We won’t be surprised if your answer is a big “NO!”, for you only know this company as HTC !

Surbhi Chawla debates on the strategic & branding issues of HTC...

After a long lull of six months, the smartphone category has once again become the talk of town, with a slew of high profile launches. First, it was Samsung Star and Star 3G. They were followed by the Nokia N97, and now, HTC plans to get back at competitors’ heels with its first Android-based handset in India – HTC Magic. So what prompted such enthusiastic acts on the part of the smartphone manufacturers? Well, despite the fact that consumer spending on mobile handsets dried up during the first quarter of 2009 (it fell by 19% as compared to the same period in 2008, according to Gartner), the smartphone category recorded a swashbuckling growth of 25% during the same period, all thanks to the terrific market performance of the Apple iPhone, BlackBerry Pearl, BlackBerry Storm and of course, the HTC’s Android phone – G1. That was global, how about local? The story is no different for the smartphone market in India too, where sales in this category is currently growing between 20-25% (a trend expected to continue till 2010). And of all the ‘smart’ brands, perhaps the least discussed of late has been HTC. But does that mean that all is silent and still behind the HTC wall. 4Ps B&M decided to pay a visit to HTC’s Indian headquarters, to uncover strategies that it has drawn-out, to run through competition in India.

We begin with the HTC Magic. Surely, there are some ripples that this so-considered ‘magic’ device from HTC’s stable is causing, but of course, minus the loud marketing efforts made by Apple during the launch of its iPhone in India, about a year back. Of course, the unavailability of the handset model currently makes it a tad difficult to make predictions about its future, but some issues are as apparent as they can get, and the trouble starts right where its strength lies -the Android mobile OS on which HTC works. The USP of an Android is that it is open-source which enables one to install a host of applications on their handsets as per one’s needs. The problem is that Android’s application store is not functional in India yet, therefore customers who buy the Magic would have to play around with the existing applications that come pre-loaded with this handset or develop something for themselves. Simply stated, a hurdle that stands between HTC and the success of its latest Android-based handset.

So aren’t officials at the company worried over the same? Not really, as Jack Tong, Vice-President, HTC APAC states, “I think the response that Android mobiles have received worldwide was at times even beyond expectations and we expect something similar in the Indian market.” Of course, a spokesperson in the company acknowledged the fact that, “availability of an application store would have sweetened the offering.” However, he goes ahead and optimistically opines that there would be plenty of early adopters willing to get their hands on HTC Magic, despite the roadblock.

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Source : IIPM Editorial, 2009

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

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Government’s new found love for private enterprises seems to be finally taking shape in the form of PPPs.

No doubt, they are the only way forward for the Indian economy towards growth at present, but then, there are areas which need immediate attention, if the government doesn’t want to hit a road block, feels Niharika Patra

What can be more surprising to a person, who is visiting India after a long time, than a host of long and shimmering roads, swanky buildings and above all, a sudden increase in the quality of basic amenities provided by the government. After all, it’s a never-seen-before India for him!

All thanks to the government’s new found love for private business houses, an impressive combination of public projects and private money is finally making India a place to be. Though, one cannot disagree that the results have been few and far, but the good thing is that the whole concept of mixed economy is finally coming up with the combination, which is certainly making the idea click.

In fact, public-private partnership (PPP) is that one thing which can make India rub its shoulders with the dragon nation, when it comes to world-class infrastructure coupled with the much needed push for the Indian economy. Agrees M. Y. Reddy, Committee Head, Infrastructure, FICCI, “Applying PPP model to the infrastructure is what can give the sector the necessary boost that it wants as of now.”

Though the idea is not new for the Indian policy makers, PPPs have been utilised to a greater extent only during the last decade or so (and that have been mostly limited to roads, airports, ports, bridges, et al). However, the recent announcements made by Finance Minister, Pranab Mukherjee, to provide infrastructure sector the much needed push, through clearing of pending PPP projects, would surely open new doors, not only for the private sector, but will also make projects like that under National Highways Authority of India (NHAI, which requires 60 highways to be built across India with an upward investment of Rs.70,000 crore) get going once again.

Even steel, ports and the Railways have been waiting for long for some big programme implementations under PPP. In fact, a latest report by BNP Paribas shows that the Railways alone provides for an investment opportunity close to a whopping Rs.2.7 lakh crore in the next eight years. Of the whole corpus, an investment of Rs.68,000 crore is alone needed by the Dedicated Freight Corridor, which covers 2,800 kms of rail corridor across seven states of India.

