Wednesday, October 31, 2012

“Like pharma, the pesticides sector is also changing very quickly...”

Salil Singhal, CMD, PI Industries Ltd. on the challenges of the pesticides sector

Having been associated with agriculture since 1967, Salil Singhal, CMD, PI Industries has a lot to talk about in a free flowing interview with Niharika Patra

B&E: What actually is the flaw with Indian agriculture?

Salil Singhal (SS): The input side of agriculture has issues. For example, if you compare the production to pesticides usage, India has a total cropped area of around 167 million hectares while the US has around 172 million hectares. In pesticides consumption, US figure is around $7 billion while for India it is $1.2 billion. Because of poor use of pesticides we are loosing crop to the tune of $20 billion per annum. The cost benefit ratio in agriculture is very high to the tune of Rs. 19 per Re.1 employed for some crops, and if you compare the $ 22 billion in fertilizer subsidies, we have grown the crops for the pests to eat it away. There are many other problems like procedures of introducing new seeds, the distribution of subsidies et al. There seems to be little focus.

B&E: How do you compare the era of 60’s and present. Do you think there has been any kind of deterioration?

SS: No. Undoubtedly, the Green Revolution gave us a lot. Today, even without favourable conditions we can produce 210-230 million tonnes of foodgrains. But looking at the changing food habits, what we have is not enough to satisfy this ever changing need. We have to double our food grain output and agricultural output resource to be able to do that. But we are not geared for that right now and agriculture needs structural changes.

B&E: What is the focus of the pesticide industry in relation to the productivity of the crop?

SS: Cost benefit is a very important input. The second important input is quality output. Organic farming doesn’t work for quality. Petsicides can give quality with high productivity and that is our focus.


Source : IIPM Editorial, 2012.

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Tuesday, October 30, 2012

Many miles to go before we hit pay dirt!

India hasn’t really arrived as an automotive hub as recent data seems to suggest; but it cannot be denied that the country is staring at quite a few phenomenal opportunities, analyses virat bahri of B&E

Being overawed by, and often envious of most things Chinese seems to come naturally to us Indians; be it with respect to their economic growth, their military might, their influence in major world forums, their manufacturing prowess, their infrastructure development or even their Olympic games! Though the competition is largely one sided, Indians surely do look for every possible reason to believe that they can outclass the dragon. Well, they got one recently, from the automotive sector that is, when data was released for automotive exports for the period of January-July 2009, where India managed to actually overtake China in terms of automotive export figures. India’s total exports grew by 18% yoy to reach nearly 2,29,809 units; while China’s exports actually declined by 60% yoy to reach around 1,64,800 units. Even South Korea and Thailand witnessed significant declines in their export numbers by 43% and 31% respectively (yoy).

Remember, the automotive industry is a key indicator of the manufacturing prowess of a country. So is the world finally recognising India’s manufacturing credentials?

Unfortunately, all the mindless media hype surrounding this ‘achievement’ tends to overshadow the true picture. India has actually become recognised as a car exporter more by default rather than by design. In fact, India only exported commercial vehicles mostly to the Middle East and Africa before Hyundai came into the picture, as Ashvin Chotai, Managing Director, Intelligence Automotive Asia, agrees, “The major boost to exports started after Hyundai made India the global hub for the production of its small cars. The main destination for Hyundai is Europe and hence this lifted the status of India as a serious exporter of cars to developed markets.”

Further, the export data needs to be analysed in perspective. Around 2,01,000 of these exported units belong to the passenger car segment. And exports in the passenger car segment are dominated largely by two players – Hyundai and Maruti.


Source : IIPM Editorial, 2012. An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Monday, October 29, 2012

Relax! It ain’t a giant wave, not yet!

With two IPOs hitting its shores one can finally see some sign of life in the primary market again. But is the market really ready? manish k. pandey acts investor... oops investigator!

At least 50,000 retail investors applied for shares when Mahindra Holidays & Resorts came out with its initial public offering (IPO) in June this year, while the much awaited Adani Power IPO, which closed last week, received a whopping 5,79,000 applications (the Rs.30 billion IPO attracted total bids to the tune of Rs.650 billion). So the entire IPO ecosystem is buzzing with energy and enthusiasm yet again. Investors are seeing this as a chance to party again after a prolonged sobering period.

