Industry News Digest Volume 2, No. 13, July 1 - 15, 2011 For Amity University Uttar Pradesh Lucknow Campus by CRC and Moc Library
Industry News Digest Volume 2, No. 13, July 1 - 15, 2011 For Amity University Uttar Pradesh Lucknow Campus by CRC and Moc Library
Industry News Digest Volume 2, No. 13, July 1 - 15, 2011 For Amity University Uttar Pradesh Lucknow Campus by CRC and Moc Library
PUBLISHED FORTNIGHTLY BY: MOC LIBRARY AMITY UNIVERSITY, LUCKNOW CAMPUS LUCKNOW
PREFACE
Industry News Digest attempts to provide a unified overview of the industries. Volume 2, Number 13 (1-15 July, 2011) is the thirteenth issue of the bulletin published during 2011. Abstracts in this document have been scanned from The Economic Newspaper. It is hoped that this issue will reach a wide and interested users. In case the full text or any other information is desired, the same may be obtained from the library.
SUBJECT INDEX
SUBJECT PAGE NUMBER
Automobile Industry Banking/ Credit Services Civil/ Construction Drugs/ Pharmaceuticals Education/ Training Electronics/ Telecommunication Export/Import Hotel Industry Human Resource Development Indian Economy Industry News Information Technology Infrastructure Investment/ Financing Management Retail Industry Tax/Taxation
2
3 7 10 12 18 22 22 23 24 27 28 30 35 35 38 40 40
Automobile Industry
1. Auto Industry Eyes 15% Growth in FY12
How do you see the growth of auto industry unfolding in this decade? The auto industry has grown at a very healthy pace over the last decade. During this period, the industry volumes have increased by 3.2 times from a level of 4.7 million number to 14.9 million numbers. Going forward, the long-term potential for growth of the auto industry is very good, given the very low vehicle penetration in the country. As income levels rise and easy finance is available, the industry will continue to see a healthy growth rate. Siam estimates that the growth of the auto industry in FY12 will be in the region of 12-15%. Is the industry equipped to handle the consumer demand? The auto industry has already made huge investments in the country. As per 2008-09, the total investment of auto industry in India was Rs. 60,952 crore. Another Rs. 78,000 crore of new investments have been announced by the auto industry out of which some have already been made and the rest will come up over the next 2-3 years. Therefore, the auto industry is keeping pace with the growing demand for vehicles in all segments, eg passenger cars, two or three wheelers and commercial vehicles. Which could be the potential auto clusters in-the-making? Over the past a few years, we have seen a number of new automotive hubs emerge in the country. The northern states have seen significant auto investments propelled by tax benefits. Gujarat has attracted large investments in the auto and auto component sector. Now we are also seeing Rajasthan proactively attracting investments from the auto sector. As the traditional auto hubs gets saturated from the point of view of land availability and cost, we can expect to see industry moving to some of these new hubs. With demand of auto components from not just domestic, but even foreign OEMs rising, what is the way out for the fragmented auto component industry? The auto-component industry would need to ramp up capacities to meet the growing domestic and export demand. This would require constant investments in the component sector, specially at the Tier 2 and 3 levels where we are seeing capacity constraints. In addition, the component industry will also have to upgrade technology, quality levels and develop product development capabilities to design and manufacture the next generation of components. What have been the takeaways for the domestic auto sector in terms of best management practices with MNCs making India their manufacturing hub? The opening up of the auto sector to global competition has been a boon for the auto sector. Global competition has brought in higher standards of quality, encouraged higher productivity through best management practices as well as best practices on the shopfloor. Japanese concepts like 5S, SMED, PPM levels of quality, Kaizan, Poka Yoke etc. are now well known and common 3
terms in the automotive industry. Maruti was the first company that brought in these concepts to the Indian automotive industry. What about the existing infrastructure? Growth in the infrastructure sector has been comparatively much slower than the industry growth leading to a infrastructure deficit. However, with the roads and highways network improving with the establishment of the Golden Quadrilateral and the East West Corridors, there would be a definite boost to the auto sector. The auto industry would like to see a faster development in the infra sector. In addition to infra, there is huge scope for better traffic management, better road design, driving discipline and effective of ITES in transport etc which would permit the existing infrastructure to accommodate higher traffic densities. Electric bikes are trying to find a space for themselves in the cluttered Indian market. What is the scope of these bikes? There will always be some category of consumers who would prefer high performance vehicles. However, a large part of our consumer base wants to purchase bikes for simple mobility. Such consumers are highly price conscious and would purchase a vehicle only if it makes economic sense in terms of overall cost of ownership of the vehicle. The real challenge will lie in making EV/HEV technology economically viable and attractive for the consumer. Do you agree that Gujarat has suddenly emerged in the automotive map? Gujarat is a fast upcoming automotive destination. After having attracted the Tata Motors Nano plant, recently, Maruti has also announced their next big investment in Gujarat. Large OE investments will also pave the way for the component industry to invest in Gujarat as the suppliers would prefer to be close to their customers due to logistic reasons. This would give a fillip to the states economy as an automotive hub. At a time when the industry is bullish about the next level of growth, labour strikes may paralyse the system. What is the way out for the industry? No country is without its share of challenges. Labour strikes not only result in production losses, but also deprive the country of economic activity and dents the global image of the industry. There is clearly a need for actions to be taken to update the antiquated labour laws in the country. Industry also needs to be more sensitive to the rising aspirations of the labour and respond accordingly. The Economic Times 02.07.2011 p. 4
firm that has a licence agreement with Honda till 2014 said it will also be hiring hundreds as it looks to develop its own technology. This (technology) is something which we are very excited about. This (going solo without Honda) is an opportunity to develop our own R&D, Hero Honda Motors Senior Vice-President (Marketing and Sales) Anil Dua said. He said the company will be investing more as the company looks to build its technological prowess. We are recruiting for our R&D and will be recruiting more. We have had few hundred people and we will have hundreds more...We are making investments for equipments and people, Dua said without specifying details. The company has some small R&D set up at its Gurgaon and Dharuhera facilities, where cosmetic changes of the products are being done so far, he added. Besides developing technology on its own, the company is also scouting for global partners. There are good technologies around the world. We are also looking for suppliers, partners and entities, with whom we can tie up and buy technologies, Dua said. The Economic Times 04.07.2011 p. 5
3. Hero Motor Finalises Export Strategy for Overseas Mkts after Honda Split
Hero Motor has finalised an export strategy focusing on markets such as Latin America, Africa and South-East Asia, taking its first step towards emerging as a global player after the recent split with its 26-year old Japanese partner Honda. The BM Munjal-controlled company is making changes in its existing products to suit the needs of these fast-growing overseas markets, apart from identifying homegrown talent to drive export growth. There is a common thread between the three export markets. These are high volume and commuter-driven markets and its a quickwin for us, said Anil Dua, senior vice-president (marketing and sales) Hero Motor. Dua, who heads the 12-member panel which finalised the export strategy, is also spearheading an exercise to identify potential partners. We are visiting interested parties and a decision will be taken soon on whether to look for local assembly or export products from here, Dua said. Indias largest two-wheeler company has identified Latin America, Africa and South-East Asia as its bikes fit into the preferences of customers in these markets growing at the rate of 10-15%. The company may also look at launching threewheelers in these markets. Nigeria, the largest two-wheeler market in Africa, uses bikes for public transport. While Chinese bike makers sell 30,000 bikes per month in Nigeria, their Indian rival Bajaj Auto has monthly sales of 21,000 bikes. Bajaj, which made an entry into this market six years ago, is developing a low-cost bike to bolster market share. We are currently looking at the pricing power in each of these markets. Our focus on mileage and quality in the commuter segment will hold an edge over other Chinese products, said Dua. The group currently exports to South Asia, Sri Lanka, Bangladesh and Nepal and accounts for only 2% of its total sales. The joint venture with Honda barred it from exporting two-wheelers to countries where Honda sells bikes and scooters. Honda is present in markets like Africa and Latin America. The overseas two-wheeler market is about 50 million units against Indian twowheeler market of 10 million units. The Economic Times 06.07.2011 p. 5
period last fiscal, it added. BALs scrip was trading down 2.31% from its previous close on the BSE at . 1,415.60 per share at noon on Thursday. The Economic Times 15.07.2011 p. 6
guidelines while opening accounts led to the perpetration of a fraud at its Gurgaon branch, said RBI in a statement. In December 2010, a Citibank employee, Shivraj Puri, was accused of luring 40 high net-worth individuals and corporate entities to invest in bogus investment schemes, promising returns beyond normal securities available in the market while diverting funds to wagering in the stock market. Puri, who perpetrated the Rs. 400-crore fraud, not only duped a string of wealthy individuals, but also duped the Munjals-controlled Hero group to invest close to Rs. 200 crore in the sham investment scheme that promised a high rate of return. A case was filed against the Citi employee in Gurgaon and the police had arrested Puri and Sanjay Gupta, the chief financial officer of Hero Corporate Services, which is a part of the Hero Group. Currently, the case is subjudice and under investigation. The central bank had issued a show cause notice to the bank on April 21, 2011, with a possible penalty of Rs. 50 lakh, in response to which the bank submitted a written reply dated May 6, 2011. The Economic Times 05.07.2011 p. 14
card receivables, there is an urgent need to cap such rates of interest as it is done in case of MFIs, said AC Mahajan, former chairman & managing director of state-run Canara Bank. It is generally believed that some banks, including foreign and private banks, charged 36% upward on credit cards dues and extra penalty on overdues. Banks lending practices, including those of state-run ones, were questioned when they were found lending below their previously benchmarked prime lending rates to top clients. The Economic Times 08.07.2011 p. 1
penalties between Rs. 1 lakh and Rs. 5 lakh on 48 banks during the January-June period, according to official data. On its part, the government has adopted a multi-pronged strategy, including setting up of special panels and review of tax treaties with different countries, to curb black money menace. Most of the erring small banks were found violating guidelines issued by the RBI on KYC norms and anti-money laundering standards. The RBI is sending right signals as laxity on KYC norms is a serious matter as it compromises transparency, Crisil principal economist DK Joshi said. He said the RBI has been regulating the sector pretty well and strong vigil is good for the sector. Earlie, the RBI had slapped a penalty of Rs. 25 lakh on Citibank contravention of various guidelines and instructions relating to KYC and AML. The Economic Times 11.07.2011 p. 10
Civil/ Construction
13. Real Estate Cos Tap PEs, NBFCs for Capital Need
Builders are tapping domestic private equity funds and non-banking finance companies (NBFCs) to raise cash by pledging their receivables as banks turn wary of financing construction projects. Over the last few months, several developers, including Parsvnath, Emaar-MGF, Adarsh and Ansal Properties, have struck such deals. The latest to take this route is Paras Buildtech, which has raised Rs. 40 crore from Xander's NBFC arm to fasttrack its 'Paras Tierea' project in Noida, which is already 70% sold. We needed to bridge the gap between customer advances and our construction requirement, said Harindra Nagar, director of national capital region-based Paras Buildtech. Under a receivable financing deal, which is generally for 12-18 months, money generated through installments paid by homebuyers is put in an escrow account by the builder and used only for repayment to the lender and for construction work. Payment from customers is constructionlinked. Funding through this route, which was earlier provided by banks, is seeing new players in the form of NBFCs, such as Xander, Piramal Enterprises and Religare Finvest, and domestic funds, such as ICICI Venture, Kotak Realty Fund and HDFC PMS. Most receivable financing happens 10
when a developer has a cash crunch and can't continue the development of a project, said Prashant Kaura, director at GenReal Property Advisers. Supertech is another developer looking to get its receivables financed. Banks are not funding adequately, so to bridge the gap, we are looking at raising money by pledging our receivables, said managing director RK Arora. The developer is in talks with domestic funds and nonbanking finance companies to raise .Rs.200-300 crore for the first phase of its Noida project, called Capetown. Typically, this financing instrument is construction-linked and meant for cash-strapped developers whose projects are 60% sold, said Ambar Maheshwari, managing director, corporate finance at property consultancy Jones Lang LaSalle. Religare Finvest chief executive Kavi Arora said, This instrument helps monitor the end use of money through an escrow account and cash received from clients goes towards repayment to the lender. However, risk for developers lurks in the form of poor market sentiment, like the one that followed Lehman's crash, when many customers withheld their installments. Developers can get trapped in capital inadequacy if sales fall. Sometimes, a large project can get stuck in such financing schemes, says Amit Goenka, national director, capital transactions at property consultancy Knight Frank India. The Economic Times 02.07.2011 p. 6
Mumbai got approvals because of greater scrutiny by authorities, which has meant very little new supply. As demand picks up, there will be short supply in Mumbai and prices will increase further, says Lalit Kumar Jain, president of Confederation of Real Estate Developers Associations of India. The Economic Times 02.07.2011 p. 6
Drugs/ Pharmaceuticals
16. Merck & Cos 2 Senior Officials Vacate Posts
Two senior executives, who spearheaded the Asian growth plans of Merck & Co Inc the worlds second largest drugmaker, have vacated their positions. Ramesh Subramanian, senior vice-president and president (Asia Pacific human health) at Merck & Co, quit at the end of May while Naveen Rao, former MD at MSD, the Indian subsidiary of Merck, has moved to global headquarters in New Jersey. He has joined a senior position with global public policy and corporate responsibility division. A Merck & Co spokeswoman said the firm is finalising suitable replacements for both positions. A senior industry executive said Subramanian is expected to join another global pharmaceutical major. This could not be independently confirmed and Subramanian, who is based in Singapore, could not be reached for comments. Subramanian, an industry veteran of over 25 years, was with the firm for five-and-ahalf years. He was closely overseeing the companys new innings in India, a market where it aims to be among the top five firms by 2015. Rao was mainly responsible for setting up the Indian team and its operations after Merck & Co re-entered the Indian market in 2005. Merck & Co has been going through a restructuring process globally after it bought rival Schering-Plough Corp for $41 billion in March 2009. The two firms are treating the acquisition as integration and Merck & Co has retained several top executives of Schering-Plough globally. In India, KG Ananthakrishnan, MD at Schering-Ploughs units Organon (India) & Fulford (India) took over as MSD head in late 2009. Rao was promoted as head of medical affairs for the companys Asia-Pacific region covering 13 countries. Prior to his Indian posting, Rao was in the US with Merck and joined as medical director-India in 2005, before taking over as its head in 2007. MSD has been aggressively scaling up its operations in the country and plans to capture about 4% market share in the fiercely competitive and fragmented Rs. 58,000-crore Indian drug market. The firm is also among the few global innovative drugmakers that have launched their original drugs at significant discount as low as one-fifth of its US price. It has also launched several drugs and 12
