Succession planning in India – Corporate and Political

Since the era of LPG (Liberalization, Privatization and Globalization) has set in India and the Indian masses both in its hinter and heartlands have been exposed to the Western world, a direct or indirect comparison has ran between the West and the East spanning a plethora of issues ranging from day to day life (like why doesn’t India use dishwashers) to more long ranging ones (could brain drain be reversed). Among these, the issue of succession planning in Indian organizations has got most prominence from time to time, the issue has again become media’s darling with the sudden and tragic death of Y. S. R. Reddy and the talks of Y. S. J. Reddy to be his heir apparent. At this stage, let us try and trace the roots of what differs in terms of succession planning between these two parts of the world.
Cultural Ethos and way of life
Let us compare an average life of an Indian with a Western male, an Indian more or less shall follow the four ashrams of the Vedas - till about 25 he shall pursue his education, till about 45 or 50 (in case of lower and middle classes this age spans at times up to 60) he shall spend his life working, then till about 70 he shall worry about getting his off springs married and settled and then he shall live his remaining retired life.
While a westerner will be on his own by 16 or 18, would have completed his high school by then. He will then separate from his parents to find and mark his own identity. By the time he turns 30, he would have more or less scripted his coming life.
The common thing between these two lives is a search for a home to stay in. For an Indian it is a 2 bedroom flat for a westerner an apartment.
Note the stark difference - getting a child settled (i.e. to make sure he gets a job and a spouse) is more or less a responsibility of an Indian parent but in US that is not the case. These are primarily individual’s decision with a little influence of his family. – This is the root cause of why we see a son as an heir apparent to his father unlike in the west.
Add to this the caste system, the joint families, a society that does not freely permit (forget about encourage) innovation and free style and we have – ‘like father like son’. Viola!
Put in other words, taking a parent’s role is an ‘option’ for a child in west and an ‘implication’ for a child in east.
But then what about meritocracy and professionalism
An often quoted criticism regarding Indian style of succession planning is that it forsakes meritocracy and professionalism. Let us examine this argument and see if it has got merits.
On the face of it, we see that many a bright professional managers see a glass ceiling in their organization because they cannot reach beyond a certain point in the organization, same applies to Indian politics, a congress leader as talented as Priyaranjandas Munshi or Shashi Tharoor or Jyotiraditya Scindia cannot fathom getting a top job at Congress.
Also, it is not the case that the professionally ran Western business has always prospered, not all the companies which formed a part of S & P 500 in 1975 are a part of S & P 500 in 2009. Reason – the multi dimensional nature of environment in which activities like politics and business are carried out, in which succession planning and leadership are but just one dimension of the environment.
Though I have not researched, but it may also turn out that professional management is no better at running an enterprise as family management.
Now, look at a few examples of Indian polity and business where professionalism and grooming through the cadre is considered a big advantage against a family back drop.
Sudhir Maheshwari (Chief of Staff at Arcelor Mittal) plays as critical a role as Laksmi Mittal himself, Bikham Agarwal (Executive Vice President (Finance)) who joined Laksmi Mittal back in his first plant at Indonesia is as good and as important as Aditya Mittal. All of ADAG and RIL’s ventures are manned by professional managers (often poached from competitors) and not family kins.
Narendra Modi was a General Secretary with BJP before becoming the Chief Minister of Gujarat (without a family back drop) Manmohan Singh is an academician first and a PM later (and is nowhere near to a politician)!

Indian Art Market?

Indian art has been around for over 5,000 years — a complicated and lively reflection of the country’s countless historical, religious and political developments.

Now as a stock market, the respondents are talking about rebound, boom and bust in the Rs. 2000 crore Indian art market, with a new lot of young and first time buyers, revival in the purchase of high-end art by collectors and the entry of Korean and Chinese buyers and investors in the market. Instead of looking it as a collection out of passion excellence and fantasy for creativity, now all the galleries in the sumit are looked as more of an investment option.

When stock markets experience a downswing, investors search for more profitable alternatives, and alternative assets that improve the risk-sdjusted return on their portfolios. But indian art index has a (–)ve market beta and 0 correlation with the S&P 500, another intersting investment for a well diversified portfolio.

Did we ever try to probe into reasons for the decline in Confidence levels in the once-booming market for Indian art? (Dropped by 63% since October) Is it lack of awareness or is it the trickle down effect of recession in the West? Moreover the problems that auction house are facing are high holding cost of inventory. And some galleries cannot liquidate their inventories, as they have used their artworks as collateral to borrow money from banks for expansion. It is yet to be seen how long would it take for the Indian art market to rebound, go for global expansion in full phase and arouse an interest of more foreign investors? How justified are the art collectors, when they claim that because of fall in Indian art market, it has come down to realistic levels and that makes buying easier now than a few months ago when one had to pay inflated prices?

We think that there is a need to promote art education, museums should be more active and discussions and seminars should be held.

What do you think taking into consideration the historical background of Indian art market and boom and bust and expected boom in Indian art market.

Share your viewpoint!

Lost in the woods of Finance- think how about this one???

Just look at the graph the history of 06-07 is set to be repeated in 2010 Mar-May Era.Think about the same scenario the big bull is set to return next year but before that investors will have the pain. Similar patterns on the chart Metals throbbing to take one large leap. Before it crashes out

Current Decision on Sugar a thumbs up for the cos?

We recall a statement from a fund manager. "Our fund did really well when others had gone down by 90% of their wealth, we managed to safe guard 40% of it y-o-y: - Simply it means they lost their NAV by 60% but in order to present a rosy piture to the investors they changed the perspective.Perception plays the most vital part in today's world

People tend to overlook their own common sense but try to borrow others idea. This is where people get stuck. Indian Investors are prone to this habit. People who made smart money are the ones who invested at the correct price or the one's who used simple common sense. I guess the second group made larger amount. Friends re visit the development on Sugar stocks and discuss what worse is stored from here or theoretically unsystemati lies in the sector. The sweetness is here to stay for quite some time but imagine what are the negatives that can make the sweet story go bitter.

Keep discussing and posting the ideas on our mail.

Effect on Courier Firms

The Rs. 8000 crore express courier services, industry with 4500 odd courier companies has been forced to drop pace, with the slowdown in retail finance activities.

The cause is not too difficult to interpret. The BFSI segment gave the industry business such as delivering welcome kits, debit and credit cards, contract notes, policy documents, dividend warrants, annual reports and mutual fund statements. But credit card volumes have fallen 20% in recent times, thanks to credit aversion among banks. Things are no better with ULIP or direct equity investment by retail investors. As such, express courier market leader Blue Dart and Express It, which used to derive 25% and 90% of their business respectively from the BFSI sector, are hit to a larger extent.

Even pricing is a crucial factor in this industry. The low-margin, high-volume business largely means that economy of scale is very important to survive in this business. Also in the express courier segment, having a broader national presence helps.

Festive deliveries, such as DHL’s Rakhi Express for delivering rakhis during the rcently concluded festival, haleem during the Ramzan period by Gati courier offer as occassional booster to business. And recently Blue Dart has initiated Money Back Guarantee plans like Domestic Priority1030 and Dart Apex 1200 which ensures that documents and small shipments are delivered the next business day to selected regions at 10:30 a.m. and 12:00 p.m., or else the money would be refunded. Airline companies like Deccan is also toying with the idea of Cargo and Express Logistics Solutions within the country.

With their ability to track individuals and their addresses, credit collection on behalf of banks for a fee, and KYC forms are newer areas in which they could venture out. Yet the future is not bleak. As the government plans for financial inclusion, bank accounts are expected to swell to 600 million, up from 300 million. With banks moving towards automation and setting up more ATMs, debit cards show the promise of providing a lot more business.

But there is another risk from automation and digitalization, as in the near future the complete financial kit could be downloaded from the internet itself. We think that the courier companies need to revamp their strategy and need to work in close knit with packers and movers.

Share your views!

Uncontrollabe Natural Factors or Drought of Ideas or Lack of Management Mechanism??

The dredge from exports and foreign investment may have moderated, looking at 6.1% GDP growth in 1st quarter but the drought has emerged as a new major challenge in India. As the primary industry is hurt, the rest of the production chain will experience the flow-on effects. For instance, a sharp decline in farm output is expected to reduce demand for transport and storage services, and the supply for exports could also drop sharply. It would have a cascading effect onto hydro electric generation, ground water levels, inflation, automobile sector, fishery industry recharging of reserviors and many more allied industries. Even gold import has decreased by 90% as high prices prevented the people and drought further acting as a spoilsport.

Drought has even emerged as another terrorist for heaven of India, J&K which has losses of over Rs. 400 crore due to it. Agriculture production is likely to fall by 14% - the third highest fall in foodgrain production since 1964-65 and expected to impact the GDP by around 60-100 basis point.

The state governments are demanding that the limit of 100 days assured employment under the NREGP be extended to 200 days as a drought-relief measure. 20% cut in salary by Mumbai office bearers of Congress Working Committee in the face of drought is presumed to act as a panacea. Governmet promised that every BPL family would be entitled, by law, to 25 kg of rice or wheat per month at Rs 3 per kg. Let’s learn some facts that are government really serious enough?

The Maharashtra government has sealed its ambitious plan to develop a Rs. 300 crore statue, tallest in the world once it is completed to honour the state's biggest hero, Chhatrapati Shivaji. Is it really justified when the state is grappling with huge debt and drought in 2/3 of its area? And where dozens of impoverished farmers struggling with debt and poor rainfall have killed themselves in southern India in recent weeks, leaving behind families plunged even further into poverty. And how can we forget the Vidharba mishap? The mockery is that government establishment is still debating on actual number of people living below poverty line. The previous rounds of fiscal stimulus are now tickling down the economy, providing a notable boost to activity, but what about the rising fiscal deicit? “Kahin Barish to Kahin Sookha”. While Western UP is relling under severe drought but Eartern UP is under floods. But these floods are not due to rains but are caused due to excessive flow of water from Nepal. Now what would you call it: unforseen natural calamities or …?

Wih drought turning into reality, and speculation and hoarding spiralling food prices, the agriculture ministry is planning to amend the Prevention of Black Marketing and Maintenance of Supplies of Essentia Commodities Act (1980) such that centre can take action against hoarders of food grains directly. But that amounts to treating the symptom than the disease as the government is yet to come up with a comprehensive drought management mechanism.

What shall the government do further to mitigate the adverse impact arising from climatic changes? (Food for thought: Establishment of, foodgrain banks, village seed banks, water banks, feed and fodder banks, and village knowledge centres, ….. and what else!)

As the government faces a sea of questions, the nation thirstly awaits solutions.

Share your views!

Talent: Sprinting or going for a sell-off

Have you ever thought of a business model where you ask people to pay 20,000 and get trained. Than you tie up with your friends company or you probably know someone put the crowd for three month internship where you recieve 7000 stipend per person you send. And than you ask the company to kickout 40% of the people so that you can send the next lot. Many companies have started this business model where HR and the person ties up.

Friends an appeal just do not fall into this trap. Also never send any money/draft to a person who states that he belongs to so and so company if you send a draft to us you will get a call and than we will return your money. Indian law does not allow such provision where companies charges you for conductiong your intrview.

So beware of this trap and do not forget to spread the same. If you come across any such companies name please mail it to your friends and also report it to Police/Ministry. Write to us @ splconquest@gmail.com

Investment- with one more dimension

Analyze market with one different dimension-Have you ever thought you can catch market momentum and reversal by mix of few indicators. Nifty PUt-call ratio, PE of Index, Momentum reversal indiicators and few other parameters. The biggest challenge is to take and make money in the falling wedge. For instance one cannot deny the fact that market can be irrationally exhuberant compared to what one can look at.

