Videocon to make and sell Philips TVs in India

Philips Electronics has signed an agreement with Videocon according to which Videocon would make and sell Philips brand TV sets in India.

http://www.dnaindia.com/money/report_philips-videocon-in-marketing-pact_1373358

Videocon would pay around 3% of royalty to Philips in return. The initial contract is for five years which can be extended by another spell of five years.

I see the benefits to the two companies in the following ways:

Benefits to Philips:

1) Better profitability because of cost rationalisation and synergy with Videocon.
2) Philips would use the sales and distribution network of Videocon to increase sales tremendously.
3) This scheme would allow Philips to invest in and focus on more profitable and innovative technologies.
4) Philips may replicate the success of a similar JV with Funai Electric in US.

Benefits to Videocon:

1) Access to advance technology courtesy Philips.
2) Wider product range.
3) Better brand value as it would be managing a respected MNC brand like Philips.
4) Better international reputation.

On the other hand, I see the threats to the two companies as:

Threats to Philips:

1) A forever dependency on Videocon. Due to any reasons if the agreement fails, Philips may not be in a position to go solo again in India.
2) In case Videocon doesn’t ensure quality, Philips brand value would diminish.
3) Customers may see it as company’s surrender to the competition.

Threats to Videocon:

1) Videocon may lose focus on its own home-grown brands in terms of technology and innovation and lose out in the long term.
2) Philips sales may cannibalise Videocon.
3) Videocon Bazooka lost its value after collaboration with Toshiba. Philips experience may become a repeat.

On the overall, I think this is a great opportunity for Videocon. Agreed that its similar collaboration with Toshiba harmed its own brands, but the company may have learnt lessons from the past and could do it better this time. Access to global technologies is one good thing which would help it in the long term. And the Philips brand is highly respected in India: a fact which would continue giving Videocon a long term returns.

I see this as a win-win deal.

- Rahul

Industry status for Logistics Sector in India - Why Not

CII has long ago asked for an 'industry' status for Logistics Sector in India. So have asked so many industry bodies, companies and business leaders.

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As they said, an industry status would facilitate in removing bottlenecks and sorting policy issues; it would create better image for industry; and would achieve better access to finance.

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My question is: Why do you think government of India doesn't grant logistics and SCM sector an industry status? And if we are not an industry, then where do we fit in?

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- Rahul

Seeking Attention

This comes from a real life incident that happened recently.

We visited their home after a long gap. The only kid in the family was naturally the centre of our attraction. After some initial period of pause, the boy opened up and started playing with the guests. He was chatting, showing off his toys and running around. It was then that his grandfather arrived from his morning walk. As the old grandpa sat down and started talking with the visitors, we noticed something unusual. While the kiddo was mixing up well with the guests and also talked some times to his parents, it so happened that about ten minutes had passed and the kid didn’t talk to the grandpa even once. He seemed to be too excited to see the visitors and was engaged in other things, and hence naturally forgot the need to talk to his grandpa at that time.

Now there he was running and passing in front of the grandpa, still not looking at him. What happened next was shocking. We saw grandpa raising his one leg and catching the kid unaware. As the kid fell down, grandpa raised his other leg and caught hold of him. The kid, realising that he had fell down and his fun had come to an interruption, started crying. Now grandpa got up, pulled the kid up in his arms, wiped out tears from his cheeks and played with him to stop his crying. The kiddo still said in his hurt and tears: “grandpa made me fell down…” But grandpa seemed happy and content now. What I quickly analysed the incident into, was a very sad realisation.

It seemed to me that the grandpa was an absolute self-satisfying attention seeker. When the kid whom he loved so much didn’t give him any attention, he created a situation where the kid had to be consoled by him and hence he would get enough importance that he thought he deserved. Was it because he, a retired professional, was missing his ‘important’ days on job? Or was it his true nature where he craved for attention from others and if not provided gratification, would do ‘something’ to fetch it for him? I remember a piece of news from some place in Europe where an elderly couple had a unique and perverted case. The husband kept administering a kind of poison to his wife for years, so that she kept on felling sick and he got chance to nurse her! Their marriage was not going on very well and he had devised this method for them to come ‘close’… It seemed to me that a similar game was put on here in front of us. The child was made to pay enough attention and importance by being interrupted and harmed, and the retired grandpa didn’t miss such an opportunity to fetch out some moments of gratification for him. While all of us know how children cry and create scenes seeking attention of elders, this case of a similar but more perverse behaviour from an old man made me wonder.

Of course truth is more interesting than fiction.

- Rahul

Gandhi Peace Exam

About three years back, I had read about ‘Gandhi Peace Exam’ in a news article. The article said that the exam was then conducted for inmates in a jail in Mumbai and hundreds had appeared in the same. The exam was taken after giving them induction about life and philosophy of Gandhiji. I searched on net more about this exam and got to know that it is conducted in schools and colleges too. I was immediately interested. I had read Gandhiji's autobiography a long time back and having read it I had grown up as a huge fan of his. Gandhiji's personal integrity and industrious efforts for nation building were unmatched in our history; so was his devotion towards non-violence.

I contacted Bombay Sarvodaya Mandal who conducted this exam. They sent me a copy of the 'Abridge Autobiography' of Mahatma Gandhi and asked me to come to their office to appear for the exam at any time.

Bombay Sarvodaya Mandal / Gandhi Book Centre
299, Tardeo Road, Nana Chowk,
Mumbai - 400 007 India.

Tel: +91 22 23872061 / 23884527
Email: info@mkgandhi.org
Website: www.mkgandhi.org

I couldn't appear for the exam for a long time since I had contacted them first. So last month I quickly finished reading the book and then asked for the exam. They were quick in response and within a week I received a beautiful certificate of appreciation (for the exam) accompanied by a letter. I had got 70 out of 80 marks and had cleared the exam. What a wonderful feeling, of being a 'certified fan' of Mahatma!

Visit the website maintained by Bombay Sarvodaya Mandal www.mkgandhi.org for details about Mahatma Gandhi’s life and philosophy.

- Rahul

Foreign Educational Institutions Bill

The Union Cabinet has Okayed the Foreign Educational Institutions Bill which allows foreign universities to open campuses in India. This bill would now be passed by the Parliament. Government says that the intent of this bill is to curb outflow of Indian students and money towards foreign countries (In 2008-09, 2.25 billion USD went out of India to fund Indian students studying abroad).

As such the bill looks good. It allows foreign universities either alone or in collaborations with local universities to offer programs in local campuses, just like any other private institution. Such universities would not have to implement any caste-based quota and can decide on whatever fee they want to charge. As a check, such universities can’t take back any profits earned out of India. Still, I doubt the success of the scheme towards its goals of stopping outflow of Indian students and Indian money abroad.

Firstly I doubt if the best of the foreign universities would be inclined enough to set up local brick and mortar campuses in India. The reason is that their foreign mother institutions depend heavily on Indian and Asian students filling up their seats (very critical in recession times too). If they start local campuses, they miss such students and hence money reaching up to them. I fear only the rank-B foreign schools would come to India. And these institutes would not stop the outgoing students. When one decides to join a foreign university, money or class room education is not the only things in mind. One goes to get a global exposure, studying with diverse set of students from all across the world. Such local campuses of foreign universities would not fulfil this very important expectation from the students. And then there would be concerns about quality of education and exorbitant fee being charged without getting back enough values in return. The cream of Indian talent still prefers IITs or IIMs over many foreign universities, unless they have intent to settle abroad. The students who have money but are not talented enough to get into IITs/IIMs, go for foreign universities for higher education. Such students would still go abroad. Also, the students who have intentions to settle abroad after studies would still go join the foreign universities rather than their local campuses because that is the shortcut to their goals. For the clause of not allowing profits to be taken out of India, they always can get creative to utilise the money in ways of self-fulfilment, like funding student exchange programs, funding training and research of their global counterparts, and in many other ways, not allowing this clause to harm their interests. On the other hand, I fear such local campuses of not-the-best foreign universities would be harming interests of Indians in more ways than one.

The high fees of such local units of foreign universities would definitely result in Indian private universities hiking their fees too, claiming their own standards being no less than those. Then, such universities would eat up some market share out of Indian universities, in terms of talented faculty members and quality students. Also, it would be very difficult to ensure that their courses are best designed for Indian environment; otherwise we would end up creating misfits.

I doubt if the government has thought enough around the bill before pushing it to the parliament. I am not sure if the time is right for such a bill too: the newer IITs and newer IIMs are still to establish grounds. If the education reforms are continued, and quality education is ensured by proper regulation, I think this bill may be welcomed after 10 years from now. In the present times, such a bill would harm our interests and would fell short of its target of stopping expatriation of Indian students and money.

- Rahul

A Collateral Loss

Our company had to roll out a plan. It had decided to implement it in South Zone first, because of its favorable past experiences. Hyderabad was to be the hub. But by the time the roll out date came nearby, Telangana issue had blown up the political space and Hyderabad and AP was burning in anger and anticipation. The company decided to deter the plan and chose West Region instead. The same story is being repeated for many other companies in all sectors and businesses.

The loss to Andhra Pradesh due to the political crisis has been immense. The losses would amount in thousands of crores, I guess. And the agitation in AP has even cost the other Southern Indian states in general as tourists, companies and investments would choose other safer destinations like West or North.

I think it would be naïve to blame TRS or any particular separatist group for the Andhra crisis. The main culprit in the case is the irresponsible handling of the issue by the central leadership of UPA/Congress. It’s also amusing to note that the members of Nehru dynasty – Rahul and Sonia Gandhi have hardly taken any clear stand on this issue; thereby saving themselves from any possible challenges or issues of ideology. It’s a situation like Nero playing the fiddle while Rome burned.

Whether Telangana becomes a separate state or not, Andhra Pradesh has already lost out heavily. Until the political crisis is resolved, the investor confidence in the state would remain negative. Given the manner in which the central leadership has handled this case, and given the attitude of the political powers in the Center, the future of Andhra Pradesh is muted.

- Rahul

The Escape

He was a first generation entrepreneur. As such he never thought of himself as an entrepreneur. What others called as entrepreneurship was a way of life for him. His business was his passion. His business was his life. He couldn’t imagine himself doing any other thing than the one he has been doing all through the years. He had made sacrifices for his success. Others in his life had to make sacrifices for his success too. He doesn’t think much about others in his life. At one time he had wondered if he was a loner. But the idea didn’t occur to him again. That was his strength – some called it his hardheadedness, some called it his maturity. One teacher in his college days had even called it his insensitivity. He doesn’t know what it should be called. It was simply his ability to keep himself unaffected from other people and other things. What mattered to him was that he was making progress in life. Today his business was of 200 Crores. All made and done in 20 years.

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He looks worried. There is a reason to be worried which he has ignored enough. The business environment has changed to an extent he had never imagined. There are competitors in his business who are using IT and automation to an extent never thought of. And he finds a handicap in this area. For twice he gave assent to his manager’s requests for new IT packages to improve productivity. But unfortunately, both times the project didn’t give the desired results. Two years back his son had joined business after he finished his studies in the US. He is energetic and enthusiastic – and more importantly – young. He offers to turnaround the IT experience under his own guidance. But what is the guarantee for success? The dilemma is acute. Should he allow a free hand to his son and do some investments in technologies which have been adopted by competitors? Or should he continue his previous ways and continue to take his company forward by labor intensive methods?

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He is 65. May be he will live for another ten years. Of the few times in his life when he has feared things; the current is definitely the most critical. When he imagines giving free reigns to his son a kind of fear grips him. What if his son has a different line of thought than his? (he is sure about this) What if his son outgrows his business many times and then looks down on him for his comparatively slower and conservative rate of growth? These matters sum up into one question: What would be his life without him sitting on this chair?
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He wonders how this feeling of insecurity and fear is something that he is not used to. He has been avoiding thinking about these issues for long. Today when he was confined in his house as he underwent a minor surgery, these thoughts clouded him and urged him to take a decision…

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Could decision be anything that changes his present and future? While all alone, he could easily see the future. But when he thinks of his son taking up the reigns, the future looks jumbled. He would rather settle for less with certainty, than for more with risk. The irony is that of all the risks he has taken in his life, which he has taken countless, this one was simplest as the onus lied on his own son. But while he took the other risks by the horn, this time he was choosing to escape. It doesn’t matter if he was a paranoid to do so. He never cared what word fitted him best. Today he would escape the future.

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Every year, thousands of businesses settle for less than potential growth because their proprietors don’t know how to pass on the baton.

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- Rahul

China Calling

We have already heard enough about what Chinese are up to courtesy Barack Hussain Obama in his regular addresses to motivate American students. Often, he clubs China with India and labels them as threat to the US and Europe in areas related to science and mathematics. The whole world, to some extent, shares the same views. But there is more to the world if we start looking without an American Eye.

