The 100 CC Strategy – flip-flop or tactical?

Many a time I have wondered why business leaders say any particular thing in the interviews. Why do they reveal much of their business strategies? Haven’t we read the MNCs talking about their ‘India plans’ in the newsprint, or Mahindras announcing their strategy for commercial vehicles? Is it that they really think revealing their strategies would help them in some ways?

After a while I put on a little skepticism – may be they want to fool their competitors by misguiding them about their strategies; may be they just want to give a push to the falling share-prices; may be they want moral boost up for their partners or see it as an advertising strategy; or may be simply the Big Boss needs a little ego-high some times. A lot can happen – business is a bad world after all.

In 2007, Bajaj had decided to exit 100 cc segment of motorbikes. [Link]. At that time their CT 100 had done well and then Bajaj Platina was not doing bad either. But they had reasons for taking this decision. The profit margin in 100 cc segment is very low and their main competitor Hero Honda takes almost the whole cake (55% of segment in 2006). So Bajaj decided to remain only in the higher capacity segments – 125 cc and above - where their margins were higher and they had good brands like Discover and Pulsar.

But now, Bajaj has done a flip-flop and has announced to reenter the 100 cc segment [Link]. The company is launching 100 cc Discover (with DTS-Si engine) by the end of this month and it will counter 100 cc Splendor and Passion from Hero Honda.

So what happened to much hyped Bajaj strategy to focus on premium and higher end bikes only and exit the entry level 100 cc segment? Is it because the recession has eaten into the buying powers of customers who now prefer lower cost bikes? Or was the company really not able to read the markets and went on a wrong strategy which it has corrected now?

I agree with Rajiv Bajaj that the company has not ‘changed’ its strategy really. May be it kept the ‘original’ strategy hidden and sent a wrong note of comfort to Hero Honda by telling that it would exist the 100 cc segment and hence Hero Honda should take it ease and become complacent. In the meanwhile they kept working on the higher-end Discover platform to come up with its variant of a 100 cc bike! Seems like a really good strategy!

I think it is also about brands. Bajaj’s Discover and Pulsar have been fairly successful bikes and have good brand names. A CT-100 from Bajaj had become to be seen as a bike for rural areas, while customers in even the semi-urban areas preferred the Hero Honda bikes for their trusted brand names and reliability. When Discover established and became to be seen as a reliable brand, it was in the interest of and convenient for Bajaj to extend the Discover brand even in 100 cc segment. I don’t think this move will erode the Discover brand.

This 100 cc Discover with DTS-Si engine will have a mileage of 80 kmph and is being promoted as ‘long distance bike’. This bike will be in the ‘premium entry-level’ segment and would fill the gap between entry-level 100 cc Platina and 135 cc Discover. The positioning and targeting of the bike seems to be alright.

Overall, I congratulate Bajaj for this tactical move. I don’t see this case of prior decision of exit and then the reentry as a strategic flip-flop. But some challenges would remain to see through that the strategy delivers results. Rest all is in the hands of customers.

(Rahul)

A Guide to Bihar Vs Bengal – History and Politics

It is said history some times gets repeated. The mystery is: which part of history will get repeated and when.

Railway Budget 2009-2010

Railway Minister Mamata Banerjee presented Railway Budget 2009-10 for India on 3rd of July. While the budget has many good schemes which can be termed pro-people and non-profiteering, it also made a specific pointer in being pro-Bengal and anti-Bihar.

Extraordinary Gifts to West Bengal

Nineteen (19) new Express Trains are started in West Bengal, while some new railway tracks, a new railway Coach Factory, a Mega Power Plant, extension of Kolkata Metro, these are all provisions made particularly for West Bengal. It doesn’t end here – several of the state’s railway stations are to be improved, a special super fast Parcel Express train will run from Howrah to Delhi, a Railway run sports complex is to come up, and Railway will revive one sick-for-decades railway factory. This much has never been done for any single state of India. Earlier, the minister had shifted the ministry of Indian Railways from New Delhi to Kolkata, so that she could manage the upcoming state assembly elections well.

Punishing Bihar for Lalu

Our railway minister has also specifically made sure that Bihar loses out because it was the state from which previous Railway Minister Lalu Prasad Yadav hailed from. So Patna has been ‘dropped’ from the list of 50 railway stations which are to be converted into world-class stations. One Diesel locomotive plant at Marhaura and one electric locomotive factory at Madhepura which were to come up as planned by the previous minister have been put on hold. If we find out what all are for Bihar in this union budget, we would get only 4 new trains to the state, an increase in frequency of three existing trains, and gauge conversions of two rail sections. To make her intentions clear, the minister announced a fact-finding analysis of last 5 year’s of performance of Indian Railways, casting doubts if Railway’s turnaround from a vehicle of loss to the most profit making ministry was really so.

UPA needs Mamata and hence her fancies are policies now

Reading the lists of new projects announced for the state of West Bengal makes us wonder if this was the railway budget of India or the state of West Bengal! 19 new express trains, one mega power plant, one new coach factory, revival of one sick factory, and the list goes on. The sole purpose behind all these ‘gifts’ to Bengal were appeasing state-based voters for the upcoming assembly elections where her party TMC will fight elections against the Left parties. The central government led by Congress gave her free hand because the party depends on her for the assembly elections. Also, Congress and Nehru dynasty would get a kind of sadistic pleasure out of punishing Lalu and people from his states, because he had accused Congress of being responsible for communal riots during last general elections.

Railway ministry has always been used for building vote banks

As such, Bengal was never starved for Railways. Abdul Gani Khan Chaudhary (from Congress) was another railway minister from WB in 80s who played the same regional card, and he brought so many project to the state and to his constituency Malda that he should be called a benchmark and a trend setter in ‘using’ Railways for creating vote-banks and making regional vote-heavens.

Afterwards, almost all railway ministers used the department to make them popular. When Madhav Rao Scindia became the railway minister, he announced two new trains connecting his own election constituency of Gwalior to Bombay and Calcutta. CK Jaffer Sharief brought a large wheel-and-axle factory to his Bangalore. When Suresh Kalmadi became railway minister, he started four new trains two/from Pune. Then Ramvilas Paswan set up a air-brake wagon workshop in Barauni. Nitish Kumar as Rail minister got three bridges made over Ganga in Bihar. And when Lalu Yadav was railway minister for 5 years, 52 new trains were started in Bihar.

Even then, all these largesse look small in comparison to what Mamata Banerjee has done in one year for her home-state this time. We could even then forgive her for all this, but can she be pardoned for what she has undone for Bihar?

Bihar after partition of Jharkhand

In independent India, Bihar was one of the states which had abundant natural resources and minerals, but had one of the poorest people. North of Bihar, which was the same one which supported Ganga civilisation, had one of the most fertile lands in India, while South of Bihar had plethora of mines and minerals under its surface. There were lots of industries particularly concentrated in the Southern part, like Bokaro, Jamshedpur, Sindri, Dhanbad, and Ranchi. But when Jharkhand was created, Bihar lost all its mineral deposits and almost all of its manufacturing industries. All that remained was agriculture.

While agriculture could still support the uneducated and unskilled workforces for the bare minimum living standards, there were hardly any opportunities left for the well and highly educated. Also, there were no opportunities in the state for the skilled workforces which could work in factories.

Bihar needs manufacturing jobs

It is said that one job created in manufacturing sector produces many others in the services sector. The job creation potential of manufacturing sector is what has given China this much progress. Could Bihar still do something? There was a silver lining. While it was very difficult to persuade private companies to set up shops in the state because when it came to financial profitability, there were many more attractive options for them, the public sector companies and government controlled enterprises could still do something. This is what the previous railway ministers were trying to do. And this is what still needs to be done.

When government comes to decide where to invest money, political clout works more than anything else. Are not almost all politicians from Maharastra big industrialists? Maharastra, the most successful states of India, along with Gujarat, is not only rich, but there are reasons for its richness, starting for the political clout its regional leaders enjoy in centre. Bihar, on the other hand was always neglected in post-independence period too. (Symbolically it produced first President of India who had no real political powers, while the state of UP which produced the first PM remained on the centre stage for beyond its fate and still gets Sonia/Rahul Gandhis’ special attention.

In Bihar, post-independence period of neglect resulted in coming up of some of the worst criminal and corrupt politicians we had ever seen in India. But after a period, people gave power in the hands of an honest government under the leadership of engineer Nitish Kumar.

Why railway is more than railway in Bihar

Each new manufacturing project coming up in the state of Bihar would be like God’s gift to the state. It is the only way to prevent heavy outward movement of Biharites from the state to industrial cities all across India. It will not only provide jobs to the poor who will now have option to become skilled and earn more, but also to the thousands of engineers and technicians from the state who pass out every year from universities all across India. Since private companies won’t be interested in investing in the state, the only way left is for the government to do so.

Since Biharites are settled in large numbers in all parts of India for livelihood, they some times face ire of regional-chauvinist violence. Every time there is such regional violence, like that happened in Maharastra or which keeps happening in Assam, our intellectuals and media ask why not Biharites be provided jobs in their own state? Even though their arguments can be seen as one with regional-lobbyist intentions, there is no doubt that we have to stop talking and start working. It is in the interest of our nation that we spread the India growth story to Bihar also, which remains one among the poorest. Still, when one ministry like railways start one project like locomotive plant, there are other regional leaders who oppose it.

History of Decline of Bihar and Rise of Bengal

Bihar has an unmatched rich historical and cultural standing. Remember Magadh empire, birth of Buddhism and Jainism, the Gupta dynasty, the Mauryan empire, the Patliputra, the world famous Nalanda and Vikramshila universities, or the Great Ashoka from Bihar who has been the greatest ruler in the history of India.

The decline of Bihar started when Muslim invasion under Muhammad Bin Bakhtiyar Khilji destroyed Magadh kingdom, burnt down Nalanda and Vikramshila universities, and massacred thousands of Buddhist monks in 12th century. Again Bihar rose under the rule of Sher Shah Suri – one of the brilliant Muslim rulers, and maintained under Mughal emperor Akbar. And then, Bengal’s rise was Bihar’s loss…

With the decline of Mughal rulers, Bihar passed under the rule of Nawabs of Bengal. This medieval period under Nawabs of Bengal brought anonymity for Bihar. Though this was the period when Bihar produced the last Sikh Guru – Guru Gobind Singh – one of the greatest sons of India.

After the battle of Buxar in 1764, British East India Company obtained diwani rights over Bihar along with Bengal and Orissa. From here after, Bihar remained a part of the Bengal Presidency of the British Raj. This period of anonymity remained till 1912 when Bihar was made a separate province by the British. Bengal on the other hand gained because Calcutta was the Capital of British Raj (until 1911).

While the capital of Bihar is the same Patna which was earlier the Pataliputra – the capital of the great Magadha Empire, and has unmatched bright past, the capital of Bengal Calcutta or Kolkata, rose mainly because the British Raj made it its capital! In the past, all lands that are named as Bengal were part of the Magadh empire. A very bright part in the history of Bengal was during the Pal Empire, the capital of which was again Pataliputra.

While Kalidasa the greatest poet ever, lived during the Gupta Empire (Kalidasa meaning servant of Goddess Kali, which the Bengalis worship like no other in this world), the Gupta empire had its capital in Pataliputra or Patna. On the other hand, Bengal produced, of course in much recent past, Rabindra Nath Tagore whose English-inspired surname tells all the success that he achieved, though we know he was a great poet. I can go on. The history of decline of Bihar and rise of Bengal also tells us what all that is wrong in India. We lost our soul to make muscles. Centres of pride of our heritage are in humiliating conditions while those created by the British are being appeased.

This history makes us wonder how Bengal has been eclipsing Bihar in the recent past. The need of this chapter from history was needed because if politicians like Mamata Banerjee have slightest chauvinist feelings, they need to be shown how hollow is their pride.

Bengal’s problems are indigenous – politics and work culture

To think that all problems of West Bengal will be solved if two manufacturing projects can be shifted from Bihar to Bengal is naïve. West Bengal sits over plethora of defunct industries which became sick due to the communist sponsored trade union politics and red tapism. The state has championed in inculcating a work culture in factories which itself is a sure shot to disaster. And to top it, the entire state comes to halt every time a bandh is organised to protest something and everything. The problems of Bengal are unique. And solutions have to come indigenously.

West Bengal has many options for taking its poor out of poverty-line. From petrochemical industries to mines to sea ports – the advantages towards creation of a developed Industrial state are many. It is not heavily dependent on government’s support to promote industries; in fact govt interventions are what have harmed the industry. Bihar, on the other hand has very limited options for creating a manufacturing base – and railway is one among the few.

Politics should be kept out of Union Budget and Prime Minster is responsible

The decision of our Railway Minister to put the two railway projects in Bihar on hold is not only partial and political in nature, but also is plain regionalism. It is sad to see that each union ministry works in isolation and according to the fancies of the individual minister, while our super-economist Prime Minister sits in comfort. There already have been demands by state of Bihar for the status of a special state, so that development works can be done with priority. A healthy and developed Bihar is very much needed for a prosperous India – but neither our PM nor our central government is looking any serious about creating a way towards a brighter Bihar.

Can we expect the central government not to do any more harm to the state if it can’t do something positive?

One India – One Nation – Say no to Regionalism

Cicero said this in ancient Rome, 42 BC: “

A nation can survive its fools, and even the ambitious. But it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and he carries his banners openly. But the traitor moves among those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself. For the traitor appears not traitor, he speaks in the accents familiar to his victims, and he wears their face and their garments, and he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of a city, he infects the body politic so that it can no longer resist. A murderer is less to be feared."

(Rahul)

Open letter to Barack Obama

18 June 2009
Mumbai

Dear Mr. Obama,

Past is always so easy to understand. It’s only the present that we don’t get hold of, in order to shape up our future. Still, many of us are obsessed with the future. You would definitely be one of these – after all, future was all that you promised in your election campaigns in order to buy the present! But I see a big problem in the way you are going about it, and hence this letter.

The Great American Blackmailers

Think of the way your predecessor George W. Bush managed to get his second term in the office. It’s an easy guess! Yes, it was nothing but blackmailing… Blackmailing the Americans that if they didn’t support him, those evil leaders with weapons of mass destruction would dig their graves, oppps, mass graves… If they didn’t support him, the Afghans would keep bringing down all the Twin Towers, and each Iraqi boy, a born Saddam, will come back to hit at the US… So the scared (and fooled) Americans put their faith behind him, and enjoyed all his fairy-tales with a coke and a ham burger. And they gave him enough time on the chair to make himself an unforgettable world leader. What followed is history… Can he be called a benchmark on blackmailing? Not yet; he has got a serious contender! Who better than yourself Mr. President?

Your message to America

Last week, you addressed a town hall speech in Green Bay, Wisconsin. You delivered a message to your countrymen. I will present the sequence in which you said things, to bring better clarity. You said: (Ref1, Ref2)

"Our kids are falling behind when it comes to science. We have kind of settled into mediocrity when we compare ourselves to other advanced countries and wealthy countries… That's a problem because the reason that America over the last hundred years has consistently been the wealthiest nation is because we've also been the most educated nation… It used to be by a pretty sizable factor we had the highest high school graduation rates, we had the highest college graduation rates, we had the highest number of PhDs, the highest number of engineers and scientists… Though the Americans used to be head and shoulders above the people of other countries, especially in the field of education, they are fast loosing that position…

So even with the good schools, we have got to pick up the pace, because the world has gotten competitive. The Chinese, the Indians, they are coming at us and they're coming at us hard, and they're hungry, and they're really buckling down.”

Is not this is what is called blackmailing? In your statements, you first express envy: “We have kind of settled into mediocrity when we compare ourselves to other advanced countries and wealthy countries.” I note that here you are comparing the position of US vis-à-vis ‘other advanced and wealthy countries’. Do India and China come here? No. You should be talking about countries like Germany, France or may be exclusively – Japan. But you have a job in your hand – to inspire people, 24X7. Envying the Europeans and Japanese is passé. What a better way to inspire the kids than to prepare a soup, opps, curry, made from a little hatred and lots of insecurity? I will explain how this is exactly what you did…

Teaching them whom to hate

While addressing the students of US, you brought in India and China. India! And China! The dreaded job-snatchers from American Silicon valleys – the Bangalorean savages who eat, drink and think software – the manufacturing mavericks who produce computers cheaper than American cell phones – are not these the real ‘circle of evil’ that Americans in Obama Raj should worry about? I love your spirit of teaching. Earlier, you were teaching them how to eat, what to watch on TV, or even how to dream. And now you are teaching them whom to hate! I remember the last time George W Bush used a hard-power to teach Americans whom to hate. Why hard power? Because beards are hard – caps and black veils are hard – nukes and chemical weapons are hard and even oil is hard in some ways. Now you Mr. Obama are using soft power. It’s not difficult to write a book like ‘A hundred reasons to hate Indians and Chinese’. This is a soft way to do the same - blackmail people to do things. (I wonder why Mr. Bush failed to use this type of soft-manipulation – after all he remains one and only MBA President of the USA in entire history!) Indian students are good at software, they are good in space research, even getting better in nuclear and cutting edge technologies, and they have Bangalores. China has Shanghai while Detroit and Manhattan are in the news more because of bankruptcies than anything else! So your problem was how to let Americans realize and come back till they achieve what it seemed they were destined to lose! And through your speeches, you made use of the uncertainly and vulnerability that a US citizen is going through these days, to blackmail them into studies and hard work!

Declining US Growth rates

Your dilemma is how to sustain the supremacy of the US. US growth rates are witnessing saturation: GDP growth in recent years are 3.2% in 2006, 3.2% in 2007, 2 % in 2008, and (-).57% in 2009. The problem is that many things in life are like the bell curve. You have to come down after a point. How you come down and how you prolong your growth phase is in your hands. I will tell where I think you are making mistakes.

How America can still grow

I think you are wrong when you emphasizes that US was supreme because of its “highest education”. Education as an end in itself won’t achieve much. What will the US do when the entire world becomes “higher educated”? It happens so many times in our life too – when we see things as ends in themselves. Is not it the reason why the US firms are losing out? And they are still not learning lessons! Was not this the very reason why US auto giants lost to Japanese and then protected themselves, but again failing now? I think when the entire US growth model is based on a ‘superiority feeling’, it leaves only one direction for movement – downwards…

Recently, I came to know that Google had to buy present day Orkut from a Turkish guy. He worked for the US firm Google! Doesn’t it tell you how much those non-native Americans contribute to your growth? Long before, US firm Microsoft had to buy Hotmail from Sabeer Bhatia. I think the US firms are best at making commercial gains out of ideas. But you should have your own ideas too! Though so many American firms have thrived because of innovation, I see something lacking in your vision. Let us come to the fundamental question – how can US still grow? I think there is only one way – and that is your basic job also. The word is –‘creativity’.

I think the US can still grow only by making ‘creative’ ways into areas where others have not plunged yet… Making the best use of creativity to create niche sectors, to use creativity to come out with lifestyle changing offerings – this is the way forward… Let the Chinese manufacture your designs at the cheapest costs. Let the Indians write software codes for your companies. You should aim at the intellect! But alas, you are fighting with Chinese to continue making tractor components. You are snubbing the Indians for ‘stealing’ your back-office jobs! And then you are blackmailing your people into competing against these very Chinese and Indians? I think this may grant you more years in power in the US, but will take your country downwards…

Please stop blackmailing into future

I think your approach of showing threats to young children to get them to study, and using blackmailing to bring people in the right direction won’t take you far. In fact your approach will kill the very hope that is still remaining in the Great American Dream. Americans like to have fun in doing whatever they have to. The days when the US saw a threat in the USSR and hence made a Space march are over. US now is not an underdog, and those tactics won’t work any longer. The faster you understand this, the quicker you will get back.

In a way, your tactics of threatening and blackmailing will breed a generation of jealous Americans. This would never have happened in history of the US. When a generation of Islam-hating America grew up, we saw the Guantanamo happening. Take care to see if you are not watering a ‘hate-India’ generation to come up… Because, the repercussions would be a loss to the entire world.

From India with love,

(Kumar Rahul)

AlumniNM Blog - New posts

Monday, May 18, 2009
B-School Rankings 2009

Sunday, May 3, 2009
Convocation address by Vice Chancellor - 2009

Wednesday, February 25, 2009
Euphoria 2009

AlumniNM Blog - New Vice Chancellor

Tuesday, January 20, 2009
New Vice Chancellor

Young father

“Now we have become three from two…” his voice was grim and eyes reflected sadness. I wondered how a young man could downplay his fatherhood like that! But by that time, I had done the calculations. What lied in front of me was an economic reality and a human tragedy.

He is one of around 35 security personnel employed in our college. A young man of around 30, he is skinny but fit, sports a thin moustache and has very sharp eyes. He sounds positive, enjoys tea once every afternoon, and has learnt a lot about operating PCs since he has been posted in the computer centre. He is honest, and has returned back my pen-drive that I left in the lab by mistake, two times recently...

The calculation which came out of our chat of about five minutes tells this: His duty for 8 hours a day earns him Rs 130. He does overtime 20 days a month. Hence, (20 days X Rs 260) plus (10 days X Rs 130) equals to Rs 6500 a month. Is that enough? How much does he spend? “We are able to maintain in Rs 2500 a month” he replies. And obviously, he sends the remaining money to his home where his old parents and may be some unwed sisters would depend on him…

“Where do you live?” I asked to confirm. “Where else? In the nearest jhuggi-jhopdi (slum)…” And the house? “It costs Rs 2500 a month… But we share it with five more families; otherwise we can’t afford it…” I am taken aback. To share a one bedroom house with five families! For a young couple with a newly born baby! That is something… And of course the house would be an illegally made structure which would have a leaking roof, with community toilets and no clean drinking water…

The calculation tells that he earns Rs 6500 a month, spends Rs 3000, and sends home Rs 3500 a month. Perhaps his wife would also be working, earning around Rs 3000 a month, and hence both of them would save around 78,000 in a year. Of course this will happen only if there are no health related problems, no absenteeism from work due to any reasons, no threat on life due to regional political parties, and no yearly floods in the city destroying their household…

The economics still makes sense. If the young family is able to save more than fifty thousand rupees at the end of a favourable year, life is still worth carrying on. Is it so?

A deeper analysis tells a different picture. The family of three is able to maintain life in Rs 2500 a month. That means Rs 83 a day. Means Rs 28 a person a day. If all this money is spent on food alone, it means Rs 9 a person a meal (assuming three meals a day). How is this possible? How is this possible in Mumbai? With this tight budget, what will happen if tomorrow his wife is diagnosed with a serious illness? Can he spend Rs 2000 a month on medicines? With this earning, will they educate their child? If yes, then for how long? How can they share a one bedroom house with five more persons? This would happen because they need the house only during night for sleeping; what if two persons become sick at the same time? Where do they keep their savings? Can they ever get a bank account opened in Mumbai, without address proof? What if one of them meets with an accident? What if he is fired from his job? What if there is an urgent need to go to his native place; how many times can they afford railway tickets? At the end of it all, why is it that he is unhappy at the birth of his first child?

What wrong did his newly born baby do that it was born amidst such poverty? Did you ever feel that your life was tough? If life is still worth carrying on for this young father; do you have the right to complain? Also, can we learn something from his life? Can we learn something from life? To begin with: We can neither control our birth, nor our death; but we can certainly control what we do between the two...

(Rahul)

How Honest is India?

I would judge someone honest if s/he does good and just even when God is not watching. Judging a nation or place in general is very difficult, because of diversity. Here is an interesting report about honesty in Mumbai/India.

Reader’s Digest came up with a report (Aug’07) on an exercise it carried out in 32 cities across the world. They deliberately mislaid 1000 cell phones, and waited to see how people behave once they see the phones lying unclaimed. And to see how many phones are returned back. At some places they even video-recorded the whole process.

On an average, 30 cell phones were kept in a city. In India, Mumbai was the chosen place. The editor says that he expected to get back only 6 out of the 30 phones left at several places in the city. Some people in the team jokingly said that they weren’t expecting even a single cell-phone back. Do you know how many cell-phones were returned back in Mumbai? 24 out of 30! And do you know how other countries fared? Mumbai stands at World’s No. 5, above Paris, London or Singapore!

Coming to my own personal experience, yes, I have lost one mobile phone while getting into a Mumbai local train. And in one instance, a gang of three guys on a motorbike stopped a friend on mine in Thane and snatched away his phone. He lodged a police complaint but didn’t get it back. But these are cases of crimes and can’t be used to judge if people are honest or not.

The average Mumbaikar who returned the cell-phone back was not of a particular caste, religion or surname. The report tells the story of one Dharmendra Kumar, who had already lost three mobile phones himself in the city, but very promptly returned back the phone he found. He even asked the journalist in disguise: “Just how can you be so careless?” Mumbai is made what it is – good or bad - with the joint effort of both the migrants and the locals.

So what explains such high score on honesty, in case you wonder? We may say that such cases can be the result of general attitude of Mumbaikars to mind their own business, which some times goes to extreme limits. A woman reported in yesterday’s newspaper that a stupid person groped her from behind at a bus-stop but not a single person came to her help. She had to hit him with newspaper and verbally abuse him to get rid of him. But these cases of returning back the mobile phones needed the person to call up a contact from the address book of the phone and enquire and then make arrangements to give the phone back: it needed investment of time and effort. And if 24 out of 30 Mumbaikars still did it, it proves that we really are honest people!

After all, the land of Buddha and Gandhi, where children grow up listening to moral stories from their mothers with every dinner should reflect some times!

Baffling Corporate Decisions

Business decisions are becoming more and more difficult to interpret. What appears apparent in the beginning is not so in reality and many a time we understand them only by looking beyond the obvious. It seems corporate now a days don’t feel any dilemma in what to keep secret and what to drop in the public domain, and are using the power of information technology and media to reach new avenues of strategies and gimmicks. Some of the recent decisions and announcements make an interesting collage.

Reliance – proposals and disposals

Back in March, Reliance Industries had decided to close down all the 1432 petrol stations it had opened across India. The company had invested some 4000 Crore rupees in setting up these stations and employed 55000 people. Reason was that government had not agreed to pass on the same subsidies to the company as what it had granted to the public sector oil firms. On one side, it made me wonder: how could Reliance be so buoyant at the business planning stage that it believed the government would grant it the same subsidies that PSUs get in order to survive? I tried to calm down my bewilderment by asking myself to wait and watch; may be Ambanis had some hidden Plan-B’s. But any good news in the regard is not coming in. On the other side, we didn’t realise that when Reliance closed its petrol stations, all its sales went to the PSU oil firms, thereby requiring the Govt of India to churn out Rs 4000 Crores extra in the form of additional subsidies! Interesting? So the decision of the Govt not to give the same subsidies to Reliance still resulted in a loss of Rs 4000 crore to the govt! Now it is evident that Reliance was sending a message across by its decision to close down.

Reliance Retail – Sending message @ speed of Fire

The first thing Reliance Retail did after public and political opposition to its setting up organised retail stores in Uttar Pradesh was to send termination letters to its 1200 employees it had hired, and announcement of closing down 20 stores. Did this decision to fire employees and bad press coverage cause it any harm? No! Actually it sent a strong signal that the opposition to organised retail in UP was actually resulting in loss of employment rather than save some! A very fine example of sending the right message with a bad news…

The Nano – and the Grand dreams

We all know about the fate of Tata Nano project in West Bengal. Knowing the state of industries there because of trade unions and labour protection policies, I wondered why Singur was Tata’s first choice. Later on I understood that the strategic port location, presence of huge middle class customer base in the vicinity and the favourable sops offered by the state government were the reasons behind its selection. But what about the long term sustainability? In a communist state where public life stands still at the call of frequent bandhs by any political party, starting a project there, which was so very critical for the company and for the nation was questionable. The same is true about communist ruled Kerala. Harsh Mariwala, Chairman and MD of Marico who visited our campus told how everyone laughed at him when he decided to put up a plant in Kerala. And successfully managing it despite all odds can still be called one of his major achievements. The public announcements made by Ratan Tata, whether at the negotiating stage or to pull out of the state can be understood because the situation was all political. Right communication by the company was very important because the whole world was watching them and their baby Nano. (Though some suspect the Govt of West Bengal of killing the political career of victorious Mamta Banerjee by not trying too hard to calm the situation with some real sops and compensations for the farmers. If we see it this way, then the defeat of the ruling party in the state in retaining the Nano project was actually its victory in insuring their rule for next two or three decades.)

Jet Airways firing and flip-flop

The case of Jet Airways firing 1100 employees and then inducting them back with some touching and emotional statements made by the Chairman and CEO Naresh Goyal calling company the mother and all employees as her children was an interesting one. No emotional speeches were able to douse the bad press it got, and this episode would definitely leave some bad impressions for the company as an employer for a long time to come. But this whole episode can be seen as an attempt by the Indian airlines industry to wake up the government and get some favourable policies and subsidies in order to survive…

State of Indian economy - Pessimism or Propaganda?

Front page of HT on Nov 12 carries a news title, “No more acquisitions, Tata tells his firms”. The news report had quoted Ratan Tata’s email to the top management of Tata Group firms! Should this email have been kept a secret? Not necessarily so. The decision to make it public is understandable. Due to Indian economy in bad shape – partly due to global financial meltdown and more critically due to failure of the Indian economic planners – private firms are the first to get the beating. Their survival is questionable as the raw material costs are going high on one hand, and the competition is merciless on the other. In such a situation, sending panic messages in the markets, raising questions about the sustainability of Indian growth story, making employment an issue in a country with 7.2% unemployment rate, the message is clear – the government has to act and give more breathing space for the private firms. But after a limit, it seems that the general pessimism and the panic that is created in India by the private firms is more in the air than on the ground. India is still not that much affected by the global financial crisis, but companies are making use of this gloomy situation to achieve some difficult goals. Some companies are using the situation to fire employees, cut down salaries, and stopping all perks, even if they are in the business of selling chocolates, which is mostly unaffected.

As we look at it, some decisions and communications by the Indian companies raise questions about their prudence at first, but eventually the real picture comes out as very different… Let us keep the faith on the board of directors who decide the salaries of the CEOs :)

AlumniNM Blog - New posts

Wednesday, January 7, 2009
Invitation to Alumni Meets – January 2009

Wednesday, December 24, 2008
Remembering late Prof. Pratap Sirur

Turnaround Babus

One day when I returned home, I found a piece of paper fixed on my door. I was ready for surprises. But it turned out to be a notice from a post man that he had brought a speed-post and as the door was locked, now I had to collect it from the designated post office within five days. I thanked the postman for his concern; otherwise he could have just returned it back.

When I went to collect the post at my nearby post office, I was asked to collect it from another PO at some distance from the place, and that too before 10 AM.

Two days after, I went there, and found to my surprise that there was a queue of around 7 people waiting to receive their registered/speed posts. The recipient needed to show our picture ID cards in order to receive. The lady at the counter was as expected slow. And then, another woman complained that the postman never made a second round to deliver; he just left the notice when he found the door locked. There I realized the problem: As the government departments are fighting hard to improve profitability, or to become profitable at all, should they do that at the sake of poorer service to the public?

Imagine how many times we shall need to make rounds of post offices just because our main door was closed for the few hours in which the postman came? Or about the person in whose name the letter has come is out of town for some time? Should government departments be making profits? Yes. But should they adopt quick-fixes in order to make profits? Think about the courier guy who will call you up if he doesn't find your house. On the other hand, the post offices don't offer any comparable service. This is true for all government departments trying to turn around. Shouldn't they focus on improving efficiency and making some real changes in their work process and culture? Think about the railways which, in order to become profitable, fixes an extra side berth, reserves large quota for RAC and tatkal, or increases cancellation charges. Why should the railway tickets booked via the internet be costing more than those booked at their counters? I am using my computer, paying via my card, taking print of my ticket on my own printer, and thus saving the railways time, manpower and money. But in return, I am charged more than the guys who make queues at the reservation counters, fill up requisition slips, argue with the booking clerks and fight at their mundane fancies. As one of our professors says: by automating the wrong processes, you will end up doing the wrong things more efficiently!

Customers don’t forgive

I was late and in a hurry. I had to create recovery CDs for my laptop, which I had been procrastinating for a long time. I stepped in the neighbour general store and asked for a blank DVD. “How much is it?” I heard “90”! I asked him to say again. Now he says “only 20”. I took two pieces and went out. But then I came to realise that the first time he had said “19”, but seeing that I couldn’t hear him, he had asked the round figure of 20 the next time. I made a mental note that I would avoid this shop in the future.

One of the ways the market has developed has resulted in un-forgiving customers. Taking a short term approach can be fatal to businesses. The opportunity cost of losing a customer is very much higher than acquiring a new customer from competition. But even then some shoppers do that mistake. And the worst thing is that they are not reading our blogs to realise this :). They will learn it a hard way...

Every man is a story

One of our professors shared his life story with us in bits and pieces. Connecting them gives us a glimpse of ups and downs on the way to a success story called India.

Born in a small town, he went to a school where the medium of instruction was the regional language. Every morning, he walked up to the school carrying two things inviting curiosity of his classmates: his half-pants which had a distinctive flared cuffs/ends and a bag in which he used to carry notebooks in the morning and household items / vegetables on the way back to home…

And then one day he found himself admitted to an English medium school in a city. Life was challenging, as he couldn’t even speak either of Hindi and English! When he had to borrow a pen from a colleague, he used to utter, “Tumhara pen, mujhe pen” :) Finding an interesting ‘item’ in their classroom, the students made him a popular punch bag. Ridicules were naïve; but then they used to call him by a name that was insulting. And he didn’t even understand its meaning! One day when he asked what the word meant, they replied, “You are such a ‘good boy’, so we call you that with love”. The teasing got more innovative day by day. Until one day, when he called it quits: in his own way.

As he was having his lunch, some boys threw dust into it and he couldn’t take it any more… He being physically much stronger beat the blues out of the ‘bad boys’. From that day onwards, whenever someone created troubles for him, he would wait for him outside the campus and make sure to send him off on shoulders rather than on legs. This way, he survived his school days…

Seasons changed, birds reached home, and time flew like clouds. He passed his engineering and joined an automobile company. Then he did his post graduate degree in management and rejoined the industry. By this time he had got to understand a market gap and started his own business by procuring parts and selling them at higher margins. Very quick by any standards, he had all that his parents would wish him to possess. But his punishing work hours and passion for ‘more’ resulted in him having some undesired ailments and one day he vomited blood. Having survived and now convinced by parents to stick to a ‘comfortable’ job, he came to teaching as a profession. At the same time he offered his consulting services to the industry. Today, he also owns a medium scale industry with turnover in crores. And then the next: he has adopted a village near his native place and has set a target to build a school; a hospital and the entire infrastructure that is needed there to make their life comfortable and safe…

Until there is mutual trust, respect and love between elders and the younger generations, our India will remain our India.

The Tata Finance episode

The American financial sector is in the turmoil. From Bear Sterns to developments with Fannie Mae and Freddie Mac, the crisis unfolded and took companies like AIG and Lehman Brothers in the grip. Coveted institutions which took generations to reach the enviable positions were down in some months. It is all in the newspapers these days. Somewhere somehow someone made mistakes which reached the US to these conditions.

Do you think Tatas did a mistake by deciding to set up the Nano plant in West Bengal? Do you hold the CEO of the bankrupt US finance major Lehman Brothers guilty? Did George W. Bush do a mistake by invading Iraq? Any question, that can be answered in ‘yes’ or ‘no’ need not be asked. Bad decisions and mistakes happen; so do frauds. One person’s gain may be the whole system’s loss.

Every event has far reaching repercussions, both positive and negative. The only thing that matters is – how you deal with them and how you let the event affect you. This small case is a very important one, because such cases set examples for years to come.

Frauds happen – deal with them

What does a corporate house do when the managing director of one of its companies commits a fraud? Does it try to put a lid on the affairs or does it make an all out effort to ensure that the stakeholders suffer no losses? When Tata Finance was engulfed in a financial mess, the Tata Group took the latter approach. Before the fraud could be detected by the regulators, it was the Tata Group’s self disclosure that opened the matter up.

Rather than sweep the issue under the carpet, Tatas decided on a two-pronged course of action. First, the interests of the small depositors who had placed their trust in the Tata name had to be protected. Second, an open and objective enquiry would be conducted to bring the culprits to book.

Tata Sons and Tata Industries made available to Tata Finance cash and corporate guarantees amounting to Rs 615 crores. Not many industries would have put hundreds of crores into a company that was sinking and that too without being sure that any of it could be recovered.

Despite the promptness with which the Tatas moved, the public perception of the Group and the Tata brand was affected initially. But it was the right thing to do, and the Tatas did what was required to be done.

Ref.: Tata Review