Saturday, October 06, 2012

“TRAI Can’t Force QOS norms on Operators”

Satyen Gupta, former Principal Advisor, TRAI

Telecom Regulatory Authority of India (TRAI) played a pivotal role in the great Indian telecom success story. The body keeps a close watch on the quality of services offered by the telecom operators to millions of wireless subscriber. However, there is little that the regulator can do when it comes to implementation of these norms on the ground level. Former Principal Advisor to TRAI Satyen Gupta spoke to Akhilesh Shukla about the MNP and regulators role in implementation of QoS norms.

B&E: The churn rate in India is very high, especially in the prepaid segment. Do you think MNP would be able to further escalate the churn rate?
Satyen Gupta (SG): Truly speaking, MNP would not have a major impact on the churn rate in the telecom space. The little churn that we could see would be on the front of high value postpaid subscribers. Most of them are corporate executives or business class people, who need to be connected 24x7. These people need quality service. They have all the reasons to port if they are dissatisfied with the existing service provider. The service provider has to make investments to retain them; otherwise they will see a decrease in top line.

B&E: How would the implementation of MNP impact the service providers?
SG: The marketing budget of telecom operators would significantly go up after the roll out of MNP across the country. The operators have to communicate and educate subscribers about its USP at regular intervals to remain competitive. Investment has to be made on the front of improvement and maintenance of QoS. At the same time, they have invest in retention of dissatisfied subscribers, especially high ARPU ones.

B&E: 3G and MNP were expected in India for quite a long time. Do you think the delay had any negative impact on the sector?
SG: The delay of both the services did not have much impact on the Indian telecom sector. Both the services were present in one form or the other. People looking for high speed connection while on move have already subscribed to EDGE services (2.75 G) for the handset. Similarly, high speed data cards, offered by the CDMA operators, have fulfilled the need for faster internet on mobile platform. Similarly, the dual SIM phones have bridged the gap for subscribers looking for a new operator while retaining the existing number.


Source : IIPM Editorial, 2012.

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posted by Editorial at 5:40 PM

Friday, October 05, 2012

How Late is Too Late for Toyota?

Etios can prove to be a Fortune Changer for Toyota in the Indian Market. But there are Challenges Galore that are Hell-Bent on Proving why the Jap’s Slow-Coach Small-Car Strategy may work Against It.

Early this year, Akio Toyoda, the chieftain of Toyota became the bad guy for doing the right thing – recalling 8.5 million vehicles over safety concerns. First, he was abused across continents. Then, after being verbally clobbered by the US Congress, he was slapped a fine of $16.4 million. Beat his audacity – Toyota paid the fine without submission of any wrongdoing on May 18, 2010. Since then, there have been (f)acts that have gone much against popular expectations. First, the Japanese carmaker announced a fresh round of recalls on November 4, 2010 (of 135,600 Passo and iQ cars in Japan and Europe to fix the vehicles’ power-steering system). Second, Toyota’s financials have remained sound despite the pepper sprays. During the first half of a trouble-marred 2010, the company sold 3.72 million vehicles worldwide – an increase of 18.7% as compared to the same period a year back. As far as earnings were concerned, it recorded an unexpected 15.5% y-o-y rise in topline to touch $117.45 billion during H1, 2010, with bottomline improving drastically (from a loss of $679 million during H1 2009, to $3.51 billion). There was more good news to follow.

While the company’s m-cap remains close to the $120 billion mark (the same as it was 12 months back), the investors have found a new reason to smile about. On November 5, 2010, the company announced an increase in net income target for FY2010-11 to $4.3 billion. The secret – as experts agree – is Toyota’s new low-cost model for emerging markets, which begins with the Etios launch in India in early December 2010.

Many suggest that Etios may face the same fate as the Toyopet did way back in 1957, when Toyota tried to introduce it in US. The suffix “pet” suggested that it was the small, compact sedan that Americans were yearning for. What followed however, was shocking. In three years, the Toyopet had sold only 1,913 units and the company was forced to withdraw the failed car from US. The sentiment in India is similar today. In the present times, it is understood that a compact car (the A2 segment) is likely to work wonders in the Indian auto market. For the records, 72.8% of the 9,22,281 units of passenger cars sold in India till September during FY2010-11, belonged to this very segment. So can the Etios do for Toyota what the Altos and the Swifts did for Maruti or what the Santros and i10s did for Hyundai? Etios is the next big step which can establish Toyota’s dominance globally, and for a long time to come. Call it clever, but it starts with the toughest of acid tests – convince the Indian consumer. But the biggest question is – can it?

