IIPM - ARTICLE AND PUBLICATION

Saturday, April 20, 2013

B&E Indicators

Inadequate logistics network

Logistics infrastructure is a critical enabler of India’s economic development. Recognising this pivotal role, India has tripled its logistics infrastructure spend from $10 billion in 2003 to over $30 billion in 2011. However, despite this increase, the country’s logistics network remain insufficient. Still seven corridors along with some national highways handle 40% of road freight traffic even though they are less than 0.5% of the Indian road network.

Relies excessively on roads

India’s roads account for a higher share of freight traffic compared to other continental sized countries like US and China. In fact, India’s dependence on roads is more than three times that of China. This is despite the fact that a large part of the country’s freight traffic comprises bulk material and moves over long distances that can be more economically served by rail and waterways.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
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IIPM Links
IIPM : The B-School with a Human Face

Friday, April 19, 2013

Can he be a change agent for his party?

Keeping in mind the mood of the electorate, which has become increasingly clamorous for change and development, Akhilesh Yadav appears to be going about in earnest giving his party a much-needed makeover.

Way back in the 1980s two Young Turks set out on a mission to transform Indian politics. One of them was Ajit Singh - the America-returned son of Chaudhary Charan Singh (aka kisan neta), the former Prime Minister of India. A computer engineer who spent 17 years in the US, Ajit made Baghpat his pocket borough, travelling the length and breadth of the constituency. He went all out to court the youth and dreamt of bringing about a massive change in the state’s political scenario.

The other young man was none other than former Prime Minister Indira Gandhi’s son, Rajiv Gandhi. A Cambridge University alumnus, Rajiv became a beacon of hope for the educated youth of the country.

Both Ajit and Rajiv went on to achieve huge success in terms of winning thousands of followers. Most still fondly recall Rajiv while Ajit Singh, now a Cabinet minister in the UPA government, is known as one of the most opportunistic political leaders of our times.

Flash forward to the present and there is an unmistakable sense of déjà vu. Once again we see a young duo trying to change the political scenario of the state. One of them is Rajiv’s son, Rahul Gandhi, and the other one is former UP chief minister Mulayam Singh Yadav’s son, Akhilesh Yadav. Both are ‘foreign educated’.

Recent months have seen Rahul take upon himself the challenge of resurrecting his party from the state of political wilderness in which it has been moldering since 1989. In a bid to revive his party’s challenge in UP and galvanise an otherwise moribund party apparatus in the state, Rahul has undertaken numerous stump tours and has been organising party and public meetings in different parts of the state. The Gandhi scion, in his campaign speeches, has repeatedly harped on the issues of employment and development and has talked of transforming the fortunes of the state if his party is voted to power. And though Rahul has staked his own political credibility in the polls most political observers are not very optimistic about Congress’s chances. But that has, however, not prevented senior Congress leaders such as Pramod Tewari from claiming that the Congress would be able to win majority on its own.

Though both Rahul and Akhilesh have their own challenges to face, the latter’s task seems more difficult. As the State President of the Samajwadi Party - an outfit accused of promoting casteism and sometimes even called the ‘goonda’ party. - not only does he need to change the party’s image, he also needs to bring it back to power. Sanjay Lathar, National President of Samajwadi Yuvjan Sabha and the man in-charge of Akhilesh’s political campaign, says, “We have the largest number of youths and females contesting the elections. About 122 of them are highly educated first-timers and 75% have held positions in student unions. We have also created history by giving tickets to 40 women.” According to Lathar, the party was approached by about 50 candidates with muscle power. “Around 30 to 35 of them would have won the elections. Yet the party decided not to embrace them,” he added.

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Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Tuesday, April 16, 2013

Drafting a better future?

The Draft National Telecom Policy 2011 has introduced amendments which benefit the industry. Changes have also been made to clauses pertaining to M&As and exit routes. However, a lot more needs to be done in order to ensure welfare of telecom operators.

One look at the Indian M&A outcomes of 2010, and the dynamics of the Indian telecom industry instantly become clear. According to statistics compiled by Assocham, the combined value of the telecom M&A deals in India stood at $22.7 billion in 2010, which roughly makes up for 67.19% of the entire deal volume across India Inc. In fact, at any given point of time, there are 14 odd players competing to extend their presence in the world’s second fastest growing telecom market after China.

No doubt, Indian telecom has emerged as one of the greatest economic success stories, registering a consistent overall growth rate of more than 35% over the past decade in terms of subscribers (according to a World Bank study, a 10% increase in teledensity is known to boost GDP growth by 1.3%), but when it comes to regulatory framework the industry still lags behind it global counterparts and as such needs radical reforms. More so because the dream run of new entrants (including Videocon, Etisalat, STel, and MTS) – who ended up paying Rs.81 crore for acquiring 3G licences – keeps hitting roadblocks as more players join the bandwagon further increasing competition in an already cluttered business segment.

Further, entry costs are exorbitantly high and operating margins are overwhelmingly low. In fact, currently only the top four private telecom companies are EBITDA-positive. Although the operating environment has improved after Bharti’s July 2011 initiative to increase on-net, pre-paid and SMS tariffs by 20% was followed by major competitors, their margins still remain under pressure. This leaves telecom operators with no choice but to consolidate in order to put a cap on the ever rising costs. However, under the current contours of the regulatory norms established by the Telecom Regulatory Authority of India (TRAI), the largest telecom entity can consolidate to command a market share of up to 30%. Anything beyond that is subject to scrutiny and does not get necessary regulatory approvals. As such, while players like Bharti Airtel consolidated their position both nationally as well as globally (it acquired Zain’s African business for $10.7 billion), others such as BPL, Max Hutchinson, AT&T, Telstra had no choice but exit.

