IIPM- News Articles

Tuesday, April 30, 2013

“My dream is to turn JNPT into a hub port”

Luxman Radhakrishnan, Chairman, Jawaharlal Nehru Port Trust, on the potential of JNPT becoming a trans-shipment hub and how it will benefit Indian trade

B&E: Can JNPT be turned into a trans-shipment hub?

Luxman Radhakrishnan (LR): JNPT is a major and sensitive port for Indian trade. Last year about 56% of the country’s total volume of container handling was done through JNPT. Since JNPT is a major port on the western coast, it can also be developed as a trans-shipment port.

B&E: What is being done to make JNPT a trans-shipment hub?

LR: The Ministry of Shipping has identified JNPT and Kochi as hub ports on the west coast and Chennai and Vishakhapatnam on the east coast. In order to make JNPT a major hub for India-related shipping, the depth of the Mumbai-JNPT channel will first be dredged to 14 metres and then to 17-metres depth. In order to be fuel-efficient and competitive it is important for ships to be very large and this requires a hub port to have depth. My dream is to bring big ships to JNPT and turn it into a hub port, and I expect to see it happen in this decade itself.

B&E: How will Indian trade benefit from JNPT becoming a hub port?

LR: It will ensure larger capacity mother vessels to call at JNPT with bigger parcel sizes. This will lead to higher productivity for the terminal operators as well as ensure savings for importers and exporters. The latter will be able to avoid trans-shipment charges and extra freight they have to pay to feeder vessels by bringing the cargo directly to JNPT in the mother ships. In the process, we will be able to save 80% of the trans-shipment revenues that currently goes to Colombo.

B&E: When do you plan to start the dredging?
LR: The dredging to 14 metres depth for the first phase should take about 24 months to complete (from the time the work starts). As soon as the first phase is completed, we should be ready with the detailed project report. We even have the necessary clearances to take the work ahead for the second phase. The dredging for the second phase will be to 17 metres depth.

B&E: What are the average pre-berthing waiting time and turnaround time at JN Port?
LR: During fiscal 2011-12, the average pre-berthing time has decreased to 8 hours 24 min. from 13 hours 40 min. in 2010-11. Even the turnaround time has been reduced to 36 hours in 2011-12 from 41 hours 2 minutes.

Read more....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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Saturday, April 27, 2013

"I only bother about production volumes"

C. S, Verma, CMD, SAIL – India’s largest public sector steel company and the second-most profitable in the business in India Inc., refuses to believe that dampened economic sentiments are making life difficult for Indian steel businesses. For him, 10% is how the trajectory of growth appears for the industry. He might be right.

B&E: Besides being one of the highest profit-makers in India Inc., in recent years, the Rs. 503.5 billion topline-earning SAIL has worked on marketing its brand. How important is the brand to the company and its stakeholders?
Chandra Shekhar Verma (CSV): Today, branding activity in the steel industry in India is on the rise. And from September 1, 2012, the government of India will introduce the mandatory BIF standard, which will make branding compulsory for industry players. As far as SAIL is concerned, today, roughly 20% of our sales come from products that are branded. So, in times to come, brands and the power of branding will hold great importance for all in the steel industry. At present, we have more than 3,000 dealers and 67 warehouses across the country, so we expect branding to hitherto impact positively the efforts of SAIL as far as strengthening its front and back-ends are concerned. Investments in branding will also give us a distinguishing upper-hand over competition that is rising each day.

B&E: You mentioned competition – can you elaborate?
CSV: Today, government policy allows free import of steel from overseas – therefore it is a case of survival of the fittest. And this is again where I come back to the branding bit. We had to create brand equity in the minds of customers. Due to the marketing activities in recent past, I can say that SAIL has got a brand awareness that is unmatchable. Whenever customers or government officials talk about steel, they talk of SAIL. And the popularity of our slogan which goes as, “There’s a little bit of SAIL in everybody’s life”, proves the how SAIL has been able to position itself in a cluttered market where there are more than six to seven big players.

B&E: India’s steel consumption grew only by 5.5% in FY2011-12 to 70 million tonne due to lower demand from industries like auto, FMCG and construction. This figure shows lack of investment in industrial projects. There is all the talk about a slowdown in the steel industry – what is your take on how your company has performed vis-à-vis the industry during FY2011-12?
CSV: I don’t agree that either the Indian economy or the steel sector is facing a slowdown. India is a demand centre as far as consumption of steel is concerned, and even last year, despite an increase in production, we had to import steel to fulfil just our domestic demand. And the fact that the government has planned a total investment of one trillion dollar during the 12th Five-Year plan period is definitely an encouragement for investors and participating companies in the steel industry. Moreover, to achieve 1% growth in GDP, there has to be a growth of 1-2 times in production of steel. To be realistic, yes, we are not completely insulated from the happenings in Europe and US – the slowdown and crises across various markets have impacted India, but the fear of slowdown only lives in the mindset of people in this country. Today, the installed capacity of steel in India is about 82 million tonne a year, which is going to rise to about 140 million tone by the end of the current Five-Year plan and then to more than 200 million tonne by FY2020-21. The reason for a slowdown in the sector in Europe and US is that they are oversaturated economies and the low 1-2% growth in their economies cannot drive forward demand of steel. But if you look at growth of the steel sector in India it has averaged 8-10% over the past few years. And this growth will continue.