But then, is the market really ready for the next big wave of IPOs considering that the retail investor is still sceptical to investing in IPOs after the failure of Reliance Power IPO? “Capital markets have short memories. They have the habit of forgiving and forgetting the losses quickly as soon as they start making money again. Investor response to the Adani Power IPO is a case in the point after the fiasco of Reliance Power IPO. Certainly, investors are back into the IPO arena and it’s business-as-usual for them,” reasons Jagannadham Thunuguntla, CEO and Equity Head, SMC Capitals.

Further, the participation of retail investors in an IPO depends primarily upon two factors. Firstly, on the valuations at which the IPO is being made available to investors and secondly, on the state of the market at the time of the IPO (which has a bearing on investor sentiments). If these two factors are in favour, there is little doubt about the success of an IPO. But are these two factors really in favour of the investor as of today? “I believe that the market is ready for quality IPOs. With the return of the risk appetite amongst the investor community at large, there is certainly a demand for newer IPOs. However, to ensure that investor appetite remains unaffected, it’s important that these IPOs are not bunched together within a short span of time,” cautions Hitesh Agrawal, Head – Research, Angel Broking.


Source : IIPM Editorial, 2012.

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Sunday, October 28, 2012

Little Boy’s big ‘Fat’ destruction

Millions of civilians were the hapless victims of the nuclear attacks that almost wiped two cities off the map… Today, most Americans believe that Uncle Sam did right in bombing Japan!

“As the bomb fell over Hiroshima and exploded, we saw an entire city disappear. I wrote in my log the words: My God, what have we done?” these were the words of Capt. Robert Lewis, who was the co-pilot of the Enola Gay, the B-29 Superfortress bomber, which dropped the atomic bomb Little Boy on the Japanese city of Hiroshima on 6th August 1945. But 64 years later, more than 60% of respondents, who were asked during a survey in the United States of America, would beg to differ. They strongly believe that it was the right thing to do and bombarding Hiroshima and Nagasaki was unavoidable. They believe that the war was triggered by the Japanese, and in order to avoid further misery to mankind USA had no choice but to take this drastic measure.

If a jolt was what was needed to bring an immediate halt to the war, then the US could have comfortably demonstrated the impact of the atomic bomb and given Japan the time to surrender. Or the ‘big bully’ could have at least refrained from bombarding Nagasaki on 9th August 1945, since it had already displayed in Hiroshima its expertise in mass destruction. But like General George S. Patton once said “May God have mercy upon my enemies, because I won’t,” that day neither God nor the ‘Little Boy’ showed any mercy. All that prevailed was blood, mutilation, mangled carcasses, burns, diseases, skin ailments and leukemia. Several generations were punished by way of genetic and hereditary disorders caused due to harmful radiations of the nuclear bomb.


Source : IIPM Editorial, 2012.

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Friday, October 26, 2012

Let’s not think ‘small & medium’

DSE’s SME exchange is worthy of applause, but they have to avoid becoming OTCEI

It was like a dream come true for many of the small and medium enterprise (SME) owners whom we came across when they heard that Delhi Stock Exchange (DSE) is planning to get back to business with focus on specialised services for SMEs (subject to SEBI approval). And why not, for this can provide them with a much needed platform to raise capital, their biggest problem so far in their vision for a dream enterprise.

But then, they should be warned by history. A similar concept was introduced in 1990, named OTCEI (Over-The-Counter Exchange of India). Today, it writes (very proudly) in its website, “As a measure of success of these efforts (introduction of screen-based nationwide trading, market making and scrip-less trading), the exchange has 115 listings.” Superb! 115 listings in 19 years. Perhaps, that’s why many don’t even remember that OTCEI still exists!

With a live example of disaster, why is DSE interested in setting up a SME exchange? Answers B. K. Sabarwal, Director, DSE, “A recent survey has revealed that 92% of unorganised enterprises in India do not receive financial assistance from banks or from any other source... An exchange is the best way to make them competitive.” Moreover, DSE is not only looking forward to the opportunity present in India’s 13 million (approx.) SMEs; it has adopted the model of London-based Alternative Investment Market (AIM)). Certainly a great idea, considering that it has 3,075 listings and raised $104 billion since its inception in 1995. But, only by following AIM, the job can’t be done successfully.