Therefore, consolidation and exit are two of the most important issues that need to be addressed in order to make the Indian telecom industry more efficient. This is where the new Draft Telecom Policy 2011 (introduced on October 10, 2011) becomes significantly important. As per the recent amendments incorporated, a deal giving birth to an entity with up to 35% market share will have no interventions from regulatory authorities. Deals which gives a company market share of up to 60% will be examined on a case to case basis. However, any deal where the new entity crosses the 60% barrier will come under strict interventions from TRAI. This seems like a move that will boost consolidation. But the fact that the draft NTP does not provide relaxations on restrictive M&A regulations offsets any benefit. As per a recent report issued by Fitch Ratings titled Indian Telecom Services: Regulatory Uncertainty to Continue, “TRAI’s recommendations to require a minimum of six operators per circle, for entities not to have over 30% market share or maximum spectrum of 14.4Mhz for GSM and 10Mhz for CDMA, effectively block consolidation in the sector.” But having said that the agency still believes that consolidation among the existing 10-13 service providers in each circle is inevitable and that the Indian telecom sector can sustain at most six or seven players in the long run.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 15, 2013

B&E This Fortnight

INTERNATIONAL

BUSINESS, ECONOMY & FINANCE
He end of Gaddafi

In what will probably be remembered as a landmark event in the history of dictatorships, Muammar Gaddafi, the man who ruled Libya for 42 years was captured, beaten ruthlessly and finally killed on October 21, 2011, as he tried to escape with his convoy. Although it is not clear how the tyrant was murdered, videos shot by bystanders and interviews of eye witnesses reveal the disturbing events which led to his death. Most of the videos circulating on the internet are graphic in nature and give an extremely violent account of his death. The entire drama led to an intervention by the US Secretary of State Hillary Clinton, who has even suggested a possible enquiry into the incident given its chaotic nature. However, the more important question is the risk of a power struggle, primarily because Libya has the ninth largest oil reserves in the world. According to data released by the CIA World Factbook, the country produced 1.789 million barrels of oil a day before the unrest started. This accounted for roughly 25% of the GDP. In the aftermath of these events, oil production has fallen to 400,000 barrels a day. More importantly, even if Libya does manage to restore production, it is not enough to fulfill the employment needs of all Libyans demanding jobs. The developments need to be closely monitored by the US in order to establish a healthy democratic system..

The netflix syndrome

‘Strategy’ has turned out to be one of the most alluring and elusive business terminologies ever conceived. What Apple has achieved through strategy, HP has destroyed. In yet another case of a strategically and financially sound company getting it wrong, Netflix has almost undone what it had managed to do over the past several years. A few weeks back, Reed Hastings, co-founder and CEO of Netflix, announced that he would be splitting up the company into two parts. While Netflix will continue to provide streaming service, the DVD rental business would be christened Qwikster. The idea has been hailed by some and criticised by many. The poorly introduced pricing and service alterations ended up upsetting customers. In fact, analysts are estimating that Netflix might have lost as many as 600,000 US subscribers since July. The announcements did not alienate the customers of its live streaming service who continued to opt for the $7.99 monthly rental plan. The backlash came from subscribers who were used to receiving DVDs in red envelopes. It appears that they perceived the streaming service as a free add-on. Now, the CEO has suddenly decided to backtrack on the plans. How the company will regain lost ground is still a question, but this was a very bad move on the part of Hastings (no wonder he’s on the board of Microsoft).

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Saturday, April 13, 2013

Global top 10 debt analysis

The top 10 indebted nations of the world are the countries who are currently struggling from the financial downturn. While US tops The list in terms of absolute value, japan stands out in terms of debt to gdp ratio. Though raising of the debt ceiling by the us has already triggered a fear of double dip recession, there are others as well who are giving the world sleepless nights.

Everybody knows it

The raising of the debt ceiling by the Obama government followed by S&P’s downgrade of US treasury bonds says it all. With the country now sitting on top of a debt pile that is a notch higher than its GDP of $14.7 trillion, the largest in the world, the global economy is now teetering on the brink. But the gradual escalation in debt, which has been happening for over a decade before it just shot up to $10.5 trillion in 2008 after a $700 billion bailout package, doesn’t seem to be taking a breather. IMF forecasts US debt will increase to $15.15 trillion by 2015. Obama’s ratings have apparently fallen to the lowest ever. If one could prove a negative correlation of his ratings with debt, would that motivate him enough to reduce US debt?

Do the world like japan

If the US showcases the highest national debt, Japan is not too far behind with a total debt of 1,055.54 trillion Japanese Yen ($13.75 trillion using exchange rates prevailing on August 17, 2011). Considering the current sensitivity of the global financial market, the impact of the dire fiscal position of Japan could be felt worldwide as it is also capable of creating a domino effect on the sovereign debt front. The country has so far been able to save itself despite a huge debt load since the days of the real estate bubble burst (early 1990s). Also, a major reason why the country is still not considered to be in a financial-crisis mode is that it owes most of that debt to itself. Moreover, IMF forecasts Japan’s debt will grow at a slower rate than the US.

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles