Indian firms more so!

CEOs have ripped apart shareholders’ wealth globally under the guise of M&As; Indian firms more so! B&E’s Manish K. Pandey, Deepak R. Patra and Karan Mehrishi undertake the most radical analysis of the recent past and destroy age-old perceptions!

But Indians, as we said before, never learn! But hey, isn’t India too supposed to grow on the back of mega-merger deals? Isn’t L. N. Mittal, who succeeded in merging his company with Arcelor (the world’s largest steel corporation), the new purveyor of the rise of Indians? Aren’t flamboyant Indian companies like Tata Steel, Suzlon, Aditya Birla Nuvo, GMR Infra, TCS, Ranbaxy, Apollo, Videocon, ONGC and many more – which have accounted for multi billion dollar M&A deals in the last three years while taking over foreign and domestic corporations – sparkling benchmarks of corporate excellence?

And what about the paeans being sung in the praise of indisputable leaders like Tata Coffee (which bought off 30% of Energy Brands Corporation in the US for an unbelievable $677 million), Dr. Reddy’s Labs (which snapped up Germany’s Betapharm for a gigantic $576 million), Ranbaxy (which gobbled up Terapia of Romania for a smothering $324 million) and innumerable more? Are we simply supposed to believe that most of these Indian M&A deals are, er, stupid? Considering shareholder value, revenue growth, cost synergies, and almost everything a company could have stood for, the answer is yes!

We started with the May 2008 BCG report (The Return of the Strategist) where this former supporter of M&As confirms, “The key question is not whether deal volumes and values will fall or rise, but whether it is still [ever] possible to generate [any] value from [M&A] transactions!... More than half of mergers destroy value for acquirers’ shareholders!” The May 2007 research (Why M&A Deals Are Bad For Shareholders) of the motherlode of all institutions, HBS, quotes, “Most M&A deals destroy shareholder value!”

How has the thinking been a few years back? The April 2004 HBS paper (Should We Brace Ourselves For Another Era Of M&A Value Destruction?) states eloquently, “In the end, M&A is a flawed process, invented by brokers, lawyers and CEOs with super-sized egos!” MarkSirower, author of the famous book Synergy Trap, shows how, on an average, 2/3rds of all deals end up destroying shareholder value. Even the famed McKinsey, once a fanatic supporter of M&As, had to accept that in the US & UK, only one quarter of all M&As even recovered the merger costs.

Their November 2001 hallmark paper (Why Mergers Fail) stated prophetically, “The belief that mergers drive revenue growth could be a myth!” In that paper, McKinsey showed how a massive 78% of companies failed to manage significant growth over a period of three years post the M&A! Professors Weber and Camerer of Carnegie Mellon University, in April 2003, statistically showed in their benchmark thesis (Merger Failure...) that “a majority of corporate mergers fail!” The Economist reported in 1999,“Study after study has shown that 2/3rd of all deals haven’t worked!” CEO Magazine reported similarly, “75% of M&As are disappointing or outright failures!” BCG’s sparkling July 2007 report, The Brave New World of M&As, documents, “Larger deals destroy progressively more value!... Deals that are above $1 billion destroy nearly twice as much value as those under $1 billion!” The hugely referenced Business Strategy Review‘s 2005 paper (Merging on the Miraculous) had the first line, “More than 2/3 M&As fail to create meaningful shareholder value.” The Gartner/Forbes Executive Survey of February 2007 asked top global executives to rank various business issues. ‘Managing M&As’ came last on the 25 factor list! Factors like ‘Attracting and retaining skilled workers’, ‘attracting new customers’, ‘Increasing market share’ etc. were ranked miles above M&As! The Economist Intelligence Unit’s outstanding briefing (Corporate Priorities For 2007) goes better! When more than 1,000 global CEOs were asked, “Which forces will have the greatest impact on the global marketplace in the coming 3 years?,” they ranked ‘M&A activity’ sixth from the bottom! Hilariously, below this were only factors like ‘Catastrophic events (eg. terrorism, natural disasters)’, ‘Advances in back office technologies’, and of course, ‘Others’.

The NYSE CEO Report 2008 put the final nail in the M&A coffin by giving the empirical evidence that “most CEOs think revenue growth in their own companies will be driven far more from organic growth than M&A activity!” It also shows how there is a direct correlation between organic growth and a company’s market capitalisation! Global M&A deals touched $4.48 trillion in 2007 (from $3.61 trillion in 2006); Indian deals touched $51.11 billion in 2007 (from $20.30 billion in 2006).

Read more......

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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IIPM : The B-School with a Human Face

CANADA: DECELERATING GROWTH

After growing at a red hot annualised rate of 5.8% in Q1 2010, Canada’s Economic growth has come down to just 2% in Q2, 2010. Canadian policymakers now need to look beyond the ‘short cuts’, be it interest rates or output, if they want the Economy to sustain its growth momentum.

Even net exports made a 4.5 percentage point drag on overall GDP growth. Result: In July, Canada’s trade deficit widened to $2.69 billion, the biggest gap since records began in 1971. What’s more? Net exports have not been a positive contributor to GDP growth since Q1 2009. While it does not appear that the drag from net exports will slow down anytime soon, what’s more confusing is the continuing soft inflation (at 1.7%) amid weak productivity growth (0.6% yoy as of August 2010), fast wage gains, and a closing output gap. So, with fragile economic recovery underway and inflation rate at the bottom of its target range, is it appropriate on the part of BoC to further increase the interest rates after already having raised them thrice in 2010?

There are still many who don’t see this as a threat to the sustainability of the Canadian economy in the long run. Jimmy Jean, the US based economist at Moody’s Economy.com tells B&E, “The housing retrenchment was long expected and has not been excessively severe, even showing signs of recent stabilisation. The cooling observed in consumer spending ties in closely with the housing slowdown, which again makes sense and is not overly worrying in light of still-healthy income growth.”

But then, income growth is likely to slow further considering the impact of the weak GDP growth on employment (unemployment rate is already at 8%) and, in fact, one can already see it happening. Second quarter GDP data already indicates a slowdown in consumer spending growth to 2.6% (yoy) from 4.3% in Q1 2010. Though BoC had not replied back to B&E’s queries till the time the magazine went to print, it, however, in its latest press release, accepts that the recovery in Canada will be slightly more gradual than it had projected in its July Monetary Policy Report.

No doubt, looking ahead, the IMF too expects Canada’s economic recovery to be among the strongest of the G-7 countries over the next two years. But, at the same time it should not forget that when an economy is not working normally (as is the case with Canada), one cannot rely on the ‘short cuts’, be it interest rates or output. In other words, policymakers should leave the overnight rates at 1% during their next policy decision on October 19, 2010. Rather, they now need to work towards developing models that have a better understanding of money and credit flows at a more disaggregated level and that include the key institutional features of banking and capital markets. If Canadian policymakers look only at interest rates, inflation, and output, they might miss out on the bubbles that perhaps might be in the making. If that happens, it could spell a disaster for the Canadian economy. Well, they say, it’s always better to be safe than sorry!

Read more.....

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.
 

Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri's Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links

IIPM : The B-School with a Human Face

Rewritten Global Management case books

In a Superlative & most Insightful analysis, B&E Documents how Corporate Leaders have Transformed their Organisations & Implemented continental strategic shifts that have Rewritten Global Management case books

In sharp contrast to IBM, the bosses at GM continued churning out monstrous gas guzzling cars even though they realised that nimbler rivals like Toyota and Honda were steadily taking away market share from the company. The false prosperity of the George Bush years and the Americans’ crazy love affair with SUVs made it appear as if the bumbling and stumbling GM might just pull through the imminent debacle. That never happened, and GM had to face the mortification of bankruptcy and a state sponsored bailout.

I am pretty sure even diehard skeptics who dismiss the ‘strategic’ importance of changing strategies for survival and growth would be convinced by now that changing strategies at the right time does matter even in a world tormented by Black Swans. But there is another sucker punch in this tale of changing strategies. Leaders like Deng and Gerstner often had the luxury of decades to contemplate the necessity of changing strategies – or changing course midstream if you may say. Leaders of the 21st century, whether of nation states or of corporations, simply do not have the luxury of time anymore. Change that occurred at a glacial pace once upon a time, now happens at a speed so blinding and dazzling that even battle-hardened veterans fail to grasp. Information technology is playing a key role in dictating the pace of this change; as is the relentless march of globalization. In effect, the time needed to change strategies is becoming so compressed that changing strategies often acquire the shape of what would be once considered a change in tactics.

Once upon a time, there used to be a Test Match played out over five days. That dictated its own strategy as well as a change in strategy. Now, we are ruled by 20-20 cricket. So, the captain, who could earlier adopt and then change strategy over a span of 450 overs, now has just 20 overs to do the same. Things are not very different in corporate boardrooms as change constantly gathers pace and keeps surprising us in a Black Swan manner. It is no longer enough to realise that you need to change strategy. You have to do it damn fast if you want to survive.

Perhaps that is the real Black Swan impact on nations and corporations!

GM’s Detour trick
The new gm is all about change – smaller, fuel-efficient cars, customer-centric approach, focus on emerging markets and most importantly, profits. pawan chabra writes about how GM’s strategic shift saved its day.

For decades together, General Motors was exalted as a symbol of American success. A success that would only be got by thinking big, making big and selling big. Today, it is cited as a failed American freighter. Its very DNA got the better of it, forcing the Detroit giant to detour. Precisely fifty years back, GM had grown into a Godzilla-making factory. It had embraced vertical manufacturing and its list of offerings either included products designed to match up to the budgets of luxury car buyers, or live up to the fancies of truck-lovers. Its audacity clouded its vision – the downfall was imminent. And so it happened in January 2009, when GM filed for bankruptcy. Fuel-guzzlers do not please a nation which is battling with rising unemployment. Not even if they carry a GM warranty. Change it needed, and change it did. From 51.4% of market share in US in 1961 to 30% in 1990, and to under 20% today, GM is a story of how a King-turned-pauper, finally realised that serving the middle-class is as important. And the fact that it still has a strong change of making it to history books as a phoenix of the modern capitalist world, is because all the three CEOs who followed Rick Wagoner (Fritz Henderson, followed by Ed Whitacre, followed by the current CEO Dan Akerson) during the past two years, have appreciated this change in mindset.

Cut to the present, and any GM insider who has lived the horrors of the downturn will confess that GM investors giggle more while talking about the muted GM DNA, than while ranting about the world-record IPO on the 18th day of November last (which helped raise $23.1 billion and marked the comeback of the company on NYSE). Muscular brands like the Saturn, the Pontiac, the Hummer and the Saab, no longer take shelter in GM’s umbrella (the company sold them about a year back) and the $80 billion in losses, accumulated over a period of four year, could soon become a thing of the past. The world is staring at a new GM, with a new strategic vision, take the differentiating leap ahead with its consumer-friendly and smaller offerings.

Read more....

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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

Can she Beat The Brazilian Heat?

Dilma Rousseff takes over a Booming Economy, but can she keep The Brazilian growth clock ticking Amidst Rising Inflation and Skyrocketing Interest rates?

As 63-year-old Dilma Rousseff took over as Brazil’s first woman President from her extremely popular predecessor Luiz Inacio Lula da Silva on January 1, 2011, she vowed (during her inauguration) to cut taxes, rein in public spending & control inflation. She repeated almost exactly the same points on which she had stressed on during her statesmanlike victory speech on October 31, 2010. “But can she?” is the question that many have started asking now, not only in streets of São Paulo, Brazil’s financial capital, but across the globe.

Reason: Challenges galore! While Brazil’s economic growth is expected to slide to 4.5% in 2011 (from an enviable 7.6% in 2010), inflation at 5.91% continues to be well above the government target of 4.5%. In fact, inflation in Latin America’s largest economy is already running at a six-year high, with food prices rocketing to 10% in 2010. And with memories of dreadful hyperinflation in initial years of this decade (see chart) still alive in the minds of Brazilians, new President Rousseff surely wouldn’t allow this plague to return to destroy Brazil’s impressive performance.

No doubt, the most logical move for Rousseff would be to boost interest rates. But then, Brazil’s interest rate, at 10.75%, is already among the world’s highest and raising them further would only give foreign investors yet another reason to buy its currency – the real – that has soared almost 35% against US dollar since the start of 2009. This directly points towards Rousseff’s other big task – to cope with the rising strength of the real.

With interest rates at all-time lows in much of the developed world, the 10.75% return on benchmark 10-year government bonds is attracting funds from all across the globe. Foreign investors have poured over $110 billion into Brazilian debt & stock in the past two years, which has lifted the real astronomically. Considering this Goldman Sachs has recently dubbed real as the world’s most overvalued currency. This not only puts Brazilian exporters on the backfoot, but also hampers the economy’s growth in the long term.

Read more....

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. 

IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting

L. K. Advani’s dumbing down

BJP’s strongman opts for a face-lift to achieve his ultimate political dream of being India’s PM
The BJP’s parliamentary board, which ratified L.K.Advani’s candidature as the Prime Minister in waiting, is in the throes of another ticklish query: while the party, allies and cadres accept Advani as their supreme leader, will the country, and more specifically Muslims, do the same when the time comes? Therefore, members of the parliamentary board have asked the state BJP chiefs to carry out an internal survey in various states for the consumption of their cadres and other party leaders. The question they have to address: what can be done to reform Advani’s hardline image and steps that need to be taken to improve and liberalise his image.

This operation is to be headed by BJP vice president, Mokhtar Abbas Naqvi. His brief: to find out why Advani, who has a hardline Hindutva image, has been unable to make an impact on the common mass of public in the same way as Sonia Gandhi or Atal Behari Vajpayee. The question rankling the BJP top brass is despite conducting five rath yatras between 1990 and 1997, Advani is not quite considered a man of the masses. At several meetings of the parliamentary board, office bearers have told state chiefs that Advani’s name and public programme, if any in the state, should be given wide publicity. His pronouncements and statements needed to be played up and his entire programmes need to be highlighted well.

But like most leaders who have aspired to lead India, Advani is very keen to undergo an image change, from being a leading Hindutva factionalist to a moderate leader with middle-of-the road views and wide acceptability. The man chosen to conduct this face change is Naqvi, a Shia, who BJP leaders say has acceptability amongst Muslims. According to one strategy being planned, the virulent anti-terrorist rhetoric, at least at Advani’s meetings is going to be tempered down. The meetings, to be uniformly christened as anti-terrorist rallies, will be held throughout the country.

ptullah was first considered for the assignment, but since Naqvi is an old favourite of the Sangh, he got the nod over her. According to the BJP assessment, the fight in the next Lok Sabha is going to be a tough one and in a tight contest, it is important not to acquire the hostility of the Muslims. Even if a small but significant portion of that vote bank moves towards the BJP, the NDA would become a strong contender for the title fight. For the record, the BJP denies anything anything out of the way. “Advani does not need any props. He can win an election on his own,” Naqvi told B&E.

Senior leader and Rajya Sabha member, Arun Jaitley, told B&E: “Advani is our leader and we are going to go to elections under his leadership.” In fact, according to Naqvi, if all goes according to plan, then Advani would have toured all of the 500+ parliamentary constituencies by the end of 2008.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
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Retail revolution

After losing out market share to competitors, India’s PSU bank is slowly becoming a one-stop financial shop. By asif ahmed

One down, six more to go! That’s what O.P. Bhatt, the Chairman of State Bank of India, must have thought as he prepared himself for Herculean task in front of him. On that particular day, he was supposed to interact with the boards of SBI’s six associate banks to consider the biggest merger in the history of Indian banking industry. Of the bank’s seven associates, the merger of the State bank of Saurashtra with the parent bank had already been approved; the remaining would happen soon, thought Bhatt.

But that fateful day never came. Intense opposition from the Left parties that supported the UPA Government at the Centre, and bank trade unions forced Bhatt to never attend the crucial meeting. In fact, the meeting wasn’t held at all, and the proposed merger was indefinitely postponed. However, this is one credit that Bhatt would like more than anything else. This is despite the fact that the SBI chairman has changed the way India’s largest bank interacts with its customers.

