Apple’s iTune ploy

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Steve Jobs plans to offer free iTunes. Will the move help Apple secure its position in the music industry?

Stagnant iPod sales and mounting pressure from companies offering DRM free music, Apple is finally reconsidering its iTune subscription model. Rumour mills started working overtime when a leading daily in US reported that Steve Jobs, CEO, Apple Inc is in talks with major music labels for providing unlimited access to iTunes, Apple’s flagship online music store. Under the so called offer, users of iPhone and iPods will pay an upfront fee of $80-$100 and have a lifetime unlimited access to the iTunes library. Another option would be to charge the iPhone users with a monthly rental of $8.

If at all Apple decides to go ahead with their plan, Jobs may be fighting too many battles at a time. First and foremost would be DRM of the songs downloaded from iTunes. Imagine what would happen if someone downloads the entire library of iTunes and starts sharing it with P2P software’s. Though the report says that Apple may allow the users to keep 40 to 50 songs, the rest they will have to listen via live streaming, but it is a no brainer that streamed media can be ripped. Also, there lies another glitch. iPhone at present is available only with AT&T and out of four million plus iPhone’s sold till date, a quarter of them are unlocked. So accessing the iTunes with iPhone goes for a toss. However a music subscription service could help the iPhone gain market share in the cellular space, said Frank berry, director of industry analysis at the NPD Group. “Or it could bring new excitement to the digital music players, which are starting to mature a bit. And if it is tied to new models, it could be a reason for people to upgrade their iPods”, as Frank further added.

As of now, Apple’s iTunes is doing well with their current business model of charging 99 cents per song. This has catapulted them as the second largest online retailer of music, raising a question as why Jobs wants to disrupt it? The answer may be a similar deal that was inked between Nokia and Universal Music. As per the deal, selected handsets of Nokia will have 100 songs chosen by the buyer. Of course this has helped Nokia to strengthen their position in market but would Apple be able to do the same is questionable. Again for this, Nokia is supposedly paying a premium of $80 per handset whereas Apple may just pay $20 per user if any such kind of deal is inked. On the other hand what Apple is planning to do is something similar to what Microsoft did with Netscape. In that case, bundling Internet explorer with Microsoft Windows nearly killed Netscape and if Apple offers unlimited access to iTunes, it may spell doom for other online music retailers.

Whatever may be the end result, if Jobs is involved one must not be surprised if the final result is beneficial for all, of course we are talking Apple as well.

Karan Karayi

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Source : IIPM Editorial, 2008

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

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A Yahoo! for BharatMatrimony

When IIPM comes to education, never compromise

Fundings from Venture Capitalists not only bring in the much-needed capital and credibility, but also serve as a great lure for skilled talent-pool. The BharatMatrimony group has astutely reaped the benefits of VC funding.

Funding and capital are like oxygen for any organisation and it could not be any different for the BharatMatrimony group as well. The group kicked off operations in 1997, with BharatMatrimony.com as their first portal. Our online portal started to gain momentum from 1998 onwards, but in the initial stages, we did not look for many funding options because of the business model that we had adopted. We were very clear about that and from the day one itself we have followed a subscription based model, wherein we used to charge around Rs.300 for the subscription. Whatever money we were earning, we were ploughing it right back into the business.

The first round of funding in the Consim Info Pvt. Ltd. (which houses brands like BharatMatrimony.com, clickjobs.com, indiaproperty.com) came from Yahoo! and Canaan Partners, which invested $8.65 million in the group. In this case, it was Yahoo! who approached the group. We welcomed the move as Yahoo! is a global player and we felt that this association would fetch us a lot of recognition. Also in this case, Yahoo! was not just getting money and capital for us, but also becoming a strategic partner in the business. The matrimonial and property services offered by Yahoo! are all powered by the BharatMatrimony group.

