Showing posts with label IIPM NEW DELHI. Show all posts
Showing posts with label IIPM NEW DELHI. Show all posts

Wednesday, August 22, 2012

Cooking-up new rules for the game!

The introduction of the word ‘career’ in the lives of women is swiftly redefining the virtues of a good relationship for today’s new-age couples…

“Shalabh was asked by his mom if the girl he had chosen for marriage would let go of her pursuit of happiness through lifework (read career) whenever needed, and he immediately replied in the affirmative to avoid further discussion,” recollects 30-year-old Priya Madaan when talking about the over-rated virtue or vice (depending on which school of thought one subscribes to) of women’s decisions regarding their work-life that gives them a high in life. Today’s women are caught between the traditional people, who are utterly disdainful of women who choose their careers over becoming the 24/7 homemaker and support system for the family even when there are no financial constraints, and the other more modern people, who are instead frowning upon the ladies giving up their work-life for the simple pleasures of life such as one’s marriage, motherhood or for simply managing the household.

25-year-old Shruti Bhatia, a recipient of the excellent performer award, quit her job at the mere confirmation of her eight-months-later wedding date. Unusual in the professionals’ world, the simple reasons, tells Shruti “of wishing to make a home, socialise more with old and new families and figure out a comfortable way of pursuing a career” invited surprise and criticism from those who for a decade or two have only epitomised the ‘perfectly juggling’ avatar of women.

But what Shruti did is somewhat closer to what 41-year-old Jennifer Wilkov and 42-year-old Kimberly Mylls, authors of a recent book, Boys Before Business: The Single Girl’s Guide to Having It All, suggest. Advising the wives (as well as the husbands) to ‘put themselves first, their relationship second, and their career last’ for having a lasting relationship, the authors feel that this way the women would actually perform better because of the love and comfort back home. So, according to the authors, staying late at work and cancelling a scheduled date with the spouse to stay behind the desk for longer are actions that must be avoided! Also, the advice usually given to men apply equally to career women – do not bring workplace problems back home with you!

While one may crib about the title of the book that anticipates how most often women are required to put the men first and not vice versa, there are a lot of privileges that women enjoy and men don’t complain about. For instance, several organisations in our country allow women comfortable work hours. “Lesser number of working hours for women is not a part of our mainstream Human Resource policies, but my team manager with the help of HR has revised my working hours to suit my responsibilities and priorities at home. This hasn’t affected my performance at all. In fact, I am more focused and grateful to my organisation because of this concession at work,” says 33-year-old Shweta Pandey (name changed) working in the sales division of a Telecom company.


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Tuesday, August 21, 2012

SMOKING: BANNING PRODUCTION

Smoking regulation has achieved some success; but it is pathetic that governments don’t have the honesty and sincerity to completely ban cigarette production globally – it’s clear how well money and lobbying works

The true return of this booming business is evident in the fact that in every eight seconds, tobacco use claims a victim in some part of the world. That means around 5 million deaths annually. Moreover, trillions of filters, filled with toxic chemicals from tobacco smoke, pollute the environment as discarded waste every year. Realizing the importance of controlling this menace, many countries have laws in place to ban advertising and any kind of promotional activities related to smoking. Despite this, a 1998 survey found that tobacco companies were among the top 10 advertisers in 18 out of 66 countries surveyed.

Thus anti-smoking policies have worked to reduce tobacco consumption; but it is still a serious issue that needs to be brought under control. In such a situation, it is often debated whether banning the tobacco production itself as a policy decision would deliver the desired results. There are complications on this front. Chinese counterfeit cigarette production reached an unprecedented 400 billion cigarettes a year, enough to supply every US smoker with 460 packs a year in just one decade since 1997; making Yunxiao the “illegal cigarette manufacturing capital of the world.” Also, there is a case of a conflict of interest, since the tobacco industry funds government treasuries massively every year.

To ban cigarette production will not only need strong political will, but as the 2005 movie Thank You For Smoking clearly showed, will need a lot of honesty – with the Tobacco Master Settlement Agreement between four largest US tobacco companies and 46 US states, which freed the companies of liability due to harm caused by tobacco use – being a shocking example.


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Monday, August 20, 2012

FINACLE: INFOSYS’ BEST FOOT FORWARD?

Quite a few global IT giants have proved that it takes just one big killer product or application to enter the Fortune 500 league. Finacle was supposed to be that for Infosys! Today, it contributes just about 4% to Infosys’ revenues. What went wrong? by Virat Bahri

Apparently, one of the major reasons why Finacle has not been into the big bucks has been the fact that the US market, which is otherwise the highest contributor to Infosys’ revenues, has actually been very inimical for core banking solutions; as banks sitting on legacy systems for 2-3 decades were unwilling to change. As late as 2006, a report by Aite group revealed that around 12% of US banks and top 500 credit unions had reached a critical point for core system replacement, but only 4% were actually expected to do so. And the major culprits of complacency were the large banks, as the mid-sized banks have been more proactive. In 2008, an Oracle report reiterated, “Despite the costs and challenges associated with running antiquated solutions, most US financial institutions continue to proceed with caution and postpone their inevitable replacement of these crucial systems.”

The financial downturn seems to have ruffled feathers quite a bit, and underscored the need to get rid of legacy systems, which presents a great opportunity for core banking solution providers like Finacle. A global survey of 1500 banks by Accenture and SAP done recently reveals that around 20% of North American banks are planning core banking replacements within the next five years; compared to 30% for Europe and over 35% for Asia Pacific. Over 70% said the main problem they faced was flexibility. David Cartwright, ANZ Group MD, Operations, Technology and Shared Services (where Finacle was deployd recently), said: “Technology is key to ANZ’s aspiration to become a super regional bank. Implementation of a new core banking platform is crucial to our plans to grow our business and provide leading products and services to our customers in Asia.”

Infosys also did a study last year with BAI of 116 banking executives from 100 banks in the US. Around 88% admitted that innovation was the ticket to driving future efficiencies. Around 59% said IT was among the top two drivers to innovation in customer service and around 50% rated it as among the top two drivers to enable innovation in products and delivery. It is a time when the mid-sized banks are looking to gain customers of larger banks and the larger banks are, in turn, looking to defend their customer base and also develop a new platform to ensure faster future growth and market expansion. Consulting firm Celent has predicted that IT spending by US and Canadian banks will reach around $50.9 billion by 2010, driven largely by rehiring, post-merger integrations and new investments in wholesale banking “In 2010, bankers need to take a hard look at their business model and find new ways to generate revenues,” says Gwenn Bézard, Research Director, Aite Group.

Ostensibly helped in part by these changing paradigms, Finacle was able to take 31 projects live last year. Their customer spread shows that their presence in North America is still very low and is largely spread into Europe, Middle East, Africa and Asia Pacific. The company also launched Finacle 10 in 2008 to enable banks to be able to manage multinational operations on a standard platform. The software now has a set of over 5000 parameters and an enhanced scripting studio and also caters to Islamic banking, wealth management and mobile banking.


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Tuesday, August 14, 2012

A B&E EXCLUSIVE

With exclusive interviews and incisive insights, B&E brings the electrifying annual listing of India’s top’ wealth creators during the financial year 2009-2010; companies that gave the largest rise in market capitalisation for their shareholders! By Deepak Ranjan Patra

Did Globalisation Matter?

The 2006 study titled Globalization and the Impact on Shareholder Value and Revenues proved that companies which globalize “create more value for shareholders than companies that don’t globalize!” The 2006 Accenture report Expanding Markets: Innovation and Globalization added that “the best performers were 83% globalized, while the average performers were only 18% globalized!”

While the world is shrinking with every passing day, when it’s about a market place and business opportunities, companies that have globalised in emerging markets and large income geographies have more or less been the ones that have come out of the economic slowdown much stronger. For that matter, as analysts believe, RIL’s thrust on its global ventures could certainly have gone a long way in creating some true value for the company. Its latest joint-venture with Atlas Energy in the US, to buy 40% stake for $1.7 billion in a shale gas project in Pennsylvania has acted as a sure shot booster for the company as the undeveloped 300,000 acres area has a potential of 13.3 tcf [trillion cubic feet].