Source : IIPM Editorial, 2012.

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THE PRODIGAL DAUGHTER

The person who has made the difference is Purandeswari Rao, MoS, HRD

Without her, former Chief Minister of Andhra Pradesh and the boss of Telugu Desam Chandrababu Naidu could have effortlessly claimed the mantle of N.T.Rama Rao. But Purandeswari Rao is one daughter who maintained her own identity despite keeping a low profile. Not many know this, but this Lok Sabha M.P from Andhra was handpicked by Manmohan Singh to ‘continue’ as the Minister of State for HRD with the Higher Education portfolio. Not many also know the fact that the arrest of the AICTE officials, the raids on their houses and the opening of the AICTE can of worms was launched officially more than 2 years ago when she was HRD Minister in the previous UPA regime. Shocked at the kind of rackets run by top AICTE officials that victimized people like Bansal, Rao wrote a formal letter to her immediate boss Arjun Singh highlighting how AICTE honchos were minting money left, right and centre. She even specified in her letter how AICTE took literally no time to acknowledge a request from a college to reduce the number of seats while it promptly sat on a request that asked for a hike in the number of seats. This is the same problem that was faced by Kidar Bansal. Though highly regarded as a can do politician and one of the rare honest ones who would rather spend time on literature and Bharatnatyam, the mother of two was helpless against the inflexible attitude of her boss Arjun Singh. Nor would she ever speak publicly about her disappointment when no action was taken despite such a strong letter from her.


Source : IIPM Editorial, 2012.

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Wednesday, October 24, 2012

Nashville or what you will...

Speaking of USA, the bustling commercial city of New York or a glittering party hub like Las Vegas are the pictures that come to mind; and undeniably, such a picture holds true for most places in the US, a country known for its fast-paced life. But the bubble that holds such images bursts the moment one steps into Nashville, a scenic haven of the superpower of the world.

Capital of Tennessee, Nashville is known to be the most populated city in this state after Memphis. But the sprawling landscape, the surrounding mountains and the lush greenery would merely make one feel part of a populous world. A major hub of music, a music lover would definitely want to visit this city, which has bestowed popularity to country music, Christian pop music and jazz. The Country Music Hall of Fame Museum and Ryman Auditorium, called the ‘Mother Church of Country Music,’ are two of the favourite music haunts. Also, to celebrate music, each year, Nashville is thronged by thousands to enjoy the CMA Music Festival (Fan Fair).

Apart from cultural attractions, which are aplenty in Nashville, if you’re someone who adores architectural beauty, you’d be bemused at the sight of the Parthenon in the city’s Centennial Park, which is an exact replica of the Greek Parthenon. A visit to the downtown area, especially in the evenings, will open the window to the lifestyle of Nashville denizens. Quiet for most part of the day, the downtown evenings can take one by surprise. With celebration in the air, one could either shop till they drop, binge till you cringe at the sight of food or even sip a drink and let your hair down at the many hip ‘n’ happening night clubs. After a wild night out, what better than to spend the next morning boating and fishing on the Old Hickory Lake or Percy Priest Lake?


Source : IIPM Editorial, 2012.

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Monday, October 22, 2012

It’s the true world wide ‘web’

Global coordinated action is a huge necessity to tackle cyber crimes

A young man called Jimmy, an Internet hacker, walks discreetly to a Cyber Café in Nigeria to demonstrate his skills of perfidy, fooling perfectly innocent people into his well crafted web of fraudulence. He sends tens of thousands of e-mails congratulating them for winning $6.4 million worth of a sham British lottery. Anybody falling into this trap would be asked to pay ‘fees’ and ‘taxes’ amounting to $5000, which would be pocketed by Jimmy, leaving the respondents in the lurch.

Jimmy is only a tiny fish in the huge ocean of cyber crimes. In UK, internet crime gangs are recruiting students from British universities to join them. Often, these syndicates have developed a cult following among young hackers who are lured by the promise of celebrity status. This kind of recruitment resembles the KGB style of doing things in the heydays of the Cold War. The online fraudulence includes Internet auctions, sweepstakes, lotteries, identity theft and prizes that have despoiled money worth $152 million in the US alone last year. Older people are more susceptible to these crimes; they have being defrauded to the tune of $43 million in 2005. Around 41% of complaints of fraudulence filed by people from the age group of above 50 and received by Federal Trade Commission of US are online crimes. The figure was only 33% in 2002; indicating an alarming increase. As if things were not bad enough for the US, top secret data from Pentagon has been hacked regularly by Russian, Chinese & French hackers, which has kick-started a cyber war with them. Now these hackers are a cause of concern across borders.


Source : IIPM Editorial, 2012.

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Sunday, October 21, 2012

No more tiger trails?

Peace can now be restored, but only if Tamilians are successfully restored to the mainstream

finally, the Sri Lankan security forces have managed to corner the Tiger in his own lair. When Colombo announced that over 350 bodies of LTTE combatants including the Tiger bosses and near-mythical figure, Velupillai Prabhakaran’s dead bodies were recovered from the war zone, it seemed to one and all to be the welcome end to the Tiger terror. The list of those killed included crème da la crème names and LTTE seems to have been left headless. A jubilant Sri Lankan President Mahinda Rajapaksa, announced to a relieved nation that the ‘final task’ for liberation had been accomplished.

Those who are left of the LTTE claim that Prabhakaran’s death has been forged. Meanwhile, the fate of thousands of unarmed civilians, reportedly accompanying the Tigers, remains unknown. Colonel Hariharan, ex-head of military intelligence of the Indian Peace Keeping Force (IPKF) in Sri Lanka back in the 1980s, told B&E, “One has to go by the version of the head of the government. The Sri Lankan President is accountable to his people.” It was a veiled admission that he had no independent sources for confirming Prabhakaran’s death. But now that Prabhakaran and LTTE are out of the way, the question is – does the Sri Lankan government have a road map to bring Tamils into the mainstream and build a foundation for lasting peace?


Source : IIPM Editorial, 2012.

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Friday, October 19, 2012

Some learn it the hard way

When a goof-up cost Pacific Gas & Electric company $333 million...

Several blunders have led to the environment’s decline but only those that affect humans come to the limelight. And, rarely, those who cause such troubles are made to pay for it. One such blunder of contaminating ground water with chromium in the Southern California town of Hinkley was done by Pacific Gas & Electric company. The depiction of its severe effects on the health of the local people has been shown in the Academy Award winning movie – Erin Brockovich, where Julia Roberts plays the lead role of Erin who fights for the cause.

“My investigation eventually established that the health of countless people who lived in and around Hinkley, California, in the 1960’s, 70’s and 80’s had been severely compromised by exposure to toxic Chromium 6. The Chromium 6 had leaked into the groundwater from the nearby PG&E company’s compressor station. In 1996, as a result of the largest direct action lawsuit of its kind, spearheaded by me and Ed Masry, the giant utility paid the largest toxic tort injury settlement in U.S. history: $333 million in damages to more than 600 Hinkley residents,” writes Erin in her online biography.


Source : IIPM Editorial, 2012.

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Thursday, October 18, 2012

Old, but not gold

The Wadia group faded with Dhrubhai’s rise

Their battle is the stuff of corporate legend. It all started in 1981 when Nusli Wadia, after gaining the license to build the Di-methyl terephthalate (DMT) plant, found Dhirubhai Ambani in the way for the first time. The latter, as we all know symbolised the aggressive new India, ready to break age old barriers and cover new ground. The Wadia Group, founded in 1879, was symbolic of colonial India. Dhirubhai moved from strength to strength in the textile business, shaking the stalwarts to their very roots. The Wadias accused Ambanis vehemently of breaking the laws and tried every trick in the book to stall his rise. In no time, the war took an ugly turn. Ramnath Goenka, initially a negotiator for both parties, decided to support Wadia. The battle went on till Ambani suffered a stroke in 1990. Ambani’s detractors in business, media and political circles tried what they could to stop him. But the Reliance Group was destined to tide over all the barriers that came before it. The group’s forward and backward integration strategy left the Wadias miles behind.


Source : IIPM Editorial, 2012.

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Wednesday, October 17, 2012

If not during, then after it...

