GUNNING FOR THE SUN

Sun Pharma’s two-pronged strategy – of making low-priced acquisitions and its cost control mechanisms – enabled it to run effortlessly ahead when others in the sector were panting during FY09!

Once considered ‘destined for greatness’, Wockhardt and Ranbaxy are bed-ridden today when it comes to operational excellence and India’s pharma sector, once considered immune to downturns, stands battered. So is it all bad for the bigwigs in the sector? Not really. Sun Pharmaceuticals has surprised everyone with its mind-boggling performance even in a recession- hit FY09!

Here are some numbers that stand testimony – while most players saw a dip in revenues and profits, Sun Pharma grew its topline by a smashing 27.3% y-o-y to garner Rs.4,272.3 crore, and its bottomlines by another handsome 22.2% y-o-y to touch Rs.1,817.8. So what enabled this $4.5 billion giant to take control in a situation when goliaths around the world were crumbling to the ground? We asked Uday Baldota, VP – Investor Relations, Sun Pharma, about the most critical strategies that help Sun Pharma beat the beatdown and he outlined two of them, “Success at acquisitions and cost leadership…”

True. In the recent past, Sun Pharma has proven critics of M&As wrong, having acquired 14 distressed assets over the years (at low prices) and turning them into profit-churning machines. And these turnarounds, which helped Sun to diversify into new drug segments, are showing signs of being the key drivers of revenues for the pharma major today. For example, when it laid hands on Dadha Pharma (Tamil Nadu), Sun entered the oncology space. With purchase of Milmet Labs, they acquired expertise in the opthalmological space and with Valeant, gained entry into the controlled substances niche. And if its $454 million Taro deal comes through (as per Baldota, “The deal is still on, with some court decisions awaited.”), Sun will get another headstrong entry into the dermatological market.

Besides, Sun has always remained a cost leader in the generics drugs platform. As Baldota reveals, Sun’s net operating margin is a tremendous (43%), which for the other top ten pharma players, is only a modest 10%! Sun also doesn’t believe in over investing in R&D (its R&D budget allocation is only 8% of revenues, while that figure for the industry stands at a much higher 14-15%)! Further, unlike major drug majors, it faces no danger of patent expiry, as Baldota clarifies, “We don’t have any problems of patent expiries as ours is a generics company…” Yes, one can claim that cost-control has been a key reason for Sun’s ultra-superior bottomlines even as the slowdown monster was gobbling-up profitability all around. “Focus on costs has remained a top priority for us (even) in good times…” confesses Baldota. For some, the year gone by looked duller than ever, but we guess that for others, the ‘Sun’ just didn’t stop shining!

Steven Philip Warner

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Why Finmin fears El Nino?

Pranab mukherjee is in a dilemma these days – should he allow the fiscal deficit to soar high or should he apply brakes and impose some degree of fiscal discipline. It’s a tough choice for all that the aam aadmi wants is a popular budget (not using the term populist budget as it sends negative connotation). Thanks to the accelerated public spending and a dwindling revenue collection, the fiscal deficit for the first month of FY 2009-10 has shot up to 16.3% of the projected full year budget deficit of Rs.3.32 trillion. The irony is that even this figure is elusive as it doesn’t take into account the off budget liabilities like the fertilizer subsidy and compensation to state-run oil companies. On a comparative basis, the total spending in April 2009 amounted to Rs.662.17 billion (up 43% from Rs.463.33 billion in CPLY) while the net tax receipts fell 32% to Rs.74.62 billion from Rs.109.63 billion last year. In fact, the tax GDP ratio, which had seen a steady rise through the boom years slipped to 11.4% in FY 2008-09 from a peak of 12.3% a year earlier. Economic think tank Centre for Monitoring Indian Economy (CMIE) attributes the lower tax collection to post-budget announcement of cuts in excise duty and service tax. The government, in its interim budget, had pegged the gross fiscal deficit at 5.5% of the GDP (lower than the 6.1% ratio in 2008-09); but given the scenario, the ratio is expected to remain higher than the budgeted estimate in 2009-10. “There is a possibility that India’s fiscal deficit would increase by 1% of GDP from the level expected by the interim budget,” forecasts the S&P report. El Nino can possibly favour the Aussies in the upcoming Ashes Series but for the finance minister, it can possibly shower fresh bout of trouble as he strikes to balance fiscal prudence and populism.

Gyanendra Kashyap

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An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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For the patrons of smiles...

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For the first multiplex in India, service has been the key. And PVR still believes that best service on their part and great experience on part of the consumers is the only way to their success, finds Pallavi Srivastava

This certainly is not the best of the times for Rahul Singh, Senior Vice President, PVR Ltd. The face-off between distributors and film makers is taking its toll on him, at least it appeared to be so when we met him over his morning cup of coffee. But even then, his smile had not left his face. And why not, after all, his company banks on ‘Bringing smiles’ to its customers. Thirteen years ago, when PVR started its first multiplex in 1997, the vision was to enhance the movie-goers cine-watching experience and they claim to have lived up to it. Of course, compare the multiplex retail chain’s first mover advantage in the segment, and its current pan India presence with 26 theaters, and you’d agree that PVR has indeed come a long way. And its the unswerving commitment and relentless efforts of small cogs like Rahul to enhance the giant wheel of the customers cine viewing experience that have played a vital role in this achievement.

Like most other senior executives of PVR, Rahul begins his day at office by sifting through the previous day’s financial and operational figures, followed by checking his appointments scheduled for the day. But his critical job is to follow up the problems occurring at any of the 26 PVR Cinema theatres and resolve it as soon as possible. Asked whether he finds the job very stressful, he gently shakes his head (with a smile intact of course!) and says he draws his inspiration from boss-man Ajay Bijli. “Our CMD believes that there is nothing more exhilarating than seeing patrons coming out smiling from our cinemas and we are committed to it,” stresses Rahul.

Interestingly, at PVR, the company claims to not only treat its patrons like kings, but also the employees. The general philosophy that prevails in the company is that the employees who deliver services are the only ones who can improve it. That is why every unit in PVR has a BODGI box (Box of Damn Good Ideas) where employees put in their ideas to improve processes or systems leading to service or operational excellence. Rahul who leads a team of 1500 energised members, points out that these BODGI boxes bring in great innovative ideas and help foster a feeling of belonging among employees.

When asked about whether the name ‘PVR’ comes to their rescue while dealing with customers, Rahuls immediately answers in the affirmative. “Of course!” he says, explaining that since patrons are sure of their PVR experiences, many potential problems are automatically averted. To ensure that this perceived value remain intact, PVR employees are encouraged to always remain on their toes to help and service customers. “We cannot be complacent in this competitive market or rest on past laurels. I would like PVR to be always reckoned for the quality of service it provides and for that, living up to the expectations is just not enough. We need to surpass it more often,” says Rahul passionately. This apparently is the qualitative difference that PVR bets big on to differentiate itself from rivals.

Segmenting its offerings is another recent strategy of PVR to cater to the diverse needs of consumers. They’ve launched brands like PVR Premiere targetted for the metros and PVR Talkies for Tier II and Tier III cities. Then there’s also the focus on complete retail entertainment to enhance the overall service experience of customers. Rahul sites an example of the new ‘Blue-O’ (a 24 lane bowling alley) at its theatre in Ambience mall, Gurgaon. It claims to provide unique entertainment to customers, combining a world class bowling and movie experience.

We caught the picture perfect service manager off guard, when we enquired how he spends his after-office hours. He revealed that he was in fact a fitness freak. “I always make it a point that I work out at least 4 times a week,” he admits shyly, before the greatest religion in India surfaces in our talks. Avers Rahul, “I am a great fan of cricket and I am completely hooked to IPL. My favourite teams are Deccan Chargers and Delhi Daredavils.” Besides, he says, “I love reading management books,” and the latest one in his hand is The Ice-Cream Makers. That’s the PVR flavour, we hope!

Pallavi Srivastava

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Reliving the up-close and personal confidence

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Brand: Close-Up
Agency: O&M
Close Up Confidence was the re-launch campaign for the HUL brand which was facing stiff competition from Colgate and low-end players like Anchor, Babool, et al. The campaign, which had a retro feel to it (a la K. L. Saigal style) was a run-away hit and Close Up became the most recalled brand that year. New ‘tingly red’ variants and the fresh campaign worked wonders. The toothpaste increased its share from 11.7% in FY06 to 12.1% in FY07 and 12.7% in FY08.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Brand: MTV

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The Vignette Victory

Agar Hum Rupa Ki Baniyaan Pahnege Toh Rupa Kya Pahnegi? This music channel has always believed in vignettes to promote the Brand MTV. And the Rupa Ki Baniyaan campaign from their stable has been one of the most effective - attracting a fair share of eyeballs to induce present and future advertisers. Says an MTV spokesperson, “We are into such types of nonsensical advertising campaigns. These are not about TRPs so much as about innovation.” But fact is that unlike its other ‘campaigns,’ this one managed to catch the imagination of India’s youth, who then were just about awakening to post-liberalisation irreverence.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).


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Fools Follow Ides of March

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It is not just about April Fool’s Day. The month has been a source of both mystery and strategy for ages. You see, back in history when people led simpler lives, April was a month of power, rejuvenation, hope and new beginnings. The harvests were in the market and families had the money to splurge (or starve if the crops failed). But even then, ‘producers’ had to take strategic decisions. The difference between then and now is – the variables were limited and strategic decision making was not so complex then. After all, all a farmer had to decide was which crop to sow and leave the rest to whichever God he believed in. In this day and age of modern corporations, annual budgets and strategic plans, April continues to be a month of new beginnings and new plans. And more often than not, God is less a factor than power point presentations and number crunching and targets. Wonder why ‘financial’ years start in April and end in March – not counting for the Ides of March followed by April Fool’s Day!

Modern day entrepreneurs like Anil Ambani too sometimes have no choice but to leave some things to God. But then, the man surely has do more than pleasing God and number crunching. Of all major entrepreneurs in the country, the younger sibling’s April, 2009 strategy will be critical for his own survival as a maker of magic. ADAG has invested billions in numerous new and old ventures. There was that promise of synergy that would boost cash flows like how. But cash flows have dried up and many of Anil Ambani’s infrastructural dreams are in danger of becoming nightmares. How will he ensure that 2010 will not be one related to the Ides of March for his group? India Inc. will be closely following his April strategy.

Lalit Modi is another gambler who has taken April as a month of challenges and opportunities. Recently, his so called brainchild and money spinner, Indian Premier League (IPL) is virtually struck by the Ides of March virus when the powers that be decreed that India may not be a safe place to host the IPL extravaganza. Shahrukh Khan suddenly saw his dreams of a rampaging Kolkata Knight Riders transforming from a blank cheque to an albatross. There were many others like Vijay Mallya, Preity Zinta and Shilpa Shetty who risked losing fame and fortune. But Lalit Modi has taken a bold April gamble and taken the IPL to South Africa. Nobody is still willing to gamble on the future of his gamble!

But the, the mother of all April, 2009 strategies will that of that branch of the Bajaj family that handles Bajaj Auto. Once the undisputed market leader and icon of the Indian automobile industry, Bajaj Auto is losing market share and mindspace so precipitously that one fears where ‘Hamara Bajaj’ will be headed in April, 2010. A turnaround will be truly remarkable. But then, betting on a Bajaj turnaround will be a huge gamble.

These are just a few isolated examples. Do read the entire package for the really interesting stuff on the real April Foolproof strategies. read more

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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What’s complicating the financial crunch is the June deadline to repay the $3 billion bridge loan taken for the JLR acquisition.

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Having already laid off some 850 JLR employees in November last year, the once ego-boosting acquisition is beginning to seem like the proverbial albatross around Tata’s neck. No, Tata Motors is nowhere near bankruptcy (a la GM and Chrysler) thanks to the backing of the cash rich Tata Group, but inventories are piling up and payments to suppliers are being missed. In a press briefing on February 5, Tata Motors Managing Director, Ravi Kant ruefully accepted that “There could be a delay in payments (to vendors). It is a difficult situation. The whole industry is facing problems.”

Launching the Nano at a time like this has its downsides and upsides for Tata Motors. With the economy worsening, a four-wheeler at the cost of a laptop is sure to catch the imagination of cash strapped consumers. So the runaway success of the Nano is almost a given. Claims Dilip Chenoy, Director General, SIAM, “Nano will pump in additional excitement in the market, creating a new segment for itself.” Also, reports are pouring in that even consumers in Europe and the US are turning to small (read: cheap) cars in these recessionary times and the Nano could become an export cash cow. “The initial response will be vital for the success of Nano and will depend upon the product performance,” points out Jagdish Khattar, former MD of Maruti Suzuki.

But that will be in the long run. For now, Nano is likely to contribute little to escort Tata Motors out of its present financial quagmire. Sure, Ratan Tata has got the Rs.1 lakh costing pat, but the problem is in the wafer-thin margins that the Nano is likely to generate. Obviously, the strategy is to play on huge volumes and high-priced variants to make the Nano a profitable proposition. “Once the new plant gets operational, the company will be looking at coming out with the other variants of Nano – the diesel version and Nano Europa for exports,” says Siddharth Vinayak Patankar, Editor-Auto, NDTV. But that’s the long-term outlook. Given the demand-supply mismatch now (at least till the Sanand plant becomes operational), Nano is not likely to add much to Tata Motors bottomline. Agrees N. K. Dhand, Chairman, Micromatic Grinding Technologies, “The Nano will attain high volumes in a time horizon of at least five years and only then it will prove profitable for Tata Motors.” In the meantime, the company would do well to focus more on the success of its Indica Vista, Ace, Winger and the soon-to-be-launched new Indigo – the quartet can help Tata Motors bounce back in the short term, much better than the Nano ever will!


Clearly, Ratan Tata is putting the burden of his ego on to the profitability of Tata Motors. Unlike other automakers in the country who are planning a slew of new launches in the market to boost falling demand, the launch of the Nano is absolutely not an attempt to fight the slowdown blues; rather it is more about Ratan Tata’s promise to deliver ‘The People’s Car’ within the appointed hour. But to pull off an ambition like the Rs.1 lakh car, you’ve got to have a bit of an ego in the first place. And lest we forget, Ratan Tata is known for his knack of being the turnaround man. He worked his magic with Tata Motors in the 1990s, turning the company around from a loss making venture to a sure-footed, nimble and profitable business. Then it was the dull & staid Indica that turned the tables. If Ratan Tata can just figure out a short term gameplan (minus the Nano) to boost profitability, the much-hyped Nano may well repeat history over the next few years...

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Bank of Baroda has now opened swank new branches in Hyderabad and Bangalore to attract IT professionals

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Bank of Baroda has now opened swank new branches in Hyderabad and Bangalore to attract IT professionals; SBI is gung-ho on ATM, Internet and phone banking; while Punjab National Bank has initiated its 8 to 8 banking campaign and started ‘Doorstep Banking’ as a pilot project in New Delhi. Most PSBs are also gleefully hiring savvy and smart-talking MBAs for their marketing and sales operations, which till a few years ago was purely the prerogative of the ICICIs and HDFCs of the Indian banking world.

To get a reality check for ourselves, we visited a branch of a state-run bank in the NCR last week to open a new savings account. The branch did look cleaner than it did a year ago (this author has a savings account there – courtesy their locker facility – for the past six years) but the sense of bureaucratic apathy is still writ large on the bank’s overall packaging ambience. Notwithstanding the gruelling training sessions with staffers; decades’ old mindsets do not change in a day. Sure the guy at the counter was more helpful (and even smiled!) but the sense of urgency was absent. Like Barack Obama, guess PSB’s will sooner or later have to figure that campaigning for change and implementing change are opposite sides – not of the same but – of different coins!

If state-run banks are flexing their muscles, you will be wondering why private and foreign banks are keeping mum. It’s the global financial watershed, silly! When Wall Street’s worries made way into India, one of the first casualties was ICICI Bank - the nation’s largest and most aggressive private bank. People were seen lining up to withdraw their savings at ICICI branches, no thanks to malicious rumours about the bank’s financial exposure to Lehman. In an unprecedented move, the RBI had to intervene and issue a statement about adequate liquidity at ICICI. Unlike their public sector counterparts, private banks have also gone on the defensive even in their positioning. So in this downturn, ICICI Bank’s ads are doling out the message of ‘trust us’, giving PSB’s a free run to communicate their ‘change’ agenda.

Sure state-run banks have all had a haircut, shaved and worn designer suits... but will it be smooth sailing from hereon to win back the young and savvy customers in metros and big cities? Halve does not think so! The first step he feels is for them to get their respective ‘change agents’ up and running across the spectrum and the second is innovation in ‘reaching out’ strategies. “Right now, state-run banks have simply reached that threshold level at par with private banks. The next step now should be to widen the service bundle.” He’s hinting at the shape of things to come. After all, like with most services-based industries, differentiation is what will eventually decide victory. The one-size-fits-all -strategy will not work forever and a segmented approach is bound to replace it. Who knows the next initiative from Canara Bank will tantamount to service guarantees? So if your account is not opened in 30 minutes, the bank will actually pay you a fine for the inconvenience (a la Domino’s 30 minutes or money back scheme)!!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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An age - ‘old’ theory

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With all modern investment instruments taking investors for a ride, traditional investment options are back in action with all guns blazing

The lust for big bucks has taken its toll on the public’s otherwise robust investment function lately. Maturity in the debt and capital markets had spawned a great deal of interest in non-traditional instruments and the response had been overwhelming. If not for the economic turmoil, non-traditional instruments would have continued with their frenzy in a flexible investment-high return scenario. However, after the recent chain of events, with investors losing money and sleep, the apparently forsaken traditional instruments are back in action.

R. K. Gupta, MD, Taurus Asset Management Company avers, “Traditional instruments of investment are for social security and are held by investors in order to meet future requirements and uncertainties.” Agrees Ramesh Dalal, VP (Financial Planning), Bajaj Capital, “Traditional investment instruments are basically meant for wealth preservation or regular fixed income. Suitability of an investment vehicle depends on one’s objective, time horizon and risk appetite.”

There are a plethora of traditional investment instruments in the market today and investors can choose as per their requirements. Each instrument is designed with a separate investment/ return scenario and investors are advised to take into account their personal preferences before going forward. Such instruments are effective for those investors who are looking at a steady flow of income irrespective of the comparatively lower rates as compared to those offered by non-traditionals. First on our list is a tried and tested instrument of Public Provident Fund; the instrument takes 15 years for maturity and has upper investment ceiling of Rs.70,000 annually. Return on investment comes to an uncompetitive but sufficient at 8%. The investment does not come under the tax net and is a friendly option for the working class. The limitation of investment is perhaps the only impediment in this investment. The monthly income plan of the post office is another productive option for the salaried and those looking for a regular income option. The plan has a lock in period of 6 years and has a maximum ceiling of Rs.4.5 lacs. The income earned from this source is exempted from tax as well. National Saving Certificate comes next in line with an investment period of at least 3 years; an investment up to Rs.100,000 is entitled for benefit under section 80C of IT Act. These instruments are virtually risk free and investors are required to have prior knowledge of such investment avenues. A diligent follow-up of the capital and money market is uncalled with such investment instruments. Considering the downturn when preserving existing capital itself is a problem, traditional investment options are the best way to beat volatility.

Investors should however bear in mind that these forms of investments are not intended for a rapid fire wealth creation. “You cannot create wealth by keeping money in the bank you have to take risks for that to happen,” opines Gupta. As per Dalal, “For short to medium term horizon and conservative investors, traditional investment avenues are definitely a better option but for long term wealth creation, one may consider market related instruments.” In all, there is enough talk on the traditional mode of investment and the ever green status of this avenue stays in this difficult time.

Karan Mehrishi

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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DTH market is going to witness a bloodbatch. Surbhi Chawla analyses tactics, strategies and, er, the dirges...

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“The quickest way of ending a war is to lose it,” is what George Orwell once said. But this logic is certainly not applicable to the ongoing war in the Indian Direct-To-Home (DTH) sector. The current industry estimates peg that there are about 10-12 million subscribers who have adopted this new technology, but the market right now is growing at an exponential rate and India has already surpassed Japan to become the leading DTH market in Asia. Interestingly, from an Indian point of view, the market right now is still considered to be at a nascent stage and there are already six major players in this market who are looking at expanding the market further at an exponential growth rate. Industry experts believe that the satellite TV market would be nothing less than 25 million by 2012. What’s more, it is expected that apart from Videocon (which has announced its plans to enter the DTH space by the end of February 2009), one can expect another 2-3 players to enter this industry in the near short-term. And this is not forgetting the fact that there is already a gruesome tussle amongst the current five players (not including DD Direct) that are actively looking at how to topple each other and bag more subscribers in their kitty.

From doing blatant comparative advertising to ground level tactics, the mud-slinging has gone to such an extent that the companies have even gone to steal the teaser ads of their arch rivals. One would remember how Airtel Digital had designed a teaser campaign to announce their arrival, where the ad had a plush red sofa landing with a thud and the tagline at the bottom reading – ‘See you at home’. One would also remember that even before Airtel Digital could break the campaign or get it to its envisioned end, BIG TV (from the ADAG stable) hijacked the teaser by floating their own campaign with a similar plush sofa falling with a more similar (and hurting) thud.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Entertainment

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What rocked?

Besides cricket, they also do the bhangra, rock n’ roll and salsa. The year not just saw Bhajji slap Sreesanth on field, but the duo showed up as rivals in a TV reality show. Bhajji won the ‘Ek Khiladi...’ contest (thanks to his partner Mona Singh), but he still ‘really’ can’t dance saala!

What didn’t?

He may be King of tinsel town, but SRK did not pass muster in the much-hyped game show ‘Kya Aap Paanchvi Paas...’ Star honchos tried every tool in the trade, created a mad buzz, but audiences gave a thumbs down.

A Promising Start

It took Star a few years (and the Big B) to beat the then numero uno Zee Telefilms. But it only took a few months for the new Hindi entertainment channel Colors to send shivers down the spine of Zee. Innovative content and a strong mktg. & dist. push made this one rock. Will it outshine Star?

The Broken Promise

2008 was the beginning of the end of the K-era, made popular by the kitchen-politics queen. Even Ekta Kapoor’s overtures to move away from mere saas-bahu dramas – with Mahabharata – didn’t create any magic. Even pet-buyer Star turned away from the lady in this time of crisis.

He mattered

His dream run began with Bhool Bhulaiya and finally there is Singh is Kinng! With this, Akshay Kumar has made it to the highest paid actor in Bollywood charging over Rs.20 cr/flick. From a B grade action hero to a super star, this Delhi lad is en route from Chandni Chowk to China.

He didn’t

Sure he tickled your funny bones by enacting the ‘fairer sex’ in the hit movie Dostana. But then, he had already spoilt it all before by delivering that monster flop of the year Drona. Slated to propel him to the league of the Khans and Akhsay, the dud left Abhishek with egg on his face.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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On wheels!

It all began with the unfolding of the Small Indian Dream, errr... the Small Indian Dream ‘Car’ – Tata’s Nano at the national capital on January 10, 2008 (a day after the Sensex closed at a magical of 20,873.33 points; what a coincidence!). Yes, the launch of the Nano received great media attention and the country was abuzz with expectations galore for a car that would revolutionise and expand the automobile industry in India, create numerous job and export opportunities, and in the end, boost GDP for the growing economy. For a year that didn’t see many successful innovative disclosures, Ratan Tata flagged off the year on a great note for India Inc.

But of course, as hurdles only love the brave, the Nano received lashes from policy makers, therefore forcing Tata to shift its ‘mother-plant’ focus from Singur (in WB) to Sanand (in Gujarat). It is currently reported that Tata Motors is producing the Nano from its existing Pantnagar plant (in Uttarakhand), in volumes that of course would multiply manyfold once the mother-plant is in place (which is expected to touch about 5,00,000 units annually). So what makes the Nano revolutionary? Well, it is so for both the consumers and producers alike. The Nano is a car so affordable that it will most definitely change the prevailing competitive conditions in the four-wheeler market, potentially making Tata Motors the number one player in the Indian market by volumes, what with even the 2008 budget reducing excise duty on small cars by nearly 4% to make them ‘more’ affordable! Today, even though Maruti remains the undisputed messiah for the 300 million-strong middle-class Indians, the Nano is only waiting to make its way into many garages! So is Maruti feeling threatened by the Nano? “I think we should let the Nano come into the market first and then we will see,” replied a candid R. C. Bhargava, Chairman, Maruti Suzuki India. Well, he didn’t say yes yet, did he? So finally, does the Nano launch deserve the first ‘Super Six’ title? Well, for the numbers, last year alone, the two-wheeler segment recorded a growth of 38% with at least 700,000 two-wheelers sold. Wouldn’t they prefer a car, with a just few thousand rupees extra?! Yezdi Nagporewalla, Analyst, KPMG agrees, “In volumes the motorbike segment is 7 million units strong and the competition from Tata’s Nano and others will be around 1 million units.” Interestingly, that’s a big number. Here’s a cheers to the number one Super Six of 2008!

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Source : IIPM Editorial, 2008

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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ART V/S COPY!

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Redifussion Y&R’s brilliant NCD, Sagar Mahabaleshwkar agrees. He remembers the time when there was a distinct LOC between the Copy and Art guys and believes that the globally renowned Young & Rubicam were the ones who demolished this divide and got them together. “In India, I think, Ogilvy followed this model early on with the Piyush Pandey-Sonal Dobral team leading the way. They were brilliant and successful all the way. Soon, others followed.” The creative honcho believes that this had to happen in response to the paradigm shift and changing contours of the new consumerscape as also the direction in which communication was headed.