formed a joint venture with Sun Pharma to develop innovative drugs for emerging markets, including India. The Economic Times 01.07.2011 p. 7
shortly be able to export medicines to the world's largest drug market. Several industry executives said teams of inspectors of the US Food and Drugs Administration (FDA) did not find any major deficiency during inspection of facilities of Ranbaxy Laboratories, Orchid Chemicals & Pharmaceuticals, Emcure Pharma, Nectar Lifesciences and Ind Swift Laboratories over the course of the last four weeks. But this could not be officially confirmed from FDA, which did not respond to an e-mail query sent last Thursday. While in the case of Ranbaxy and Nectar, a goahead from the FDA will mean that they can begin exporting to the US from their units, in the case of other companies, an FDA approval will allow them to continue exporting. FDA conducts audit to ensure that Indian drugmakers meet US drug manufacturing norms so that the medicines made at these facilities are safe for American citizens, before they are allowed to be sold in the US market. Senior industry executives said this was the first time that FDA had inspected so many manufacturing units in India during such a short span of time. The US government may be trying to expedite approval of generic drugs to reduce healthcare cost, which is a welcome move, D G Shah, secretary-general of Indian Pharmaceutical Alliance, an association of big Indian drugmakers said. An estimated $30-40 billion worth of drugs, including top-selling drugs like Lipitor (Pfizer), Nexium (Astra Zeneca) and Plavix ( Bristol Myers Squibb), will lose patent protect protection in the next 1-2 years. This means generic firms can launch their versions at one-tenth of the price of the original brand, if they have FDA approval. For the US consumer, sale of more generic drugs will result in greater competition and therefore, lower prices. Ranbaxy Laboratories, the country's largest drugmaker, stands to benefit the most from a favourable report from the FDA. The US constitutes a fourth of Ranbaxy's total sales and a nod from the FDA will permit the Gurgaon-based firm to sell new drugs in the US from its Indian plants, nearly three years after FDA banned and halted marketing approval of new drugs from its two main plants for data fabrication. Two FDA officials spent about two weeks examining the drugmakers new manufacturing facility at Mohali, Punjab and it is learnt that they have not pointed out any major flaw during the examination. A Ranbaxy spokesperson declined comment. FDA officials carried out separate four-day inspections at the active pharmaceutical ingredient (API) plants of two Chandigarh-based firms, Nectar Lifesciences and Ind Swift, at their Dera Bassi plants. Nectar can begin exporting APIs to the US once it gets a formal approval from the American regulator. For Ind Swift, which already exports to the US, this was a re-inspection which concluded about a week back, said the company's managing director NR Munjal. The Nectar Lifesciences spokesman declined comment. Chennai-based Orchid Chemicals said late last month that its cephalosporin API manufacturing facility in Alathur, Chennai has cleared a recent FDA inspection allowing it to continue supply of niche APIs to developed markets. For Pune-based Emcure, this was the third reinspection of its API plant in Kurkumbh, near Pune. FDA officials also audited the facility of a Mumbai-based drugmakers plant in Naroda, near Ahmedabad. The Economic Times 05.07.2011 p. 7
Gulati will be mainly responsible for the companys global marketing strategy and report to Sawhney, who heads the executive team. Gulati joined the Gurgaon-based firm company more than a month back and has relocated to the country. Gulati is a seasoned professional adept at managing large business teams across key functions of marketing, business development and corporate strategy, Ranbaxy said in its website. A graduate from the Indian Institute of Management, Ahmedabad, Gulati is familiar with the Indian pharmaceutical market and Ranbaxy. He was the MD of Eli Lilly India for seven years and also Director, India & China (Corporate Strategic Planning) for twoand-a-half years. In the early phase of his career, he also worked in Ranbaxy for over six years in different roles, the last being marketing manager in 1992. Several top executives have left Ranbaxy in the last three years, since Daiichi Sankyo took over the firm in June 2008. Amid its pending regulatory problems in the US, top officials, including two CEOs, Malvinder Singh and Atul Sobti; heads of finance, regulatory affairs, human resources, global pharmaceutical and Europe, quit the organisation. The Economic Times 05.07.2011 p. 7
22. USFDA Bans Sale of Medicines from DRLs Mexico Facility, Warns Cadila
The United States Food and Drugs Administration on Wednesday banned the US sale of medicines made at Dr Reddy's Mexican facility and sent a warning letter to Cadila Healthcare for violating manufacturing norms at their plants. With this, all top Indian pharmaceutical firms have either been warned or slapped with product bans in the US in the last two to three years, four of them in the last three months alone. The US market, the largest in the world, accounts for about a quarter of India's . 50,000-crore drug exports. The import ban on Dr Reddy's follows a warning by the USFDA last year. The FDA letter had listed four violations by Industrias Quimicas Falcon de Mexico SA plant, in Jiutepec, which manufactures intermediates and active pharmaceutical ingredients (APIs) for use in Dr Reddy's generic medicines. Dr Reddy's acquired the Jiutepec site 15
from Roche in 2005. It is one of Dr Reddy's eight API-manufacturing facilities. The other six others are in India and one in the UK. A Dr Reddy's spokesperson declined to comment. A Cadila spokesperson said: We have received a warning letter from the agency based on the preapproval inspection of our new injectable area. We are addressing the issue expeditiously. We do not expect any impact on our current business. The company has 15 days to notify the steps it has taken to correct the violations. The USFDA also said failure to correct these violations may result in ban on articles manufactured at the Sanand facility into the US. The company's formulation plant at Moraiya, in Sanand, makes tablets, capsules and soft gel capsules as well as injectable drugs in both sterile liquid and lyophilised form. On BSE, DRL shares slipped 2.40% to close at Rs. 1, 527 while Cadila Healthcare lost 1.63% to end at Rs. 933.25. The BSE healthcare index closed at Rs. 6,387.62, down 0.44%. Brokerage firms said the financial impact for both Cadila and Dr Reddy's would be small because the respective plants were either small or contributed little to total sales. But, it is a matter of concern and multiples of the companies in future will be under pressure, if issues are not sorted out, Hemant Bakhru, pharma analyst at CLSA said. Dr Reddy's financials would not be affected significantly, said another analyst who did not want to be quoted as he was not authorised to speak with the media. Market estimates suggest that the Hyderabad-based company's Mexican facility contributes close to $60 million to DRL's revenues, of which half the sales are to the US alone. Companies now have to remain vigilant and take regulatory requirements at top priority, said Daara Patel, president of Indian Drug Manufacturer's Association. Abhay Shanbhag, pharma analyst at Deutsche India Equities Research, wrote in a note that the developments will have a drain on sentiments. The aggressive FDA focus on Indian companies is because the country has the highest number of FDA-approved facilities outside the US, and not due to lack of quality. India has about 120-130 USFDA approved plants, or for every plant that has been penalised, there are nine others which are fully compliant. Indian firms account for 40% of drug masterfile filings, 27% of abbreviated new drug applications approvals and 13% of volume market share in US market, the note said. The Economic Times 07.07.2011 p. 5