How the times have changed for SBI in the past few years. As competition intensified, SBI was hit by falling market share, had to raise funds for expansion, and look for new avenues for growth. For instance, in 2004, the State Bank Group (SBG) accounted for 27.8% of the total banking assets, which fell to 23.3% in 2007. In terms of deposits, while SBG controlled 27.6% of deposits in 2004, the figure shrunk to 23.5% in 2007. But still, Bhatt is thinking in terms of a banking mega merger.

The reason: Bhatt knows that size matters. If SBI can become a banking and financial powerhouse, it will be in a better position to combat private and foreign players. It’s only when it becomes bigger and better will SBI be able to arrest its falling market shares in various categories. Apart from the proposed merger, Bhatt has sought organic growth for SBI in India, and other neighbouring countries. The strategy was unlike that of his predecessor, A.K. Purwar, who believed in acquisitions-related growth.

Under Purwar’s chairmanship, SBI acquired three small banks - Indonesia’s PT Bank IndoMonex, Mauritius-based Indian Ocean International Bank and Kenya’s Giro Commercial Bank. As a part of the overseas-driven strategy, SBI focused on developing foreign market that had substantial Indian population. During his tenure, SBI also made it to the coveted list of Fortune Global 500 list; he made the bank a member of the $1 billion revenues club, and was the first Indian bank to join it.

Bhatt comes from a different school, and thinks differently. According to him, the domestic market still offers immense opportunities to expand, and there are far more critical issues to be dealt with. “Overseas acquisitions can wait,” he said the day he took over as the chairman of SBI. However, Purwar’s legacy still lingers around. For example, during Bhatt’s time, SBI became the first Indian bank to open a fully-fledged branch in China. “Being India’s largest bank, it is only befitting that SBI should be the first to open a branch in mainland China,’’ said Bhatt. But this isn’t a focus area.

Keeping in line with the local mindset, Bhatt expanded the bank’s network in India. He tied up with other banks and institutions to cross-sell banking and financial products. S. K. Mishra, General Manager (Marketing and Cross-Selling Department), State Bank of India, explains, “In the Indian financial markets, mutual funds are rapidly gaining ground among retail investors due to various advantages such as professional management, diversification, and liquidity. For us, the tie-up will open up opportunities to provide our vast client base with a wider choice of products to meet their diverse financial needs and give boost to our fee-based incomes.”

Over the next three years, SBI plans to offer more financial services products like general insurance, custodian services, venture funds, wealth management, and pension-fund management. Given its size, number of branches, and growing customers’ base, it will not be difficult for the bank to woo customers for the new products. At the same time, SBI is the only Indian bank to have got the approval to manage the government’s pension fund. That, in itself, will be a big boon to future revenues and profits.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
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American in-laws…

…will they accept the Indian affair of Hollywood?

The Oscar winning flick Elizabeth earmarked the debut of Indian cinema on the American silver screen. Ever since, the on and off flings between Bollywood and Hollywood have always been there. But it seems those flirtatious affairs between the two are now taking shape of a serious romance. Be it Anil Ambani’s aggressive Big Motion Pictures (a part of Reliance Big Entertainment) or Ronnie Screwvala’s consistent UTV, the chase for the Hollywood cheese is really heating up among the Indian corporate production houses. But what is it that has kicked off this romance?

What will be the compatibility quotient between the two? More importantly, will the American in-laws be able accept this ‘Indian affair’ of Hollywood? The vital statistics of Hollywood are one of the biggest bait enticing the biggies of Bollywood to invest in the industry. Sample this: The American Media and Entertainment (M&E) industry is worth a mind boggling $612 billion (in contrast to a paltry $13.6 billion Indian M&E industry) accounting for 40% of the M&E industry in the world. The movie business alone in America is worth $35 billion (compared to $2.4 billion of the Indian film industry) and contributes the lion’s share of 42% to the world film business worth $84 billion. Talking about the Indian production house’s Hollywood stint, Naresh Gupta, Head, Planning, Publicis India says, “This was bound to happen… Hollywood is the biggest film market in the world. How can one not target such a lucrative market?”

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

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Success is 1% inspiration and 99% perspiration... Believe it?

RNSSL displays the many weapons in its arsenal to 4Ps B&M

Money grows on the tree of persistence! And Rane NSK Steering Systems Limited’s (RNSSL) persistence (in supplying steering systems) over the years has proven this Japanese adage to be true. Rising input costs and lower profitability have hit the automotive industry where it hurts the most. But as an exception, RNSSL with their breath taking technology is surging ahead steadily with sheer determination of making its mark and ‘steering’ the industry.

In 1997, RNSSL kicked off as a 50:50 JV between Rane group (India) and NSK Ltd (Japan) with an equity capital of Rs.179 million. Today, it boasts of manufacturing plants in Chennai and Bawal (Haryana). The company has pumped in Rs.377 million in the recently opened Bawal plant which has an annual production capacity of two lakh electric power steering systems. “We have decided to invest in this plant keeping in mind with our overall strategic growth plans. RNSSL will grow in its chosen segments through expansion, upgraded technology and synergetic diversification,” says L. Ganesh, Chairman, Rane Group.

The company has done well on the balance sheet too. Over the last 3-5 years they have recorded a CAGR of 20% in terms of revenues and have won numerous awards including Gold award from Frost & Sullivan and Zero PPM award from Toyota in 2007.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Indian pharma companies

So does it mean that Indian pharma companies have lost their appetite? Or is it capital constraints giving them hiccups? “No”, says Anindya Acharya, Deputy Director, Drugs and Pharmaceuticals, CII. “It’s a well planned strategic move by the Indian pharma companies targeted towards improving their portfolios by entering certain niche segments rather than gobbling-up the entire portfolio of the prey.” Certainly, domestic pharma market is going through a transformation phase, led by strong underlying growth drivers and has witnessed robust growth over the last couple of years. According to a KPMG-CII Pharma Summit 2007 Report, the industry has grown at a CAGR of 13% from 2002-2007 and is further expected to grow at over 16% over 2007-2011. So there’s no dearth of future growth in the sector.

Indian players are also focusing on capturing emerging opportunities in certain niche specialties which offer higher and more sustainable margins to compete with their international counterparts. Moreover, the strategy also compensates for the intense pricing pressure that the generics segment is witnessing these days. But then, “what really holds promise?” seems to be the billion-dollar question.

“While areas like diabetics, cardiovascular hold great promise, some of the traditional sectors like respiratory, anti-infective et al are segments where the Indian companies have an edge over their counterparts as these segments are not well researched globally and have higher success ratio compared to other therapeutic segments,” avers Sarabjit Kour Nangra, VP Research, Angel Broking. Even a recent Deutsche Bank report says, “Currently the most important segment on the domestic market is anti-infective; they account for 25% of total turnover. Next in line, and accounting for one-tenth each, are cardio-vascular preparations, cold remedies and pain-killers”. Thus by gaining dominance in any of theses therapeutic areas, the Indian companies want to make up with what they seem to have lost as result of increasing generics competition.

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Many a hurdle on its path to glory

But this emerging force faces many a hurdle on its path to glory. One of them are the bigger fish like Reliance, Dabur, Future Group et al which are charting out massive plans to grab ailing customers with their pharma retail stores. Then there is also the bitter truth about those ‘huge’ planned investments by ‘bigger’ players. So will it be a threat for MedPlus? Madhukar denies it as, “Others are focussing on both pharma and personal care, while we are/will be purely into medicine. Also, we have a massive expansion plan for every metro in South India. So by the time they come in, we will already have captured enough shelf-space!”

Fast and furious, MedPlus is venturing into other domains of medicine and healthcare as well. Not compromising with its image of being low-cost and at convenient locations, it is creating family clinics which comprises a network of 50 physicians. And there’s more geographical expansion on the cards with the company planning to add 1500 stores to its current count by the end of March 2008.

Adds Madhukar, “Many of these stores will be in northern India. We are trying out the franchisee route also, because now MedPlus has been able to create a brand of its own.” Sure, with north India too under its control, the bigwigs will need to watch out for this doctor; lest he prescribes the ‘exit’ pill for them!