The second round of funding for the group, Consim Info, came from Mayfield Fund, (along with the existing investors) for a whopping $1,175 million. Whenever a company gets these kinds of funding it gives it a great boost. With capital at your disposal you can go out and grab each opportunity that awaits you, as money is no longer an issue to ponder about. Also your credibility in the marketplace increases as you have prestigious names that are backing you and your business ventures. All this helps in attracting good talent towards the organisation, as great minds would work with vigour when they know that their monetary needs would be well met by the organisation in both the short & the long run. More money in your hand also helps you to grow faster than the market.

Apart from all these, the fundings from these Venture Capitalists (VCs) have also helped the group in streamlining the business and putting proper processes in place. We also got more professional guidance and now are strengthening our top management further, through the support of our investors. We have been enjoying these fundings for a couple of years now and as one knows the average span of any VC is normally 3-5 years, so we have a couple of more years to enjoy these liberties and make our systems stronger before we are ready to test the markets through our IPO.

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Source : IIPM Editorial, 2008

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

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B-schooled in India, Placed Abroad (Print Version)
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Future planning for children

IIPM, GURGAON

Hi, I am Subhasish Dey! I’m working as an automotive industry manager in Huntsman International India. I am a father of one and my current annual income is Rs.12 lakhs. Financing my son’s education is my basic priority.

Subhasish Dey

“The times are changing and planning for children’s future is becoming important because one never knows when some unexpected expenditures creep up and for that one needs to plan for everything,” avers Subhasish. And judiciously so! His objective for investments is worry about his children’s future education. “For my son’s future, I consider Life Insurance Corporation (LIC) the best, as it was done by my father also. I invested in LIC’s Child Plan, which has a time horizon of 16 years and I have to invest Rs.4 lakhs in total and by the time my son will be 18 years old, he will be getting Rs.18 lakhs,” he says. He adds that he doesn’t trust private bankers for educational loans. “I don’t want to get bogged down by unnecessary hassles and paper work, rather would prefer investingOne recently aired ad of an insurance company had close frames of a father-son duo, where the latter is getting sporadic outburst of ambitious career options, that leaves the father gaping. Until Tendulkar comes to his rescue peddling a child benefit insurance plan. Well, we couldn’t manage Sachin but here we are with some of the best ways to secure your child’s future. And get this, experts say that currently available insurance plans “will also not serve the purpose!” Kartik Jhaveri adds that “parents will have to make some compromises if they only stick to insurance.” Woah!

So what next? Analysts opine that instead of insurance, one must go for equity options. “Without investing in equity, financing children’s education will be a mighty task,” cautions Jhaveri.

Remember, here we are assuming a conservative scenario that parents want to put their children into a reasonable business school after schooling. In such a scenario, a one time investment of about Rs.8-10 lakhs should be made with targeted returns worth 14-15%. And when we talk about such returns, you should know which road to hit – the equity road (stocks & mutual funds). Even mutual funds like diversified equity funds can serve the purpose.

So, if you are planning for a better future for your children (including a stint abroad, maybe), then some risks should be on the cards! regularly and encashing it when my children need it,” he explains.

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Source : IIPM Editorial, 2008

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

Read these article :-
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• Hindustan Times Article - Publisher goes underground
• Rashmi Bansal (Editor of JAMMAG)
• Rashmi Bansal (Publisher of JAMMAG)

‘IT’ simply didn’t impress the bulls...

When IIPM comes to education, never compromise

Whilst the Indian IT brigade is firing on all cylinders, their stock prices haven’t got much mileage this time round. A look at the stock prices of these companies shows that there hasn’t been any remarkable upward movement considering their impressive results.

The share prices of TCS over the past one month (December 29, 2006 - January 29, 2007) has appreciated by only 4% from Rs.1218.60 to Rs.1269.30, while the third quarter results of the company saw an increase of 41% in gross sales,42% increase in total Income and 37% increase in Profit Before Interest, Depreciation and Taxes (PBIDT). Similarly, in case of Infosys, the share prices have only appreciated by only 0.07% from Rs.2240.50 to Rs. 2242.15 during the same period as against an increase of 44.03%, 44.14% and 45.48% in gross sales, total income and PBIDT respectively. In case of Wipro, the share prices have only moved up by 4.3% from Rs. 604.55 to Rs. 630.80 while there was an increase in 44% in Wipro’s gross sales, 45% increase in total income and 46.28% increase in PBIDT.