To imagine that the magic could happen overnight would be foolish. While Maruti today accounts for 55.03% of the sales in this category, having sold 369,466 units in the A2 segment during Q1 & Q2, FY2010-11 alone, the #2 Hyundai has 22.74% of the segment, with sales of 152,664 units during the same period. More so, both have been celebrated brands for over two decades for the price-sensitive Indians. Toyota on the other hand, is simply recognised as a brand in just the Rs.1 million-plus bracket, which includes the A4 segment (where it holds an 18.99% share; data for Q1-Q2, FY2010-11) and the Utility Vehicle (UV) segment (22.31% share). And even if Toyota manages to challenge the might of the Marutis and the Hyundais in the sub-Rs.0.5 million platform, finding the right price level, while maintaining decent margins will pose a challenge to Toyota, as Hiroshi Nakagawa, MD, Toyota Kirloskar confesses to B&E, “Pricing will surely play a very strategic role in the success of the compact car Etios, as convincing the value-conscious Indian consumer is the toughest task in the world.”

But if the Spark & Beat could save GM’s day in India, and if Figo could come to broaden Ford’s consumer base, why discount out Toyota? Out of the 46,603 units sold in India by GM during the past two quarters, 74.52% belonged to the A2 segment. And of the 48,002 units sold by Ford India, 79.54% were from the same category. It is largely the entry into the A2 segment by GM (in 2006 with the Spark) and Ford (in 2010 with the Figo) that boosted their Indian market shares in the passenger vehicle category, which currently stand at 5.32% and 4.02% respectively. Perhaps the Etios will help improve Toyota’s low market share (of 0.57%) in the Indian passenger vehicle market too!


Source : IIPM Editorial, 2012.
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posted by Editorial at 12:03 PM

Tuesday, September 04, 2012

B&E: There are many brands, one of which is Woodland, which have never believed in the franchisee model for fear of manipulation by the partner(s). What is your opinion?
NPS: There are risks for sure, but it is about taking that chance. You have to ensure that nobody is involved in malpractices that would disturb your brand image. We at Samsonite took the plunge and it has worked out great for us. It is through this very franchisee route that we plan to open 100 more stores by the end of this fiscal year.

B&E: To neutralise the drop in footfalls and turnover thereof during the slowdown, many retailers resorted to discounts. But Samsonite didn’t. How did you deal with the dry situation?
NPS: Rightly said, we did not promote ourselves through discounts because panic price-cut only kills the brand. We only gave discounts in multi-branded outlets; and in the case of our own stores, we combated the fall in revenues by slashing our operating costs. For instance, while in some stores we reduced the number of personnel by 1/3rd, in others, we simply reworked our logistics.

B&E: Will organised retail in India be able to double its size to account for 10% of the total pie by 2012?
NPS: I can’t give a figure here, but if you look at Samsonite, our organised retail is growing at a CAGR of 30%. And there are other brands which are growing equally fast. Considering that there are a many new brands coming up by 2012, organised retail will definitely become much more structured and bigger.



 

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posted by Editorial at 2:45 PM

Saturday, August 11, 2012

THE FOOD PROCESSING IMBROGLIO

There is an urgent need for reforms in the food processing sector, the poor, fragmented and often ignored cousin of agriculture. Such transformations would not only create hundreds of thousands of new jobs, but prove to be the catalyst for the much needed second Green Revolution in Indian agriculture.

As a result, the critical link in the chain, marketing and distribution, is muddled with middlemen and small kirana stores with poor storage and packaging facilities. Thus, massive wastages occur, proving to be a deterrent to processors acquiring larger scales. In fact, according to estimates from the Ministry of Food Processing, food worth $12.7 billion (7% of total food industry value) was wasted in 2008, courtesy lack of adequate post-harvest management infrastructure. The second factor that incentivises only small-scale operations is the controversial APMC Act, which prohibits direct contract of processors with farmers, which therefore forces the processors to pay higher mandi rates. There is clear lack of integration amongst various entities in the sector at present, as Richard F. Stier, Consulting Food Scientist, Institute of Food Technologists, says, “Perhaps the greatest challenges faced by nations like India are government, transportation and the lack of an integrated agri-business sector.”

To further sour the pudding, India has one of the highest tax and duty rates for this industry. High tax and excise duties, coupled with high import tariffs for unprocessed food are a sure-shot deterrent. Although peak customs duty rate has been reduced progressively to 10%, several agricultural commodities (perceived as ‘sensitive’ for our masses) pay higher rates. Thus unit costs continue to escalate. Despite the fact that archaic food laws (The Prevention of Food Adulteration Act, 1954 and PFA Rules, 1955) have been replaced by a new one – The Food Safety and Standards Act, 2006 – that is aimed at establish an overarching authority to lay down latest scientific standards for food articles on the lines of the FDA in USA, such efforts will prove useless until streamlined markets and easier credit don’t exist. High cost is also a killer, as Dr. A. Bandyopadhyay, Chief General Manager, NABARD, says, “The food processing industry seems to suffer from a vicious cycle of high unit cost – low demand – low capacity utilisation – high unit cost.” Thus much is left to be done in this regard.

