Showing posts with label India. Show all posts
Showing posts with label India. Show all posts

Friday, April 19, 2013

Creating an impact that achieves goals of equity as well as economic growth

As a new field of investing, impact investing uniquely gives the best of two worlds to the investor – financial returns as well as social equity. Linda L. Darragh, Director of Entrepreneurship Programs & Clinical Associate Professor of Entrepreneurship and Nurkholisoh Aman (Research Assistant) of the Booth School of Business analyse the developments and stumbling blocks for impact investing in India

Impact investing is an emerging investment field that is gaining increasing popularity as people look for ways to grow sustainable businesses. The recent global financial crisis is often cited as an example of how the capitalist model has failed to generate equitable and sustainable economic growth. On the other hand, philantropic activities alone cannot provide long-term solutions to what are the world’s most pressing challenges such as poverty, renewable energy, and the lack of basic health care.

Impact investing occupies a unique position between the extremes of pure for-profit businesses and charity/grantmaking. Through the promise of getting the “best of the two worlds”, impact investing presents a new alternative in the world of investing. In a 2010 study, JP Morgan defined impact investment as “investment intended to create a positive impact beyond financial return.”

Generally, impact investments target the population at “the base of the pyramid” (BoP). They aim to improve the lives of the poor by providing products or services that are otherwise unavailable or unaffordable. Another point of view of impact investments places the focus on respecting the environmental impact of business activities.

At Chicago Booth, we recently conducted a study to understand the landscape of impact investment in six emerging economies. In India, we found that there is an increasing interest in investing in entrepreneurs who pursue both social and financial objectives. A few years ago, micro finance lenders represented the breadth of social entrepreneurs in India. Now, impact investors have significantly broadened their definition of social investing due to the emergence of potentially scalable ideas in other sectors.

Given the sheer size of the Indian population at the base of the pyramid, there are almost unlimited opportunities for impact investing. Additionally, India now faces big challenges to protect its fragile environment – air, water, forests, and bio-diversity – from the rising pressures created by economic success.

Interviews with impact investors and agencies that work with social ventures identified the sectors that are most popular amongst social entrepreneurs in India. These are:
A. Water & Sanitation – There is a huge need for companies that offer customers safe, affordable drinking water through community water systems. Approximately 170 million people in India currently lack access to safe, clean drinking water. Water-borne diseases are estimated to cost US$600 million annually in lost production & medical treatment.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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Friday, April 12, 2013

Oops, They Did it Again!

North India, The Country’s Biggest auto belt, has seen Spurts of Labour unrest over The Last Few Years to The Extent that Automakers are now Shying Away from Investing in The Region. Can The Stretch retain its No.1 Position?

The management of Maruti Suzuki, India’s largest passenger car manufacturer, heaved a sigh of relief as the company reported 2% sales growth in May 2011, selling 104,073 units against 102,175 units in May 2010. No doubt, the growth was negligible considering Maruti’s sales trend over the last 12 months, but in a month when car sales grew by only 7% (the slowest pace of growth in two years) and players like Tata Motors saw a fall of 8.3% in passenger vehicle sales (due to a massive 35% decline in both Indica & Indigo sales), the 2% growth gave management enough reasons to cheer. However, the party didn’t last long. Just three days after, on June 4, 2011, the New Delhi-based company was grappling with labour unrest as 800 workers at its Manesar plant (the plant produces about 1,200 vehicles a day, including the popular Swift and A-Star hatchbacks, and the DZiRE and SX4 sedans) went on strike demanding recognition of a new union specific to the plant. The days that followed saw the company sacking 11 workers accusing them of instigating the strike at the facility, which only added fuel to the fire. Although the strike was called off in just 13 days, on June 17, 2011, it had already made a Rs.4.2 billion dent in the company’s topline by then. And not just Maruti, even its vendors reportedly made losses to the tune of Rs.300 million per day taking the total revenue loss to over Rs.8.1 billion.

It’s not the first time that the northern auto belt has been affected by labour unrest. Companies like Hero Honda, Honda Motorcycle & Scooter India (HMSI), Rico Auto, Sunbeam Auto, Hyundai, et al, have reported similar problems over the last few years. For instance, in 2009, while workers at HMSI’s Gurgaon plant were on strike to protest wages and other issues, Hyundai Motor’s India plant saw a three-day labour unrest. Almost half the workers at the Indian unit of Sweden’s Volvo Bus Corp. too went on strike in 2010, protesting wages. All this has certainly dented the image of India’s leading motown and automobile manufacturers are now shying away from investing in the region.