One of the major reasons for such an asymmetry is the fact that it has been a phenomenon across the market in this period. Considering a stupendous Q3 performance of India Inc., if one takes a look at the movement of Sensex during the past one month (Dec 29, 2006 - Jan 29, 2006), it’s interesting to note that the thirty scrip index has only appreciated by 3%. The major reason these results have hardly moved the markets is that everybody is eying the Credit Policy, which is to be announced by the RBI on January 31, 2007.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

Read these article :-
B-schooled in India, Placed Abroad (Print Version)
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Rashmi Bansal Publisher of JAMMAG magazine caught red-handed, for details click on the following links.

• Hindustan Times Article - Publisher goes underground
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‘Pure Magic’ wonder!

Is Britannia justifying its magical worth?

The bitter romance between the Wadias and Danone is already a tale too old to discuss. And even as the tug-of-war appears far from over, the Wadias are already too busy, baking something new for their flagship venture Britannia. And that ‘new’ is their recent entry into the premium foods business which was palpable when Britannia recently rolled out its luxury cookies called ‘Pure Magic’. Priced at levels higher than the average product, the company is all set to promote it as a premium product. So what’s so new about the launch?

To this Richa Arora, GM & Head – Marketing, Britannia Industries Ltd replied, “This is not a mass product and that’s what’s different. We already have a strong presence in the economical product segment with Tiger. So the target is the upper class.” However, she strictly denies that it’s a ‘hi-end’ product and calls it as an ‘affordable luxury’. To give it the so-called ‘luxury’ touch, these elegant cookies are available only in two selected stores across metros.

Now the million dollar question is, why at all limit the distribution of the so called luxurious biscuit, especially when the festive season is drawing near? Especially considering that premium cookies market in India is dominated by foreign players, isn’t Britannia wasting a golden opportunity by limiting its distribution capabilities?

Responding to this, Richa assets, “Pure Magic is not a product meant for Diwali gifting purpose and we are very clear about that as it’s a totally separate segment.” Well, Britannia indeed has a wider product portfolio, so it really doesn’t need to turn ‘Pure Magic’ into a cash-cow. However, this FMCG behemoth should realise that newer cash-rich foreign giants like Unibic Biscuits are entering the luxury biscuit segment to make living tougher for it. Also, considering arch-rival ITC’s plans to roll-out such cookies, Britannia indeed needs some ‘pure magic’ to have good days ahead!

4Ps edit bureau: Angshuman Paul

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Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
When IIPM comes to education, never compromise
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• Hindustan Times Article - Publisher goes underground
• Rashmi Bansal (Editor of JAMMAG)
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(U)lip-locked and growing taller

When IIPM comes to education, never compromise

From the house of Aditya Vikram Birla, comes Birla Sun Life insurance, a technologically-led entity which was the first domestic player to issue policies over the internet. Today, Birla Sun life has cemented its position in the life insurance market by pioneering Unit Linked Insurance Solutions in India. It has aggressive growth plans on the anvil and commands a domestic market share of 4.81% (as on September 30, 2007). “We had plans to double our branch presence in the first half of 2007 & we exceeded that target. We now have over 300 branches nationally. We are also entering into strategic tie-ups for exclusive distribution of our Plans,” asserts Vikram Mehmi, President, Birla Sun Life, while talking to 4Ps B&M. Well, as of now, surely, the forecast for it is – ‘Sunny’!

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Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM, GURGAON
IIPM - Admission Procedure
IIPM is A World of Career
Why Study Abroad When IIPM Gives You 3 global Advantages!

Rashmi Bansal Publisher of JAMMAG magazine caught red-handed, for details click on the following links.