B&E: So you claim that the previous financial year was not a challenging period for SAIL?
CSV: Challenges were there. They still are. But the growth of more than 8% in demand and production of steel in India over the past few years, due to the India growth story, has been more than encouraging for us. There are challenges galore. More and more players are entering the industry today. The market is a free import market so if we are not cost competitive, there will be imports from China. Today, the total installed capacity of steel in the world is 1.8 billion tonne. Of this, 50% capacity is in China. And China is our next door neighbour. So, if we do not control costs and therefore prices, there will be free imports from China. So there are many more such challenges in the industry in India, but the opportunities outweigh the threats. And this is really not the case with other economies in Europe. India presents a growth opportunity for this industry.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Wednesday, April 24, 2013

“We’ll try to close the gaps in our after-sales process”

Neeraj Garg, Member of Board & Director, Volkswagen Passenger cars, talks about the automaker’s plan of action in the all important Indian market

B&E: As compared to what Volkswagen has achieved in markets like China and Europe, it is still early days for the automaker in the Indian market. What it is that VW wants to achieve in India?
Neeraj Garg (NG): As a company, we are looking at becoming a key driver of the growth in India’s automobile market. After we started launching products in the high-volume segments three years back, we have been able to gain a strong position in the Indian market. As compared to a sales volume of 3,000 units in 2009, we sold 33,000 in 2010 and 78,000 in 2011. We are today the sixth-largest passenger car manufacturer in the country. Is this where we want to stop? Certainly not!

B&E: Globally, VW has a plan to become the market leader by 2018. While it is expected that the company will be able to achieve that milestone before the set year, what is your view on the market share that you would like to achieve in India by, say 2018?
NG: What I’d like to say is that if VW wants to keep growing, we will have to keep on expanding our sales volumes here. We are among the top three globally. And because India is a strategically critical market for us, we have to build a very strong footing for ourselves in this domestic market. Three years back, the awareness level of our brand was single digits. Hardly anyone knew what VW stood for. Today, that awareness level has risen by 800-900%, which is a significant jump. Although in this respect we are still way behind companies like Maruti, Hyundai and Tata – whose awareness levels range from 90%-99% – I think we have been able to communicate well with our target segment. We have the potential to climb up the ladder. However, this process will take time. Today, we are catering to only 40% of the total market with our seven-product line-up. Hoping that the industry will sell more cars than the 2.2 million cars sold last year, all I can say is that we are right on track.

B&E: You have outpaced the industry in terms of growth over the past few years. What is the action plan for this year?
NG: This is the time to check whether we are ready for the long-term growth of the domestic market or not. We plan to fill the gaps in our system and consolidate what we have achieved so far in India. For instance, since our sales network has grown exponentially, there are gaps in the after-sales process. We will also be addressing issues like manpower training et al.

B&E: And what about the novelty factor, since your competitors have launched many new models over the past few months?
NG: All our products are new in any case. Vento is one year-old, Jetta is just six months-old and Passat is just nine months-old. India is very different from the developed markets where manufacturers have to snatch away market shares of other manufacturers to grow. India has a lot of headroom for all manufacturers to grow and we will be able to scale up volumes by opening more dealerships and infusing more efficiency into our system.

Read more.....

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Saturday, April 20, 2013

Honda is out. Hero goes on... but with challenges multiplied! What next?

With Honda, Hero was growing in stature. Now that the Japanese are gone, questions are being raised on how well can Hero master in-house engine technology. Can Pawan Munjal silence his critics?

I n the Indian two-wheeler market during the 1980s, the closest you could get to being a rockstar was working for Bajaj Auto – the scooter maker. Thirty years later, much has changed. Bajaj no longer rules the minds of commuters in India. From occupying over 80% of the Indian two-wheeler market, the company today has a loose grip over only 18.15% of the category. Two reasons. Competition is the lesser excuse. Hero MotoCorp is the main. The Pawan Munjal-led giant controls 45.46% of the market, and at no hour seems to be losing the elasticity of its youth!

The company’s leader is an introvert. But that is where the shyness ends. Munjal, over the past few years has increasingly started to love sunlight. Today, at every new product launch, you can see the 57 year-old share his excitement with onlookers. Pawan Munjal, MD & CEO of Hero MotoCorp, is the new rock star of the Indian two-wheeler industry. His employees too, perhaps, feel the same. But many critics in the industry don’t feel as upbeat about his company. They are open about it. Some say that there isn’t much happening at Hero MotoCorp – not after Honda decided to abandon ship. Truth is – the Honda-goodbye was an important Munjal-plan that worked.

Those who are familiar with Munjal know this is true. According to him, the JV was proving a deterrent for the Hero Group to expand at a rate that it was capable of. Add to this, Honda’s presence not only meant allowing a future to shape up that had a crippled-for-technology Hero Group struggling with competition but also the fact that it had to play by Honda’s rulebook as far as expansion into international markets was concerned (implying a no-expansion policy for Hero in Asia & Latin America – markets where Honda bikes were sold).

And so it happened in December 2010. Honda was out. Eight months later, Hero Honda became rechristened as Hero MotoCorp, and there was apparently no happier a man in the whole of London (where the unveiling of the new identity was done) than Munjal. The launch of Hero-branded products like Impulse followed and the company ended 2011 on a happy note, with sales of 6.12 million units during CY2011 – a y-o-y growth of 19.2%. The numbers following the ouster of Honda looked encouraging. But questions were still being asked about the company’s future. “What will happen when Honda stops allowing Hero MotoCorp to use its technology in June 2014?” was the most common.

Munjal was silent for months. Then in the fourth week of February 2012, he spoke. He announced his company’s partnership with US-based two-wheeler manufacturing company Erik Buell Racing (EBR). The partnership was the answer to people who wondered what Hero would do after Honda. First, it will begin by borrowing technology to make its machines by paying a royalty that is lower than what it paid Honda (Rs.1.87 billion per quarter). Second, it will invest in R&D to create its own technological platforms to serve the global market starting mid-2014. Looks good on paper, but easier said than done.

Read more......

Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Friday, April 19, 2013

B&E Indicators

PE investments up 24% in 2011

Private Equity (PE) firms invested $10,117 million over 441 deals in India during the 12 months ending December 2011, compared to $8,187 million across 362 deals during the previous year. These figures, which include VC (venture capital) investments and exclude PE investments in real estate, take the total investments by PE firms over the past five years to about $47 billion across 2,062 transactions.

IT – still the hot favourite

With 137 investments worth about $1,752 million, Information Technology and IT-Enabled Services (ITES) companies topped in terms of both investment value and volume during 2011. The Energy industry absorbed $1,651 million across 43 deals, while Manufacturing attracted $1,598 across 37 transactions. Engineering & Construction companies and Food & Beverages companies also attracted special investor attention during 2011.

Read more.....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Tuesday, April 16, 2013

B&E Indicators

Choppy commodity markets

On the back of global concerns about demand and appreciation in exchange rates, non-energy commodities have registered an approximate decline of 7.6% yoy in October 2011. Due to a decline in global industrial production, metals were the worst hit. Improving supplies also led to fall in prices of agricultural commodities. Crude prices dipped below $100/bbl due to slow demand but light/sweet crude and distillate markets will be tight in the upcoming peak winter.

Flourishing agri-supplies

A more robust supply scenario is leading to a fall in prices of agricultural commodities., led by raw materials like rubber and cotton. Most commodities have registered bumper crops like coffee (Brazil & Vietnam), fats & oils (Malaysia & South America) and wheat (increasing production in Australia, Canada, Russia and the Ukraine & Argentina). But uncertainties still remain about the longevity of this scenario.

Read more...

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

Monday, April 15, 2013

Laying the ground for a second coming

After years of struggling with its CDMA technology in India, Qualcomm is looking for business avenues in the smartphone space. However, its real potential seems to lie elsewhere.

The Indian telecom industry has been witnessing an unprecedented fall in subscriber additions of late. For the last 4 months, the net additions have been less than 10 million every month and still descending on monthly basis; taking the total to 611.75 million by August 2011 (COAI). However, low cost handset makers are getting upbeat about revolutionising the 2nd largest telecom market in the world even after over half of it is taken.

Riding on the wave created by Google’s free operating system Android, which surpassed Nokia’s outdated operating system Symbian in 2010, even chipset manufacturing companies like Qualcomm are eager to have their share of the pie in Android’s feast, which is all set to cross 49% market share by 2012 (Gartner). The worldwide smartphone market is expected to grow by more than 55% yoy in 2011 and around 472 million phones will be shipped through the year. It is projected that shipments will reach 982 million by 2015 with Apple’s iPhones & Samsung’s Galaxys leading the segment currently.

Many OEMs naturally believe in the low cost handset market for an emerging market like India. Qualcomm CEO Paul Jacobs shares the view. After facing significant reversals in India due to the far lower success rate of CDMA services, due to which even its largest customer RCom switched a few years back to a dual service portfolio, Qualcomm is looking to make amends. In 1990, Qualcomm pioneered the designing of CDMA-based cellular base stations, which has been its forte. Being the OEM of mobile phone chipsets, (Qualcomm CDMA technologies contributed 61% of its revenues in FY 2010), Qualcomm was once able to derive huge royalties from the companies it served with CDMA (globally, LG and Samsung contributed over 10% each in the same period). But India is very low in contrbution despite significant investments by the company.

The San Diego-based company’s strategy is to leverage the expanding availability of 3G services (as its core competency is producing 3G compatible chipsets) and after successfully tapping the biggest handset market of the world (China accounted for 29% of Qualcomm’s revenues of $10.99 billion for the year ending September 2010), the company has now decided to follow the footsteps of its Chinese competitors and bring out a sub-$100 phone with a Qualcomm chip in order to cater to the needs of the price sensitive yet feature conscious Indian market. Huawei and ZTE have already launched Qualcomm chip powered Android handsets in that range in China.

Read more....

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles