Wednesday, December 12, 2012

Wi ran outta ca$h, Oh! Jush like datt...

Bankruptcies in US companies have continued...

History is a great teacher, but we are among the poorest pupils, aren’t we? For if we were to learn, the biggest bankruptcy ever, wouldn’t have happened as recently as last year. Yes, we are talking about Lehman Brothers, the global financial services behemoth that tripped over the weight of its own mountain of toxic securities and had a massive, fatal fall. It seemed that all prudent thinking people in the company had been handed over pink slips, the way the bank kept extending loans to people with dubious credit reputations. What were some of the best financial brains of the world thinking when they kept riding the inflating housing bubble till it said ‘Pop’? Your guess is as good as ours.

And in our obsession with Lehman, let us not ignore the some other mammoth companies who seemed to have an esoteric obsession with ‘11’. Billionaire investor Donald Trump is as famous for his classy hotels and casinos as for his trysts with business and personal bankruptcy. This year itself, Trump Entertainment Resorts Inc. has filed for Chapter 11, and Trump has himself stepped down as Chairman after major disagreements with bond holders. The company’s major failing has again been extreme reliance on debt and failure to understand market dynamics. The gambling industry in Las Vegas is teethering on the edge; for people are visiting casinos less and less in the slowdown. It’s unfortunate, since the company only emerged from bankruptcy in 2005. They need to really give up on their ‘gambling’ habits!


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

For More IIPM Info, Visit below mentioned IIPM articles.


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Monday, December 10, 2012

Raj of the satraps

The elections this year is seeing a trend' parties vying for larger pie shun pre-poll alliances

The eleventh Lok Sabha was a defining moment for Indian politics. Despite emerging as the single largest party with 161 seats in 1996, BJP could not prove its majority. Who can forget images of Pramod Mahajan talking simultaneously on two mobiles, claiming confidently of having the required numbers? They were all false claims, as BJP simply did not have allies that could help it reach the magic figure. During the next two years, the party worked hard on stitching alliances. That heralded the era of coalition politics, which necessitated pre-poll alliances.

BJP again forgot this lesson in 2004, when it entered the elections with only five allies. The Congress by then had learnt from its past mistakes. Party Chief, Sonia Gandhi, quietly buried her party’s Panchmarhi resolution to fight all elections on its own and have no alliances. She personally visited regional satraps like Lalu Prasad Yadav and Ram Vilas Paswan, and forfeited own seats to have pre-poll alliance with their parties.

Cut to 2009: Both NDA and UPA are devoid of partners. Barring NCP, DMK and JMM, all UPA constituents are contesting against 'big brother' Congress. They were apparently irked by Congress’s political posturing refusing a national alliance and restricting itself to state-level alliances only. That put paid to ambitions of allies like the NCP to grow outside Maharashtra and of Samajwadi Party to grow out of UP.


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

For More IIPM Info, Visit below mentioned IIPM articles.



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Saturday, December 08, 2012

Safexpress will need to proactively

Safexpress will need to proactively align with global best practices, says Pawan Chabra of B&E

If one goes by the numbers, the future of logistics in India certainly looks dazzling. In fact, according to a study done by Cushman & Wakefield, the Indian logistics industry is anticipated to grow at a healthy rate of 15-20% per annum (way above the average growth rate of 7-10% that the sector have had between 2002 and 2007) to reach a whopping $385 billion by 2015. According to a KPMG report, India’s spend on logistics activities is equivalent to 13% of its GDP, compared to less than 10% in almost all the developed nations. But then this necessarily doesn’t mean big business! The key reason for this astonishing big size is relatively higher level of inefficiencies in the system, with lower average transportaion speeds, higher turnaround times at ports and high costs of administrative delays. Players like Safexpress will need to take the lead in correcting this anomaly.

Moreover, the Indian logistics industry is dominated by unorganised players. Transporters with fleets smaller than five trucks account for over 75% of the total trucks owned and operated in India and make up 80% of revenues. Even the freight forwarding segment comprises thousands of small customs brokers and clearing & forwarding agents, who just cater to local cargo requirements. So, considering this, the biggest challenge for organised players like Safexpress will be to take the growth forward. In fact, “one can even see a major phase of consolidation in the sector in the coming times,” avers Pradhan.

No doubt Safexpress has generated a decent level of loyalty and trust towards the brand in the past few years, but with the sudden flurry of international behemoths like FedEx, DHL, TNT, et al, and considering their edge over domestic players, particularly because of their big pockets, players like Safexpress will definitely find it hard to retain clients.


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

For More IIPM Info, Visit below mentioned IIPM articles.

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Friday, December 07, 2012

BARCLAYS: FINANCIAL DISCLOSURE

Questioning the ‘brilliant’ financial disclosure by Barclays...

Secondly, the increase in loans and advances of $175.99 billion also deserves credit for the growth in balance sheet growth. Worst, the true indicator of real earnings (Economic profit, which excludes opportunity costs) has fallen by a deplorable 23% as compared to the previous year to touch $2.51 billion.

Add to this the fact that even the cost to PBIT and the cost to PAT ratios have increased by 5% and 16% respectively, the issue of operational efficiency also casts a dark shadow upon Barclays’ performance. Thus, the underlying fact is that Barclays’ ‘happy’ revelation is all due to some unusual gains and earnings on certain ‘abnormal’ deals that won’t make their way into its books every year.