• Hindustan Times Article - Publisher goes underground
• Rashmi Bansal (Editor of JAMMAG)
• Rashmi Bansal (Publisher of JAMMAG)

Voodooed? No more.

Why Study Abroad When IIPM Gives You 3 global Advantages!

Vodafone’s canvas looks pretty, but for how long? 4Ps B&M’s Steven Philip Warner analyses the situation...

India, a land of incredible opportunities; India, a land of countless heroic tales; and India, a land of miraculous revivals…. And just as you might have heard the first two many-a-time, there indeed remains something to be said about the country being a perfect playground to modern day phoenixes; Vodafone being an unmistakable proof… and of course, with its recently announced half-yearly financial result standing alibi!

What after being battered in various countries? What after it earned respite as the largest loss-maker in European history? And what after it earned curses for doling out precious shareholder funds in making unnecessarily over-priced acquisitions? Vodafone is back, and how! Its first half-yearly FY 2007-08 revenues announced on November 13, 2007, marked a healthy 8.98% rise over the previous year to touch $34.92 billion and its net profits also touched an encouraging $6.76 billion for the same period. So what’s so special about it all? Well, for the uninitiated, we’re talking about a company here, which for the past five financial calendars was held at gunpoint for having scripted a teeth-shattering $81.75 billion in cumulative losses after a most annoying $44.84 billion net loss during FY 2005-06 alone! And now, returning home with happy tidings for its stakeholders for the first time in over five years comes as a sweet surprise to many. After all this, today, perhaps the Vodafone camp resounds with the words, “Losses? What losses? Wake up!”

So where did the magic come from? Which brilliant strategy led to this tub-thumping revival of a global giant that was condemned by the majority as a disaster-prone machinery, ill-fated and waiting to be pushed over the edge by its condemned past? The answer is not too implausible – India! So where on one hand, it’s the ‘emerging markets shining’ strategy which worked for the British giant, its March 2007 acquisition of a 52% controlling stake in the country’s third largest mobile operator (second largest GSM player in India) Hutchison Essar valued at $11.1 billion. So while the deal, touted as the largest in the telecom arena on the sub-continent, was criticised by many, the only question remains – has the pay-back period begun already? Well, judging by the fact that the multi-billion dollar investment has put Arun Sarin, CEO, Vodafone in charge of 33.61 million customers (as on September 30, 2007), with a 16.45% market share control, the investment under any scanner has proven a fair and promising acquisition as Arun Sarin proudly declared, “Our Indian business is delivering very strong growth. Average net customer additions are running at 1.6 million per month with a customer base of over 35 million at the end of September.”

And moving on, Vodafone’s India story goes far beyond just a massive monthly addition of 1.6 million customers to its base on an average during 2007, and with its revenues rising by a solid 53% in India. And this power of India can also be judged by the fact that while India grew at such a brisk rate, its other growth engine arms only showed a modest growth with revenues growing by 33% in Egypt, 24% in Romania and by 19.6% in South Africa. Further on, the company after getting rid of the ‘Hutch’ brand is now launching a $2 billion re-branding campaign to gain more control over a market which added a mind-boggling 5.75 million customers in the mobile category and is forecasted to grow to 425 million by March 2010 as per Confederation of Indian Industries (CII). Confirming the development, a Vodafone spokesperson told 4Ps B&M, “We are looking at investing about $2 billion in India and have already announced as to how we will go about doing so, and how we will deploy those funds in the country…” Harping on the India growth story, he further asserts, “We have now launched some low-cost handsets with the brand of Vodafone and are providing operator services with it. We would be looking at launching more such services in the future as well. We are looking ahead to further strengthen the brand Vodafone not just in the countries that we are currently operating in but all across the globe. It could be through our services or our alliances…”

Then there is also the fact that with investments upto $25 billion over the next half-a-decade (as per Ernst & Young), the multi-billion dollar investment by Vodafone has certainly come at a right time. With combined revenues of mobile operators slated to grow by 158.6% to touch $33.1 billion (from $12.8 billion in 2006), Vodafone surely has more to take away from India, than it serving as a growth machinery for pushing its global business ahead. Yes, indeed there is some serious (l)earning yet to be taken from the country, and just as we have seen in the past (with Vodafone’s reputation of making investments that really are not worth the efforts and capex), this India story is surely not a repeat of its poor past.

However, there are many challenges that lie ahead of the global titan. The first one being of course, that it’s still a long way from overtaking the numero uno spot from Suni Bharti Mittal’s Airtel which today is undoubtedly the leader when it comes to minting bucks from the GSM business with 48.87 million customers under its roof. Also, there remains the challenging fact that while Bharti Airtel’s subscriber count has increased by 16.9 million in the past nine months, Vodafone (previously Hutch) has only seen a modest appreciation of 9.25 million! So while we hear of Vodafone’s vision to capture 25% market share by 2012 (from the current 16.45%), the battle on the Indian frontiers appears to have just begun! There is also an issue on the policy front with spectrum allocation issues with CDMA players camp (led of course by Reliance Communication’s Anil Ambani) crying hoarse over the favouritism shown to GSM operators by the Department of Telecommunication (DoT).

And it comes as a no surprise that after Bharti Airtel’s Chairman, Sunil Mittal and Idea’s promoter, Kumarmanglam Birla, Vodafone’s Arun Sarin too repeated the favour to the Prime Minister, expressing concerns over the non-transparent methodology followed religiously by the DoT in framing policies related to precious spectrum allocations on November 10, 2007. As Arpita Pal Agarwal, Associate Director, PwC, agrees and expresses her concerns over the spectrum allocation issue to 4Ps B&M, “The entire thing has to be more transparent, as at present it is very ad-hoc, within such a short span, every body is coming out with a new directive of their own and hence it is difficult to know which is the final authority on how many subscribers can go per spectrum.” The situation gets rougher for Vodafone as its plan to increase its presence to all the 23 circles in the country is at a standstill as Harit Shah, Telecom Analyst, Angel Brokings, feels, “Vodafone is awaiting allocation of spectrum in seven new circles for which they are done with all the formalities but are incapable to operate because they do not have spectrum so that is of the utmost importance for Vodafone to become a pan-India player with presence in all 23 circles...”

Sure enough, a lack of spectrum can prove a killer negative externality nullifying the very positive earnings forecasted by Vodafone in its global revival, which at the moment is mainly hinged on attainment of a scintillating growth in India as Vodafone has planned its huge investments in the country in anticipation of securing atleast 15MHz bandwidth. However, if the Communication Ministry’s norms are put into practice, it would get no more than 6.2MHz spectrum; clearly proving a deathblow to all its hopes! Additionally, if DoT allows Reliance Communications, HFCL and Shyam Tele to offer services on both the platforms, then Vodafone will bear the maximum risk, owing to the recent mammoth investments in the country. Bundling is another strategy that Vodafone would be looking at to reduce its costs. However with bundling only being present in the CDMA segment in India, this move seems a far cry for now as Harit Shah agrees and tells 4Ps B&M, “Although in the other countries bundling is very common in the GSM space however, in India it is seen only in the CDMA segment. And this will be one key test for Vodafone in India. It would help in tying down customer with the service provider for a longer period of time as there is contractual period involved like six months or an year. Vodafone has a vast experience of many markets in terms of bundling and should be making use of its experience in India as well.”

Then there is also the lack of infrastructure in the country which makes it difficult for Vodafone. As per a recent forecast by TRAI, the country will require about 350,000 telecom towers by December 2010, as against 125,000 in 2007, calling for a 180% appreciation in facilities! Vodafone’s task to gain a hold over 25% market share by 2012 also appears daunting as per Macquaire Research which stated that the attainment of a comprehensive 25% market share appears “a bit unrealistic without help from M&As.”

Hence, the giant’s strategy to ensure a sustained growth should be three-pronged – strategic alliances, cost lowering measures like sharing of infrastructure, and finally, expansion of its distribution & network coverage within the country as Harit Shah declares, “Strategic alliances such as with Nokia and Siemens is what Vodafone needs to expand speedily. Thankfully, it has done that in the past few months.”




