IIPM- News Articles: September 2008

Tuesday, September 30, 2008

Game, Set, Catch!

The kind of hype and money generated by Indian Premier League (IPL) is simply astounding. Even better, it is becoming a classic case of Bollywood and Cricket merging to propel Indian sports towards the league of really big bucks. But are things as rosy as they look?

Just imagine this tantalising scenario. Mahendra Singh Dhoni,

the new rock star of Indian cricket, marries Deepika Padukone, the new rock star of Bollywood. As a honeymoon gift, Dhoni gives Deepika the Mohali IPL team. A consortium led by Dhoni and Anil Ambani has persuaded the current owners of the team, Ness Wadia, Mohit Burman and Preity Zinta to cash out. Don’t think for a moment that this is fantasy. Bollywood and cricket have well and truly married each other to propel the business of sports towards the big boys club in India. And why not? Shahrukh Khan has paid $75 million for the Kolkata team led by Saurav Ganguly. Preity and her partners have forked out $75 million for the Mohali team. Akhsay Kumar has become the brand ambassador for the Delhi Daredevils led by triple centurion Virendra Sehwag. And the list just goes on and on… At one stroke, the Board of Cricket Control of India (BCCI) has generated $1.5 billion through the launch of the Indian Premier League (IPL) that will oragnise 20-20 matches that start on April 18.

In an exclusive interview to B&E, Shahrukh Khan says, “I have invested a big stake, and as an investor, I am concerned about every move of the team…overall the business of sports is very interesting and profitable, both for businessmen and for our country.” Shahrukh’s co-star in quite a few Bollywood blockbusters, Preity Zinta has this to say about her new found zeal as an investor, “You know that for me, money is very important… we are looking at a long term plan. We have a professional set up, so it is not a child’s game.”

And it’s not just cricket that is using Bollywood and entertainment to promote itself and generate the real big bucks. The ‘King of Good Times’ Vijay Mallya has vowed to bring the phenomenal Formula One racing into India. Simultaneously, he has promoted and launched the Force India team that now participates in F-1 races across the world. Everybody knows about how Sania Mirza has taken the ‘business’ of tennis to new heights. The humble yet brilliant Vishwanathan Anand routinely earns crores every year through chess matches. Others like Jeev Milkha Singh (golf), too, have become dollar millionaires. So, as the Indian economy gallops ahead at a scorching pace, sports is also becoming big business.

But one thing is unmistakable. While sports like racing, football, golf and chess do have a bright future, it is cricket that rules as the unchallenged emperor. Says Amita Sarkar, Head, Media & Entertainment division, FICCI, “No other sport can match the popularity of cricket in India. The other sports have a future, but it is a long way from now.” Just look at this comparison: When the Indian hockey team won the Asia Cup, they got piffling money rewards while when India won the first T-20 World Cup (cricket), Dhoni and his band of merry boys were showered with cash prizes, which also resulted in protests by the hockey players for a stepmotherly behaviour.

Amidst all this hype, hoopla and media frenzy, one question that keeps cropping up repeatedly is: Have people like Shahrukh, Preity, Mallya and Mukesh Ambani made a wise decision by investing such huge amounts in teams and players? And will they be in a position to recover their investments in the future? Equally important, Sony has bagged the telecast rights of IPL for a mind boggling $1 billion. Will the channel be able to recover the money it has gambled on the new 20-20 format? If history is any guide, then the head honchos at Sony surely have some thinking to do. In an exclusive interview with B&E, Ashish Kaul, the then Executive Vice-President of Zee Network explains the economics of IPL and how tough it will be for Sony, “It is only BCCI who is going to make money out of IPL. By no means Sony or WSG will make money.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

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'This is one of Big B's best performances'
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IIPM Ranked No1 B-School in India
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The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs

Monday, September 29, 2008

No guarantee here

Despite its good intentions, the rural employment scheme has failed in many states. In many cases, only 6% of the villagers who demanded employment got it, says ANIL PANDEY

If you want to see how a good plan loses its relevance due

to corruption, then you must come to Jhalawar district of Rajasthan. This is the same constituency from where the chief minister Vasundhara Raje is the MLA. Despite the fact that information about the progress of the National Rural Employment Guarantee Scheme (NREGS) should be available within seven days, queries from representatives from Kisaan Majdur Shakti Sanghtan (KMSS) were ignored for about a month in this high-profile area. At least when KMSS finally got the required information after a long wait and dharna for three days, they understood why they were being ignored.

