Wednesday, March 27, 2013

“B-Schools Should Desire Maximum Industry Interface”

Taking Forward their Commitment to Education, The Ninth IIM was set up in Rohtak in 2010 under The Mentorship of IIM-Lucknow. In Conversation with B&E’s Bhuvnesh Talwar, Dr. P Rameshan, Director of IIM-Rohtak, talks of Urgent reforms that are Required in India’s Management Education System.

An economist and an IITian, Dr. P. Ramesh has represented India several times in the international arena. The most prominent ones being The Asian Productivity Organisation, Tokyo, Japan, representing India on “Survey on Total Factor Productivity” on Asian countries and at the National Experts’ meeting in Kuala Lumpur, Malaysia. He is presently involved in teaching, training, research and consulting. Prior to joining IIM, Rohtak in July 2010, he served as Director in-charge of IIM, Kozhikode during April-May, 2009. In an exclusive interview with B&E, Dr. Ramashan discusses the need for innovation and greater independence at work place.

B&E: There is a general opinion that India has been home to some quality B-schools. Do you think there are loopholes in the system that deserve careful corrections?
Dr. P Rameshan (PR): In any business field, first the business emerges and develops, and then the government thinks about placing control mechanisms. Yes, there are issues in terms of accreditation and regulatory mechanisms since the existing systems are inadequate. However, a view over the need to regulate the business of B-schools has strengthened over the years and a good mechanism will definitely emerge soon.

B&E: Although considered as one of the key ingredients of quality B-school education, many institutes in the country still treat “industry interface” as secondary. Why so?
PR: I think every business school should desire maximum industry interface. However, to many of them, industry interface is a tedious task. This is due to their own constraints and inadequate response from the industry. It has been observed that although companies speak of increased interaction with the academic world, they have actually been wary of the initiatives of the academia.

B&E: Unlike the West, India has failed to develop home-grown cutting edge technology. What is your opinion on the same?
PR: This has been a matter of concern for many of us in the academic world. However, the Indian teachers are so pampered by ready-made material available from the western world that they do not feel the need to develop new material or frameworks. In fact, Indian academic researchers have not been sufficiently motivated to work on fundamental issues. The short run orientation of Indians due to genetic, social and economic reasons have also contributed to this.

B&E: What value-addition do internship programmes offer to freshers and students with prior experience?
PR: For a fresher, everything that he learns about management is new and his value addition is obvious. During the internship, he gets an opportunity to apply the concepts and techniques he learnt over the first year as the whole experience will be new to him. For those with prior industry experience, it’s the time to revalidate what they experienced while on job.


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

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Tuesday, March 12, 2013

EXCLUSIVE SURVEY: MR COMPANIES

However, even if it comes from the mouth of Steve Jobs, it is not a conclusive debate against the relevance of market research, not by any stretch of imagination. Apple’s iPhone has suffered a lot of flak in India, for instance, since it was a market Jobs hadn’t prepared the product for. Research In Motion, which is the player Apple is competing with fiercely in the smartphone segment, believes passionately in consistently lapping up consumer insights through its Blackberry Market Research Panel; which sends short questionnaires to selective people on a monthly basis. Moreover, especially when resources are limited, and when you are not an Apple or a RIM, it’s better to adhere to the age old military lesson of using precision bombing over carpet bombing. Without quality MR, it is virtually impossible to know who to target, with what product and how.

But yes, one has to admit that market research is a relatively less understood and insufficiently applied part of the marketing budget in today’s time as compared to say, the advertising industry (and also not given that kind of attention by the media). This was evident when companies began to make deep and painful cuts into their market research budgets (especially big American B2C companies, which made cuts by up to 20%) during recession; even at the risk of affecting expansion plans, getting out of touch with vital consumer intelligence, delaying product launches and possibly giving competition a leeway. The key word, though, has to be cost optimisation and not cost cutting. The Greenbook Research Industry Trends Report for Summer, 2010, talks about how clients and companies in US are perceiving growth trends. Around 33% actually saw higher spending on market research, as compared to a mere 6% in the winter of 2009. Alarmingly, around a third of respondents from the research industry felt that market research is not as respected today as it was earlier, citing unrealistic client expectations and the competition from the growing trend of online surveys. The feeling that quality of research has come down and important insights are lacking were the major issues that clients had, with 14% of respondents surveyed offering this view.
 

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
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Tuesday, March 5, 2013

Switching on the next big power play!

REC has been posting growth in numbers at an impressive clip. Certain challenges threaten this growth in the long run. Virat Bahri of B&E analyses the company’s strategy to face the same.