Vodafone’s recent deal with Chinese handset manufacturer ZTE may also mean that it will get the low-cost handsets to India (which would start from a price range of Rs.850), thus enabling it to gain more ground in the country. However, what makes matters complex for Vodafone as compared to other players on the Indian turf is that the huge consideration which it paid for acquiring a strategic control in Hutch and its streamlined returns focus prevents its from walking that extra mile by even playing the price reduction game to attain higher market shares.

With India making a record of sorts by attaining the world’s lowest call rates (of about $0.02-0.03 per minute of usage time), high revenues will have to be got with increased volumes. So, with the pug out of the scene for Vodafone, traversing on Indian roads will only get tougher by the day... And for the moment, all that can be said is that, Vodafone has arrived and is willing to take on fights with Indian players! Question is – is it armed enough?

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
When IIPM comes to education, never compromise
IIPM, GURGAON
IIPM - Admission Procedure
IIPM is A World of Career

Rashmi Bansal Publisher of JAMMAG magazine caught red-handed, for details click on the following links.

• Hindustan Times Article - Publisher goes underground
• Rashmi Bansal (Editor of JAMMAG)
• Rashmi Bansal (Publisher of JAMMAG)

Your real ‘company’ion

Why Study Abroad When IIPM Gives You 3 global Advantages!

It’s companies that allowed you to participate in their growth stories

It took us some time to make Bhuvnesh Joshi, a dhaaba owner in New Delhi’s Ghazipur, understand what ‘admirable’ stands for. After going back and forth in English and Hindi, Bhuvnesh quickly identified his own admirable company. Surprisingly, the company he named wasn’t from the house of Tatas, Birlas, or the much-sought-after Ambanis. It was BAG Films, an integrated media house. “Whosoever creates money, is admirable for me, it’s simple,” was Joshi’s prompt reply. He works hard for his income, and he wants his investments to work even harder. Just to answer your query, as to what’s so special about BAG Films, the stock was quoted at Rs.9 in the beginning of 2007, and is now trading at Rs.90, providing a swashbuckling 900% return on Joshi’s investment of Rs.25,000. The dhaaba owner says his portfolio is now close to Rs.3 lakhs.

Sustained wealth creation despite the crests and troughs of business cycles is a trait of a fundamentally sound company. And allowing all stakeholders to participate in the process is the hallmark of a true wealth creator. Surely, none other than Warren Buffet can make one understand what wealth creation means in the true sense. This legendary investor believes in a simple philosophy, “We eat our cooking.” Therefore, 99% of Buffet’s personal wealth is invested in his own company, Berkshire Hathaway. So, whenever he makes a profitable decision, his shareholders benefit. And whenever he does something dumb, his shareholders derive some solace from the fact that Buffet’s financial suffering is proportional to theirs.

However, Indian promoters – business families or professionals – have yet to reach those standards. Even today, several promoters make money at the expense of gullible shareholders and investors. Unlike the developed nations, Indian shareholders don’t have a voice to checkmate owners, who don’t give them adequate returns or fail to create wealth for the stakeholders. But the times are changing fast.

At a time, when Indian capital markets are turning into a modern day El Dorado for investors, Indian corporate houses do have a story to tell. “Houses like those of the Tatas, Ambanis, and Birlas have withstood the ups & downs of economic cycles and this is what makes them and their flagship brands the most admired companies,” says Mehul Tyagi, Senior Analyst, Karvy Stock Broking Research. Apart from governance issues that have plagued several business houses, the fact is that family-owned companies have dominated the Indian business turf and have been among the biggest value, and wealth creators.