But then, that’s not all. Poverty eradication and social reforms too are reaching ground levels and this is where the PPP model is eying for a big opportunity. In fact, Food Security Bill, which talks about providing grains to the poor at Rs.3, can do wonders coupled with a proper distribution system. For instance, the use of Smart Cards (for the distribution of food grains), the latest innovative step that allows the holder to check the status of their application and stock while facilitating easier and more transparent distribution of stocks, provides huge business opportunity to Smart Card producers, who have been eagerly waiting to tap the huge potential in the public sector. The initiative (which has already tasted success in National Health Insurance Scheme) can be seen as a win-win solution for both the government as well as private players. Avers S. Kumarswamy, Chairman, Agrochemicals Promotion Group, “Public distribution has been a problem not only for the BPL families, but also for the ingredient suppliers of fertilisers and seeds because of the rampant corruption.” Certainly, Smart Cards would to a great extent also help in removing that devastating loophole.

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Source : IIPM Editorial, 2009

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

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Sunil Bharti Mittal believes that life gives everyone at least one big break, and he got his big break when he was awarded the telecom licence for the National Capital Region and launched services in 1995. The ‘big boys’ in India Inc. laughed at him then. But With Airtel a clear market leader today, they are not laughing anymore. teaming up with his brothers - Rakesh and Rajan Bharti Mittal now - sunil is bent on extracting another big break from destiny. financial services, retail or agri-biz: Where will the next big leap for the mittal brothers come from? savreen gadhoke, suRbhi chawla and gyanendra kashyap dive into the mittal empire for some answers...

“I am a new age entrepreneur. I believe I represent the changing face of India,” said Sunil Bharti Mittal (SBM to his friends and colleagues), while addressing faculty and students at the convocation function of a management school in Bangalore. His self-assessment could not have been more accurate! The manner in which he has been able to usurp a ‘pole-position’ in India Inc. (from right under the noses of the Tatas, Birlas and Ambanis of the world) stands testimony to his revolutionary streak. For those who came in late, the Ludhiana boy started with a bicycle parts business and today straddles a multi-billion dollar telecom empire.

It all began when he applied for and won a telecom licence and launched mobile services in Delhi and NCR in 1995. That was the beginning of SBM’s battle with the ‘big boys’ to stake his claim to a coveted ‘pole position’ in Indian business – a battle, which he has won, fair and square. With a market cap of Rs.1.52 trillion (as on June 2, 2009), Bharti Telecom now stands tall among India Inc.’s top rankers, amidst the Ambani and Tata empires – the very names that once perhaps sparked his envy! If the MTN deal comes through (see box on pg.71) , Bharti’s stature will grow bigger and better.

The telecom dream is on track. But not resting on past laurels, Mittal already seems to be looking for the next big leap. In fact, he had started fantasising about new frontiers years ago. And last year when he gave up the role of Bharti Airtel’s CEO to Manoj Kohli, the desire in part was to focus more on emerging businesses. Along with brothers Rakesh and Rajan Bharti Mittal, the winsome threesome have laid out the roadmap for Bharti Enterprises. Financial services (where Bharti teams up with AXA); retail (with Walmart as their winning gambit) and processed foods (a JV with Singapore based Del Monte) are the new playing fields. Question is, which of them will deliver the goods? Do these forays have it in them to come up to the stature of brand Airtel? More important, do the Mittal brothers have it in them to repeat their telecom achievements?

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Source : IIPM Editorial, 2009

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

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Bingo! We all tasted ITC’s madness... didn’t we?

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Brand: Bingo!
Agency: O&M

No Confusion, Great Combination yelled ITC’s Bingo, with the result that a completely new snack got a munching response from the Indian market. Within a month, Bingo’s brand recall was as high as 70%. And introducing 15-16 flavours simultaneously helped Bingo grab 16% of the market in just 9 months. The ‘Mad’ angle did prove sane for the brand new product...

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

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A. CHAKRAVARTY, CR. CHIEF, MCCANN ERICKSON

Shahrukh khan is coming to IIPM - IIPM 4Ps Quiz

1. Happydent’s campaign
2. Fevicol’s ad campaign
3. Coke’s ‘Thanda matlab Coca Cola’ campaign
4. Hutch’s ‘You and I’ campaign
5. Liril’s waterfall campaign created and conceptualised by Alyque Padamsee

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

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All that glitters...

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Gold has again emerged victorious, but investors need to be selective in choosing the right instrument

As the global stock markets continue to ride the turmoil roller-coaster and fixed deposit returns bite dust amid falling interest rates, investment in gold seems to be the right choice for all investors. And why not, after all when the equity markets were melting last year, gold was silently surging to new highs justifying Indian women’s love for it for once at least.