Even a few minutes without electricity supply in our urban environment can make us cringe. In fact that makes the term electri‘city’ all the more apt! Imagine the plight of millions who go on with their lives without this precious resource. Power for all by 2012 is a cornerstone of the vision of the Indian government, which it has been trying to achieve under all circumstances. It presents myriad technological, managerial and logistical challenges and a mammoth financial challenge as well. That is where Rural Electrification Corporation of India (REC) comes in, as the nodal agency of the Indian government to fund power projects in rural areas.

Under the Rajeev Gandhi Grameen Vidyutikaran Yojana, funds used in completed projects and projects under implementation for rural electrification amounted to Rs.570 billion as on September 15. And REC is moving every inch possible to leverage the potential. The company has been growing income from operations at a CAGR of 18.8% since 2000-01 to reach Rs.67.07 billion for 2009-10. Net profit has grown even faster at a CAGR of 21.8% in the same period to reach Rs20.01 billion in FY 2009-10. REC Chairman J. M. Phatak tells B&E in an exclusive interview, “Since the base in rural India is much lower than urban India, their demand (for electricity) grows at around 8%, slightly higher than the national average. Our business therefore has to grow at least that rate plus inflation if any.” Typically, he expects business to continue to grow by 15% plus yoy. Loans of Rs.271.27 billion were disbursed during the year, and recovery was to the tune of Rs.124.96 billion.

Being an NBFC with the primary motive of social welfare, one of the key challenges for REC has been to control the default rate on loans. Being restricted to the power sector does have its drawbacks, as it is well known how power projects in India have been famously infamous for missing deadlines by miles. As Phatak tells us, the company comes in when most of the delays are accounted for, particularly with respect to environmental clearance and securing of coal linkages. But borrowers here are generally State Electricity Boards (primarily for transmission and distribution) with an inherently weak credit profile. Over time, the company has been able to mitigate this problem. Since 2005-06, the company’s loan sanctions have tripled to around Rs.450 billion but NPAs have come down drastically from around Rs.3 billion then to around Rs.195.4 million, around 0.03% of gross total assets. A CARE analyst tells B&E, “The risks (from the weak credit profile of SEBs) stand mitigated due to robust credit appraisal procedures and monitoring. Also, a majority of these loan assets are backed by respective state government guarantees and escrow mechanism for recovery.” Moreover, REC is an important source of funding from tax free bonds and loans from multilateral institutions backed by the government of India; and borrowers do not want to risk losing this source. That is why REC’s credit rating relies heavily on the government’s ratings. On June 14 this year, Fitch Ratings revised REC’s Long-term local currency Issuer Default Rating (LC IDR) to Stable from Negative after it changed India’s sovereign LC IDR rating to Stable from Negative on the same day. Another option they are now considering is equity stake in upcoming projects, which they can cash out of at an opportune time.


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

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Sunday, March 3, 2013

POLICY LEAD: DTAA

Having lost billions in treaty shopping while honouring the clauses of the DTAA signed with other nations, India is now on a renegotiation spree. But as the government signs new treaties with other tax havens it must ascertain that the clauses are foolproof so that shell companies are prevented from taking undue advantage of the tax provisions. by Gyanendra Kumar Kashyap

Primarily tax havens do not impose capital gains tax on its residents and with India exempting the capital gains under DTAA, the provision for sure has been used and abused by a select few who have formed conduit companies in these tax havens taking advantage of the sweet tax deals on the pretext of avoiding paying tax in India. In fact, the loss to the exchequer on account of lost capital gains tax is humungous. In the last decade alone the loss on this account has been a whopping `281.39 billion while on an average the annual loss to the government coffer amounts to `23 billion. Even the most pessimistic estimates are suggestive of the fact that the extent of the lost revenue could have easily come to the rescue of companies such as Balco, VSNL, IPCL and several others which were sold to private parties at dirt cheap prices. This poses a question as to whether, the clauses in the agreement need to be revisited.

Finance ministers till recent past were vociferous in their support of the controversial agreements citing the oft touted logic that changing the clauses would lead to capital flight, slowing down of foreign investment and thereby stock market crash. In fact, former finance minister P. Chidamabram (May 2006) went to the extent saying that he didn't want to review the subject given the “ larger economic, political and diplomatic considerations.” The fallout concern is totally logical given the fact that out of the $117.9 billion of foreign direct investment that has come to India since April 2000, the estimates of the Department of Industrial Policy & Promotion, DIPP, suggests that $47.8 billion (a whopping 42.53% of the total amount) was routed through Mauritius. However, what is worth noting is the fact that these investors are not necessarily based in Mauritius. It's the billions of dollars that are stashed in tax havens like Mauritius (by Indians themselves) and a large part of this black money is channelled back as FDI or FII apparently through the legitimate path provided by the likes of Indo-Mauritian DTAA. Sudhir Kapadia, Market Leader, Ernst & Young is of the belief that Indian MNCs float holding companies or special purpose vehicles in tax havens for acquiring companies in US and Europe.


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.


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