Money would continue to play a crucial role before or after elections

Money is increasingly becoming an indispensable proposition when it comes to influencing voters in election s anywhere in the world. Even in developing countries like India, where fiscal deficit is a norm, a gigantic Rs.10,000 crore is estimated to be spent during the election this time. One wonders what could have been done by this money if at all the political parties were serious about bringing in development.

Researches show that the two highest spenders in election are the US and Canada. While Canada spent over $300 million in 2008, the US spent over $5.3 billion in the 2008 US presidential election. Collectively all parties in the US raised over $1.64 billion while the US President Barack Obama alone had raised $532 million which adds up to $7.39 per vote. And mind you, a large chunk of money raised by Obama was a result of small donations received from Obama’s fans and not from big fat corporate donations. Even Nigerians understood the mystery behind the politics of money and allowed its Stock Exchange to allocate $630,000 to influence the US election. This bluntly ignored the US election rule that prohibits political parties from receiving contributions from abroad. The domestic corporates were not far behind. The McCain campaign finance is a case in point. However there is very little connection between money spent and voters’ turnout. Huge expenditure does not guarantee high turn-out.


Source : IIPM Editorial, 2012.

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Tuesday, October 16, 2012

Poor man’s labour lost

The UPA announced some schemes for the working class, but largely ignored the issues that really needed to be urgently addressed, says vikas kumar

When the Manmohan Singh-led UPA government assumed office, hardly anybody had expected drastic steps in the direction of the much contentious labour reforms. This was because the oxygen for the government’s survival was being supplied by Left parties. However, its performance on many accounts was even below the modest expectations.

The National Common Minimum Programme specifically mentions about the implementation of minimum wage laws, “ The UPA administration will ensure the fullest implementation of minimum wage laws for farm labour. Comprehensive protective legislation will be enacted for all agricultural workers.” Minister of Labour and Employment Oscar Fernandes says to B&E, “Whatever we had promised in the CMP for the organised or unorganised sector, we have fulfilled it.”

Labour laws face severe challenges at the grassroots level. One major problem is that there is a paucity of clear statistics on the number of people working as domestic labour. The estimated number of domestic workers in India is 90 million, but this is probably an underestimate as there has been hardly any systematic study to document such workers throughout the country.

The other issue which haunts a majority of the labour class is lack of a credible social safety net. This forces them towards bonded labour-like situation under appalling conditions for less than decent wages, often from childhood to old age. It is deplorable that in most of the states, the minimum permissible daily wage is less than Rs.50; the level of minimum wages rises above Rs.100 only in four states.


Source : IIPM Editorial, 2012.

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Monday, October 15, 2012

Bad business today?

Expansions are on hold & value for money products are the in thing

Bon appétit in India? A year back, the answer to this question for global QSR brands would definitely be a yes. Thanks to the gastronomic Indian market, this sector has shown a whopping 35% growth till August 2008. From the beginning of 2007 till the first half of 2008, the sector has seen a mind boggling investment of Rs.1.6 billion (according to figures from Federation of Hotel & Restaurant Association of India, FHRAI). While growth rate of the pizza market in US is just 5%, India has shown a strong 20% growth.

However, all that seems to be a history now, as the prevailing economic turmoil has browbeaten the feasting dreams of the Rs.25 billion Indian QSR industry. The economic meltdown has impacted them in two ways; on one hand, there’s a stymie on real-estate development and on the other, there’s rising real estate cost. “Indeed, rising real estate cost is a deep concern,” avers Ajay Kaul, CEO, Domino’s Pizza India Ltd. No wonder then that Domino’s has slashed its growth plans from opening 65 stores in 2009 to 45.


Source : IIPM Editorial, 2012.

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Sunday, October 14, 2012

Lonely Knight

Dasgupta’s successor will not find the going very easy

Aleader can be as great as can be, but he cannot ever be larger than his team. That’s exactly where Multi Screen Media’s (MSM) now ex-CEO Kunal Dasgupta faltered. Undoubtedly, Sony grew leaps and bounds in India under his stewardship. But unfortunately, insecurity and the fear of being overshadowed by new blood gripped him so badly that his prime focus shifted (from ensuring the channel’s success) towards chucking out his possible successors.

Dasgupta joined Sony as CFO in 1995 and was promoted as CEO in just three years (in 1998). Over his 14-year-long stint, he build the Sony network from one entertainment channel to a bouquet of six channels. With his visionary leadership, he has not only led Sony but the entire genre. He brought the concept of cricket as entertainment by telecasting it on SETMAX. He started telecasting new movie flicks to get glued eyeballs on weekends. He also managed to displace Zee TV from its number one position in 1999. This time, his weapon was horror show ‘Aahat’. Andy Kaplan, President – International Networks, SPTI acknowledges Kunal’s contribution, “Kunal has played an instrumental role in growing our channels business... His experience and leadership will be greatly missed.”

Maybe. But ten years later, Kunal hasn’t exactly been the image of visionary leadership that he was when he started off. For he is the man who has also led Sony on the downtrodden path to a poor number four in the GEC category in the latter half of 2008. So where did this media maverick go wrong? “I think Kaun Banega Crorepati (KBC) should have never ever happened… because I had a chance to buy it but I felt a quiz format will not be that appealing to the audience. I refused it...”, is what Dasgupta himself admitted earlier to B&E. And that exactly was the turning point. In July 2000, KBC was launched on Star Plus along with K-packed soaps. Within months Star Plus became number one in the GEC category. Since then, Dasgupta has been on an erring spree and Sony kept falling on expectations. And as he started faltering, his fears of being replaced became stronger, with alarming consequences.


Source : IIPM Editorial, 2012.

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Friday, October 12, 2012

Recession hits the World Bank :-)

Who would’ve thought that the Third World would get to see this day

Damn the recession! One can’t even keep quasi-nationalist and snobbish institutions insulated from the pungent smell of the Third World. Look at what’s going on at poor IMF and World Bank, two institutions who in the past have not only ensured that power and policy is dictated by the western world, but have also ignominiously had their own policies initiating economic crises in various parts of the world. The pretty poor World Bank is planning to introduce some changes in their constitution. In the new set up, emerging economies will get a bigger say in policy and decision making. And how did this doe-eyed garbled monster end up accepting such a huge ego destruction? Look no further than its prettier, and now much poorer cousin IMF.

Surprise surprise, the IMF is now eyeing countries like China, Brazil, Gulf countries, South East Asian countries and India to get some ‘funds’. Though Japan, which has been hit hard by global meltdown, continues to fork out large amounts of money for the IMF and World Bank (Recently, the Japanese government donated a gigantic $100 billion to the IMF), economists say the IMF would still need a minimum of $500 billion to start its ‘good work’ for battered economies globally.


Source : IIPM Editorial, 2012.

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Thursday, October 11, 2012

More blasts from the past...

A recent release of classified documents shows how US has manipulated West Asia. A B&E exclusive

American Presidents have wanted to differentiate themselves from their precursors with abrupt alterations in Middle East guidelines and dubious tactics that have only helped in damaging American integrity in the area. And as far as conflict resolution is concerned, on several occasions, presidential judgments and the out-sized sway of White House advisers and foreign statesmen and their envoys, have defined US policy. Recently, declassified White House documents released by National Security Archive reveal how knee-jerk actions (and inactions) by several presidents of the United States shaped the (mis?)fortunes of Middle-East.

For example, the personal pleadings of Soviet leader Leonid Brezhnev, who tried to convince President Nixon in June 1973 that conflict was imminent in the Middle East and that the lone approach to avert it was by a vigorous ambassadorial involvement by the superpowers, went unheard. The document reveals Brezhnev pressing, cajoling, and nearly beseeching with Nixon to arrive to a concord on Israeli terms. It emerges that Brezhnev's endeavour possibly would have been genuine. But in the summer of 1973, the outlook in the White House appears to have been that given the “Watergate Scandal” on the domestic front, it was politically too hazardous to move into the minefield of Middle East negotiation. And war followed, as Brezhnev had envisaged.

However, when war broke out, Nixon’s resolve of non-intervention melted and the US started arming Israel. The documents released show how, in a propaganda move, US accused USSR of intervention to justify its move. President Nixon's crown national security aides including James Schlesinger and William Colby met right away and chuckled that they could clarify their abrupt decision by blaming “Russian treachery”. They indicted Moscow of commissioning a “massive” airlift, falsely, according to the CIA's guesstimate. Kissinger rough drafted what the government would say to the world: “We can now say there was Russian treachery on the negotiations.


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