For years, China has been developing ports in Pakistan, Bangladesh and Myanmar. China is also planning to build a rail network in Nepal, apart from already built roads and bridges to connect Chinese occupied Tibet via Nepal route. Now I read China is developing a small fishing town in Srilanka into a new port, investing millions!

It would be naïve to think that all these projects are to help these small and poor South Asian countries. There is going to be a huge impact on long term political climate of the region if China continues in this way and at this speed. No doubt, the threat to India is now both on security and economy front.

These projects show a resolute attempt by China and Chinese companies to invade these smaller markets and make long-lasting relationships. This would serve many purposes. One, it would help China gain political might in the South Asian region, including coming in nearer to India and counterbalancing the Indian might. It would also help remove dependence of Chinese companies on European or American markets to some extent and in the same time help develop new market for same or outdated (may be outdated at other places; as we know quality constraints in Chinese products) or even for newer products and services. In the short term this is a win-win situation for both China and the other small South Asian countries. But in the long term it is the Chinese who would eat the cake.

Despite all this, I don’t see much effort from government of India to do something proactively. Last time I heard the Maoists in Nepal had stopped Indian firms (most recently GMR Energy) from work at a hydroelectric power project. The future of the whole South Asian region popularly called Indian subcontinent is at the brink of a change in course.

- Rahul

Remembering Subir Raha and World Cancer Day

Many management trainees join a company of their choice. How many of them go on to become its director? Subir Raha did that at Indian Oil. And this is one of his humblest achievements in comparison.

Subir Raha is a legend in the PSUs management now. As the Chairman and MD of ONGC, Mr. Raha wrote a turnaround story which was never thought of before. His leadership qualities which tested and surpassed all expectations were subject matter of case studies in b-schools. We also remember him for his frequent conflicts with politician bosses. In the UPA government, the former Petroleum Minister Mani Shankar Aiyar and Petroleum Secretary S C Tripathi tried hard to clip his wings, but the efforts went in vain. In the end, the government had to deny him an extension at ONGC and thus ended one of the greatest turnaround stories in Indian PSUs. (During his tenure, ONGC’s market capitalization became 10 times larger)

Subir Raha, the man and the leader, died last Monday (Feb 1st, 2010). Here are two very good articles some Indian newspapers wrote in his memory.

Subir Raha was ONGC’s zest: http://www.business-standard.com/india/news/subir-raha-was-ongc%5Cs-zest/384381/
ONGC became behemoth under Subir Raha http://www.dailypioneer.com/233262/ONGC-became-behemoth-under-Subir-Raha.html

On personal front, Subir Raha was a chain smoker. The press also covered his smoking habits. He suffered from Lung Cancer and after more than a year’s battle with cancer, Mr. Raha breathed his last three days back. It was a huge loss for the business world (and for fans like me). But it was just another victory for the disease.

Today is World Cancer Day (February 4th). Let his demise be remembered more in the light of its cause. Let us stop smoking. Let us stop cancer.

- Rahul

Gandhi Philosophy

In his autobiography, Gandhi ji tells about a Gujarati stanza which was his guiding principle. Here is its translation: 

Return Good for Evil

For a bowl of water give a goodly meal;

For a kindly greeting bow thou down with zeal;

For a simple penny pay thou back with gold;

If thy life be rescued, life do not withhold;

Thus the words and actions of the wise regard;

Every little service tenfold they reward;

But the truly noble know all men as one,

And return with gladness good for evil done.

Is not it wonderful?

The Wine Shop

I was sitting in a restaurant waiting for my order to be served. Just in front of it was a buzzing road. And on the other side of the road there was a wine shop. I gave it a look and also noticed that it was very busy with business. Many people came in after stopping their vehicles by the side of the road. They went away with a package or black polythene bag in their hand. It was an afternoon and it seemed the shop did a very good business. It was also because it was on the main road and in a very populated area. Next moment, I saw a couple walking in there. They were a young couple, the man was in his shorts and the lady seemed to be from the North Eastern part of India. They went in holding hands of each other and also walked out after few minutes in the same manner. I didn’t feel nice – it seemed to me that today wine and alcohol had entered into people’s daily life like never before. And such shops which made alcohol easily available – near their homes and anytime they wished – also contributed to their drinking habits. But then I tried to control my thoughts. Some drinkers would be young but they had the freedom to decide what was good and what was bad for their lives. I tended to be too idealistic and moralistic too – and hence I convinced me that may be it was I who was seeing too much into the whole thing. I didn’t drink; it didn’t mean no one should drink. Gradually, I let the thoughts fly away and started having my food. Just before I was to leave after finishing the meal, I watched something that disturbed me.

A father stopped his motorbike by the side of the road. He had a three year old baby girl in his lap. He carried her in his lap and entered into the wine shop. Few minutes later, he came back with a black polythene bag in his one hand. And his baby daughter in the other. The scene made me uncomfortable.

Agreed, that the young or otherwise parents had the freedom to enjoy their lives by drinking as and when they liked. But while doing so, were not they also bringing alcohol in the lives of their children? I didn’t know if they drank while hiding from their children; but one day the children would definitely know their habit. I had no idea how the parents would behave with the young children while in drunken state. But the whole picture revolving in front of my eyes – after seeing the father leaving the wine shop with his baby daughter in his lap – was not at all nice…

Does someone from the governments keep a tab on the number of wine shops and their vicinity with densely populated areas? Do they have any mechanism to prevent young children from getting exposed to others’ drinking habits and alcoholism from very early age? I don’t think so.

Then are not we doing something wrong somewhere?

- Rahul

The Drawing Competition

Our office celebrated the Republic Day one day before actual 26th of January. Many games and events were carried out for us in the office. A part of the contests was a drawing competition. All of us made drawings on any of the three themes given to us. The idea was to take us back to our childhood days when we took part in similar competitions and won prizes. Colleagues used pencil, sketch pens and crayon – or whatever they got. At the end of the day, all the drawings were put on the wall and three best drawings got prizes.

If one gave one look at the drawings, one would not be able to correctly guess the actual age of the artists. All drawings looked like those made by children in the age group of 10-15. Even the selection of themes in general was like those of the children, barring a few exceptions. The picture elements – the huts, the river and mountains, as well as the use of colours, and the art in general – all were exactly like those from the juvenile. Noting that, I made an interesting observation.

When we grow up; its not that each aspect of our personality grows up in the same proportion. That is why children are better than the grownups in many respects. And that is why all of us still remain kids, no matter how old we become. The Drawing competition painted this clear message for us.

- Rahul

My Ring

I used to wear a slim silver ring which had a pearl at its centre. I had been wearing it for around 15 years. After some years of use, it used to get loose and I would get it fixed by the silversmiths. In my hometown they would charge me only Rs 10 for the job. They would heat a pair of metallic tongs and press the metal around the stone, thereby fixing it.

I needed to get the same job done while I was in Mumbai. But I found no jewellery shop agreeing to do the job! And to my horror, they criticized me and had a ‘you are so cheap’ look in their eyes when they saw me wearing this ‘light’ and ‘thin’ ring! One after the other all jewellers offered to help me only if I agreed to get some more metal and get the ring remade as a heavier one. That would make them earn some hundreds of rupees and I would get a big heavy ring. I didn’t like the idea as it would give me flashy jewellery and was costly too, but I had no choice. If I didn’t agree with them, I would have to bear with wearing a loose ring which had the risk of the stone getting out and losing itself. Ultimately I agreed to their design.

Just some weeks afterwards, I felt an itch in my little finger with ring. I took out the ring and was shocked to see the skin below it. The skin was swollen, pinkish and very different! I removed the ring for some time and it became alright. I wore the ring again and faced the same problem! Water would go inside the ring and since the ring was too bulky and big, it would keep some water beneath – resulting in skin becoming wet and swollen. I got the ring enlarged a bit but now it became more uncomfortable to wear because of its weight. After hanging on with it for some more weeks, I permanently removed the ring. I lost my dear ring and the white pearl – the ring that had witnessed ‘life’ with me.

I realised that I had made a wrong decision by agreeing with the money-minded jewellers. My earlier ring was thin, light and comfortable. It was unnecessary to use a ‘big’ and ‘heavy’ ring. The jeweller gained by making a heavy and big ring for me, but I lost.

‘Less’ doesn’t necessarily mean ‘scarce’. We should be careful, because businessmen’s lust for money is creating an environment which doesn’t support those who are ‘content with less’. My dear ring gave me this message. I will try to get another thin and light ring made for me and will be content with it.

- Rahul