Learnings for finance students in this case would bee how to make sure that market is postioned for a fall/ rise.

Take a sectoral example:Consider a case of banking Industry. Historically all PSU's have traded in terms of P/B in the range of 0.6 to 1.42. If one catches and holds at 0.7 he has made money like anything because of the underlying volatility. Think about one strategy where you lock investment in a banking stock for dividend yield> post tax return on savings account. this is the right time to invest in a bank. If you want to analyze, look at the PSU's with three year average dividend payout in 2006 scenario and 2009 beginning and if they were giving you a div yield of 7% odd. You build one of the sure short money making strategy. Buy underlying/ Sell higher call options if freely tradeable/ sell simultaneous puts or take a short on Banking Index with Vanilla long on your stock and capacity to absorb short term supplies. there are numerous ways one can make money if it identifies a right time to enter into a sector. This is part one of the Investment Series that we are going to post every alternate day. Now its upon you to think how one can make money and learn the art of making money by using all the ideas that we suggested. For queries write to us@ splconquest@gmail.com.

Friends this is what we expect in the scholarship competition for JP this year. Last year we had banking dilemma but this year the hot flavor is Portfolio investments in India. We will definitely have something on it in the competition. Keep following us to learn the real investment strategies and overview of the economy.

Some key words in banking sector you need to understand are NPA, GPA,NII,NIM,PCR,P/B,Asset utilization, Risky weights etc. along with basic information

Unleashing New life in Automobile Industry

April 1^st 2010 would be written in gloden words in $35 billion Indian Automobile industry. In another step towards greener technology, we are going through a phase of evolution from Bharat Stage I to II to III and now much awaited IV norms.

But are all Indian Players ready for it? And how expensive would the new cars be with new norms, considering the current norms prevailing in the market? But we think that considering the economic meltdown and the ever looming recession, the work is still difficult for any automobile company, despite the fact that some players like Maruti Suzuki, Hindustan Motors and Hyundai claim boldly that they are ready for it and even come up with cars that comply to these norms.

Why it is that none of NE states have been named to comply with Bharat IV norms? Are they neglected? And would there be price reduction for those CV and passenger vehicles which does not comply with IV norms? And do you think that people who do not reside in those 11 identified cities (NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Ahmedabad, Pune, Surat, Kanpur and Agra) are left unattended to suffer from pollution? And don’t you think it would create another marketing dilemma for these players to decide upon to focus more on which area after April 1^st – 11 cities or Rest of India? And by how much %age is it expected to boost exports?

One would be surprised to know SIAM officials are happy to stay behind European norms and cited the example of after-treatment devices as they claim that we can learn from their experience. Are Indians born to be followers according to these officials?

Great news for workers and planners of NREGP! We think that the governement has to put up a separate notice board at each state board that one is moving from Bharat stage IV norms area to non-norms area, if one is going from say Delhi to J&K.

Share your ideas!

An Appeal from SPL Conquest

Given the response on the mail over what we post on our blogspot, seems to have a uni-direction thought process. This monotonous thought process is possible only when an individual thinks about it and writes the same. Any topic that we post can be viewed from different perspective as well. The idea of keeping you people thinking, is to promote discussion among your friends, but despite over 100 of responses, it seems our purpose stays defeated, as you all are not forming a habit of discussion. The benefit that will accrue if you discuss among your group:

• It will boost your confidence on the final day
• By learning other people’s perspective, you’ll be able to develop a sound thought process

So, it’s a request on our part to all the visitors, followers to make it a habit of posting the analysis as a group.

Another thing that can be done on your part is to start the channel on comment section, where you can get the insight across B-schools and not only of your own confined group.

A new Avtar – Pay per click, Cost per impression, …, ??

You would be shocked to know that in 2008-09 advertisers spent Rs. 51663 million. Now just think of calculating the amount of extra money that you paid for product/services which compensates for advertisement and promotion spending?

Have you ever calculated the time that you devote online vis-à-vis watching television or listening to radio or say watching a print ad? Or has it changed over a period of time from traditional media to digital media? Out of the total advertisement spending, about 5.4% was taken up by Internet advertising, 51.4% and 27.4% by televsion and print respectively. But the interesting fact is that digital media is set to grow from approx Rs. 800 crore by whopping 44% in the next year, while the rest is expected to fall by 10%. Try to analyse the reason for the expected rise in figures. (Food for thought: rising service sector, rising young adults, increasing social networking portal, increasing visibility, higher accountability, easier to calculate ROI and what more…)

And is the allocation and growth figure similar for each and every sector or how much is the disparity among sectors? Just look at the chart shown above and try to anlayze the reason for the disparity. (figures are in Rs. million)

But one cannot deny the fact that every solution has a flip side to it. So what about the ethical issues associated with it? Moreover, keeping into consideration the wide difference in the reach of internet users and number of mobile subscribers, online advertisement might have a tough competition with mobile advertisement.

Share your thought on it for one day you could also be in a dilemma on the proportion of advertisement spending through different channels.

Cornflakes – A substitute of Food

Reasons to celebrate! There has been a price war among the cereal manufacturers like Kellogg, General Mills and Post and Nabisco cereals. But is it really a reason to enjoy for the consumer?

In some of our previous articles, we have mentoined that Indians are trying to ape the West, but is it justified at the cost of your health? Do you think that people are diverting more towards ready to cooked food? Or is it mere presentation of one’s standard of living? Still unanswerable!

Is recession good for cornflakes manufacturers, as they claim that cereal is an especially strong category, as consumers seek to maximize the value received from every dollar spent?

Have you ever tried to probe into the real target segment for cornflakes? Is it only limited to working young adults, school going children or is it tightening its grip to every class and every age group?

Studies suggest that most commercial cereals like cornflakes with the exception of Fibre One, Ultrafibre,Bran Flakes and a few others, contain a gram or two of fiber, and they are usually high-glycemic (meaning they raise blood sugar quickly). Not only this, they even contribute to weight gain, cravings and ultimatley lower energy.

If one is planning for suicidal, we think it’s really a good option, but the drawback is that it kills slowly. Alas! The consumption of high-glycemic foods is not only bad for your waistline, but even worst for your heart. They even hamper the functioning of one’s blood vessels and raise the risk of developing cardiovascular disease. And best part is that it put undue stress on one’s artries.

We would suggest you to give a second thought whenever you are consuming cornflakes at the cost of your health and when one knows that Breakfast has to be the King.

Share your viewpoints!

Equity Market- Is it unleashing the beast again?

Irrationality and Euphoria this is exactly what prevails in the market which is beyond people sentiments and also beyond control, couple of quarters back one used to think about tight grip of bears and the same market used to consider bulls are dead.
Market is a beast which will ensure nor the bull or the bear survive. It says let the irrationality survive but still the fortune will be created by Rational investors.

How? An appeal to all of you to think and analyze market in these three phases.
May 2006-Oct 2006 the recent crisis of 2008 and the midst of bull runs in the associated periods between 1st Jan 2006 to 1st August 2009.

How does this help for your placements?

While posting this on our blog, we had to justify how this will help you people on placements. Think about it what this exercise could do

You people need to analyze market trends in the sense which sectors were growth packs and which sectors underperformed, which sector had potential rise and which was a market performer?
What triggered market meltdowns? For e.g. 2006 was an aftermath of sell-off in commodity market. This is one case were people opened up Valuations Matrix and realized we had long way to go. The history needs to be looked and analyzed as one of the question in you interview would be where you see market from here by the turn of this year. Your insights and findings might get you a placement in one of those finance companies that comes for placements? Isn't it worth thinking from placement perspective if not otherwise!!!!

Send your findings to splconquest@gmail.com

Wow God- A new Market!

As India continues to ape the West, does mythology have a market in India? Or does mythology appeals to only senior citizens? We say that global meltdown has rocked economies, then why is it that amount in the Hundi in Tirupati has been increasing at a rate of around 30-40% y-o-y?

Have you ever tried to probe into TRP of “Shri Krishna”, or the ROI on Ramanand Sagar’s “Ramayan” and B. R. Chopra’s “Mahabharat”? Or did you ever thought the amount of revenue that the channels like Aastha, Sanskar, Zee Jagran and Sadhna are garnering out of commercials? One would be surprised to know that almost 70% slots on Aastha TV are pre-booked by advertisers at any given time. In which direction are we heading? Yes, my friends Search for God is the buzz word in market.

Apart from these religious channels, even the demands for mythological books are growing rapidly at about 30% every year. Even India’s leading VAS content developers like Mauj Telecom, IndiaGames and Cellebrum have started focussing on religious content, ranging from the frivolous (like astrology, numerology et al) to the profound as it accounts for 12-15% of the total Rs. 60 billion VAS industry.

Even deity statue makers are carving their own special niche in this godly industry, and you would be surpised to know that Indian mythological and religion inspired arts and sculptures contribute 20% of the Llardo’s entire turnover, an organised player in this industry and they sell Lakshmi wares at Rs. 7.5 lakh a piece today. What would you call it – a lifestyle statement?

How could one forget the travel companies? Of the estimated 400 million journeys undertaken by the Indians every year, close to 25% journeys are to pilgrimage centres, and numbers are swelling. And leading the race are the Gurus that claim to take you a step closer to spirituality and well being, offer peace of mind for battered soul from places like ISKON, OSHO world, Patanjali Yogpeeth and Art of Living Centres. And you would better find out the price that is being charged at these places.

Hats off to Technology! It has allowed people to e-donate, online puja, e-Seva, e-Accomodation at temples. Good news for Sachin Tendulkar fans! You could see him in a movie titled Vighnaharta Shree Siddhivinayak that the Siddhi Vinayak temple is making and marketing with the help of Vistaas Media and Eros International. And in this whole discussion how could you forget the animated myhthological market, where Hanuman Returns earned 320% return for Toonz Animation Pvt. Ltd.?

So what do you think: Is God on Sale or is it a new organized market opening up in India in a big way?

Share your views!

The IFT challenge- For Finance Friends

IT companies are vulnerable to the foreign exchange risk as compared to other businesses, as the theme for them is outsourcing. Simply, it means earn in US $ and pay in INR. The last two years have been volatile for RE/$ equation. More imporatantly we framed a model pre 2007 and post 2007 to test whether those 8-10 factors impacted in the similar fashion or things have changed for IT companies in terms of covering their foreign exchange risk. From Naked call/ naked put to Collar formation .A lot of things changed for large companies.

We found a case where companies entered into swap agreements. We also found that few of the companies formed collar position to cover their exposure.

What we want you people to do is discuss and think how collar/ other strategies are formed and also think about swap agreements.

Friends this is one exercise which will ensure you know 30% of option strategies straight away. Right from Straddle to strangle and than collar to box.

Please note:We are in midst of releasing the case, just want to ensure we do not fall in legal tangle with the large Indian Corporate houses. ELse we would rename the companies. One exercise for all the Security analyst.

Airline Industry - Boom to Bust to .....???

Few years ago, India's airline industry was flying high. India, one of the fastest growing and most competitive aviation markets in the world. Six new carriers launched. In the last four years, Indian carriers ordered 400 Boeing and Airbus jetliners worth about $37 billion.