Based on a social audit of five panchayats of Manohar Thana block, the Sanghtan found that there has been a huge scam in job cards and large sums had been siphoned off. A member of KMSS, Shankar Singh, says, “When we went to the village for the audit, the sarpanch and his goons attacked us with lathis and stones. Later, we finished the audit under police security. It was evident that the village sarpanch and corrupt officials didn’t want the social audit because of fears that reality will be out in the open.”

The NREGS was launched in 2006 by the UPA government. But it failed to meet its targets. At least, this is clear from the reports by social organisations and NGO’s across India. The working of the NREGS has been in question from the beginning. As the scheme gathered steam, corruption became an issue. In the second phase of NREGS, Prime Minister Manmohan Singh accepted in his report that only 5% of the people in 200 villages benefited from the scheme. But the fact is that the scheme worked in places where NGO’s are active and produced results.

In its recent survey, KMSS found that of the Rs.11.5 million spent in Jhalawar district under the NREG scheme, there was a fraud of Rs.2.1 million. Economist Jean Dreze, who has played a major role in the programme and is a member of the National Employment Guarantee Council, feels that corruption is one of the primary reasons that the scheme is not working out properly. He elaborates, “If this program needs to be saved, then corruption needs to be fully eradicated.” Despite this, it is also true that under this programme, hundreds and thousands people have got employment. A spokesperson of NGO, Hum Kisaan, says, “If people get employed in activities other than agriculture, their situation improves. They get cash, which helps in increasing their savings.”

The audit by KMSS finds that poor people were forced to shell out a bribe of Rs.500 to get a job card. Speaking about this aspect, social activist Devendra, who carried out the audit, says, “In the master roll of Boreband panchayat, there were names of 5 people, who were dead. This makes it clear that the names of fake people are being used to siphon off money.” Master rolls are important because they form the basis on which workers are given their wages. So, if there’s discrepancy there, it stinks of corruption. The audit brought to the surface the fact that there were caste and class discriminations in Dabang and Saryana sarpanchs while doling out the job cards to dalits.

According to NREGS, a labourer can approach the panchayat and demand a job. Such workers need to be given a priority over others while creating job cards. And it is mandatory that they get a job within 15 days. In case the government does not provide them with a job within this period, according to the rules, it needs to give unemployment wages. Says a local worker, “It has been seen that the sarpanch and other officials do not give receipts and job cards. In such situations, even if the labourer complains, he has no proof. Thus, he cannot avail of the unemployment wages. Other than this, according to the government rules, it is mandatory that after 15 days, the workers need to be paid. But there have been many incidents where people have not been paid in six months.”

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Saturday, September 27, 2008

Money before wicket

Bollywood and business weds cricket. The bidding frenzy for players in the IPL auction proves that glamour is the new name of the gentleman’s game. By SHASHANK SHEKHAR
It’s finally here – cricket gets an all-out, European-style Premier

League look with serious glamour making inroads into this new-fangled multi-million dollar industry. Perhaps, the auctioneers from Christie’s can learn a few lessons from our babus at BCCI on conducting crazy high-profile auctions that can leave most people gasping for breath when struck with the realisation of the kind of money at play on BCCI’s home turf. As the Indian cricket board auctioned top international superstars from across the world in a first-of-its-kind auction to distribute players amongst the Indian Premier League’s (IPL) eight franchises, the cricket body was taken aback by sky-high bidding amounts. And the media went berserk at the thought of finding top Bollywood superstars and the country’s most loved sportsmen on a single platter and under one roof.