Citigroup is an obvious inclusion in this commentary. The bank has just returned from the brink of oblivion. If Goldman Sachs’ profitability came from hedging exposures and shorting losses (that is, pure financial investments) the brilliant turnaround time for Citi has been possible mostly because of the group’s strong global presence (on-site presence in 100 countries and operations in over 140 countries). As per Citi’s books for the financial year ended on December 31, 2009, 77% of the $14.8 billion profit earned by Citicorp came from regions like Asia, Latin America and EMEA (Europe, Middle-East and Africa). Not that the group jumped into profits for the last financial year. But because of this contribution from Citicorp, the group managed to restrict its losses to just $1.6 billion as compared to a mammoth loss of $27.7 billion in 2008. This certainly should be a lesson for Indian banks like SBI and ICICI Bank, who, although being amongst the country’s biggest wealth creators and profit makers, are still living with a very negligible global presence.

When it’s about creating a true value for a company’s shareholders by foreign ventures, it certainly is an area of expertise for the Indian IT brigade- TCS, Infosys and Wipro. This has been their key growth area for years now with over 90% of their revenue coming from the overseas markets. Moreover, with the conditions in the international market – especially in the US – improving, these companies are all charged up to swing back to their best in those markets. A company like Infosys (read more about it in the last story in this cover package) has beaten Microsoft comprehensively if one were to consider the three year average growth rates for profits and revenues (see chart on left page) and even the past FY’s earning per share. It’s the same case when one sees our #6 company ICICI Bank in comparison with Citigroup. Does this mean that ICICI Bank is better than Citigroup; or that Infosys is better than Microsoft? Actually, that’s quite possible.

Though Microsoft apparently comes in fourth on this year’s US list of top m-cap gainers in absolute value, the Steve Ballmer led fireball has actually devastated shareholder value since the start of this decade. Microsoft has plummeted from close to $580 billion dollars in market capitalisation in April 2000 to around $270 billion dollars in April 2010. That is what we’d call murderous! Compare this to Apple’s m-cap increase: from $20 billion or so in April 2000 to $240 billion in April 2010. That’s godly!

Coming back to India, TCS, which has been growing consistently in the North American market even during the recession, has ensured that the North American contribution to its growth trajectory moves up to 52.8% during FY’2009-10 from 51.5% in the previous fiscal. And N. Chandrasekaran, CEO and MD, TCS, confirms that, “Our ability to react to growth opportunities and execute efficiently has helped TCS deliver a superior performance. Our sales and execution machine is primed and we have laid a solid platform for growth. There is significant traction for our strategy of full services, which together with our global engagement model positions us well for accelerated growth.”

One noteworthy aspect of the top five Indian market capitalisation stalwarts is that with respect to simply their stock price growth (and not absolute m-cap rise) through the previous financial year, all of them outbeat the BSE Sensex and the NYSE Index (see chart on previous page). And in the flow of things, if one were to rate listed firms purely based on m-cap percentage growth (rather than m-cap absolute growth; see chart below) for the past financial year, none of our original BSE top ten absolute wealth creators figure on the new list, which has names like Kwality Dairy (1,342% stock price growth), IVRCL Assets (989%), JP Power Venture (894%) and the likes. But truly, pure stock price growth can be misleading given how a smaller base of stock price in one year is enough to give a top ranking in the next year.

Did R&D Matter?

The joint HBS and Southwestern University 2006 ‘Industry R&D Survey’ proved how, in the US, the total number of R&D spenders has almost regularly gone down year after year since 1993. The Stock Market Valuation of R&D Expenditures by Chan, Lakonishok & Sougiannis of The University of Illinois summarises that “the average historical stock returns of firms doing R&D matches the returns of firms without R&D...” The concept is double proved by simply reviewing the two IT icons. While Microsoft spent nearly 15% of sales as its R&D expense, Apple spent about 3% only! And down south, TCS spent only 0.28%! Case proved!

In Conclusion

While CEOs in contemporary times do realise that they have to modulate all strategies and tactical moves with the shareholders’ wealth in mind, the paradox still remains on the viciousness of the expectations of shareholders – who more or less demand immediate short term stock price increases disregarding long term vision. Would not focusing purely on short-term shareholders’ wealth destroy the company completely? Jim Collins gave the right answer two years back in his brilliant analysis in the Fortune 500 issue, “Of the 500 companies that appeared on the first Fortune 500 list in 1955, only 71 have a place on the list today. Nearly 2,000 companies have appeared on the list since its inception, and most are long gone from it.” In conclusion, maximise shareholders’ wealth, even if it means destroying the company!


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Saturday, August 11, 2012

The Finance Minister has galvanised the Opposition to close ranks in a rare show of unity

The fuel price hike announced by the Finance Minister has galvanised the Opposition to close ranks in a rare show of unity. But will the sound and fury translate into long-term political gains? Pramod Kumar reports

From the government side, parliamentary affairs minister Pawan Bansal was in total command. He had personally called Mulayam and Lalu to request that if at all they plan to protest against the move by the government, they should do so in a way that would not unduly embarrass the government. However, Lalu, for own sweet reasons, not only came out openly to support the allegations levelled by Swaraj but also made it amply clear that his party would support the Opposition in the mass movement against price rise.

As far as the BJP is concerned, the plan was carefully laid out during the Indore conclave. It was planned that the struggle would be taken to the streets. It was felt that the party rank and file are a demoralised lot at the current juncture and the anti-price rise agitation would galvanise them. It is not for nothing that the party has launched mass protests in every provincial capital city. The party plans to move the campaign to the rural areas and has also decided to show its strength in a mass rally in Delhi on April 21. However, while talking to B&E, BJP spokesperson Ravi Shankar Prasad did not admit that the party was linking price rise to the awareness campaign. He also insisted that BJP was a national party and its cadre were spread across the entire country.

Lalu, Mulayam and Mamata want to remain associated with the regime while making their stance clear. This will also revitalise their parties, which, particularly in the case of RJD and SP, is the need of the hour. Mulayam, in a hurriedly called meeting of SP MPs, asked his flock to return to the state and initiate street protests. This was a clear departure from the pre-Budget days when Mulayam was hardly active and the day to day affairs were in the hands of Ram Gopal Yadav and Mohan Singh.

Lalu, on the other hand, has also joined hands with the Opposition. In a reply to B&E, he said he is aware he cannot muster much in terms of numbers in Parliament, but he certainly can mobilise effective street protests.

The Left is once again on the same side as the BJP. They insist that they were the first to ring the warning bell. Talking to B&E, CPM leader Sitaram Yechury said, “If we had not checked the government during UPA-1, inflation would have touched double digits. This Budget will strangle the common man. Every party is convinced of this apart from the ruling Congress party, which still insists that the policies are good for the nation.” Commerce minister Anand Sharma said such decisions were necessary in the interest of the country as the price hike will lead to funds that will keep pro-people projects running. Such decisions become necessary at times, he added.

Sources claim that in the Congress Core Committee meeting on Tuesday night, the party was unanimous in concluding that the Opposition was opposing the UPA for the sake of it and it will not affect the fate of the government. However, it was felt that the parliamentary affairs minister would need to coordinate more actively with the alliance partners.

It was also decided that even though international crude price is low, the government needs extra money. Pranab Mukherjee will try to convince party MPs regarding the move, failing which Sonia Gandhi will step in and intervene.


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Thursday, August 09, 2012

Not so ‘Wright’ after all, eh!

A takeoff towards greening the aviation sector is not financially viable. Can we ensure its sustainability?

The fact is – endless rounds of green summits between nations have ended up doing far greater harm than good. And the numerous flights that ferry officials and their teams back and forth to these meetings have a lot to do with that. Indeed, the reality of green transport will remain a distant dream without considering the aviation sector, which ranks right up there in the ranks of the world’s most polluting sectors of all time.

While flying is a day-to-day activity for those who can afford it, it’s a dream for many more who can’t. For the earth, however, it’s a growing nightmare the more such dreams get realised. Air travel is responsible for around 2.5% of CO2 emissions to the atmosphere. The effect of emissions has been known to increase nonlinearly with altitude. Environmental activists believe that aircraft are so harmful that one 747 takeoff creates the pollution level equivalent to setting a local gas station on fire – compare this to the fact that the year 2008 had over 77 million aircraft movements taking place globally. And the figure will only increase exponentially.

If this still looks like a non-issue, consider this report. A medical report from the University of Illinois, Chicago, estimated that the Chicago O’Hare International Airport affects the health of as many as 5-million people living in the surroundings. The report cites that if you live within 5-6 miles of an airport, you face a heightened risk of dying prematurely from environmentally induced cancer. Imagine the cumulative effect caused by around 49,000 airports operating worldwide (as per last statistics of Airports Council International). From damage due to chemicals like ethylene glycol, propylene glycol and NO2 to the harmful effects of aircraft noise, major health problems have been identified regularly.




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