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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ZEE BUSINESS BEST B SCHOOL SURVEY
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IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
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Indian consumers are reshaping

With the 9%-plus GDP growth rate resulting in higher per capita and higher disposable incomes, the aspirations and mindsets of Indian consumers are reshaping. No longer is he interested in doing what others do. Engineering and medical profession that were once looked upon with highest reverence are considered traditional and boring. Fashion designing, microbiology and other non-conventional professions are popular because everyone wants to be perceived differently – ‘unique societal positioning’! Similar changes are reflected in consumption patterns. “People no longer want to own a Nokia 6600. It’s too common. They love their latest wine red W910i (Sony Ericsson), which is peppy and suits their personality,” says a senior marketing guy, with a leading telecom player.

Launching products for the 300 million-odd great Indian middle-class was once the dream of every marketer. But that class has now fragmented into individualistic consumers flaunting their respective differences. Tune into the rest of this story to gain more insight into this new trend that mass marketers can surely afford to ignore, but only at their own peril!

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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ZEE BUSINESS BEST B SCHOOL SURVEY
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Multiplier effect From 0 to 20,000 in 11 months

Aggression pays in the long run, and Reliance Money is ‘cashing in‘ on CEO Sudip Bandyopadhyay’s aggressive stance to expand ADAG’s financial services foray. By neha saraiya

“Let’s get it done,” gushes the dynamic Director and CEO of Reliance Money, Sudip Bandyopadhyay, when asked to comment on his leadership mantra. The line is reminiscent of Bandyopadhyay’s brazen aggressiveness to accomplish what many of his peers can only dream about. He has successfully led Anil Dhirubhai Ambani’s foray in the financial services domain, to emerge as one of the leading brokerage firms in the country today. Within just eleven months of its launch, Reliance Money (an offshoot of Reliance Capital, which crossed a total customer base of 14 million this financial year, recording a three-fold jump in one year) has been rated as the largest broker house with a distribution reach of 20,000 plus across 10,000 touch points, with a pan India presence in nearly 4000 towns/cities. The company has also bagged the recognition for being the top brokerage house in the Starcom Worldwide India Investor Survey for the year 2007.

“At Reliance Money, our approach is completely different. We don’t charge any brokerage as our security is unique. We have a security token, a trading clause and a mobile portal,” avers Bandyopadhyay, detailing qualities that makes Reliance Money distinct form others of its ilk. And Bandyopadhyay should know. He has been at the forefront of this initiative right from the very beginning. A commerce graduate and a chartered accountant and cost accountant by qualification, Bandyopadhyay has worked with HUL and ITC (as head of treasury & investments) before joining at the helm of Reliance Money. Ever since, he has been consistently working to bring out innovative investment models for large and small investors, eager to make a buck.

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Investee: DLF Assets Ltd.

Investor: D. E. Shaw & I PCC

Investment Value: $600 mn (cumulative)

Says, Naveen Jain, Real Estate Analyst, Emkay Share, “DLF Assets holds property and earns its bread and butter from the capital appreciation and rents from various properties that it has acquired from DLF. The infusion of growth capital will help DLF Assets to acquire more and more assets. DE Shaw & I PCC are betting on the Singapore listing (and may exit at the time of listing to rake in handsome returns) for which DLF Assets still needs to provide a lot of clarifications. For now, DAL is aggressively adding more properties to its existing portfolio, with plans to spend $1 billion annually for acquiring properties.”

DLF Assets Ltd. (DAL), a sister concern of DLF, sprang a surprise last year, striking it rich with not one but two PE deals, one with Hedge Fund D.E. Shaw for $400 million and the other with New Opportunities I PCC (sponsored by Lehman Brothers) for $200 million. The deals give DAL requisite growth capital and investors will gain by selling their stake in DAL through the proposed listing as a Real Estate Investment Trust (REIT) in Singapore Stock Exchange. They plan to raise as much as $2 billion by the listing. “The process of listing is in advance stages and pretty soon other details will be revealed,” offers a source in DLF. Both investors will get a seat on the DAL board and will play a critical part in future decisions. In HY ’08, sales to DLF Assets accounted for a huge 47% of DLF’s total income. DLF Assets has acquired more than 5.5 million square feet from DLF. To further boost its portfolio, DAL also plans to acquire SEZ assets.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-
ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global (Print Version)
The Indian Institute of Planning and Management (IIPM)
IIPM Campus