For instance, when Nissan decided to set up its new unit in India, in alliance with its global partner Renault, it chose Chennai as its home and not NCR. The company now plans to invest Rs.45 billion in this unit by 2015. Similar has been the case with Volkswagen and Tata Motors that chose to set up their base in Chakan (near Pune) and Gujarat (as the home for Nano) respectively. In fact, Maruti Suzuki too is setting up its third facility (its first outside Haryana) in Gujarat with a production capacity of 10 lakh units per annum (expandable up to 20 lakh units). On the contrary, except HMSI (which is planning to invest Rs.8.6 billion in production capacity expansion), no other big name is willing to set up its base in the region, at least not in the near future. This certainly raises questions over how North India will preserve its auto hub status amidst rising labour unrests. For the less informed, auto majors like Maruti Suzuki, Hero Honda, Honda Siel, Hyundai, Yamaha, and Suzuki Motorcycles are operating from the northern region, which accounts for over 50% of the country’s automobile production.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
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Thursday, February 7, 2013

BURNING CARS: THE TRUTH

As car manufacturers double up efforts to ensure cars don’t catch fire, it is important for customers also to understand how they might be ‘the’ problem in such incidents. by Pawan Chabra

Many similar Ajays and Pramods in the Indian market have literally put their lives at stake and eventually ended up spending lakhs just for saving a few thousands. According to data provided by Indraprastha Gas Ltd., there are around 170 certified CNG kit suppliers in Delhi alone, but consumers still visit local suppliers and get the uncertified kits fitted. Further, the technology is still crude. Cases of leakages in the CNG pipe or problems in the valve of a vehicle are a daily affair at several CNG stations. “The technology has been just lifted from western countries. It needs some refinement so that it can adapt the Indian climate,” says Ramesh Kumar Gautam, an employee at one of the CNG stations in Delhi.

The story is no different with the LPG-kit fitted car owners. In fact, some car owners use gas cylinders that are meant for household use. “We refrain from selling our alternative fuel empowered cars in regions where the alternative fuel is not available as it encourages unsafe practices,” reasons Mayank Pareek, Managing Executive, Sales & Marketing, Maruti Suzuki. He adds that though Maruti is working on developing CNG and LPG variants of its models, it will only happen once the network for these fuels fully develops in India.

Undoubtedly, car manufacturers are doing their bit to control such incidents, but then no one has a control on unsafe practices undertaken by individual consumers. For instance, in western countries, the after-sales market is equally divided between authorised service stations and multi-brand car workshops. But in India, customers prefer to go to the neighbourhood garages rather than visiting an authorised service centre to get their car serviced. Moreover the concept of multi-brand car service shops has still not picked up. “The trend and magnitude of neighbourhood garage shops is almost exclusive to India. Having said that, the trend is changing and consumers prefer authorised showrooms over the neighbourhood garage shops,” Jagdish Khattar, former Maruti head honcho and current MD, Carnation Auto tells B&E.

All this clearly indicates that just as car manufacturers need to be put under the scanner for service defects, there is a need to reinforce safety measures and the government should persuade consumers to follow the same either by incentives or by increasing the cost of non-compliance.


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

For More IIPM Info, Visit below mentioned IIPM articles.
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Tuesday, February 5, 2013

A stem cell in need...

Being the pioneer in stem cell banking in India, LifeCell does have a head start. But these are early days in this industry and digging beyond the iceberg’s tip is going to be the real challenge by Virat Bahri

We rightly do not consider their banks or their auto companies as role models, but there are areas where we can learn from the American way of life and from their democracy. The manner in which they debated the morality of the use of human embryos (which would get destroyed in the process) for stem cell research is one instance (although it was amusing to see George Bush oppose the use of taxpayer’s dollars for destroying human embryos while using it in the wars in Iraq and Afghanistan!).

The scenario in India is quite different; where a debate on statehood is still far more likely to grab bigger headlines. Moreover, India is a market where health insurance itself has penetrated just about 3% of the market, so stem cell treatment looks even more distant. As far as morality of using embryos is concerned, we ourselves would sound like hypocrites even raising the issue; considering that around 7,50,000 abortions happen every year in India (UN figures), because they were girls.

Mayur Abhaya, ED, LifeCell International was never doubtful of the potential of this business when the company was set up in India in 2004 in technological collaboration with CRYO-CELL International Inc. The twin challenges that they faced instead were to create awareness in the Indian market and create acceptability in terms of pricing.

With a focus on embryonic stem cell banking, the company’s primary target audience is expectant parents from SEC A+, SEC A and SEC B categories. Initially, the company was constrained by availability of funds and therefore tried to reach out to customers through a B2B strategy (gynaecologists). Slowly, the company is targetting end customers through advertising, events, et al. Besides, the company is trying to improve penetration through EMI schemes et al. Tie ups are being done with players like Club Mahindra, Fitness One and Kaya Skin Clinic. The company has decided to position itself on the lifestyle plank to broaden its appeal.


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

For More IIPM Info, Visit below mentioned IIPM articles.
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Thursday, January 10, 2013

“India is critical to world’s progress”

In an exclusive interview to B&E’s pathikrit payne, Sir Richard Stagg, British High Commissioner to India speaks about India’s incredible future potential and the positive impact of its outsourcing business...

B&E: How do you look at the transformation of India from the time of Independence to now when it is an emerging powerhouse?

RS: We view it as an amazing achievement of India. The transformation especially in economy, society and the way in which the country worked in the last 60 years. India has an enormously important role to play in the world. India is a model of how democracy and development can go hand in hand as it has just been shown in the elections, which went off so well. So we view India as a country which has emerged on the world’s scene. It’s now the fourth biggest economy in the world by PPP. It’s critical to almost all critical issues that the world faces, be it trade rounds, development sphere, agreement on climate change, international sponsor to financial crisis. India has put itself in the centre of major issues, which reflects the success of its governance.

B&E: Is there paranoia in the UK about the economic resurgence of India and it becoming an outsourcing hub, as it leads to job losses in UK?

RS: In the case of India, there’s genuine welcome from almost every political group in UK. UK is very comfortable with the companies using outsourcing as one of the ways to make their business more successful. From our perspective, it makes no sense to constrain the competitiveness of our companies by limiting their ability to outsource. We will not succeed as an economy just by competing for relatively low skilled jobs, which can be done at a lower cost elsewhere. We have to accept that the only way we are going to succeed as a country and as an economy, is by moving up the value chain by doing higher value added tasks. So the government’s challenge is to ensure that as the low skilled jobs leave UK, we provide training and up-skilling to the people affected, so that they can do higher value work in the economy.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles.

 
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Sunday, December 9, 2012

The secret of the Unicorn!

No surprises; it’s nationalism and not globalization that has created great nations over the years
 
Last month, the Obama Administration made it clear in no uncertain words that the companies which are recipients of money under the Troubled Asset Regulation Program (TARP) as part of the financial stimulus package will have to abide by the new restrictions imposed on outsourcing of work to destinations like India. For many in India, it was nothing but an obnoxious move on the part of a dogmatic Obamasque US administration seeking the easiest (but definitely counter-effective in the long run) way to fix the problems of the US economy rather than dealing with the real structural problems plaguing it. Intriguingly, however much one might criticise Barack, the reasons for which Obama has taken this path are the same that come into play when Indians or Chinese thump their chests when companies of their country’s origin go out and handsomely acquire a US or a Europe based company. The string that binds both Barack and us is fanatic economic nationalism, for our respective countries of course. Quite some time since the homo sapien race decided to exit forests and to materialize the concept of society, the concept of ‘he’, ‘his’ people and ‘his’ land have always been more important than ‘they’, ‘their’ people and ‘their’ land. Evidently, this philosophy hasn’t changed much till date. So, from the era of hostility between Sparta (present day Greece) and Troy, when Achilles decided to fight for his bête noire Agamemnon, the Spartan king, because Spartan ‘pride’ was at stake, to the era of the British, French, Dutch and Spanish empires, when they often fought prolonged and violent battles keeping imperial interests in mind, it was all the same nationalistic fervour in play.

In fact, the time-line between the beginning of the First World War and the end of the Second World War and furtheron after it, has been the most intriguing period in terms of the transformation of nation states into nationalistic states. While four established empires – namely Russian, Ottoman, German and Austro-Hungarian – were washed away by the tides of the First World War, this period also witnessed the emergence of the violent form of ethnic nationalism which almost destroyed the world with the rise of the German Nazis and their fanatic obsession with the obliteration/subjugation of Jews and in fact anyone who – according to them – was not a pure Aryan.


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

For More IIPM Info, Visit below mentioned IIPM articles.

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Thursday, November 29, 2012

Realise India’s economic potential

Reforms can help realise India’s economic potential, provided there are ‘real’ reforms!