“The era of smart words and pretty visuals were over. In a fiercely competitive market place, ads that were clutter-busting and powered with solid persuasion-quotient were the ones that were most likely to make a difference. Hence, joint brainstorming was the obvious solution. This resulted in the Art-College type Art guys recognising the significance of a well-argued, convincing communication capsule and the Copy guys recognising the fact that, many times, a powerful visual with minimum copy could do the trick. It was a learning curve for both providing a win-win situation for all concerned.” He cites the hilarious example of the globally revered creative Guru, Neil French, who once asked him if he knew why Art Directors went bonkers… and Copywriters didn’t! “Seeing my blank expression, he explained, that unlike writers who leveraged reason, argument and logic in their work, the Art person just freaked out on imagination, with all cylinders firing. This put so much pressure on one side of the brain that at one point, they flip their lid!” Ogilvy’s poster-boy Creative Director [impishly?] chooses to rain on this parade! Sumanto Chatopadhaya reckons that while the scary teller-system approach of Copywriters passing on copy to the Art person through a cubby-hole for visuals is over, the Copywriter still remains the public face of the team. “The reasons are obvious. English is the language of business communication and the writer is, mostly, more articulate and confident in that language than his Art partner. This allows for a higher degree of comfort level during interaction with clients. Also, for TVCs, usually script ideas emanate from the writer. Of course there are exceptions like my colleague Rajiv Rao, an Art person, who is brilliant and sufficiently articulate when he chooses to make a point. But then exceptions prove the rule, right? Hey, I hope my Art Director colleagues and associates don’t kill me after this sound byte!”

The last words, fittingly, must come from Adworld’s new super cat Paddy of Leo Burnett, whose Luxor ad created a sensation at Cannes. “I think the divide is history with Art Colleges themselves taking the initiative of making the students more savvy in the verbal area. They are now totally clued-in into articulating, explaining and defending their work in selling-mode instead of just letting their work do the talking.” He also believes that global exposure has played a huge part in this turnaround with art people realising that collaboration will only add value to the end product.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
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Rumour Raining!

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Of course rumour-mongering is ingrained in much of Indian culture. Earlier the bank was also hit by rumours in 2003. But then it was contained only in parts of Gujarat. This time it took a pan-Indian field. One of the reasons for this lies in the aggressive and innovative strategy of investments that ICICI Bank has been following ever since its inception. But then this is what lands the bank in trouble at times. According to Morgan Stanley, ICICI bank is most exposed to the US market in Asia. The bank’s retail portfolio has also been much frowned upon. Charudatta Deshpande, Head of Corporate Communications, ICICI Banks, tells 4Ps B&M, “ICICI Bank’s leadership position in most segments and its tendency to take initiatives has been wrongly interpreted as over-aggression and recklessness.”

Another reason for it being extra prone to rumours lies in the slightly negative brand image that it has acquired over the years, despite its stellar achievements in banking. The main source for this negative brand image is the violent and outlawed methods that the bank had deployed to deal with some of its defaulters. From being fined for hiring goons for loan recovery to harassed defaulters committing suicide, ICICI Bank has gone through it all. To sum it all no other bank in India has been so mired in controversy as ICICI Bank. But Deshpande begs to differ, “This has nothing to do with the bank’s image. It’s a systematic, well-planned effort of a cartel of brokers to hammer down its share price.”

Post the 2003 run-on in Gujarat, ICICI Bank recovered smartly and its stock made spectacular gains. But then its recovery was fueled by the bull run in the markets during next five years. This time the scenario is different. The crisis has been aggravated by the bearish Indian stock markets. The market capitalisation of Indian capital markets has plunged by over 51% from $1.81 trillion on January 10, 2008 to $894 billion on September 30, 2008 and the onslaught is expected to continue further. Therefore stocks of ICICI Bank will find it even harder to move up.

But ICICI Bank has aptly described the continued rumour-mongering as a form of economic terrorism. This can be seen in the case of fallen US investment bank Bear Sterns. Post its fall, many believe that it was rumour-mongering that brought down Bear Sterns. The investment bank had $18 billion in cash reserves when it went under. But rumours led to a run on the bank and sealed its fate. Now Bear executives accuse rival Goldman Sachs for spreading the rumour.

Integration of world financial markets and continued financial innovation have made banking an extremely difficult, complicated and dynamically changing job. Rumours have added to its woes. Their economic terrorism is helped by the Internet and advances in information technology and telecommunications.

So now do companies and banks need to keep rumour management teams and sophisticated rumour management systems to gun down this economic terrorism? Do management schools need to teach additional courses in rumour management? Should rumour management be a management discipline like Financial Management? Well, though a victim of it, Deshpande disagrees, “I don’t think it’s about having separate rumour management systems. It’s part of the crisis management system.” But then there are many more who may readily agree to it. Ask Steve Jobs!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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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Spicing up the entertainme nt dreams!

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B. K. Modi, Global Chairman, Spice Corp. is all game for the entertainment business. In an exclusive interview with Pallavi Srivastava he reveals his $1 billion plans...

He is sporting a new look these days. And in his new creative attire (with that hard to miss big hat!) you may easily mistake him as a director or producer of tinsel town. Though he laughingly offers, “this new look hides my age and makes me look younger,” but there is much more to it... His new look matches perfectly with his ultra zeal for the entertainment business. And his entertainment dreams start right from the 70mm screen; spans across the smaller screen of television, mobile and Internet; and tunes in to the music industry. So let’s hear about the mega entertainment plans, the reason for exiting Spice Telecom, rumours about selling Spice Mobile and much more straight from the man himself...