IPL’s auction, held at Mumbai’s Hilton hotel on February 20, marked the beginning of another era in the world of cricket and by far the most prominent if one were to examine the sheer magnitude of the moolah involved. “I’ve been associated with the BCCI and ICC for 30 years, and have seen nothing of this sort before,” claimed Inderjit Bindra, a member of the IPL Governing Council. “It’s the first time that the market is determining the prices of players in a market-driven economy,” he added. And if one were to go by the atmosphere, it resembled a stock trading room during a bull phase; punters at Dalal Street, a few kms down the road, must surely have taken notice of the auction, where the frenzied bidding resembled stock speculation.

Mahendra Singh Dhoni, India’s current star in the shorter format of the game, was picked up for the highest bid of $1.5 million by Chennai team, owned by India Cements. The second highest bid was for the controversial Australian Andrew Symonds ($1.35 million), a price put up by Hyderabad team, owned by the Deccan Chronicle group. Other cricketers, who received bids of over $900,000 included Sri Lankan Sanath Jayasuriya ($975,000), rising Indian star Ishant Sharma ($950,000), Irfan Pathan ($925,000), Brett Lee ($900,000) and Jacques Kallis ($900,000).

Star players like Sachin Tendulkar, Sourav Ganguly, Rahul Dravid, Yuvraj Singh and Virender Sehwag were deemed to be icons and put out of the bidding process. They would get 15% more money than the highest bid received for the other players. However, what was unusual in the bidding process were the bids for some of the Pakistanis and New Zealanders. Shahid Afridi was picked up for $675,000, Shoaib Akhtar for $425,000, Shoaib Malik for $500,000, and Stephen Fleming for $350,000. Logically, the West Indians and many Sri Lankans went for low bids. After the bidding process, experts said that there was a lot of subjectivity involved in the bidding and team owners picked up players more for their charisma, rather than skills.

These bids came almost a month after BCCI, which came up with the idea of Indian Premier League to combat Zee’s Subhash Chandra’s ICL, auctioned the various teams to interested bidders. During that bid, people were shocked to know the price that bidders were willing to pay, as well as the interest shown by unexpected parties. For example, business tycoons Mukesh Ambani and Vijay Mallya agreed to pay over $111 million for Mumbai and Bangalore teams, respectively. Superstar Shahrukh Khan joined hands with former actress Juhi Chawla and Jay Mehta to pick up the Kolkata team for over $70 million. Preity Zinta and Ness Wadia got the Mohali team for $76 million. Companies like Deccan Chronicle and GMR Holdings also put in successful bids.

For many observers, even those who are passionate about the game, the frenzied response to the auction has taken them by surprise. Especially because a few of them are convinced that the bidders for the teams and players will find it difficult to recover their investments. According to one expert, the team bidding indicated that it will take 5-6 years to recover the money. After witnessing the bidding for the players, it seems that there is little hope for the bidders to make money. However, others disagree. They contend that owners like Shahrukh or Mallya can easily woo rich upper-class Indians to pay huge sums to watch matches while mingling with Bollywood and business celebrities. “Imagine, how much Indians will pay for an hour with Shahrukh?” asks one of them. And answers: “Thousands will be ready to pay Rs.1 lakh each.”

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Friday, September 26, 2008

The road to growth

It’s a project to connect rural India with urban parts. It’s also a means to ensure inclusive growth. But the reality at the ground level is dismal. By ATUL BHARDWAJ
In the US, the ‘good roads’ movement started

towards the turn of the 20th century, and it was led by bicyclists from the League of American Wheelmen. He believed that states, nations and communities should be physically connected – through roads, rail, or air. This is the reason that he thought about mega ‘connectivity’ projects – a road through north eastern states, Myanmar, Thailand to Cambodia and Laos, a rail link through central Asia to Turkey, open skies policy with ASEAN and, of course, the Golden Quadrilateral and freight corridor. But of all these dreams, it was the last one that took off during the NDA regime. Roads, contend experts, would entail an investment of $88 billion, out of the projected $500 billion in infrastructure projects, over the next five years.