The reforms that Dr. Manmohan Singh launched in 1991 have done much to simplify the maze of regulations and licensing that stifled entrepreneurship, but the job is only half done. India rates only around the 50th percentile of the 2007 World Bank rankings on the dimensions of government effectiveness, regulatory quality, rule of law, and control of corruption. In the bank’s latest survey of business environment, almost 60% of those questioned rated corruption as a major or moderate obstacle; the corresponding number for the functioning of the judiciary was about 30% and that for taxes and regulation, 40%. India ranks only 48th among 131 countries on the World Economic Forum’s competitiveness index. This is not good enough for a would-be economic superpower. Business is a mixture of competition and cooperation. Everyone knows and extols the social benefits of competition. In contrast, cooperation is usually identified with cartelization and social harm.

But there are dimensions of cooperation that benefit not only the business community but society as a whole. Improvements in the institutional infrastructure of property right protection and contract enforcement, and improvements in most physical infrastructure, are cases in point. Take corruption, which is rated the most serious obstacle. When firms compete to win lucrative public contracts or licenses using corruption, some win and others lose. But even the winners have to give up some or even much of their profits to pay the bribes. To be sure, each will retain a temptation to cheat and gain an advantage at the expense of others through bribery. What is needed is a system whereby the others can deter the cheater with a credible threat of punishment. Suppose the community has a norm that no one should engage in bribery to win a favorable contract or license. If a member violates this norm, the community stipulates that no others will have any dealings with him. The cheat is going to need some things – material inputs, trade credit, and so on – from the others. If the others ostracise him, he will be unable to fulfill the contract and so won’t profit from his bribery. Of course he can try to induce some of the others to violate the ban by offering them shares in his profits. But that will dilute his profit. More importantly, community also stipulates that anyone who engages in dealings with a cheat is himself labeled a cheater and ostracised. If the business community, with some support from the government, establishes the needed infrastructure, and if the government pursues Rodrik’s other criteria, then India’s great economic potential can be fully realised...


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

Why we do what we do

In other words, the reasons for our super-obsession with criticising India!

The arguments were intense. Half of our editorial team was arguing for running a purely national Scrutiny section, as opposed to covering international stories too. And half was arguing against the premise, debating that we should cover even international stories. The only problem was, they were the same halves! In other words [if you’re not thoroughly confused already], while one half was arguing for and against the same issue, the other half was thoroughly disinterested in having to do anything with it! Well, we were tickled breathless – we kid you not, it’s the same case with India. While one half of us Indians are busy inanely arguing for and against issues without understanding what stand to take, the other (illiterate?) 600 million odd half is busier organising the daily meal, finding out a place to defecate, ensuring that the girl child & lady of the house don’t get raped, and of course, ensuring death doesn’t become a family issue this week.

India, as a noted foreign economist put it, is a stale mistress few would like to wed, and sadly, fewer to bed. Change today, in India, is a word privy more to private corporations than to government bureaucracy. Many of those who are opposed to change often swear by the Constitution to rationalise their opposition, without realising that even the Constitution has been amended a smashing number of 93 times – vindicating the fact that what was of relevance in the past needs to change its dimension for the future. The context in which we mention this is that India is galore with organisations that in some sense are past their prime, but can play stunning change agents to bridge the ever increasing rural urban divide. For example, while the Indian government is gearing up to open up the banking sector to foreign companies, what it doesn’t realise is that many of India’s homegrown problems [like the fact that more than 50% Indians don’t have access to banking] can be solved by homegrown solutions like converting, say, the India Post into a separate bank, thereby at one go creating nearly 130,000 bank branches for rural India!


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

Classical music comes into vogue!

Imagine selling rock guitars when classical music comes into vogue! Surely, a difficult external environment can overwhelm the best of them. B&E profiles three key sectors that merit a mention for profitable or not-so-profitable reasons. psus, of course have been included for their prominence in the list

Market capitalisation of ICICI bank (on June 24, 2008) was at $18.01 billion (as compared to SBI’s mcap of $17.71 billion); ample reasons to suggest why Brand Finance Plc. has rated the brand value & mcap of ICICI as ‘very strong’; HDFC bank has been rated strong on the same parameters. Going by the current rate of growth and promises that the new players show (AXIS, HDFC & ICICI banks have respectively registered 62%, 39% & 34% surge in profitability), the day may not be too far when more of them occupy the coveted B&E Power 100 ranks. For the last couple of years, the industry has been posting healthy annual growth rates of over 20%, its profit pool is all set to increase to $20 billion by 2010 and $40 billion by 2015 (BCG estimates).