What is the reason behind selling off the telecom business to Idea Cellular?
We wanted to get out of our businesses on the infrastructure side, as infrastructure has become stagnant over the years. So it’s time we move forward and look for new pastures. Currently, we are focusing on the softer side of the business: the content business.

What are the new business areas that you are targetting?
I am strongly interested in the entertainment business. We have plans to put up $1 billion in this business across segments like music, games, movies, et al. Also making these content available on various new platforms, like mobile and Internet, along with traditional platforms like television. And we are not restricting ourselves to India only; we are looking at the region around India and also in the US.

What is the strategy behind getting into the entertainment arena?
It’s simple. The entertainment industry is on an upswing. And I strongly feel that India could be the world leader in the entertainment business. Moreover, it derives synergies from our mobile and Internet business.

Are you looking at acquisitions to expand yourself in this sphere?
As I told you that we are looking at an investment of $1 billion in the entertainment business, this money will be used for expanding ourselves both through acquisitions and through new ventures. We are considering a lot of options on the acquisition front in television, gaming, etc. Actually, we are a cash rich company and this industry is going through change, it requires consolidation and new players.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Five point someone?!

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Comparisons are odious but forewarned is forearmed...4Ps B&M’s Savreen Gadhoke analyses the backward journey of Indian retailers

Even before the then 44-year-old Sam Walton opened the first Wal-Mart store in Rogers, Arkansas in 1962, he had already put in place his supply chain and marketing vision. The fact that he already had more than a dozen years of experience running a variety of retail stores (Walton’s 5X10), spread across Arkansas, Missouri and Kansas, gave him requisite depth about consumer needs and a strategy for meeting their ‘lowest prices everyday’ expectations.

Cut to India’s Sam Walton wannabes a.k.a. Kishore Biyani, Mukesh Ambani and Sunil Mittal, among others (we’re sure you get the picture...) and you realise that they are holding the wrong end of the stick. If globally, supply chain management came first; in India, the story is remarkably different. Forget Walton, across Europe and US, new entrants in the retail business first ensure that their back-end is strong and robust and then concentration is shifted to front-end. But it is just antipodal in India. “In European and American markets,” says Andrew Levermore, CEO, Hypercity, “the supply chain is much more organised compared to India and this has enabled them to create very many successful retail brands.”

Retailers bemoan the multiple tax layers imposed by the Government as one of the biggest hurdles in developing efficient logistics and warehousing facilities. Vivek Wikhe, Senior Consultant, Technopak, avers, “Overall investment in back-end has not picked up in India so far and the main focus of retailers is on expansion. Most of the retailers still rely on the traditional set-ups of godown to store their goods.” No wonder, the Government has now begun giving incentives to those who are investing in building strong back-end support and players like Reliance, Bharti (Wal-Mart) and Vishal Mega Mart have begun earmarking hefty investments for establishing their back-end and logistics facilities.

Adds Arvind Singhal, Chairman, Technopak: “Indian retail industry compared to developed nations is very unorganised and unconsolidated.” Of course, there are those who say that one does not really need to compare. After all, organised retail is still a nascent industry in the country. But comparisons are inevitable, if one were to simply take into account that all the rosy predictions about the potential of Indian retail have somehow not kept pace. In fact, the picture today is nowhere as rosy as the one painted three years ago, when the Indian retail juggernaut was just about gathering steam. Then, pundits predicted that organised retail in India would grow at 38% annually and that the industry would touch the grandiose $60 billion mark by 2011. Contrary to the hype, even today, Indian organised retail is only growing at about 28-30% per annum, and the industry stands at only $14 billion odd today.

Clearly, something is not going as per plan. And hey, we are not even referring to the dismal ambience of Indian retail stores vis-à-vis their global peers. Out-of-stock notices, lack of air conditioning, slow billing process, are just among a few downsides of the Indian retail experience, but all that is easily rectifiable given that the industry is still nascent. But this nascence is perhaps the single biggest reason why one needs comparisons with global counterparts at this stage. Forewarned, is after all, forearmed!

Apart from supply chain issues, there is also the additional pressure of huge infrastructure bottlenecks faced by retailers in India, crucial among them being transportation. Seconds Soumitra Ghatak, CEO, My Dollarstore, who says, “As compared to other markets, Indian retail industry is still very new and its growth is being disturbed by lack of adequate infrastructure and property.” India is geographically vast and 40% of the traffic passes through national highways for going from one state to another. But national highways are few and far between, leading to congestion on road and timely delivery, which has a direct effect on the quality of products especially fruits and vegetables. They say that apart from a few states like Maharashtra, Gujarat and Tamil Nadu that have good highways, the rest of the nation (particularly north India) suffers from pathetic infrastructure. Interestingly, organised retail has had a successful run in South India largely because of the very developed Nilgiri belt. Major retailers like Subhiksha and Spencers have flourished out of Chennai only because of the good infrastructure facilities.

Further, unlike western countries, India is a vast, heterogeneous nation, with varied geographical and cultural tastes. So single-format retail has as little chances of success in India as peaceful resolution of the Kashmir issue between India and Pakistan! Little wonder that retailer after retailer is expanding his retail format net (small & big stores, large & smaller inventory stores, hypermarts, departmental stores, food & grocery retail outlets, electronics stores, apparel stores, et al) to catch more consumers. But herein is the catch! In India, the retail growth is mainly in food & grocery retail, a chunk which comprises of 55-60% of total organised retail, much higher than the global consumption pattern. And hence, while in Europe and US, the shift has been from hypermarkets to convenience stores, so far, the exact opposite has been the case in India. Baqar Naqvi, Associate Vice President, Retail and Consumer Goods, Technopak avers, “Given that large-scale growth has been projected for Indian organised retail, then retailers will clearly have to shift their focus on larger formats like hypermarkets and supermarkets.”

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Source : IIPM Editorial, 2008

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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When IIPM comes to education, never compromise
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Vampire endorsements and celeb abusement have become all to common words in ad-land’s lingo. neha saraiya gets to the bottom of the matter

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They can’t seem to talk about much else in ad-land these days. The talk almost always hovers around how to plug in a film star, a cricketer, a Sania Mirza, a TV saas-bahu soap star (in that order) into campaigns to get in the oomph factor. Worse, they are also talking about how, more often than not, celebrities are unable to deliver the bang for their bucks for the brand. Contradictory discussions, but these are the facts staring all marketers in their face. The choice it seems is between celeb endorsement and celeb abusement!

In December 2005, telecom giant Motorola was looking desperately for a celebrity who could kickstart its market share of, then just a measly 4% and set it off against competitors. The solution was Abhishek Bachchan! Around that time, Aby baby was also endorsing LG and its range of consumer durables (that also had mobile handsets in their kitty). Consumers were confused. More pertinently, Motorola’s ads were more eye-catching and LG felt completely overshadowed. Abhishek had failed to deliver for brand LG, a classic case of celeb abusement. LG did not renew its contract with Abhishek.

More importantly though, even consumers are sick of the celeb abusement in ad-world, with every ad looking an exact replica of the next. As per an IMRB International survey, more than half the respondents concur that celebs are just the icing and even they would not be using the products they endorse. Moreover, many feel that there is a grotesque disconnect between the product and the brand in most endorsement instances, where the celebrity eats away the brand. Often termed as Vampire endorsements these ones have a long list to go. From Tina Munim’s endorsement of ‘Ria’ soap in late 80s to the latest Tata Sky commercial featuring Aamir Khan, the question mark is not so much on the brand, but on the honchos who conceived the brand connect and storyboard. Says Titus Upputuru, Senior Creative Director, O&M, “How you use celebrities is how you get the final output. Celebs provide a brand recall, likeability of the product, along with equity. That’s how it works.”

So while very obvious brand-celeb connects (like Akshay Kumar and Thums Up) gets a definite ‘yes’, fact is that marketers need to look closely at the moolah they are churning out to rope in such big names to be a part of their campaign. Just think! Instead of Abhishek Bachchan in the Idea Cellular campaigns, couldn’t it be anyone else or even the usual good-looks model? No doubt, the campaign has got rave reviews. However, that’s not because of celeb power, but the credit goes to the powerful idea & storyboard that the creative guys came up with.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM - Admission Procedure
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
IIPM’s 36th Glorious Year of Academic Excellence
4Ps Power Brand Awards 2007
When IIPM comes to education, never compromise
Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...

Who’ll win the finals?

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Given the stakes, honchos at Nokia immediately pre-poned the launch of their N96 here – and are confident that at least in terms of features (where Nokia has an edge – see table) their smart phone will give Apple tough competition. Even the pricing of N96 is expected to be in the same range (maybe even a tad higher) as of iPhone. The strategy is clear. Both players want to first capture the innovative consumers and then opt for the late-movers and laggards, finally tapping the entire potential of the Indian mobile-scape.

As Anshul Gupta, Principal Research Analyst, Gartner India states, “The pricing is strategically high to get the cream first and then you will see major price cuts in both these handsets.” Speaking on the same lines, Sougat Chatterjee, Chief Marketing Officer, Fly Mobile India avers, “The market potential of phones like iPhone and N96 will never be more than 2-2.5% as they are targeted at niche audiences.”

To let the brand remain connected to its now-famous international success legacy, all iPhone marketing communications are based on their global campaign – typically basic and minimal. Agrees Sanjay Kapoor, President-Mobile Services, Bharti Airtel: “We have kept iPhone more or less the same device as in the other countries other than offering free download packs.” In other words, there is no tearing hysteria to ‘tease’ the consumer and get him out to sample the product, at least just yet. On the other hand, Nokia is expected to go the whole hog with its marketing blitz for the N96. The Finnish giant has already hired special buses (painted black with N96 splashed boldly in white) for its teaser messages.

What could still clinch the finals for Apple in India is the fact that the iPhone has exclusive tie-ups with both Airtel and Vodafone (India’s biggest GSM players – giving Apple a huge distribution strength), while Nokia has had to settle for a similar (though not exclusive) arrangement with Idea. When it comes to choosing between the two, going by features alone Nokia’s N96 holds the edge, although iPhone’s Operating System is reputed to be the most reliable in the industry. But Jobs’ marketing prowess can spring a surprise anytime. After all, if he has been able to crack markets world over, what’s to say that he will hate to lose in the most lucrative telecom market of them all? Yes bro, India!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM - Admission Procedure
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
IIPM’s 36th Glorious Year of Academic Excellence
4Ps Power Brand Awards 2007
When IIPM comes to education, never compromise
Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...