrophe in history, claiming between 3,000 and 20,000 lives, leaving thousands with serious diseases and injuries. The reaction of Dow Chemical, the global giant providing innovative chemical, plastic and agricultural products and services and responsible for this industrial catastrophe, publicly disowns its accountability. Moreover, it tried to console affected families with mere $300-$500. And when nearly 200 women protested against Dow for its meagre liability and for not really taking any proactive mechanisms to clean up the area stacked with dangerous toxic waste which spreads many gas related diseases in the small town Bhopal, it has sued them for raising voice against the company using it’s political, monetary & muscle power.

When an explosion and fire ruined a fireworks factory belonging to Bright Sparkles Sdn. Bhd. at Sungai Buloh, Malaysia in 1991, causing 22 deaths & injuring 103, Bright Sparkles remained lukewarm in helping victims and their families and compensating the environmental damages it has caused. What can be more traumatic and horrifying industrial accident than the phosgene, the lethal gas leak at Thailand petrochemical company Thai Polycarbonate Co. which has killed one and injured over hundreds. Shockingly, inspite of innumerable calls from many environmental activists of the locality to stop gas leakage which many had already identified, the accident could have been prevented; the company was reluctant to improve its pipelines.

And the fiery explosion with unstoppable fire and smoke at one of the largest oil refineries of British Petroleum in Texas City in 2005 is another example of shameless irresponsibility of global MNCs. Well, it was not the first such accident; BP has a record of fatal accidents, for last few decades. Moreover, it is the eighth largest polluter in the US, releasing over 5.1 million tonnes of pollutants with many harmful toxic gases like carcinogens causing serious health ill-effects to 30,000 people living within three mile radius. But while FBI investigation and imposition of new laws and fines continues, BP’s capability gradually sharpens to refuse or strive to escape from it. Nigeria witnessed the perfect misery out of corporate social irresponsibility. Companies like Shell, Exxonmobil & Chevron are reaping off nation’s oil industry but continue showing through negligence in improving environment, human life and the locality which have been affected by gas leakage and flares in their plants or refineries.

For MNCs, the planet has been served to be their playing-field but they have to follow rules of the game. Their profits cannot plunder people. How long will international community put up with their myopic vision and operations? The deemed-be-national-treasures actually prove to be global shame in neglecting their duties.

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Source :
IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Saturday, September 20, 2008

The deal wouldn’t ‘Burn’ away

Even without Nicholas the deal will see through, but it may dilute the process a bit While the Indian Left is hell-bent on seeing the Indo-US nuclear deal die its natural death – the rightist forces led by some religious groups in the US are launching a campaign against the deal on the grounds that it goes against the US non-proliferation goals & strengthens India’s strategic options. In addition, the recent resignation of US’ Under Secretary for Political Affairs Nicholas Burns, the Chief Architect of the 123 agreement sent shivers down the Indian strategic community. However, the fears were short-lived – Nicholas will continue as the Special Envoy on the nuclear deal till at least the end of the Bush Administration.

The ongoing safeguards negotiations between the India administration & the IAEA are reported to be moving in a positive direction. The IAEA is considering India’s concerns regarding ‘disruption in fuel supplies & also ‘non-intrusive inspections’ – leaving its defence nuclear reactors outside the purview of inspections. However, it is difficult to say that any kind of agreement with the IAEA will be acceptable to the Indian Left, especially because their opposition is to the Indo-US nuclear deal & not really against the de-nuclearisation of India.

Taking Prakash Karat’s statement on January 21 into account, it seems that the deal is unlikely. But, Commodore C. Uday Bhaskar, former Director, IDSA, adds, “Even if Indian Communists oppose the deal and pull down the government, then the next Congress or BJP government will have to face India’s nuclear reality of shortage of fuel and nuclear isolation and will carry though the deal.” On the success of the deal, post-Burns, Ajay Lele, Research Fellow, Institute of Defence Studies and Analysis, (IDSA) India, said, “Nicholas Burns, before resigning has said that they have done as much as they could and won’t be making any more concessions. The fructification of deal will depend on how Congress is able to manoeuvre Indian Communists.”

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ZEE BUSINESS BEST B SCHOOL SURVEY
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IIPM in Financial times (Print Version)
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'This is one of Big B's best performances'
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
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The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs

Tuesday, September 16, 2008

FUTURE: AMERICAN AUTOMOBILE INDUSTRY

Sky’s the limit
Wish a Jaguar or a Land Rover could fly...