From Rs.10,658.75 (per 10 gms) on January 1, 2008, gold prices have taken a giant leap and touched Rs.15,150.00 on April 1, 2009 – offering a phenomenal 42.13% return to its investors in just 15 months. Amar Singh, Head of Research, Angel Commodities confirms, “Gold buying in the last one year has not yielded any losses.” This is primarily because the base cost of bullion can never become lower than its cost of production unlike in equity market. Agrees Pratim Patnaik, AVP and Head Retail Business, Kotak Commodities, “Gold has always been an investment for retail public. The risk reward ratio in gold is highly favourable for the long term investors as the returns are expected to be skewed positively.”

However, while investing in gold, investors must keep a few things in mind like they must avoid investing in gold jewellery. It’s simply for the fact that such a move attracts VAT at a very high rate and thus investors’ return on investment falls sharply. To get a proper return on the yellow metal analysts suggest to invest in gold coins or bars, which are stamp duty and VAT free.

As fund houses are going gaga over Gold ETFs (Exchange Traded Funds) these days, investors can also evaluate their options to make some investments in these schemes. Investment in GETFs will make investors’ life a lot easier as while giving the benefits of investment in gold, GETFs relieve the investor from all hassles associated with physical possession of gold like, the storage cost, liquidity, purity et al.

As per Keyur Shah, Associate Director, World Gold Council, “Currently, gold is one of the best performing asset classes. It continues to remain the most accepted and time tested asset class for its proven ability to preserve value over time and act as an effective portfolio diversifier, which come to the forefront in times of economic downturn, making it extremely relevant in today’s time.” Going by his words, this is definitely the time when investors must give a serious thought about investing in gold; but at the same time they must invest in the right instrument.

Deepak Ranjan Patra

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

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Is ‘young’ the undisputed flavour of the day?

Are yesterday’s sweethearts suddenly, dreaded victims of the don’t-call-us-we’ll call-you disease? Monojit Lahiri surveys the scene...

Recently, a screaming headline in a tabloid grabbed my attention. Out of work Sush loses ad deal to petite Asin. A gorgeous, glamorous, sophisticated diva like Sushmita Sen, given the heave-ho (for a product she’s been associated with for years – Pantene) and replaced by young, pretty [but nowhere as charismatic or enjoying pan-India popularity with the upmarket crowd] South Indian actress Asin, of Ghajini fame! Why, even the great King Khan – whose other name seemed to have been ‘Pepsi Khan’ – is, reportedly, dropped from Team Pepsi in their latest outing. Ditto for yesterday’s queens Ash Rai Bachchan, Rani Mukherjee and Preity Zinta, say adbiz and Bollywood insiders. On the cricket front too, similar tremors have been felt. Yesterday’s icons Saurav Ganguly, Rahul Dravid, Anil Kumble, V.V.S. Laxman, even the sensational Sachin Tendulkar, have suffered anything between a meltdown to a slowdown. It’s the T-20 kids – Dhoni, Yuvraj, Ishant, Raina, Zaheer and gang – that are zooming centre-stage and replacing them in the endorsement sweepstakes. In Bollywood, new dazzlers rocking it include Kareena Kapoor, Priyanka Chopra, Asin, Genelia, Jiah Khan, Katrina Kaif, Imran Khan, Ranbir Kapoor, Neil Nitin Mukesh, Kangana Ranaut, Deepika Padkone, even Farhan Akhtar! With half of our one billion population said to be under the age group of 25, marketers are indeed getting hot n’ heavy in the business of torpedoing this target base, all the way!

Is it working… and what drives it? Who better to kick-off this debate with the very person who founded and coined the ground-breaking term youngistan – which for Washington Post defines young India as also TV channels and political parties identifying the new India – Soumitra Karnik, Creative Head of JWT’s Pepsi team who says, “Much as I am tempted to say that I suddenly dreamt it all up one stormy night – like fake directors or smart plagiarists! – I didn’t! Its just that, while reading up something, the words ‘Young’ and ‘Hindustan’ struck me as interesting cues for coining something new, fresh, simple along street-speak lines that would resonate with the target base. That’s how it was really born. If it captured popular imagination instantly, I guess its largely because it was red-hot topical, had the required bindaas tone to it and reflected the mood, colour and voice of today’s most important segment-youth.” Karnik doesn’t munch his words and packs in a solid punch when he says that today’s marketers live in the here n’ now and grab only what they believe will rock their product. “They are pretty much like fair-weather friends – and why not? They have a job to do. If its not working, then its goodbye time! The new kids on the block, both in the Cricket and Bollywood arena, reflect this reality in dramatic fashion, right? The age of loyalty is over, boss. It is the age of Return on Investment (ROI)!”

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Source : IIPM Editorial, 2009

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

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TO HELL WITH CORE COMPETENCE

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

Take for instance the white goods major LG. Hit by a decline in consumer spending in urban areas, this hitherto premium brand has made a paradigm shift in its strategy and is now focusing on the rural market. Not only is LG rolling out a line of entry-level products, it is also investing heavily in channel expansion and setting up services network for its rural customers. Moon Bum Shin, MD, LG Electronics India Ltd, asserts, “Our penetration in the rural markets is low, but we are taking it as a potential market for future as it is very important in terms of profit. In a span of ten years, the market anatomy for urban and rural would be really in a good balance.”

But that’s not all India Inc. is experimenting with; a host of companies are capturing the market and improving their sales in their own different ways. While for the first time ever, Maruti extended its sales season till February (instead of offering discounts only till December), big real estate players are giving unheard of freebies (getting a Mercedes free on the purchase of a penthouse is no big deal now) or even developing ultra-low budget houses to lure lower and mid-segment consumers. Even public sector banks, like SBI, which had never seen the sunnier side of marketing spends ever, have scaled up their ad investments like never before, given the general negative perception in the market about private banks.

If Kingfisher, in order to improve occupancy of its full service carriers, cut its fares by 50-60% in January 2009 (and subsequently reversed the strategy a few days later; and re-reversed it in February); Skoda Auto, which has always produced premium sedans and hatchbacks (like Fabia) have announced the launch of a small car in the range of Rs.3-5 lakhs to capture the mid and lower segments. The retail space too is seeing a few first-time strategies adopted by companies. Says Arvind Singhal, Chairman, KSA Technopak, “Reliance Industries, the promoter of Reliance Retail, has generally not been open to joint ventures and strategic alliances. Yet, for their retail start-up, very early on, they’ve started seeking partnerships.” He further adds that even Shoppers’ Stop has started to actually shut down nonviable formats, which is also a shift in their strategy. “Overall, the focus of retailers being on achieving profitability first, and then on aggressive growth, itself is a shift in strategy,” Singhal avers.

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Source : IIPM Editorial, 2009

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

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CHINESE POTION

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In a toughening market, Lenovo needs to bring in products that stand out, and yet are priced right

In the midst of their growing animosity, there remain precious few companies like Lenovo, who symbolise the power of American and Chinese collaboration. That bond now stands considerably weakened, for Lenovo, the world’s 4th largest PC maker has got on board Yang Yuanqing, former Chairman of Lenovo as CEO, replacing their American CEO William Amelio, who held the mantle of the firm since 2005. Also, Liu Chuanzhi (who was instrumental in the formation of the company 25 years ago) has taken the post of Chairman.

The reasons, however, are more to do with fading fortunes rather than Sino-US relations. The company posted losses to the tune of $96.7 million as opposed to a profit of $171.7 million during the same period last year. Revenue and sales too dipped to $35.92 billion and $3.6 billion from $44.94 billion and $4.5 billion respectively. The main reason was the dampening of demand in the US and European markets and a weak dollar against a CNY. However, amidst gloomy quarterly results and a recession-stricken economy, a ray of optimism is still beaming across Lenovo as it has got on board their former team of Chinese management. Will focusing on ‘Chinese solutions’ set the distraught PC maker back on track?

“Chuanzhi said that the company would refocus on the China market, and expand offerings for homes and small businesses. The biggest challenge (for Chuanzhi) will be to craft and execute a revised business/product strategy during the current economic crisis,” professes Charles King, Principal Analyst, Pund-IT, Inc. Hitherto, Lenovo’s primary focus had been on enterprise customers, which heavily contributed to losses in the last quarter. “This seems a reasonable response… But it’s difficult to see how consumers and SMBs will contribute significant revenues over the short term,” King adds. The company is seeking the low cost route to return to profitability. Moreover, it has to contend with stronger competitors, particularly HP & Acer, which have gained market share y-o-y by 3.5% and 31.1% respectively in the December quarter, while Lenovo has suffered a decline of 4.5% y-o-y (Gartner).

Concentrating on the Chinese market seems to be a good proposition for the time being as further penetration in the US and European markets in such tumultuous times will be difficult. Explains Rob Enderle of Enderle Group, “No competitor will give up shelf space without a fight and currently Lenovo needs much more retail shelf space.” Enderle opines that Lenovo should follow the Apple model of building high profile products and driving consumers to them. “This approach results in fewer products that will require less shelf space and puts most of the rest of the problems within Lenovo’s control,” avers Enderle. With this kind of pull strategy, Lenovo can gain significant bargaining power over retailers. But it must also realise that it cannot price such ‘wow’ products at a significant premium at the moment, so it needs to balance price and features diligently for the recession hit market.

Savreen Gadhoke

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Source : IIPM Editorial, 2009

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

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THE TALE OF TWO 'CITI'ES...

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If the whopping $10.42 billion losses for the nine months ending September 30, 2008 were not enough, Citigroup has once again reported a net loss of $8.29 billion for the fourth quarter of 2008 – its fifth-straight quarterly deficit in a row. Revenues at $5.6 billion are heavily affected by write-downs and losses in securities and banking. This also includes $6.1 billion in net credit losses, which surely means that Citigroup is actually moving on similar lines to meet the fates of many (like Lehman Brothers and Merrill Lynch) who have already fallen flat in their bouts against subprime devil. In fact, today Citigroup is one of the biggest unsecured creditors with a sickeningly shocking $138 billion (an unbelievable 23% of Lehman’s gross outstanding debt of $613 billion) unsecured exposure to the Lehman collapse! Even for the full year 2008, Citigroup has reported a net loss of $18.72 billion against a net profit of $3.62 billion in 2007. Moreover, Citigroup’s share that has plunged over 77% last year on the US bourses (more than 43% in the year through the day of announcement of split), which points out to a further deteriorating situation.

Considering this, the possibility of a revival of this financial conglomerate appears somewhat bleak. Even if the restructuring process ends up without any problems, where the heck on earth will Pandit find a buyer for these limping assets of Citi Holdings amid the dismal state of economies where the loan losses will only worsen. However, on a positive note, instead of attempting to cut costs by not only throwing out employees but interestingly by controlling colour copying, printing, et al (which Pandit tried a few months back), the group has seriously taken up some restructuring plan which if successful can really be a ray of hope for the dying Citigroup.

Meanwhile, the group has also named former Time Warner CEO Richard Parsons (who ran Time Warner from 2002 to 2007) to head its board of directors, replacing Chairman Win Bischoff. But how different will he be from his predecessors is still a big mystery! Moreover, we shouldn’t forget that he was the one who saw the brilliant supernova merger between Time and AOL. Brilliant because the post merger entity which had a combined value of $247 billion at the time of merger in 2000-01, is worth a mind numbingly low $58 billion today. But Parsons may be valuable to Citi for at least one reason: his proximity to US President Barack Obama (he was one of 17 members of Obama’s Transition Economic Advisory Board). Interestinly, Treasury had become one of Citigroup’s biggest investors last year when it acquired $52 billion of preferred shares in the group under the Troubled Asset Relief Program. However, it’s still unclear what the relationship will be between the Treasury and Citi.

So, under such circumstances the best-case scenario for the Citigroup will be a orderly managed sale process of its assets under Citi Holdings (if in case it finds any suitor). Else we can only hope that Pandit does not have to face the situation that former Citi CEO John Reed faced recently. Reed, who engineered the Travelers deal with another former Citi CEO Sandy Weill in 1998, had confessed to the Financial Times in April 2008, “The specific merger transaction clearly has to be seen as a mistake,” and he was unclear whether the company’s model or management deserved the greater share of blame for its problem. God forbid, if in case Pandit has to face such a situation, he might be equally clueless in the blame game that follows!

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Source : IIPM Editorial, 2009

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

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While the biggies were biting dust...

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While the biggies were biting dust, fighting against all odds the ‘defensive stocks’ managed to create wealth for their shareholders, says Gyanendra Kashyap

Lord Byron, English poet and satirist remarked, “Adversity is the first path to truth”. True to his words, the adversities of the stock market in 2008 in a way challenged almost every myth present at the market place. And now, the investor fraternity in retrospect would rather prefer to forget the ‘heroics of the bear’ in 2008. It is true that with the collapse of the stock market, asset prices and commodities an unprecedented fear psychosis gripped the minds of the investors; yet despite all these adversities the truth is ‘2008 was actually not that bad as has been painted!’ Sherman Chan, Economist, Moody’s Economy.com, justifies, “India’s economic performance remained surprisingly solid in the first three quarters of 2008 due to robust domestic demand. GDP climbed 7.6% year on year in the September quarter; an enviable outcome compared with neighboring economies, many of which have entered recession or at least experienced a significant slowdown.”

If the stock market (Sensex) is considered as the only economic parameter which decides the fate of the economy (and foreign investment) then the performances of HUL, Godrej Consumer, Glaxosmithkline Pharmaceuticals, Zandu Pharmaceuticals and Hero Honda which have respectively delivered returns to the tune of 14.7%, 20.6%, 10.9% , 7% and 15.3% are worth considering. Don’t just go by the numbers if you consider that they are smaller, because numbers are often deceptive, understand the contextual essence. The stellar performances have come at a time when the stock markets were held hostage to possibly one of the worst crisis in recent times with foreign institutional investors pulling out more than Rs.530 billion and the benchmark Sensex crashing by a whopping 51.2%.