Agreeing to the thought, even an analyst at Brand Finance avers, “The bank has been criticised for not ‘marking down’ asset value and the investors are sceptical about banks like Barclays for declaring toxic assets!” Thus it is quite clear that the Barclays’ FY‘08 audited figures do not paint the real picture! Now for the ‘real’ asset – its shares on the NYSE have tumbled by 85.6% since December 31, 2007 to touch just $5.83 as on February 17, 2009; its Mcap falling by 80% during the same interval – all this despite the ‘extraordinary’ result announced?! Talking about the bank’s immediate agenda, an optimistic John Varley, CEO, Barclays explains, “Our immediate objective at Barclays is... manage the impact of the credit crisis...” Yes, we wish you all the best in your endeavours, but seriously Sir, sometimes even strong financials can have little impact on stock fortunes; and as for your shareholders, the ‘positive’ earnings may just have become a matter to mourn over!


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

For More IIPM Info, Visit below mentioned IIPM articles.

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Thursday, December 06, 2012

STARBUCKS: REDUCTION IN OUTLETS

Over-expansionary policy is responsible for Starbucks predicament

And as situation for consumers in US worsens, a preferential move away from premium coffee was a natural outcome, a fact revealed by a January 2009 Adage survey which reported that 90% of Americans have trimmed their consumption of expensive coffee during these recessionary times (43% of whom were loyal to Starbucks!).

Consumers are only too happy to switch from Starbucks’ premium coffee to McDonalds’ cheaper alternative, especially at a time when liquidity has become dearer to them, similar to the drift of shoppers from Target to Walmart stores. “We will continue our efforts to elevate the Starbucks Experience and stay true to our core value,” asserts Wendy Pang, Spokesperson for Starbucks when asked about Starbucks’ future strategy. Clearly, the company for now is ‘not’ considering any price reductions to counteract the reduction in customer base... It clearly should think along logical lines, and price changes to revive demand is what comes to the mind of the informed! What say, coffee lover?


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

For More IIPM Info, Visit below mentioned IIPM articles.

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Tuesday, December 04, 2012

WORLD: ENERGY CRISIS AND WHY EVEN WE COULD BE WRONG :-)

The lethargy to move to alternative fuel seems almost insane...

While billions of dollars are being spent in most nations for construction of highways, a fraction of similar investments for the creation of mass rapid railroad transport system running on gas (not gasoline, but hydrogen based gas) would not just drastically reduce the need for fuel oil, but would also help in creating a cleaner environment.

Reports state that India’s natural gas production is slated to touch nearly 170 million standard cubic metres per day by 2011-12. So, when natural gas and CBM can run power plants and vehicles, when an Iran or Russia based pipeline can meet the rest of the demand, why is such a price rise paranoia?

As the oil reserves near depletion in Middle East, the price of the same can only go up. A war between Israel and Iran might never happen but the fear factor of the same would continue to push the price northward. It’s time to exit this game theory of US (who perhaps benefit the most as the more the price of oil rises, more becomes the demand of dollar to buy the same). Let’s hope that the day gas becomes the preferred fuel is not far. And what would be proof of that? That’s easy. That would be the day an exemplary American President bombs a state called Bihar in India and claims he did it for saving the world from weapons of ‘gas’ destruction.


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

For More IIPM Info, Visit below mentioned IIPM articles.


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Monday, December 03, 2012

TYRE SECTOR: TAX STRUCTURE

As Dunlop cuts production, other tyre manufacturers should consider following suit

More importantly, the inverted tax structure has been the topic of debate between the Government and tyre manufacturers in the country for years now. And why wouldn’t it be, when the raw material (natural rubber) attracts an import duty of 70%, whereas tyre imports attracts a significantly low duty of 10%? “The tyre manufacturers are against the inverted tax structure for years but the end of their problems is still not in sight,” laments Girish Solanki, Mid-Cap analyst, Angel Broking. And many players have already cut their production and are relying on exports as the only factor attracting them is the low cost of labour.

China can surely be an option which the manufacturers are eying on to shift their production facilities but the only point of worry is that the Government could lift the subsidies and with the ‘you cannot take your assets back’ policy present there, the tyre manufacturers are still in a situation of dilemma.

But economies like Malaysia and Indonesia can surely be a place to be in for the tyre manufacturers as “the cost of raw material is 20% lower than that of India,” added Solanki. Moreover, labour cost is more or less competitive (though India is at the supreme position). So tyre manufacturing in India is not feasible with the current tax structure and manufacturers should perhaps bet on new destinations to roll out their ‘hot wheels’!


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

For More IIPM Info, Visit below mentioned IIPM articles.

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Saturday, December 01, 2012

Did I do everything wrong?!

Bush during his tenure has made many mistakes, but that doesn’t give us a chance to write him off

When I sat down to write George Bush’s legacy, the literature surrounding him was full of disgusted people who are ready to rip him apart, given a single chance. His eight year long tenure as the President of the world's superpower has in many ways made United States the most criticised one, with a future, which is as bleak as it was during the Great Depression. He deserves the wrath for the steps that he took and the attitude that he followed in implementing them. So strong has been the wave of hatred against him that McCain during his whole campaign tried hard to disassociate himself from Bush, so much so that he clearly made it a point to say, “I am not George Bush” and got cheers for saying so.

The disgust has been so high and disappointment so deep that Bush was set aside as a lame duck long before his tenure had begin to see its end. His departure, as they say, would cause pain and rethinking only in one part of America – Hollywood. Bush has been the punching bag for not only America but the whole world and he was a God sent opportunity for Hollywood, which has extensively used Bush as the face of comedy from the very day he came to the office.

Bush’s past, present and future are all painted in black (pun unintended). He started his presidency under clouds of controversy. Recounting of votes that brought him to power, pushing aside Al Gore, had been questioned. The doubts were that Bush used his brother to win the voters that were not supporting him. Then came the allegations about his past and his involvement in corrupt oil dealings.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
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