But is the fairy tale for Indian airline industry over or is it that there is only one story around the corner – mayhem? The impact of the economic recession is clearly visible, as Indian aviation industry posted a whopping loss of $2 billion in FY’09. This mayhem is not peculiar to only Indian airline industry but has hit global players viz. British Airways, Air-France KLM, Lufthansa, to name a few.

Players are forced to postpone their international expansion plans. The domestic capacity is on a decline. Do you think that resorting to steps like turning their full service domestic fleets into budget businesses, deferring aircraft deliveries, cancelling orders, rationalizing routes and trimming staff would work as balm to their sufferings?

Now what are these players shouting for? Bailout! Players like British Airways have already got the support from the governement while Indian players are still waiting for a bailout in the form of reduction in taxes and airport charges, allowing them to import jet fuels under the open general license which would save them on high sales tax, as also proposed by Naresh Chandra Committee and adding ATF under declared goods category, which the airlines say will result in an estimated annual savings of $624 million for the industry. According to an estimate, the ATF prices in India are 60-70% higher than those at the international level, and fuel costs accounts for about 40% of the total operating costs vis-à-vis 10-15% in other countries, add to their woes.

As part of measures to provide relief to the airlines, the government has already brought down customs duty from 5 to 2.5%. Is that sufficient enough?

But critics’ claim that still after 4-5 years only 2% of the population travels by air and the airline industry did very less or nothing to attract the 98% that uses road and rail travel. Even the allegation was raised that the airline operators formed cartel and fixed the price of airline tickets, which is a crime in any other country. But was this practised in any India for the lack of transparency or is it because we lack structural aviation policy? But it is projected that cargo traffic, airline traffic, number of passengers or even the number of airplans, each of these will record a growth rate between 3% and 5.5% over the next 20 years.

But how relevant do you think these future prediction holds good keeping into consideration their bleeding status? And do we need a bailout package or an aviation policy?

Share your viewpoint or send us your feedback at splconquest@gmail.com

Competition- Yama of Cartelization

Have you ever thought the reasons for cartelization? One of the basic factors that drive the sustenance of a cartel is lack of distinction. It is no wonder that most of the proven and averred cases of cartelization are in industries which have a low level of differentiation such as cement, fertilizers, tyres etc. or which are either commoditised like oil, food, grains, sugar etc. Secret cartel agreements are a direct assail on the principles of competition.
Cartelization is not peculiar to India. Even the Asian Shippers Council complained that shipping lines are conspiring to slap additional charges on Asian exports.
Do you think that the approval granted to Shree Renuka Sugars from the FMC for buying 5% in NCDEX is a signal towards cartelization? As we think that these approvals would allow the players to virtually check the prices of commodities and at the same time also profit from the price movements on the exchange.
To curb cartelization, CCI, which got the statutory powers in 2007 by an Act of Parliament, has been formed by the government, to promote and sustain competition in the market and protect interests of consumers. If it finds any company guilty of being part of a cartel or abusing their position, it can impose penalty up to 10% of the average (three-year) turnover of the firm or companies involved. That is in contrast to MRTPC’s powers, which can only ask companies to abstain from such activities.
Do you think that the pressure by the Indian Inc. on government to stall the notification of Section 3 and 4 of the Competition Act which make it mandatory for the companies to seek prior approval of CCI on matters related to mergers and acquisitions (M&A) is a sign of cartelization in future?
But the recent cartel formed by the airline companies and the concomitant withdrawal of the stike threats foreground the facts that cartel in India will increasingly find it difficult to withstand public scrutiny in the information age and retaliation by regulatory authorities for consumer protection.
Export-oriented industries such as software in India are examples of limited cartelization with active government support. With increasing scrutiny of industry data it will become difficult for cartels to justify their actions to the civil society.

Share your views!

Do theories have different interpretation in the Real World?

Porter’s 5 forces model implies Profit = Selling Price-Cost Price

Friends have you ever thought that whether its marketing or finance discipline, what makes a difference is the bottom line (Profit). Keeping this in mind, we took a holistic approach on Porter’s 5 Forces model.