Has anybody ever wondered why Ford, world’s third largest automobile manufacturer and seventh largest in Fortune list finds it difficult to manage such niche and high-end brands like Jaguar and Land Rover? Well, the answer lies not with the dynamics of automobile industry but something else. For long, world has witnessed the exponential consumerism of the US. And now its becoming ambitious too. Consider this: Forecast International states in its report, ‘The Market for General Aviation/Utility Aircraft 2007-2016’ that ‘makers of general aviation and utility aircraft will turn out nearly 27,140 aircrafts worth approximately $22.55 billion during the period 2007-2016.’ It further states that ‘of the total number of aircrafts produced, 22,477 piston aircrafts will account for the vast majority of units produced (82.8% of the total).

Turboprop aircraft manufacturers will turn out aircrafts in lower numbers, for total production of 4,660 units (17.2% of the total). Turboprop value of production is projected to amount to $13.7 billion or 60% of the total, while the value of production of piston aircraft will amount to $9 billion or 40% of the total, due to the much higher unit prices of turboprop aircraft.’ Moreover, Very Light Jets (VLJ) are changing the dynamics of the private jet industry. Companies such as Cessna with its Citation Mustang VLJ, Eclipse Aviation’s Eclipse 500 are revitalising the fractional ownership industry. Reports state that more than 3,000 VLJs are already on order. A report by Charles M. Schulz – Sonoma County Airport, states, ‘The FAA/Transportation Research Board Business Aviation Panel has suggested that the market for VLJs could add an additional 4,950 of these aircrafts to the general aviation fleet by 2017. Other forecasts project from 7,400 to 10,900 new business jets entering the market between 2006 and 2014.’ Furthermore, it states that Federal Aviation Administration expects another 14,000 light sport aircrafts to be added to the General Aviation fleet by 2017 and that ‘the growth of the active general aviation aircraft fleet is forecast to increase by an annual average rate of 1.4% through to 2017, growing from an estimated 214,591 aircrafts in 2005 to 252,775 in 2017.’


So what does all this have to do with the inability of Ford to manage Jaguar and Land Rover brand? Well, no prize for guessing that these are not utility cars but essentially status enhancers. Yet on any given day, even a single engine piston aircraft like Cessna 172, or a twin engine turboprop like Cessna 421C is more of a status enhancer than a Jaguar or Land Rover, simply because they can fly. Already the VLJs are being termed as SUVs of the sky. Americans now buy personal aircrafts, the way Indians buy cars now. A Very Light Jet costs a shade more than a two million dollar while one can get a second hand piston aircraft at the price of a high-end Jaguar. Expecting this craze to go northward, Honda and Toyota have started working on making private jets. In contrast, in emerging economies like India and China, the craze for high-end cars is just growing due to increased affluence, just as the demand for Rs.1 lakh car would explode. Here, Ford prefers the Tatas exactly for the same reason for which Fiat finds it more feasible to sell its cars through Tatas as dynamics of these markets are far more different than the US and Europe. Ford bettered what Fiat did first. But don’t get surprised if Tatas bid for Fiat in a few years’ time.That’s the future of automobile makers in the US and Europe. Realisisng this, Ford has already started the exit game.

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
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Wednesday, September 03, 2008

Global car for global consumers

Now, the world’s cheapest car moves into the third gear. With access to high-end diesel technology, and several options to locate its ‘cheap car’ factory (or assembly units), the Tatas seem to have got their back-end in place. Simultaneously, they had to look at the front-end; after all, Tata Motors wanted to sell the Rs.1 lakh car in as many markets as possible. It was meant to be a global car for global consumers. It is in this context that the Jaguar-Land Rover deal will immediately help it to tap the European market.

The Jaguar-Land Rover buyout becomes critical as the Tatas have failed to make a mark in foreign markets in the past. Prominent signage on the Team Jordan’s Formula 1 car preceded Tata’s exports of Indica to the UK; the car was marketed under the City Rover brand name. Even though the car did not do too well, it did give Tata Motors a foothold in Europe. Today, the company has agreements in various European nations to assemble the Tata Safari SUV, among other products. Sponsoring Narain Kartekeyan, India’s first F1 driver, was also a step to establish the Tata brand in Europe.

As you have probably realised, the Rs.1 lakh car has moved into fourth gear, and you are cruising at 60 kms an hour. But just drive along, as the puzzle is still not complete. The last few pieces have to still fall into place. Only then will you be able to figure out the real design behind the several decisions taken by Ratan Tata to turn his ‘small car’ dream into reality.

Despite being loss-making (see box), Jaguar and Land Rover are perceived as exclusive and high-end European brands. Even if Tata Motors gives full management autonomy to the acquired businesses, and sells their products the same way as Japan’s Toyota does with Lexus (without lending its name to reduce any form of brand dilution), it will still earn brownie points. The two European brands will help establish Brand Tata, at least in Europe. They will additionally help the Indian car maker to combat any moves by China to manufacture its own version of the world’s cheapest car.

“Tata Motors has a better image then the Chinese as it has a history of manufacturing, and has already acquired brands like Tetley and Corus,” says Autocar India’s Ashish Masih. It’s time to move into fifth gear. Tata Motors now has the technology, low-cost manufacturing options, access to developed markets, and a globally-recognised brand name. It is all set to launch the Rs.1 lakh car, which will be unveiled at the Auto Expo. Every cog in the design-manufacturing-marketing-branding wheel is in place.

So, while the world’s cheapest car is breaching the 80 kms an hour mark, it’s time to take a ride in another vehicle, the Tata Motors’ SUV. For years, Tata wanted to do an Indica with his range of SUVs. But Tata Sumo and Tata Safari have never been perceived as low-cost, entry-level, but stylish vehicles. Another Indian competitor, M&M, has done wonders with its Scorpio. Foreign players like Toyota too have fared much better. In the high-priced SUV segment, Tata hasn’t been able to make any inroads.

Land Rover will be a coveted catch for Tata as the brand represents one of the most-sought after SUV. The recently launched Range Rover and the updated Disco models have done well and can provide Tata with a platform to ride the international markets. Tata Motors may sell its products along with Land Rover’s, thereby amplifying both the visibility and reach of the indigenous SUVs. Before you think that it is not worthwhile to associate with a loss-making brand, listen to Ford UK’s John Gardner.

“The Jaguar-Land Rover business has been a profitable one in recent times; 2007 has been best ever year for Land Rover, better than 2005 and 2006.” This implies that Land Rover can effectively be used as a brand extension. Masih agrees, “Tata Motors will get access to better technology from Land Rover that can help the former to reposition its SUVs in higher segments.”

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
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B-schooled in India, Placed Abroad (Print Version)
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The Indian Institute of Planning and Management (IIPM)
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Tuesday, September 02, 2008

Caution? Never met him!

Citadel taking a risky gamble on subprime assets with E*Trade
When one looks at the situation in subprime markets, one is reminded of a famous one liner by popular Hollywood actor, Will Smith, in the movie Hitch, when he says, “Basic principles? There aren’t any.” Months after all the subprime mayhem has been unleashed, the casualties are still being counted. And one would feel that the markets would be keen on behaving rationally for a while. But then, if that’s what you think, what would you make of Citadel Investment Corporation’s whopping cash infusion of $2.55 billion in a subprime tainted E*Trade Financial Corporation? And other similar big ticket infusions in Citigroup, Merrill Lynch & northern rock, among others?

The E*Trade deal has been sealed with the purchase of $1.75 billion of 10-year notes yielding 12.5%, and buying E*Trade’s $3 billion of asset backed securities for $800 million. It has increased Citadel stake up from 3% to just below 20% in E*Trade. E*Trade will get $2.4 billion in cash immediately. Out of this, $1.6 billion will be the price of E*Trade’s stock and senior unsecured notes.

So what’s the catch? Leading its ship into troubled waters is not new for Citadel, it earlier proved a saviour for distressed hedge funds Amaranth Advisers & Sowood. Opines Dr. Paul S. Kedrosky, Executive Director, William J. von Liebig Center in San Diego, “It’s not that big of an investment for Citadel considering its assets and access to capital.” Avers Robert Ellis, Senior Analyst, Celent, a global consultancy, “The bet is that Citadel was able to get much better terms after write-off of much of banking side’s loan portfolio, including almost their entire mortgage portfolio.” He estimates that there is considerable potential left in US online broking, where E*Trade is still one of the key players. Moreover, as Dr. Kedrosky comments, “They hope they’ll make money via control and eventual resale of over-discounted mortgage assets.” As we said, no basic principles at work in the markets!
For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Top Articles on IIPM:-
IIPM to come up at Rajarhat
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