In a so called bear market when wary investors play defensive, the fast moving consumer goods (FMCG) stocks and pharma stocks have outperformed the benchmark index to emerge as the best performers. An analysis by Centre for Monitoring Indian Economy (CMIE) brings forth the point that in 2008 out of the 20 top performers 7 belonged to the FMCG sector. Despite the inherent weakness and competition in the market, their calculated strategy of pushing volumes and price increase seems to have paid off. In the present scenario HUL is amongst the few stocks that have managed to evade value erosion; as a matter of fact the market capitalisation of HUL on December 31, 2008 was pegged at Rs.276.45 billion as against Rs.239.17 billion on January 1, 2008. Though the absolute increase in market capitalisation may seem marginal (Rs.37.28 billion), considering the fact that behemoths like Reliance Industries, Wipro, Grasim Industries, DLF and Reliance Infra have eroded wealth to the tune of 53.2%, 54.6%, 67.6%, 73.6% and 74.53%; 15.56%; wealth apprehension definitely calls for a round of applause.

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Source : IIPM Editorial, 2009

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

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1500-plus IIPM students placed across the country with 44 bagging international offers
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A ‘Color’ful clutter buster

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With Akshay ‘Khiladi’ Kumar, agreeing to host the desi version of Fear Factor Extreme with thirteen damsels, there was no way that Indian audiences could resist keeping their eyes off it! Khatron Ke Khiladi along with other differentiated content like Jai Shri Krishna and Balika Vadhu marked the entry of Viacom’s new GEC – Colors. The Indian audience, which just about had enough of kitchen politics, song & dance-based reality shows and were fed up with the laughter challenges of the world, welcomed this fresh wave of content that this channel offered. Colors instantly bagged the number three spot in the GEC race and is still going strong (last few weeks, it’s at No.2). With new serials like Dancing Queens up its alley, this one plans to continue its upward stride. But fame is fickle. Stalwarts Zee and Sony will not sit idle for long...

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Source : IIPM Editorial, 2008

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

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IIPM set to beat economic slowdown
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Real world is not the place that an online player like Info Edge would want to be in at the moment...

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But this ‘virtual entity’ isn’t without its share of recessionary headaches either, writes Neha Sariaya...

What does the term ‘garage’ got to do with every successful entrepreneurship venture? Internationally of course, you’d have heard of names galore who made their mark in their home garage, but in India? Well, wonderfully, here too, the situation is no different! You’ll get the drift of our argument when you finish this paragraph... When you are born to succeed as an entrepreneur, you learn a thousand ways to achieve your ends, or rather start your golden journey. And Sanjeev Bikhchandani, MD and CEO, Info Edge (India) Ltd. certainly had a few of those tricks up his sleeves. And what degree of solidarity in vision are we talking about? When dotcom startups fell all around like nine pins during the turn of the millenium, Sanjeev’s virtual brainchild held its spot tight, and grew with every passing year. Of course there were the hiccups, but fighting his way to make the most of opportunities was much that he learnt having started operations in the servant quarter above his garage paying Rs.800 as monthly rent in 1990 (Hey! Wait! Did you miss that one? He started operations in the servant quarter above his ‘garage’!)

It is 2008, and his once small dotcom startup can boast of current assets of Rs.646.6 million (as on March 31, 2008). So what was the first to-market mode that the company followed? “We used to take job ads and make direct calls to our clients just like direct selling of a product. It was then a small company with a few people working for it. After we took funding the first thing we did was to move to a new office and started off different teams for different functions like marketing, technology etc,” reminisces Hitesh Oberoi, Whole time Director & Chief Operating Officer, Info Edge. As far as expansion to frontiers beyond was concerned, Oberoi adds, “We expanded to other cities beyond Delhi, and also enhanced our offerings and changed our prices.” Today, when you measure the brand awareness quotient of the company’s first online portal, naukri.com, to the blooming of many others under its umbrella such as Jeevansaathi.com, 99acres.com, Quadrangle.com, Brijj.com and the latest being Shiksha.com, one can safely conclude that it has been quite a journey. Even Ankit Kedia, Analyst, Centrum Broking, agreeingly voices out, “They enjoy the first mover advantage till date. The company has a brand name and a large circulation. Thus they enjoy the biggest pool of resources...” And the proof of dominance? Today, naukri.com has been able to retain its no.1 spot and has witnessed a growth rate of about 56% over the years with a market share of 50% followed by competitors like Monster.com and Timesjobs.com which accounted for about 35% and 15% of the online job application marketpie during 2008.

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Source : IIPM Editorial, 2008

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

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India Inc. is apparently sitting on a goldmine

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Well, this may be true for a few companies in the emerging markets, but businesses and industries in the global north (US, UK et al) are willingly avoiding infrastructural changes. And why is that? Here comes the Kwai river bridge. For polluting companies, interestingly, it is cheaper to buy carbon credits than to invest in environment protecting and technologically advanced machinery or in related innovation. Think about the hilarious situation. While as near as in July 2008, a unit of carbon credit was trading at above €33, currently, the same unit is languishing at €16. That basically means that companies belonging to developed economies, that have huge amounts of spare cash (more so as they refused to invest all along in greener technology) can buy even surplus carbon credits in the currently underpriced market for future indiscretions. Such companies might have the audacity to become bigger polluters in the future (based on the bank that they are creating of purchased carbon credits) or might have the temerity to even sell these surplus credits, once their per unit price appreciates, to book magnanimous profits.

It is but apparent that the enormous amounts generated by the so-termed Kyoto style trading has benefited the biggest industrial polluters the most, both in the past (when carbon credits purchase was just basically a licence to forego green investments) and in the future (when they’ll easily be able to forecast how much bigger their emission can be). But having said that, the fact is that all this gives no reason why India should not benefit from such an easily available source of foreign exchange.

India Inc. is apparently sitting on a goldmine. And why India is falling behind China in numbers is not because the companies have opened their eyes to the pitfalls in the carbon trading market. It is simply because of the general lack of awareness that India Inc. has been somehow losing on the opportunities to monetize carbon credits. For starters, ask yourself. If you’re a top manager in any company, do you even have an idea where exactly to register to start carbon trading? Do you even know how, say, non-manufacturing entities can also register and earn millions in carbon trading? If your answers are close to being negative, don’t be surprised, as a majority of India’s CEOs fail to pass muster and the test too. KPMG confirms in their November 2007 report (Climate Change: Is India Inc. Prepared?) that only a measly 21% of top CEOs in India had taken steps to mark out their ‘carbon footprint’.

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Source : IIPM Editorial, 2008

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

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With growing interest in animated movies, gaming et al, print comics are on a decline. Sreoshi Ghose explores...

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With television, computers, video games dominating the lives of GenY, who has the time to listen to the age-old bedtime tales that our grandma used to oh-so lovingly narrate. The kids of this generation are also missing out on the unadulterated fun of reading comic strips like Amar Chitra Katha, Archies, Chacha Choudhary, Shikari Shambu, and Suppandi. With the advent of television in the late 80s, comics in print received their first blow, which slowly stabilised in the 90s. “There were days when television was rare, and comic books became a way to spend time. Advent of television enables a child to sit passively and enjoy the show, hence comic book culture has been steadily on a decline,” explains James Clifford of Pentamedia Graphics.

Would it then be too early for us to say that the print comic industry is phasing out? And does it mean that immortal characters like Tin Tin would not outlive time? “These characters took birth in their comic versions during the yesteryears and have captured the imagination of young & old alike. With the advent of technology, the medium in which they would be given life to is slowly changing to include digital comics, animation, gaming, live action feature films and even product extensions in the form of merchandising items. An independent study in 2006 pegged the sales of comics (including the vernacular languages) to a figure of 30 million per year. The total industry value, which was under Rs.100 crore in 2006, is estimated to increase to Rs.400 crore over the decade,” replies Ramaprasad, Executive Director of Toonz Academy. The shift of comics from print to games & animations is true but erasing out print totally is an overstatement. A testimony to this is the entry of a big player like Virgin Comics in this sector. In fact, Virgin Comics is backed by none other than Deepak Chopra, Shekhar Kapur and Richard Branson.

At the same time, there is no denying the fact that other media have also made our favourite comic characters much lucrative to the kids. Agrees Clifford, “Television occupies 50% of a child's time. And of course, with competition growing, parents are more inclined to promote extra-curricular activities, which leaves the children with very less time for reading.” What's more? The huge success of animated feature films like My Friend Ganesha and Hanuman proves that with growing awareness and increase in pester power, children are more likely to watch an animated film than read a comic. Little wonder then that a big production house like Yashraj Films is all set to launch its first full fledged animation film, Roadside Romeo. Even ace director and producer, Karan Johar, is planning an animated version of his hugely successful film Kuch Kuch Hota Hai.

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Source : IIPM Editorial, 2008

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

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Monojit Lahiri evokes the spirit of 3 of the greatest masters of their craft... and lays it on the line!

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If advertising is truly a business of ideas, then the creative process – which really means ideating – must be hounded, invoked, ruthlessly pursued and celebrated every day, right? Boy, is that a tough call? The (late) distinguished writer Dorothy Parker once described creativity as that magical fusion “of a disciplined eye and wild mind!” Point is – how disciplined… and how wild?!