However, at first glance, it seems that when it comes to the export potential of the sector, the elephant trudges along at its own agonizingly slow pace. But some interesting facts twist this tale. Indian food processing industry caters mainly to the domestic market (quite unlike the IT industry) which is growing at a substancial pace. India’s processed food products made for the domestic market are still largely unacceptable in the global markets while western cousine has satiated the Indian palate comparatively well. Still, the potential of the sector to bring in foreign exchange and generate huge export oreinted jobs is huge yet almost ignored.

Not just in terms of newer policies and legislations that will bring about overarching changes in the way the industry is tructured and functions, there is a need for some fast paced steps to immediately untangle the various ropes binding the sector. In fact, according to C. K. Basu, former President, All India Food Processor’s Association, “For entrepreneurs who wish to establish or expand their projects without any financial support from the government, quick clearance of their proposals will be essential for rapid growth of food industry. For this purpose effective and efficient one window system need to be established at both national and state levels.”

Thus for the moment, despite a few green patches here and there, the food processing landscape in India remains dry and cracking, craving for the panacea of right policy, credit and technology to successfully feed the millions being added every year to the populace.




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posted by Editorial at 3:54 PM

Tuesday, July 24, 2012

Anna Hazare : My Prime Minister

A seventy-three year old unassuming man by the name of Kisan Bapat Baburao Hazare is again set out to give sleepless nights to the Government of India. More popularly known as Anna Hazare, this isn’t his first endeavour to take the establishment head on. He earned his due recognition when he tirelessly fought to develop a model village in the district of Ahmednagar in Maharashtra. As it happens to most in our country, for all the good work, Dr. Hazare was also arrested in 1998 and was released on account of a huge public uproar. Incidentally, the Government of India also recognised his efforts by bestowing him with the Padma Bhushan. But amongst all his mini revolutions which have advantaged the smaller sections of society, this time, Hazare is taking up such an issue which is probably the biggest malaise of our democracy and is a cause which affects every living Indian in some way or the other.

Hazare is one amongst those few who have dared to raise their voices against corruption in our system, by voicing his concerns over the Jan Lokpal Bill. The Bill currently, is nothing but a politically jaundiced version of the anti-corruption bill. In order to assert his arguments, which manifests into a more meaningful and logical conclusion to the Bill, he declared a fast unto death at Jantar Mantar, New Delhi; a fast that started on April 5, 2011 amidst massive support. His arguments stem from the manner in which the current bill has shaped up; the current bill is not just illogical, but also nothing more than a mere tokenism with respect to the fight against corruption! On the one hand, while Hazare is asking the government to give powers to Lokpal to receive complaints of corruption directly from the victims (and declare their decision suo moto), on the other, our government wishes to confine such powers to those that can be politically influenced. In simple words, in its current form, Lokpal can only probe complaints forwarded by heads of either the lower house or the upper house. The fact is that in its current form, the Bill is purely a tool for political gaming and one-upmanship. Unfortunately, the government – quoting hilariously that it cannot be blackmailed by Anna Hazare – has conveniently turned down Hazare’s logical argument of involving representatives from civil society. Owing to the fact that the biggest victim of corruption is the common man, Hazare also rightfully is demanding extending the ambit of the Bill to a level where the Lokpal can register FIRs and act as an independent body (along with the CBI) to punish corrupt officials, with sentences ranging from a minimum of 5 years to a maximum of life imprisonment. Expectably, and shamelessly, the government doesn’t want any such powers to be given to the Lokpal and instead wants corrupt officials, if convicted, to serve a punishment ranging from only six months to a maximum of 7 years. In a nation where every second official is corrupt, the quickest and strictest of punishment should have been the recourse! The government apparently thinks otherwise.

As the affairs stand today, when a civilian has to bribe any and every police official for raising an FIR, a Lokpal would be of great social benefit. Furthermore, making this body independent of political intervention would ensure its smooth functioning. It is so very unfortunate that first, our government is not willing to adopt a tool which can uproot corruption from our system; on top of it, like a habitual offender, the government is trying to find a scapegoat in Dr. Hazare and is even conspiring to punish him! I am amazed by the audacity of the government to not only turn down such logical and meaningful arguments but also criticise him! These are the heights of double standards when the same government, which awards a person with the highest state honour, after sometime, tries to find avenues for charging the very same person with criminal offences. We have seen such a situation happen with Dr. Binayak Sen as well!