The former government’s focus on highways and expressways was necessitated by the fact that although the 33 lakh km of road network in the country is one of the largest in the world, only 66,000 km of national highways, or just 2% of the total, carry 40% of the nation’s traffic. However, the moment the Congress-led UPA government came to power in May 2004, it realised that it must also develop rural roads and state highways to ring in ‘inclusive’ growth. Golden Quadrilateral took a slightly back seat, and the government decided to simultaneously bridge the mother of all divides by proposing to add loads of bitumen to kuccha roads.

Concerned about the growing gap between Bharat and India, the policy makers launched the Pradhan Mantri Gram Sadak Yojana (PMGSY) in 2005. The aim was to provide “all weather access to unconnected habitations”. PMGSY, the 100% centrally-sponsored scheme is estimated to cost Rs.48,0000 crores over a period of six years, and it involves the participation of state governments and grassroots administrative machinery to execute and implement the project. The government has adopted the Public Private Partnership (PPP) model for it.

Even multilateral funding agencies seem quite enthused by the scale of PMGSY. For example, the World Bank has decided to put in $400 million in the project for roads in the states of Jharkhand, Himachal Pradesh, Rajasthan and Uttar Pradesh. According to World Bank sources, over 50% of the finances have been disbursed, and the remaining would be done soon; the multilateral agency will close the accounts for the project by March 31, 2010. Even the past three union Budgets have allocated huge sums for the project. Today, it has become a critical ingredient of Congress’ strategy to woo the aam admi.

However, despite stringent procedures and the involvement of global funding institutions and private contractors, the common man is skeptical about the quality of roads that will be constructed. People fear that like in the case of most schemes, which are announced with great fanfare, this will end up as a tool for corrupt officials to siphon off the taxpayers’ money. The question which such grandiose plans evince is: do officials care about proper implementation of such projects? The prime example of such apathy is indicated by the much-touted Delhi-Gurgaon expressway, where little thought was given to delays that could occur at the toll-collection point.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Thursday, September 25, 2008

On the trail of Teekli’s ‘tiger’

With reports of a tiger lurking in Teekli, a little known village in the outskirts of Gurgaon, B&E set forth in the wilderness of this small village, tracking the pug marks...
T he recent news peg of a tiger lurking somewhere in the

villages of Gurgaon triggered my venture to Teekli, a village in the outskirts of Delhi. Just a while after the car cantered effortlessly through the narrow road with endless shades of green on either side, a familiar face among a group of villagers drew my attention. It was Lakhi Ram whose statement and appearance in one of the dailies had spurred curiosity and wonder. “It isn’t recent. The animal has been around for years now. Many cows and goats have been killed and eaten. Gopi’s cow was found half eaten yesterday. I can also show you the pug marks in the field. Sher to hai yahan (There’s a tiger for sure),” he concluded while the others nodded in affirmation.

Lakhi Ram and two others agreed to take us to the interiors of the wilderness where he had seen the pug marks. After a rickety ride through the vast mud-packed spread amidst the Aravalis, we stopped the car and took to the feet in search of the evidence of the striped beast. “Here it is!” called out Lakhi Ram. There were deep imprints of claws in the damp mud. “I told you I have seen pug marks. And there are people in Ansal Farms who have seen the ‘tiger’,” he informed us. Unsure whether the pug marks was of a tiger, leaopard or another carnivore, we took pictures for its verification from a wildlife expert, and headed on the hunt for witnesses.

On our way through the stretches of green towards Ansal Farms, we chanced upon a shepherd who provided us with some more interesting facts. “I have seen the animal. But it isn’t a tiger. It doesn’t have stripes, it has spots,” explained Ganga Ram. “These villagers don’t recognise the difference. I have been living here for years and have seen hunters who would hunt tigers. But what roams around here is a cheetah. And not just one. Many! About four-five of them,” he said. Must be a family of leopards, I thought.

My mind instantly absorbed Ganga Ram’s words, considering that a tiger could not have strayed as they had long disappeared from the neighbouring wildlife reserve, Sariska. Ganga Ram narrated an incident when one of his goats was hauled away in his presence by one of these beasts. On requesting, he agreed to take us through the woods where he claimed to have often seen a ‘cheetah’ pass by. He spoke all along as we followed him through the trees and scrubs, rambling about his life in this wild outskirt of the city... of the Ansals acquiring this land, of the dwindling number of animals in jungles... Interestingly, he has a neelgai (blue bull)which plays a sheep dog and protects his goats by signaling them to change course on sensing trouble ahead. He suddenly halted, abruptly cutting short the conversation.

“There! I have seen the ‘cheetah’ there.” I stood with anticipation, gazing at the grassland from atop the elevated mount, hoping to catch a glimpse or get to hear the animal’s call, which had created a stir. It was for quite some time that we stood, silently, the breeze whistling through the trees. Was it plain bad luck or was there no carnivore there, I asked myself. On further investigation and finding pieces of bones (presumably that of a cow) strewn around, and the claims by the security guard (of the entire stretch that comprises Ansal Farms) of having seen a leopard a few days ago, reinstated my belief of a wild shadow’s existence. “They haven’t harmed a human yet. They only feed on cows and goats for survival. They shouldn’t be captured and taken away,” said Ganga Ram, as he was taking leave, his smile highlighting his wrinkles. Inspite of repeated attacks on their cattle, the intrepid villagers too were of the same opinion.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Wednesday, September 24, 2008

This zero can unleash big value

Resources conserved can be easily reallocated to other priorities
Zero-based budgeting! A method of budgeting or a technique business

that sets all budgets to nil at the beginning of the financial year or a period. It requires government departments to justify all their expenditures, not just those exceeding the budget. Money is allocated to the departments and not just based on previous year’s budget (plus or minus some percentage).

This method is detailed, and provides a comprehensive analysis of objectives and needs. That essentially implies that it is not only a budget, it is also a tool to plan and strategise. But to implement such a detailed and immaculate plan, requires managers to evaluate cost effectiveness of their operations, threadbare. Also, management participation in planning & budgeting is expanded to all levels of the organisation. The Union Government’s first acceptance of Zero-based budgeting was for the Department of Science and Technology through its Memorandum of December 1983. Later in 2006, Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, emphasized that in the 11th Plan, moves must be made to shift towards Zero-based budgeting.

On the negative side, countries following Zero-based budgeting fail to focus on their long term achievements, while focusing too much on short term expenditures. Even the reviews and analysis required to be carried out cannot be handled within the normal cycle of the budget process spread over a few months. But all in all, the need for Zero-based budgeting can hardly be over emphasised in a situation of resource crunch, when demands far outstrip resources.

It is absolutely essential that the government’s resources be conserved, by eliminating wasteful expenditure, removing duplication or multiplication of expenditure and making expenses prudent, most fruitful and efficient. Well, it sounds good but will we implement it?

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Tuesday, September 23, 2008

Murkier it gets

Growing complexities in financial instruments are making regulation tougher and increasing the risk quotient
If necessity is the mother of all inventions than greed has

to be the mother of all necessities. On May 18, 1986 Ivan Boesky – the king of junk bond (high yielding debt) gave a speech at the University of California at Berkeley’s Business School, which also happens to be his Alma Mater. He said “I think greed is healthy,” he told his enthusiastic audience. “You can be greedy and still feel good about yourself.”

Greed has been the epicentre of all frauds, misappropriation, manipulation and what not… from the time man existed on the Earth to the recent Société Générale fraud. The recent instance in Société Générale reminds us of Gordon Gekko, a character loosely based on Ivan Boesky in the movie Wall Street in which he says, “The public’s out there throwing darts at a board, kid, I don’t throw darts at a board; I bet on sure things.” The 31-year-old trader, Jerome Kerviel, who worked on Société Générale European equities derivatives desk was accused of taking ‘massive fraudulent’ positions to the tune of $75 billion in 2007 and 2008 on European equity market indices, leaving them with 4.9 billion euros of losses. Kerviel joined SocGen in 2002 and was trading in one of the ‘most basic’ financial instruments in the ‘most complex’ world of derivatives contracts. What Kerviel did and possibly could have done raise serious questions on growing complexities of financial markets and lacking regulation or risk management practices. From basic derivatives to complex junk bonds and most sophisticated sub-prime mortgage-fame Collateral Debt Obligation (CDOs), all led to some of the biggest financial frauds of all time. CDOs are basically pooling of bonds, loans or credit-default swaps & using their income to pay investors interest. According to Alan Greenspan, CDOs butchered the sub-prime market.

Similar was the case with junk bonds or for that matter all structured products, which tend to have short life. Their basic premise was on more leverage, which only delayed the inevitable write-offs. By 1990, of 104 small companies that had been involved in public issues of Milken’s junk bonds, 24% defaulted on their debt or were bankrupt. “Many companies financed M&As through junk bonds and carrying interest rates as high as 20%, in turbulent times like the ongoing one, there are chances of future default,” says Agost Benard, primary credit analyst at S&P. Junk bond data is disappointing too. In January, junk bonds dropped an average 2 cents on the dollar. An additional 7 cents would create losses of about $50 billion, based on the $709 billion of debt in Merrill’s high-yield index. “There must be a limit as to how many you can create, and we’re way past that limit as far as I am concerned” says Alan Greenspan. Recently, European Central Bank President Jean-Claude Trichet too called for an examination of risk management practices at financial institutions.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Monday, September 22, 2008

No money for your dreams, honey!!

In between the extremes of private equity and microfinance, the common man is still deprived of money to start a simple business
At the annual ritual of Kolkata Book Fair that has become an impeccable

part of the Bengali culture, one would often come across dozens of art students, from the city’s fine arts colleges, selling paintings for pittance of Rs.30-Rs.40. Looking at those creative indulgences, many of which might have got tagged as masterpieces if they were to find a place among scores of art galleries which are raking millions now, one would easily conclude that if there were ever a need to find an ideal example of the quintessential slip between the cup and the lip, India is the ideal sojourn for that. India has often been the land of contrast. A land where many a paradoxes co-exists, be it feminism and female foeticide or over-supply of funds, coupled with lack of funds for new entrepreneurs.

In last few years, no other words probably have got as much mileage the way ‘microfinance’ & ‘private equity’ have entered the mental lexicon of upwardly mobile Indians. So while the legendary Md. Yunus has become a household name, the daily bombardment of news of how private equity investors are making strategic investments in Indian companies and how their crucial involvement is helping India Inc., to have a better foothold in global biz, has also become a routine affair. Assocham forecasts that private equity (PE) funding in India is expected to be $48 billion by 2010. Such forecasts are justified as in 2007 itself, the private equity investments in India have been nearly $17 billion, in a year when the total value of cross-border deals involving Indian companies was worth more than $70 billion. Similarly, microfinance also got much impetus, thanks to the incredible feats of Md. Yunus. In a country where about half of its population still don’t have access to banking, advent of microfinance is a boon. So on one hand, there’s advent of global private equity funds like Carlyle, Blackstone, Warburg Pincus, ChrysCapital & Temasek into India, and domestically too there have been sprouting of such equities like IDFC Private Equity, Infinity Venture Capital Fund, UTI Venture Funds & ICICI Venture, on the other hand, many conventional banks like Bank of Baroda, SBI, ICICI, Yes Bank & even ABN AMRO have been foraying into microfinance. Reports state that by 2010, amount of microfinance in India would be about $3 billion.

So where do we go from here? Well, the halo over both private equity and microfinance is essentially a reflection of the failure of conventional banking in India. For years, industry craved to get the right kind of support system from financial institutions to fund their expansion. While initially it was the tentacles of license raj and small scale industry policies which prevented India Inc. to achieve the critical scale, later it was the paranoia of reducing the Non Performing Assets (NPA) that prevented many banks from increasing their exposure to industry. Add to these, was the domestic high interest rates at a time when interest rates are plunging all across the world. This eventually forced the industry to look towards the private equity partners for assistance. And the rest is history. Today the upper layer of Indian Inc. hardly bothers to run after Indian banks for their funding as they can go for external commercial borrowings, private placement of equity and initial & secondary public offerings. If at all there is need for further funds, the foreign banks with bigger money bags are there to satiate the appetite of India Inc.. Incidentally, today when the likes of Tatas have to raise money, the like of SBI clears a loan of $1 billion for the Tata–Corus deal in just five minutes, lest some foreign bank do it faster. So while private equity has been able to make Indian companies get less worried about funds-in-need, the question is whether it is same for all or only for ones in the upper layers? Are private equity players too following the same trodden path as has been followed by India’s financial institutions, i.e. lend only to those who already have it?

In the book, Creating a World Without Poverty, Muhammad Yunus writes, ‘None of us likes the idea of apartheid. We object when we hear about such a system in any form, anywhere. We all understand that no one should suffer because s/he happened to be born in a certain race, class or economic condition. But our financial institutions have created a worldwide system of apartheid without anyone being horrified by it. If you don’t have collateral, you are not credit-worthy. To the banks, you are not acceptable on our side of the world.’

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Top Articles on IIPM:-
'This is one of Big B's best performances'
IIPM to come up at Rajarhat
IIPM awards four Bengali novelists
IIPM makes business education truly global-Education-The Times of ...
The Hindu : Education Plus : Honour for IIPM
IIPM ranked No.1 B-School in India, Management News - By ...
IIPM Ranked No1 B-School in India
Moneycontrol >> News >> Press- News >> IIPM ranked No1 B-School in ...
IIPM ranked No. 1 B-school in India- Zee Business Survey ...
IIPM ranked No1 B-School in India :: Education, Careers ...
The Hindu Business Line : IIPM placements hit a high of over 2000 jobs
Deccan Herald - IIPM ranked as top B-School in India
India eNews - IIPM Ranked No1 B-School in India
IIPM Delhi - Indian Institute of Planning and Management New Delhi ...domain-b.com : IIPM ranked ahead of IIMs

Saturday, September 20, 2008

Back to square one!

Bush performs another peace ritual in Palestine towards the fag end of his presidency even while the region continues to burn
President Bush wrapped up his Israel trip last week, visiting

the Mt. of Beatitudes in Jerusalem where Jesus is believed to have said “blessed are the peace-makers” & ruins of the biblical city Capernaum on the Sea of Galilee. Quite symbolical a start is for a man who has waged two ugly wars in the name of fighting terrorism. Given the past seven years in power, nobody would doubt Bush’s ability to make rhetoric on all the issues, whether it is the domestic economy, ‘war on terror’ or the West Asian peace process. Does his recent visit to the Holy Land mean anything other than a damage control exercise organised by conservatives in the White House?

Well, before the November 2007 Annapolis peace conference, observers had issued sceptical notes against Bush’s diplomatic gambling. Invariably, American presidents in their last year in power, use soft hands in dealing with the West Asian conflict. And now, it’s Bush’s turn. After holding talks with Palestinian Authority (PA) President Abu Mazen in Ramalla, West Bank, Bush challenged the “sceptics” saying, “I believe it’s going to happen that there will be a signed peace treaty by the time I leave office.” Is it as easy as taking a decision to bomb a weak Saddam Hussein regime in Baghdad? Many experts would disagree. Speaking to B&E, the Director of Gulf Studies Programme at JNU, Prof. Gulshan Dietl said, “Bush’s political clout is weaning tremendously. This visit is a theatre set for his own personal history.

Not only that, the leaders who have to reach an agreement are domestically too weak to take any decision. So, this visit is not going to change anything in the ground.” Two months after Annapolis, it’s obvious that the US & Israel are unlikely to take any step beyond their conventional understanding of the national identity of Palestinians. All this is happening amid reports that Israel, with the tacit support of the PA, would attack and reoccupy the Gaza strip, which has been under the control of Hamas since last June. Hamas on the other side declared, “The only dialogue with the enemy will be with rifles & rockets.” If Israel is going to do that, the entire region would be plunged into a civil war. Even if the PA, by any chance, reaches a political agreement with Israel, as years go by, the number of “core issues” only goes up, not down.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
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Wednesday, September 17, 2008

Lowly Asians...

Discriminated everywhere
Discrimination never leaves Asian (especially South Asian) alone, be it inside the boundaries of their motherland or outside. According to a recent report, many Asian-American voters faced discrimination from voting officials during 2006 mid-term elections in the United States.

The report alleges that poll officers were hostile towards Asian-American voters, particularly those not fluent in English. Moreover, 83% of voters who were asked to show identification, for authentication, which was not required. The Asian-American communities are primarily immigrants (670,000 persons) and covered under the provisions of the Voting Rights Act. With America having more than 10 million Asian-Americans which accounts for 3.6% of its population, this type of discrimination will create a serious threat to voting patterns. These discriminations are just not confined to the US but can be even experienced in other developed countries like the UK and Canada.

Asian migrants who came to the US in search for better lifestyle and jobs may soon neglect these election and other political participations, if such biased treatment and persecution is practiced.And you call yourself democracy.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Tuesday, September 16, 2008

The Perfidy Kings!

The stock markets always rise over the long term! So what, if a short term “correction” happens! Be the long term strategic investor rather than the daily punter!...

...And their vices
The murmur of an analyst with Angel Broking,

fighting to keep back words, was quite striking to us, “A correction to an extent of 900-1,000 points in the market was on the cards, but this huge fall came as a surprise to us!” Surprise? Wouldn’t ‘terribly shocking’ have been a better description? After scaling a historic high of 21,206 on January 10, the Sensex touched a terrifying low of 15,322 in the opening session of January 22. No doubt, ‘Correction’ is an accepted corollary to a dramatic climb in a financial market. But what started as a mere correction turned out to be mayhem on the bourses. Investors lost over Rs.15,000 billion with major indices tumbling over 16%. As on January 24, the Sensex had thankfully crawled back to the 17,000 levels and around.
But why did this happen in the first place? B&E’s analysis threw up incisive answers and more questions... P.V. Jarolia, an analyst with the topline domestic brokerage firm Asit C Mehta, claimed, like other experts, “The correction was long overdue, what was awaited was a spark and the Reliance Power IPO just did that. Excess liquidity was soaked by the IPO.” Of course, the mega issue did make various indices fall due to a crunch in liquidity (a whopping $180 billion was sucked out of the market). But can only this be blamed? In fact, not at all! From January 15 (inaugural day of the Reliance Power issue, a Tuesday), till January 18 (closing day, Friday), the Sensex fell only by a relatively low daily average of 425 points.

Clearly, this was only a discounted normal correction. But what was never clearly reported was the fact that FIIs, who from January 1 till January 16 had net flows totalling a positive Rs.30.59 billion, started very shrewdly becoming net sellers on January 17 and 18, the last two days of the Reliance Power issue. Imagine this, the net FII status of these two days was a stupendous negative Rs.44.65 billion! And the moment this happened, on the opening day of the next week (January 21, Monday), a majority of retail investors were forced by their brokers to square off their over-leveraged positions immediately.

And how can brokers do that? Don’t retail investors have the right to hold on to their stocks over the long term? Not at all! Because of a small little issue called margin-trading. All stock brokers now in India entice their retail investors with the margin concept, which encourages investors to use only 20% of their own money to trade, added on to 80% of funds borrowed from brokers at 0% interest! How attractive, right? Except for the fine print, where brokers are allowed to automatically sell off their clients precious holdings to maintain liquidity levels.

By January 23, the aggregate of FII net flows since January 17 had reached an unbelievably huge negative of Rs.105.03 billion! And why did FIIs do this? “Clearly, fears of a recession in the US dealt a major blow to sentiments,” says R. K. Gupta, MD, Taurus Mutul Fund to B&E. Seriously? Was it really because of a fear of an impending US economy recession? Or of the long standing sub-prime crisis? Of course not! Read the next story to understand why news and effects of the US economy slowdown and sub-prime crisis have been in the know since the past three quarters. There is nothing dramatic that occurred in the past week to support an FII pull back theory. Even the Goldman Sachs ‘recession’ warning came almost a fortnight ago (January 9; just a day before the Sensex was at its historic highest, and when FIIs amusingly were amazing net buyers to the tune of Rs.10.53 billion on a single day)!

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

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