Think from the perspective of business doer and evaluate how Porter 5 Forces impact the three variables i.e. Profit, Selling Price and Cost Price.

Feel free to write your feedback and learn what's the reality behind. You can even mail your analysis at splconquest@gmail.com

Decoding the New Tax Code

Media, Tax Man and General consensus feels tax savings for common man with the new tax code. Is this a fact, we doubt the same:
The new system will help in clarity, simple tax filing procedure easy to calculate tax returns and what we call a transparent system, No doubt about it.

What about tax planning? More importantly who suffers the middle class in the service sector?
The real story, Corporations happy with the slab cuts specially the FMCG pack and other Corp Houses paying 30% tax would now be paying 25%.

The common man story: A simple mathematics but making my tax burden go up? Here we write the story of the common man.

Consider the scenario 2012, 31st march under old and new system. Before that we suggest you to go through the expenditure revenue statement:
Earning s >Cash> Pre tax 7 lacs, Expenditure:Home loan repayment 1 lac( 80C) home to be occupied in 2013, ,interest 50k,(Travel Allowances 9.6k and other benefits non tax 40.4 k) totaling 50k ,15k medical, HRA benefit 1.5 lacs. House hold expenditure 2 lac.

So what makes you believe that the new tax code favors the aam aadmi. It’s an even more expensive shot of wine. Media Tax Man please help us to understand if we are wrong . Also the government is trying to emphasize on investment habit. But this reduces liquidity in the hands of the common man 2.65 lac of other expenditure will cover all the monthly household expense, in new regime if one wants to pay less of tax, invest more with a 5 year lock in. What about emergency requirement.

Note: Pardon us if we have gone wrong anywhere, would incorporate the correction immediately this is what a CA has accepted the fact to be.Note PWC argues that HRA would still be there if thats he case than many would not fall underthe purview of tax itself. There is no clarity. But hRA is defined as Benfit recd by employee from Employer. This is not the only burden you need to pay additionally, tax on your retirement and etc. Adding link for all of you to take a different view on the Hype created by media.Think about it and discuss. FOr details on the tax code hit the below link
http://lite.epaper.timesofindia.com/getpage.aspx?pageid=1&pagesize=&edid=&edlabel=ETBG&mydateHid=13-08-2009&pubname=&edname=&publabel=ET
This is only for service class wait for the SME's and COrporations who stand to lose on the new system. Suggestions/Comments please.

Political Recruitment in a Corporate Isshtyle…..!!

Did you ever had an idea how much does a company/organization spend in terms of recruitment, forget about the training part? Can the amount be as big as Rs. 2-3 crore in a single state like Gujrat, which the IYC (Indian Youth Congress) team spent for the just concluded youth congress election? If it can be, just think about India as a large!
Gone is the conventional grassroots panchayat assembly ticket itinerary to become state level office bearers. We think the days are not far when we would see Congress Inc. or BJP Inc. or be it any political part name with Inc. as a suffix.
Rahul Gandhi the master mind behind revamping the image of IYC is on a hiring spree pan India. And what would the employees in the organization/team be called as? “Aam Aadmi ke Sipahi” or “freedom fighter” or would they bear different managerial post as CEO, CFO, Business Development Executive, Analyst, consultants and other posts in an organization one can think of.
We all understand the fact that youth is considered as the backbone of an economy and don’t forget that youth are the target segment for IYC. So do you think it could be a next viable employement opportunity for you? Or do you think a new industry is opening up for the mass at large?
Candidates are grilled by a panel on their vision for the future of the youth wing, so how about the idea of schools/colleges opening up where people would be imparted training, how to get into these upcoming organization?
Do you think his concept of “ONE MAN ONE POST” as also suggested by Antony Committee is set to revolutionize the functional structure in the organization?
To what extent do you think that the policy of corporate culture adopted by IYC to identify and prepare a new generation of leaders is feasible?
Share your ideas!