At a point in time when the entire world is witnessing the fury of civil societies which are toppling governments left, right and middle, at a point in time where we are seeing global governments increasingly allowing public intervention in political decision making, our own government is going back in time and is trying to adapt a dictatorial model – and that too in its worst form! There is no doubt that just like the Right to Information Bill, the Lokpal Bill will not only give Indians the voice that had got suppressed over the years under the huge debris of corruption, but it would also increase public participation at large, which is an imperative in any functional democracy. Perhaps that is the very reason why Dr. Hazare has been getting every support from media, celebrities and common people, who understand the significance of his argument. Such is his support that while writing this article some time past midnight, when I uploaded his picture on my Facebook profile as a gesture of my support towards him, in 15 minutes flat, his photograph had received as many as 200 comments and 750 likes!

All in all, it is visibly clear that through this Bill, the government is trying to do nothing else but save its own skin and the skins of its own corrupt officials. In its current form, the Bill is similar to CVC initiatives, which are good for nothing and have no tooth to bite. The current situation is a matter of utter disgrace for the Indian government – especially when it has failed to bring back the Swiss black money, punish CWG officials and arrest 2G scamsters. In a country where the same government has failed to provide its citizens with even two meals a day and instead has allowed corruption to flourish, what more could one expect?

Anna Hazare is increasingly becoming a phenomenon in himself, if not already one, and rightly so. It is the duty of every non-corrupt, patriotic and sensible Indian to provide every form of support to this one man who is selflessly fighting for everyone’s cause. India needs one more victory and this time against corruption! Along with stalwarts like Kiran Bedi – a great icon of honesty – and the great RTI activist Arvind Kejrival, Anna Hazare is showing the way to Indians. We all need to unite to get him right to the top, because finally, Indians have seen an honest man who is also leading from the front. Irrespective of who is holding the position officially, Anna Hazare is my Prime Minister!



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posted by Editorial at 4:51 PM

Thursday, July 22, 2010

Flavours of India

These are not celebrated stories of fortune 500 global brands with multi-million marketing budgets or chest-thumping nuggets about state sponsored public sector heavyweights; neither are they oft-repeated sagas of how some dynamic guys combated India’s license regime to emerge as global business tycoons or even how some new age leaders pounced on sunrise sectors to carve their niche. instead these are stories about humble beginnings, sometimes misplaced ambitions and halting growth. the following pages may titillate many, but if the entrepreneurial vision of these regional rajahs influence even a few, our purpose will have been served. Read on...
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Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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posted by Editorial at 3:54 PM 0 Comments

Friday, April 02, 2010

In Media: think local act local!!


Exclusive In chat with Society Magazine - Prof. Arindam Chaudhuri

For now, Media is the lone cash cow in Madison World. Group CEO, Punitha Arumugam on the challenges of living & winning with limitations...

4Ps: You are the lone big agency today that is not aligned with a global partner. In an industry where multinats automatically partner with global agencies, how does Madison’s client list still boast so many MNC clients?
PA: The more you know your limitations, the more you strive for success. We know we are competing with Indian agencies that have global capacities at their beck and call. We recognised that weakness early and worked hard to overcome it. That is the single biggest reason for our success. For example, we know that other agencies have access to global R&D tool, so we’ve developed our own in-house tools. The beauty is that while other agencies are using globally developed tools, which are not adapted to the very different realities of the Indian market; Madison uses tools developed in India that are totally attuned to the local market.

4Ps: So would you say that these tools comprise the strength of Madison?
PA: Yes, but the real strength of Madison is our people, our value system & commitment to our clients. That’s why the industry says, once a Madison client, always a Madison client!

4Ps: Don’t global alignments of big multinational clients affect you?
PA: Global alignments affect us, but they’ve not hindered us. Check our clients – Coca Cola, P&G, GM, Cadbury, McDonald’s... I don’t think that solutions for media are global. In creative, you can think global and act local because basic consumer psychology is almost similar. But in media, one has to think local and act local because media market realities are different than developed nations. Especially in India and China, the media market is very complicated due to strong regional influences.

4Ps: But today the market mostly functions on global alignments...
PA: Yes, but the market is slowly moving toward local alignment in Media. The slowdown had many clients calling for pitches and I know that they are favouring local expertise more.

4Ps: Any plans as of now to expand Media’s ambit?
PA: We’ve set up a second brand Platinum Media and we’re looking at more ways to consolidate its strength. A parallel brand not only helps us handle competitive brands but also gives growth opportunities for our people. If Madison handles Zee; Platinum has NDTV Imagine. Within Madison itself, we have created four units. Madison Media has 30 clients and each of our individual sub-units handle 7-8 clients each, to give them individual attention.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!
For Exclusive Footage by Sunday Indian Click Here

Outlook Magazine's B School Ranking Scam Exposed
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IIPM exposes Career 360 and Mahesh Peri scam
IIPM - We will change your outlook : Career 360 and Mahesh Peri scam is exposed

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B-schools expect higher rate of campus placements this year

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posted by Editorial at 11:33 AM 0 Comments