To most creative people (in adbiz and outside) the moments that are easily the most painful, traumatic and nerve-wracking are the start-up! Beginning is always a nightmare! Invariably this curtain-raiser (or what colourful, flamboyant creative hot-shot George Louis calls foreplay!) is filled with a zillion nervous, useless, irrelevant (sometimes even superstitious) rituals! That last ciggie must be smoked. That last cup of coffee has to be consumed. That last call has to be made. The windows have to be closed, opened or adjusted. The chair must be placed just-so for inspiration and comfort (whichever came first!). The comp must be dusted and re-dusted. This tortuous game of procrastination carries on and on until someone blows the whistle (Publisher? Client?) to signal: Buddy, your time starts NOW!!

Chillingly familiar, right? In this kind of a scenario, everyone has their own method of tackling this bugaboo. It would be interesting to do a checkout on how the legends and gurus and Dada’s tackled it, right? Let’s start with the acknowledged Big Daddy of the creative revolution on Madison Avenue, the one n’ only Bill Bernbach! Pragmatic and unromantic as it may sound, the creator of timeless masterpieces like ‘We’re number 2, so we try harder’ believed that that the most important inspiration while writing an ad “is the product itself! I can’t say that often enough. Looking for ways to make the people want it… that is crucial.” He was also very critical of questions like what makes a good writer. “I don’t know! You can’t be mathematical and precise in this calling. This attitude leads to a dangerous worship of research where the primary preoccupation seems to be the load of facts got… and not how provocatively and engagingly we present those facts to bored & uninterested consumers.”

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Source : IIPM Editorial, 2008

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

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CURSE OF FINANCIAL INTEGRATION

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However, the so called ‘short-term’ impact is also looking quite heavy on the Indian market as after an unexpected slide on September 24, before the expiry of derivative contracts on September 25, Indian share market turned out to be the second worst performer in Asia. Still, analysts are arguing that the market will not be impacted highly as Indian firms do not have meaningful exposures to sub prime assets. Interesting! Perhaps they are looking deep into various sectors. Analyse the real estate or the banking sector and you will get to know it immediately. True, they are not exposed to sub-prime assets in a direct manner but they are definitely closely related to the companies who are biting dust under the ongoing crisis.

Sudip Bandyopadhyay, Director & CEO, Reliance Money avers, “The real estate sector will be hit badly since American investment banks in trouble had made commitments for investment to many private players in this sector. And now it doesn’t seem to materialise given the present state.” In banking too the situation is no different as banks like ICICI Bank ($80 million), Bank of India ($30 million including $20 million in a Lehman Brothers subsidiary) and Bank of Baroda ($10 million) had some major investment in Lehman Brothers. Now Lehman Brothers’ bankruptcy would put some pressure on these banks in terms of additional reserves.

Also the demand slowdown from US financial services companies will dent the top line growth of Indian IT companies. As per Bandyopadhyay, “Few IT and BPO/ KPO companies would get temporarily affected since a significant part of their income is from BFSI segment in US.” As another aftereffect we might see is, this credit crunch might put pressure on the big ticket acquisitions. With global meltdown in equity markets, risk appetite would see a huge contraction and there might be a period of lull in the Indian companies’ global acquisition spree.

With three of India’s sunrise sectors feeling the heat on collapse of Wall Street giants analysts who are still confident that Indian market is insulated enough to escape with little dent may soon need to chew their words. And if that happens investors will have to wait for a longer period before they feel after hearing ‘Good evening.’

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Source : IIPM Editorial, 2008

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

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Advertising agencies are inward-looking

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Prem Kamath,
Vice President, Marketing, Star India

“Advertising agencies are inward-looking”

“In India, the advertising industry is incredibly inward looking. For most agencies the focus is not ‘how do I add more value to my client’s business; the focus is on how do I make better advertisements. And the definition of those better advertisements is also extremely questionable. There is the entire awards culture that has permeated Indian advertising, which is doing more harm than good. The awards are certainly a motivation to do better work, but they are not an end in itself. And it is common knowledge that what finally wins an award in most international or Indian shows is something that most people cannot relate to. More energy is being spent within agencies in India on these things rather than on ‘How do I add value to my clients?’ And therein lies the answer. If an agency does add value to the client’s business, the client would not be inclined to change agency and would be even willing to pay them more than what they are being paid today. And that is perhaps what is needed for agencies to emerge from being a mere commodity to create value for their own brand.

While I don’t subscribe to changing agencies too often, the trend comes from a specific client mindset. Either the client is over reliant on what the agency is doing for them; or else clients don’t value their agency’s work/ creativity at all. Both are not good. Over reliance on agencies means that you call for a review and a multiple-agency pitch only to ‘fish’ for new brand building ideas. This can only happen if the client itself is heavily dependent in a particular agency for ideas, business plan, strategy, new insights, et al. Alternatively, if the agency is adding no value at all, the client is perhaps still taking agency services as a commodity and in calling for a pitch, is taking the brand it to the market again, to see if there is a better bet to get new ideas.”

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Source : IIPM Editorial, 2008

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

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