On parameter to parameter basis, private players have given a beating to their public sector counterparts on all fronts. Notwithstanding the global crisis, net profits of private players, even in the tumultuous Q4, was much higher than the others; their growth in net profit was pegged at 46.45% as compared to 28.06% for public sector players. The impact of the global credit crisis and liquidity crunch was very limited and primarily affected banks with international operations to some extent. Nevertheless, the slowdown in the global economy and the Q4 debacle did make its impact; explains Ajinkya Dhavale, Analyst, Motilal Oswal, “In Q4, the Bankex declined by 27% mainly due to uncertainties and concerns on account of – farmer loan waiver as announced by the FM, large derivatives exposures of private banks on behalf of clients, MTM provisions on international investments and mounting inflation and slowing industrial/manufacturing activity.” Agrees Abhishek Agarwal, Research Analyst, Religare Securities Limited, “Major impediments were moderation of credit demand, increase in inflation and interest rates, MTM losses on credit derivatives exposure and defaults in retail segments, especially in the last quarter.” Despite all these hiccups in the last quarter of FY ’08, the average interest and income earned by 16 private banks was 35.5% and 33.40% respectively. Increased emphasis by private players on international operations has contributed a huge chunk to their revenues. The limited downside risks associated with banks, stable outlook and strong corporate profitability and comfortable liquidity conditions are suggestive of future prospects. According to a Pricewaterhouse Coopers report, India is likely to emerge as the third largest banking hub in the world by 2040. The projections hold true despite the global financial market downturn; more so after the Bear Stearns fiasco in the last quarter.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
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Monday, November 5, 2012

‘Gene’sis of Indian cricket

From India’s first score to the last ball for victory; runs this family legacy

In a country like India where almost every new born is intravenously fed cricket, where every kid on the block dreams of finding a berth in that ‘esteemed 11’, there are very few to keep the fire in the belly alive, perpetually, to make their way in becoming the nation’s pride. If we flip through the pages of sports history, there would be many to follow the imprints of a legendary father, but seldom would one find someone capable of carrying the sports legacy to the same pedestal. And when speaking of cricket and dynasties in the same breath, just one name is exhaled. And that is of the Amarnath family.

It was destiny that brought Nanik Amarnath Bhardwaj to India to make this country proud. A resident of Lahore before partition, Amarnath and his family’s near fatality forced them to flee to Patiala and then later on to Delhi. Credit fate for playing its trick of sowing the seed in India, which would sprout to become an icon called Lala Amarnath. Independent India’s first captain, he also holds the record of giving India its first ever test century. Such an achievement in his debut match still wins praises, not only in India but throughout the cricketing world. However, apart from his commendable cricketing career, Lala Amarnath was also famous for things infamous in the gentleman’s game. Known for his flamboyance, Lala was no alien to controversies due to his candid attitude towards politics in the game of cricket. However, more than the attitudinal bent towards revolt, it was his passion to sustain the spirit of the game that, although threw him in the pits of follies, generated arguments that were justified and appreciated amongst rivals.

Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Tuesday, October 9, 2012

Dress up girl!

And behave; the Indian arrives!

On the eve of India 60th Republic Day, one of India’s most civilised state experienced a not-so-uncommon uncivilised incident. A few representative of the SRS party went inside a pub in Mangalore and molested and misbehaved with girls under the veil of moral policing. Our protagonist is not particularly the Mangalore story [read more about this in our Policy section], but something more. On the same day, in the name of honour killing, a newly-wed couple, Balkar Singh and Ravinder Pal Kaur, was shot dead by the girl’s family members in Punjab’s Tarn Taran district even after having police protection. This is just not one of its kind – similar incidents have happened in the past; with Baljit and Ashwini (July 14, 2007), Manoj and Babli (June 15, 2007), Sunita and Jasbir (Nov 9, 2008), Pinki and Sonam (Nov 7, 2008), 12 years old Mamta (April 21, 2008) who was found with a boy in her room, and many more who are killed in the name of honour.

Not surprisingly, this genre of violence aptly fits into the mould seen across the country, be it in Bihar, Maharshtra or Karnataka. Despite arrests, governments have mostly shown a soft attitude towards such kind of unpardonable behaviour, despicably in order to not lose votes from the area where such incidents have taken place.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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