Suppose there is a power plant which has a PPP signed but there is no permission to mine...There are challenges involving financial closure. It is becoming difficult to raise equity, forget debt. Private equity and venture capital funds are not enthusiastic. The RBI is worried over banks excess exposure to infrastructure as it has already touched 40%, he said. The 11th Five Year Plan infrastructure number was . 20 lakh crore, while the 12th Year Plan is . 42 lakh crore. Unless you target everyone, insurance, pension, where would that money come from? said Krishnan. Among other sectors, the company plans to hold on to its exposure in auto stocks though they have been hit by the rise in input cost. There are the first signs of a slowdown in auto. Sales have come down while commodity prices are going up. From the inflation and financial perspective, demand has come down in both two wheelers and four wheelers. In auto, the company has a stake in Maruti Suzuki. On the overall market condition, Krishnan said, equities are likely to trade with a downward bias over the next few months and fall 7-8% this financial year amid rising uncertainty over implementation of government policies. Everybody thinks the government should do something, which is the worrying part. Look at GST and DTC, the government has not been able to implement them. People are not seeing the intent to pass government policies and that is the cause of increasing concern, he said. The Economic Times 11.07.2011 p. 9
development said. Though this promises to significantly reduce healthcare costs for the masses, there could be some medical issues and legal bottlenecks, points out CM Gulhati, editor of medical journal Monthly Index of Medical Specialties. For one, Gulhati says it is illegal for chemists to sell substitute brands for prescription medicines. Besides, in some cases, brand substitution can be harmful to patients. There is a significant difference in the price of the costliest brand of a medicine and its cheapest alternative. A recent survey by NPPA found that prices of the expensive brands can be ten times higher than the cheapest alternative of the same medicine. Drugs are not allowed to be advertised, so companies push their brands through doctors. There is a wide practice of companies giving gifts, sponsoring foreign trips and other incentives to doctors to prescribe their brands. Indian consumers are price-sensitive, but most are unaware they need not buy the costly brands prescribed by physicians. The purchase decision is made by their doctor. This will curb some of the overriding power of doctors, the person added. Low-cost drugs are not only less profitable for pharmacists but even doctors might resist brand substitution under pressure from drug firms. The possibility of substitution of their drugs with cheaper alternatives will upset the marketing strategy of large pharma companies, says Gulhati. Mankind Pharma Managing Director Ramesh Juneja says the implications of the governments initiative will be known only after it is implemented. Experts say there are several other issues the government must address before launching this programme. The government has no centralised database of over 90,000 brands of drugs sold in the country, raising questions about the accuracy of the information on alternative brands provided to consumers by SMS. We have to take the first step, a government functionary said, adding such issues will get addressed over time. The Economic Times 14.07.2011 p. 7
Education/ Training
26. IIM-B Makes Summer Internships Optional for Experienced Students
INDIAN Institute of Management-Bangalore (IIM-B) has decided to make summer internships optional for students with prior job experience after feedback from students indicated that the two-month training was suited only for fresh passouts. The IIM-B move may lead to a similar change at other B-Schools, though no institute ET spoke to said it would follow suit immediately. The number of experienced students is rising at all top B-Schools almost 25% as most grads prefer to go for management education only after working for a couple of years. IIM-B has communicated the decision to its students. We have taken the important decision and made internships optional for students who have worked for at least 34 months. Experienced students from earlier batches said they did not learn much more during the internships. We are now exploring options on engaging the students during these two months when no teaching takes place on the campus, Sapna Agarawal, head of IIM-B career development services (CDS) told ET. This is for the first time that an IIM student will have a choice of skipping internship if he has significant experience. Internships offer entry level roles and experienced students feel that they are under utilised, she added. B-Schools send their grads to work with the industry for two months after they complete the first year. Corporates pay stipend to the interns to work on shortterm projects. The stint helps the corporates in identifying prospective candidates for pre18
placement offers (PPOs). Candidates who secure PPOs need not appear for final placements as their job is secured. Work experience counts during placements, but it is not taken into account during internships and hence experienced students find the exercise irrelevant. IIM-B had 25% of its students with work experience of more than 36 months in the 2009-11 batch that had total 348 students. The 375-student strong batch of 2010-12 has 28% students with more than 36 months of experience. It expects that the new batch of 2011-13 too will have a similar composition. However, a professor at one of the top IIMs said the decision may impact the number of Pre Placement Offers (PPOs). Logically, the decision is good. Internships are meant to make students understand how an organisation runs. Students having around three years of experience know everything about corporate world. However, in some cases, internships really help experienced students. If a student has worked with an engineering firm and he wants to join financial services sector after doing MBA, he can learn significantly during the internship. Also, there might be some impact on PPOs, if a large number of experienced students opt to stay away from internships, he said. According to Credila Financial Services, an HDFC group company, the IIM-B decision will not have major impact on the final placements. If a student has significant work experience, he knows about the corporate world and he need not go through internships. Mostly freshers prefer internships. There can be some impact on PPOs, but companies give good offers to experienced students during final placements, Dinesh Gehlot, assistant VP of Credila Financial Services told ET. The Economic Times 02.07.2011 p. 5
Given the anticipated shortfall in admissions to engineering colleges, Bansal says there could be a shakeout, with colleges shutting down. In Orissa, four colleges have already shut down since they did not get students. In Bangalore, an MBA college has closed down, and been replaced by a mall. In Andhra Pradesh, colleges are up for sale about 70 km from Hyderabad. Colleges are either shutting down, selling the land and buildings, or are being taken over by better managed institutes. This is happening mainly where the focus of the management is non-academic, says Bansal. For long-term sustainability, say Saxena Poria and Bansal, there is an urgent need for good faculty. Only then will the two courses see some of their sheen restored. The Economic Times 05.07.2011 p. 10
transform the canvas with exciting colours, are credible, spur creativity, charge up the teams imagination and touch the spirit. Like the leader, their words too are charged with energy and more importantly relevance to the audience. Most leaders have excellent verbal and written communication skills. They connect with people. And since leadership is about dealing with emotions, energy, spirit and motivation communications, particularly of the verbal kind plays a big role in positioning you as a leader in any organisation. The Economic Times 05.07.2011 p. 10
21
Electronics/ Telecommunication
30. Good Communication Skills are Key To Being in Charge
In his eight steps model to bring about transformations in organisations, John Kotter from Harvard Business School says a leader can never underestimate the importance of communication. According to him, communication is the common platform upon which a leader builds his change process. He relies on communication to establish a sense of urgency, form a powerful guiding coalition, create a vision and empower others to act on the vision. A good example is Jack Welch, the earlier chairman of GE, who transformed the stodgy $13 billion company into a $525 billion giant. By emphasising on communication skills, Jack began his revolution of building a new GE, very different in attitude and functioning from the GE of the past. He facilitated more than 250 sessions in GEs Management Development Institute in Crotonville, New York, often lasting more than four hours each. Welchs communication skills yielded tremendous motivation in the management and staff at GE. Faulty communication can cause many problems. It can lead to confusion and cause a good plan to fail. Probably the best example of faulty communication ruining a company is that of Gerald Ratner, once head of Britains biggest high street jeweller. He was one of the countrys most successful businessmen, building Ratners Group into a jewellery business with sales of 2.5 billion dollars. Ratner, which in 1991 produced profits of $220 million, while addressing the Institute of Directors, described a silver decanter as total crap. Ratner was reported by the Financial Times as saying: We also do cutglass sherry decanters complete with six glasses on a silver-plated tray that your butler can serve you drinks on, all for 4.95. People say, How can you sell this for such a low price? I say, because its total crap. Ratner paid a terrible price for his comments: customers boycotted the chain, about a billion dollars were wiped off the value, the companys profits soon turned into a loss and investors forced him to leave the board. If only he had chosen his words more carefully, the entrepreneurial community would probably have bracketed him with the likes of Philip Green of British Home Stores and Richard Branson of Virgin. So, how can leaders avoid the perils of faulty communication? The Economic Times 01.07.2011 p. 10
Export/Import
31. Exports Rise 46% to $29 b
Indias merchandise trade grew at a faster-than-expected pace in June, belying fears of depressed demand in buyer countries and possible slowdown at home. June exports rose 46.4% to $29.2 billion while imports increased 42.4% to $36.9 billion over the year-ago period, data released by the government on Friday showed. Cumulatively, first quarter exports rose 45.7% to $79 billion and imports 36% to $110.6 billion. In May, exports went up by a huge 56.93% at $25.94 billion from $16.53 billion in May 2010. The surprisingly robust trade performance has baffled experts and policymakers, who say theyre not sure if it would be sustained throughout the year. The Economic Times 09.07.2011 p. 1 22
Hotel Industry
33. Manpower Crunch Plagues Hospitality Industry
As Indias hotel industry readies for unprecedented growth, it is about to face a manpower crisis the likes of which it has never seen before. Too few people are being trained for the industry; many of those who have received the training choose greener pastures and fierce fights break out regularly to keep or poach the few who remain. All this while a new hotel or restaurant is being added every week. It is a battle every day to retain people you have groomed over the years. While earlier the mantra was to engage with the staff, today you have to keep them enchanted, said Sujata Guin, regional director of human resources at luxury boutique hotel chain The Park. It is not just other hotels we are losing people to. Everyone wants a piece of the hospitality pie retail, telecom and banking. With Indias economy expanding by about 8% a year, the number of people travelling on business or for pleasure is booming. Every year, there are 540 million domestic travellers and the number of overseas tourists will increase from five million now to 18 million by 2016, according to HVS Hospitality Services, a consulting firm focused on the hotel industry. Where India now has 62,000 top-quality rooms for such travellers, by 2014 it is expected that there will be 150,000 rooms. But where are the chefs, butlers and bellboys to serve all the guests? Surveys show an immediate shortfall of 30-40% in the supply of quality manpower as students passing from hotel management institutes shun the profession because of poor pay and long work hours. They prefer 23
to work overseas or with cruise liners, airlines and retail companies. One such student is Sandeep Singh, who graduated this year from the International Institute of Hotel Management in Delhi. He had offers from Le Meridien, Pullman and The Oberoi but he preferred to join an event management company. I am getting three times the money offered by the hotels and I do not have to work for 14 hours a day, he said. Another hotel management graduate Manish Paul took up a job at Kingfisher Airlines, a decision he made after working 42 hours on the trot at a hotel during his training. Nakul Anand, who heads the hospitality, travel, and tourism businesses for ITC, said six out of every 10 students from the Welcome group Graduate School of Hotel Administration run by the business conglomerate do not join the hotel industry. We need to find more creative ways to attract people, he said. There was a hotel boom in the late 1980s and 1990s but demand for manpower was met by hotel management and catering institutes. This time, the industry is ill-prepared. Anand, who is also the president of the Hotel Association of India, estimates that the hotel industry will need to add 100,000 staff within four years. But only about a fifth of this number are even being trained and a big slice of them will not join the hotel industry. The Economic Times 01.07.2011 p. 5
country the final placement season brings forth many recruiting trends, student preferences, new entrants and a constant buzz around salaries. ET decided to look at one more aspect of the recruitment spectacle: the companies that hired in large numbers at the top Bschools, including seven of the IIMs. The objective was to look at who had managed to snare the best and finest talent from Indias top Bschools. A couple of caveats though. We are talking about the big recruiters that hired in numbers and not about any pecking order. Also, we approached a large number of institutes and some of them declined to divulge the exact numbers. Some top-notch recruiters may have failed to make it to the list due to this, but those who did, showed us that the numbers do tell a story. ON A ROLL Placements 2011 was an extension of the happy sentiment of 2010. If 2010 was the return of topnotch jobs to campuses, 2011 was the time students were on a roll. Caution was thrown to the wind and the heady days of being courted by the Whos Who of India Inc were back. Says IIM Kozhikode director Debashis Chatterjee, The number of offers at campuses was back to 2008 levels. Companies agree. Priti Rajora, VP and head, global talent acquisition at Wipro Technologies, says: We have been witnessing very strong economic growth indicators for the past several months. Due to positive changes in the demandside ecosystem and organic and inorganic growth and projections, our outlook for hiring in the current fiscal has been very optimistic. Ramkumar agrees. It was a more confident year at the campus compared to the last two years, he says. This backdrop, however, ensured that placement this year was almost as much dictated by students as it was by recruiters. We give you a snapshot of who found favour with students, and what makes this set of companies tick. The Economic Times 08.07.2011 p. 10
during the quarter. Over previous quarters levels, net profit is expected to decline by a significant 23% to Rs 44.3 crore given the higher tax rate. Polaris will have to pay an effective tax rate of 27% this quarter against a nuch lower 13.4% in the previous quarter. NIIT Technologies is also likely to report a robust 4.4% sequential revenue growth. Here too, margins are expected to decline by 270 basis points over the previous quarter to 17.8 % on account of wage hikes. Net profit will also drop due to higher tax rates In the mid-cap space, KPIT Cummins will deliver the strongest growth at 4 % quarter on quarter. Geometrics growth will be flat on back of delay in some projects, the MSFL report said. Summing it up, Rohit Kumar Anand of Pinc Research points out: Mid-tier firms will deliver bi-polar results with firms being clear outperformers and laggards in terms of revenue growth. Players like Hexaware and Persistent are likely to show strong revenue growth this quarter. Others like MindTree, MphasiS, Sasken and Geometric are struggling with specific issues which will result in muted revenue growth. The Economic Times 12.07.2011 p. 4
Indian Economy
38. Data Shows Economy on Firm Ground
Indias macro economy is in a much better shape than what the mood on the ground reflects, a clutch of data released by the government on Thursday showed. The readings point to a moderation in food inflation, a brighter industrial outlook and a comfortable balance of payments position. Economists say the data indicates the Indian economy may avoid a hard landing, but there will still be pain in the offing. It seems we might have a soft landing, said Sonal Varma, India economist for Nomura Financial Advisory and Securities Private Limited. The countrys eight key infrastructure industries logged a growth of 5.4% in May, up from 4.6% in April, data showed. This indicates that overall industrial output growth could rise above 6.3% registered in April. The revamped infrastructure index has eight sectors, as against six in the earlier index, and has a 38% weight in the Index of Industrial Production, as compared with 27% in the old index. The higher weight in the IIP makes it a good indicator of industrial growth. Right now the key relation to be assessed is between growth and inflation, said Samiran Chakraborty, chief economist with Standard Chartered Bank. The numbers are suggesting that growth is moderating, but not collapsing. The rise in core sector output was despite a 9.3% contraction in output of natural gas in May from a year earlier. Steel output, a key indicator of demand in the construction sector, rose 6.1% in May from 4.8% in April. Food inflation dropped to a sixweek low of 7.78% for the week to June 18 while consumer price index for industrial workers rose at a slower pace of 8.7% in May from 9.41% in April. The decline in food inflation was because of a drop in prices of vegetables, pulses, poultry and tea. Even at the retail level, food inflation dropped to 7.61% in May from 8.24% in April. However, most experts see food inflation rising in the coming months because of the knock-on effects of the recent hike in prices of diesel, cooking gas and kerosene. Fuel inflation rose to 13% for the week ended June 18 from 12.8% in the week before. I am not sure if we have seen the worst, said Madan Sabnavis, chief economist at Mumbaibased CARE Ratings. Until September, inflation would be high. It is too early to see food inflation declining, we will have to wait and watch, he said. Fuel price increase is alone expected to add one percentage point to the headline wholesale inflation, which stood at 9.1% for May. On the inflation front, there is 27
still about 2-4 months of pain left, said Chakraborty. The consensus estimate is that the economy will expand at about 8% in the current fiscal because of the rise in interest rates, which is beginning to impact demand. The biggest positive was the current account deficit, which came in much lower than what had been expected in the middle of 2010-11. The impressive 47.1% rise in exports in the last quarter and a slower 27.4% growth in imports kept the trade deficit in check. The Economic Times 01.07.2011 p. 15
Industry News
40. Indian Consumption to Grow 14% in 3 Yrs: Study
Consumer durables, automobiles, food and personal care products have the maximum growth potential in the country as multinationals shift focus to Asia Pacific and Latin America to drive up their sales, says a study. And Indian consumers will maintain their spending spree despite challenges such as rising prices and higher interest rates, according to an Ambit Capital Research report, The Indian Consumer: a robust operator in an uncertain world. Despite being impacted by several challenges, we expect India's consumption growth story to maintain its course of about 14% growth over the next three years driven by three factorsinclusiveness, mix changes and specific consumption categories, senior analysts Vijay Chugh, Ashvin Shetty and Shariq Merchant wrote in the report. 28
Reasonable valuations will keep acquisition interest by global midcap firms alive, they added. The $473-billion processed dairy category could grow at a rate of 15% in the next four years, while the $340-billion personal care products category would grow a tad lower at 14%. Multinationals are aware of the potential in India. I am hopeful that McDonalds India will contribute half a percent to the global sales in the next fiveseven years, McDonalds India (North & East) MD Vikram Bakshi said. India currently accounts for just 0.37% of the US fast food giants $24-billion global business. Last week, at the Cannes advertising festival, Unilever CEO Paul Polman was categorical when he said We have to shift our thinking to New Delhi, not New York. Calling Unilever an 'emerging markets company', Polman said the shift of economic power to the East and the South was forcing the worlds second largest consumer products firm to make extraordinary changes. He said while about 56% of Unilevers revenues come from outside North America and Europe, by 2020, Unilever expected this to be 70-75%. At the same venue, Paul Bulcke, CEO of the world's largest foods maker Nestle SA, said that the most important global economic difference over the last few decades was that emerging markets are emerging. As sales flatten in mature markets like the US and Europe, consumer products makers are relying on Asia Pacific and Latin America for growth. Multinationals are committing resources to India not only for manufacturing but also for innovation. Both traditional names such as Nestle and contemporary ones like Yum Brands and Google have committed to setting up local innovation centres, the report said. And Indian managers are being given positions of power to steer growth in emerging markets. Late last month, Unilever elevated Harish Manwani, currently chairman of its India arm Hindustan Unilever, to become the global giants chief operating officer, second only to CEO Paul Polman. Three months back, British consumer goods giant Reckitt Benckiser named India-born Rakesh Kapoor as its CEO to succeed Bart Becht who spent a decade at the firm. Earlier this year, GlaxoSmithKline Consumer Healthcare, maker of Horlicks milk drink and Crocin anti-pyretic drug, elevated its subsidiaries in India and China to report directly to the companys global headquarters instead of its international division that excludes the US and Europe. India and China are now part of the companys global consumer healthcare leadership team, with India among the fastest-growing regions of GSK Consumer. A combination of good GDP growth, India being a nutrition deficient geography and an emerging consumer class are contributing to the growth, GlaxoSmithKline Consumer Healthcare MD Zubair Ahmed said. The Economic Times 05.07.2011 p. 5
provided Rs. 450 crore towards third-party motor pool and Rs. 300 crore for wage revision. There may be a loss. But it will be premature to comment on it since we are yet to announce the result, he said. Cut-throat competition and high discounts have been taking a toll on the underwriting profits of insurers. The market is driven by competition. Insurers need to compromise between topline and bottom line. They should not grow top line at the cost of bottom line, said General Insurance Council secretary general SL Mohan. Insurers have been posting losses after underwriting their core activities since the sector was detariffed. An insurance company reports underwriting loss when the claims paid out exceeds premium income. The combined ratio of most insurance companies was below 105% without third party motor pool. There was pressure due to wage revision and extra capital towards third party. Investment income may not be good because of the volatility in the market. Insurance companies will have to resort to risk-based pricing if they want to improve underwriting, said a senior executive at a large public sector insurance company. The four public sector insurance companies recorded 21% growth in gross written premium in 2010-11. The Economic Times 06.07.2011 p. 14
Information Technology
42. After Infosys & Wipro, TCS Under Lens for Body Shopping
Its now the turn of Indias largest software company to spell out its stand on a tricky point that tax authorities have been raking up. After Infosys and Wipro, the Income-Tax Department has initiated scrutiny on Tata Consultancy Services (TCS) for claiming tax benefits for onshore services, often derogatorily called body shopping. Onshore software services account for close to 45% of TCS $8-billion revenues.In a scrutiny notice initiated a few days ago, the I-T Department has revisited its argument that onshore software services provided by Indian exporters boil down to export of manpower, rather than software, a senior tax official said. Onshore development refers to the practice of IT companies sending their staff to work in overseas markets, including the US and Europe. Often, such services are rendered in the premises of the overseas client. The Income-Tax Department has argued that since professionals are under the control and supervision of the company abroad, the contract between the local software company and the foreign client amounts to export of manpower. Simultaneously, tax authorities say many software companies often book the earnings from such onshore work in their units located in the Software Technology Parks of India (STPI) to avail tax benefits. Responding to an email, a TCS spokesperson said: As a policy we do not comment on taxrelated issues. According to a senior tax practitioner, the timing of the notice is important. While there is no longer tax holiday for STPIs and EOUs (except for units in SEZs) from April 1, 2011, the government continues to be under pressure to generate revenues, said Indraneel Roy Chaudhury, Tax Leader, South India Practice, PwC. Interestingly, under Indian tax rules, human resource services can get the benefit of tax holiday. But on this, he said, one need to examine contracts to determine what would fall within this purview. The Economic Times 01.07.2011 p. 1
30
indeed unique! agrees Larry Fisher, Research Director at ABI Research. This is why Watson might herald a new wave in the future of AI and advanced computing. It shows what could be possible in computing, says Whit Andrews of technology consulting firm Gartner. But then Watson wasnt created to play Jeopardy! The Economic Times 07.07.2011 p. 4
Unlike in the past, when a fraction of rising salary and other operational costs were passed on to customers, clients are now refusing to share any burden citing low demand in their own businesses. Indian IT firms pyramid model wherein lowcost, fresh engineering graduates are pumped into the system every year to deliver projects at nearly 30% profit margin is under pressure as salaries rise. Were seeing everything from 0-20% depending on scope, age of deal, industry, etc. The older the original rates, the more likely you are to see a large percentage drop some rates that have not been negotiated since before 2008, for example, could see doubledigit reductions, said Esteban Herrera, COO of US-based HfS Research, which advises customers on outsourcing. These rate cuts are happening for commoditised maintenance kind of projects, and there are still certain projects that are immune to such price cuts. The Economic Times 11.07.2011 p. 1
offering online therapy, HealthLinkNow, in Sacramento, has decided to avoid the direct-toconsumer route, at least for now. The company, which started its service in May, is trying to sign up institutional clients, like hospital emergency rooms or large employers, rather than individuals online at home. Barb Johnston, the chief executive of HealthLinkNow, says: I think youre going to see larger companies provide rooms in which employees can seek telemedicine services, including mental health services. That way, the employee wont lose a half or a whole day of work for a consult. Because a range of health services would be provided in the privacy of that room, no stigma should attach to a patient who goes in for a private e-therapy session. No one will know, Ms Johnston says. One disadvantage of online therapy through teleconferencing is that it can be hard to read each others cues that are not visible, like body language, Ms Bufka says. Humor can misfire, and some people may really benefit from having the personal relationship of therapy, she says. The Economic Times 12.07.2011 p. 4
Investors and experts tracking the sector were anxious about the prospects ahead after Infosys provided a muted forecast and raised concerns about macro economic worries affecting demand for outsourcing business. While TCS, too, saw it profits get affected because of wage hikes, the management commentary hinted at strong demand, which is quite opposite of what Infosys projected, said an analyst at Mumbai-based office of a multinational brokerage firm. Last month, consulting firm Accenture reported better-than-expected third-quarter profit growth of 28% and raised its outlook for the year, citing strong demand for services. TCS results were above our estimates. The 7.4% volume growth was the highlight. More importantly, the growth was broadbased, which lends a degree of stability to this growth, we believe. The management is confident about client spending while being cautious on the macro scene, said Dipen Shah of Kotak Securities. The Economic Times 15.07.2011 p. 6
Infrastructure
50. World Bank Approves $648-M Loan to THDC
State-run THDC India Ltd has received loan of $648 million (about Rs. 2,886 crore) from the World Bank for its project in Uttrakhand. With the loan, the 444-MW Vishnugad Pipalkoti hydroelectric project has achieved full financial closure, the company said in a statement. The company has recently received environment ministrys nod for diversion of 80 hectares of forest land for the project that is expected to be completed by 2016. THDC has a portfolio of hydro projects in Uttarakhand, Maharashtra and Bhutan with aggregate capacity of 8,868 MW. Its 1,000-MW Tehri hydro power project is operational since 2006-07. The companys 400-MW Koteshwar hydro power project is likely to be fully commissioned by 2012. THDC is implementing 4060 MW Sankosh project in Bhutan for which a detailed report is under preparation. It is also implementing a 1,320-MW Khurja super thermal plant in Uttar Pradesh. The Economic Times 02.07.2011 p. 6
Investment/ Financing
51. At $4.66 B, FDI in May Second Highest in 11 Years
Foreign direct investment (FDI) into the country more than doubled in May from year ago, touching $4.66 billion against $2.21 billion in May last year. This is the second highest monthly FDI inflow since 2000. The rebound follows a dismal 201011 fiscal in which FDI dropped 25% to $ 19.4 billion. Foreign investors have shied away from India in the last year even as growth remained robust at above eight percent, amid mounting governance concerns and a decline in overall investment sentiment. "The recent trend of a dip in foreign direct investment inflows appears to have been reversed in the current financial year, where a significant upward trend is evident," the industry ministry said in a statement on Monday. The FDI is likely to spurt as a number of acquisition have been cleared against which inflows will come soon. The proposed tie up between BP and Reliance and Vodafone buying share of Essar could alone result in an inflow of approximately $ 12 billion. 35
Major deals like Cairn Vedanta are also expected to give an impetus to FDI into the country. There is a likelihood of another surprising spurt in the coming months with many projects are due for clearance under FIPB. FDIs tend to have a bunching effect under private equity, said Abheek Barua, chief economist at HDFC Bank. Combined inflow over April and May through FDI has jumped 77% to $7.79 billion, the data showed. Economists say that continued inflows could be a big positive as the stock market has not been able to attract FII inflows. The FDI could help in paying for the current account deficit (CAD) at the end of the year. The CAD is expected to be in the range of 2.5-3% of GDP for FY12. According to data released by Grant Thornton India, 27 more deals were signed in May this year over last year worth $5.4 billion as compared with $1.8 billion May 2010. The deals include mergers and acquisitions, qualified institutional placements and private equity deals. These include the acquisition by Mundra Port of Abbot Point worth $1.96 billion, Religare-Fortis deal amongst others. The decline in FDI in the last year had become a cause for concern, as most of the emerging nations had been able to attract huge amounts of FDI inflows. In response the government has simplified a number of procedures and also tried to consolidate the FDI policy. The Economic Times 05.07.2011 p. 15
products and innovations. With annual revenues of more than $1 billion, it is over two times as large as P&Gs listed subsidiaries. Between 2005 and 2010, P&G Home Products has generated Rs. 360 crore in profits after tax. And it clocked sales of around Rs. 2,188 crore in the year ended March 2010, but its biggest rival, Hindustan Unilever, was over nine times bigger. The Economic Times 12.07.2011 p. 5
distinguish between business income and short-term capital gains. The Mumbai ITAT, however, held that the statute is clear only as far as the distinction between long-term and shortterm capital gains is concerned. For long-term capital gains, shares have to be held for at least 12 months and profit from shares held for less than 12 months will be taxed as short-term capital gains. There is no tax on longterm capital gains. But the Mumbai ITAT observed that the law does not lay down a 30-day mark to distinguish between business income and short-term capital gains. The ITAT pointed out at the whole set of parameters laid down by the Supreme Court for making the distinction between investment and trading in shares. Factors such as intention of the assessee at the time of buying shares, whether the assessee borrowed money to purchase the shares and paid interest thereon, the frequency of such purchase and disposal in that particular item, whether the purchase and sale is for realising profit or purchases are made for retention and appreciation in its value, and how the value of items has been taken in the balance sheet, are critical in whether a gain is business income or short-term capital gains. Therefore, no single factor can be said to be decisive to determine whether the nature of the transaction is trading activity or investment, the ITAT held. Each case needs to be decided on the facts of the case. The Economic Times 14.07.2011 p. 9
Management
56. My First 100 Days as CEO
Five CEOs, in a candid conversation with ET on Sunday, explain why their first days as the top boss were so critical in shaping their tenure
All new beginnings offer a chance to reboot, start afresh. When the beginnings are about a CEOship, the stakes are higher. The first 100 days of a new CEO are the most critical part of the stint in a company. With the change of guard, this is the best time to set the tone and signal a change. Here, an eclectic set of CEOs from western MNCs to a Korean chaebol, from a cooperative to a PSU share their experience about their first 100 days. They are a good mix of internal and external hires. LG Indias new CEO moved base from Korea to India. Philips Indias new boss 38
moved up from within. The new boss at Mother Dairy is an IIM alumnus who has worked with a range of MNCs from Pepsi to Cadburys to Philips. Each CEO transition is unique. But they are not without a few ground rules. Outsider CEOs face vastly different kinds of challenges vis--vis insider CEOs. For insiders, the change is on familiar ground the boss knows the people and vice versa. This knowledge helps him but also constrains him with past biases. As the new big boss, it is critical for him to rise above the past and set the tone to signal the change. In contrast, outsider CEOs are unknown entities with no historical baggage; it is easier for them to start on a fresh note. But in unfamiliar territory, they must spend time to understand and build connections in the initial days. Under constant scrutiny, their every move is watched. They must function with an open mind and give themselves time to form views about people and issues. Many use the time between the announcement and formal joining to do background research on the firm and its work culture. The first 100 days are rarely about microgranular goals most use the period to get the big picture right the big goals, challenges, key people and leadership team. They also use this time to project an image formal vs informal, hands-on vs hands-off the perceptions they want to nurture through their tenure. While doing all that, some also get their hands dirty to grab quick business victories. It helps build an instant rapport and establishes them as leaders. The Economic Times 02.07.2011 p. 10
was arrested on silly charges. History is full of instances where this kind of drama was enacted with impunity. The Economic Times 11.07.2011 p. 16
Retail Industry
58. Fast Fashion Gains Currency among Asians
As pop music blares from a Zara store in Bangkok, Suthip Nanthavong jostles with others for bargains that might disappear in days -- from stylish thin-strap t-shirts selling for 490 baht ($16) to racks of bluedenim jeans. When you're in the store, there's little time to think. What's here today might be gone tomorrow, said the 30-year-old flight attendant, clutching two pairs of shorts and a dress. Some call it fast fashion retailing -- the apparel sector's equivalent to fast-food. Across Asia, global brands are setting up shops as U.S. and European shoppers cut discretionary spending, burdened by rising prices and a weak economic outlook. U.S. teen retailer Abercrombie & Fitch Co and clothing maker Gap Inc, which operates the Gap and Banana Republic brands, are among them. They plan to open their first stores in Hong Kong's central business district in a few months. Expansion plans by Abercrombie and other big names could hurt established Asian brands such as Giordano, Esprit and Bossini , rather than high-end clothiers. Although Asian shoppers still aspire for luxury brands, many are embracing specialty stores with higher inventory turnover and better value, especially as a new middle class emerges with more disposable income and fickle fashion tastes. Cheap chic brands are known for a limited run of new designs in as little as two weeks, a model that limits the surplus of unwanted clothes on shelves. Consumer confidence is very high in Asia, especially China, said Shaun Rein, managing director of Shanghai-based China Market Research Group, forecasting fast-fashion retail would grow as much as 15 percent a year in Asia.In the fashion retail industry, if you don't win China, you're going to lose the world. The Economic Times 01.07.2011 p. 4
Tax/Taxation
59. Mumbai I-T Dept to Collect 17% More Corporate Tax this Year
The Mumbai income-tax department, which accounts for 35-40% of the countrys total tax collections, is planning to collect 17.2% more corporate tax than last year, as revenue authorities expect buoyancy in the economy seen last year, to continue. The projected corporate tax collection from Mumbai for the current fiscal is Rs. 127,200 crore. The government has fixed a 20% higher target for the current fiscal years all India direct tax collection at Rs. 532,630 crore. However, senior Income-tax officers say the advance tax collection in the next installment, due in September, will be a better indication of whether they can meet the target. Advance taxes are collected in four installments, June, September, December and March. Over 40% of the estimated advance taxes are paid by September and therefore the September figures are considered a fair indication of the total advance tax collected in the year. 40
The tax department is aware of the general mood which has seen deferment in various projects, bringing back memories the 2008-09 period when the first installment showed a 75% increase in tax collection, but fell sharply by the end of the year, as a fallout of the economic downturn triggered by the collapse of Lehman Brothers. The Economic Times 05.07.2011 p. 6
41