Take the case of Mukesh Ambani’s Reliance Industries Ltd. (RIL). The late patriarch, Dhirubhai, made his investors rich. Remember the movie, Guru, which was based on the life and times of Dhirubhai, where a taxi driver tells Guru Kant Desai that he got his daughters married by investing in shares of Shakti Group. Many a pensioners, schoolteachers, cab drivers, and peons earned huge sums by investing in RIL in those heady 1980s and early 1990s. The same promise is reflected in RIL’s ongoing Greenfield project, Reliance Petroleum, which will be the world’s largest grassroots refinery and is expected to commence operations by mid-2008.


Like RIL, Reliance Petroleum has 16 lakh shareholders. Like in the case of several projects set up by RIL, RPL shareholders are expecting the best. The investors are expecting similar track records and, hence, similar returns. Although Reliance Petroleum is still in the set-up stage, the stock has already appreciated from Rs.60 to a high of Rs.290. The current mcap of this company is now bigger than the combined mcap of all its peers. Now, that’s what is called wealth creation.

“RIL has been by far the biggest value creator, be it in the era of Dhirubhai Ambani or after the split between brothers Anil and Mukesh. But apart from stock appreciation, has RIL done anything? I don’t think so,” says a broker with Indiabulls. The reason is that in recent times, RIL hasn’t helped investors through stocks splits, bonus & rights, or even high dividends. In the Dhirubhai era, investors gained in various forms – through rights, bonus, and the innovative conversion of debentures into shares. The same has not happened now. But how can one deny the fact RIL’s scrip price has zoomed several times in the past two years, and there was negligible impact even when the Ambani brothers were warring publicly.

“The idea is to create wealth so that small investors benefit. This attitude also shows the prospecting growth, sustainability, and the confidence of a company to take this decision. It is a good signal about the shape of things to come,” said Jigar Shah, KR Choksey, while commenting on the possibility of an announcement of a split or bonus at RIL’s AGM, which was held on October 12 this year. But there was no such announcement. However, the stock kept appreciating almost every day.

If it’s stock appreciation, then there are others like GMR, Punj Lloyd, Suzlon, Siemens, & ABB that aren’t members of the power pack, yet delivered a power-packed performance. For example, the debt-ridden and state-owned IFCI, is on the resurrection path after government’s intervention. The stock was trading at Rs.13 in January 2007. Thanks to government’s decision to sell a part of its stake in the company, and the scrip price leapfrogged to Rs.100. Investors made serious money.

There are stocks like BAG Films, Bihar Sponge, HFCL Infotel, TTML MRPL, and Gitanjali Gems, whose prices have gone up even though their financials are not exceedingly good. HFCL Infotel and Bihar Sponge, for instance, have negative Earnings per Share, yet the scrips rose by over 100% in no time. The flip side is that investors in these companies are looking at future earnings, and they realise that these firms have the potential to carve out a niche for themselves in their respective sectors.

Still, is it justified to place a Bihar Sponge and RIL on the same platter, just because they gave similar returns to their shareholders? The answer is a clear-cut ‘No’. The former category of companies have only seen the good times, as they have charted out their new growth paths in the past few years, but names like Reliance, Tata, Bajaj, and Birla have seen misses and hits, successes and failures, and yet have emerged as winners. So, have the New Economy and IT majors created better and more all-round wealth than the old economy giants? Yes, because they have driven value through several means – stock splits and higher dividends. But then the IT firms have been driven by other logic, apart from shareholders’ interests. They have been scared of any hit on their scrip prices in case they bloated their equity capital and, hence, opted for stock splits. Their margins are much higher and, hence, they can afford to give higher dividends. And if they don’t operate with an eye on their shareholders, their paper dreams can crash in no time as has happened with low-rung software companies. In the end, it’s both internal and external mindsets that decide how much wealth and value is created by a promoter. The investors have to make the right bets.

Source : IIPM Editorial, 2008

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

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Just ‘ONE’ step more...

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HDFC struggles to keep pace with SBI & ICICI, though the sector is set to boom

“The good retail penetration achieved by the bank in a short span of time speaks for itself,” asserts Rajesh Mokashi, Executive Director, Credit Analysis & Research Ltd, India on the road map for HDFC Bank. Despite such a context, it would be worthwhile to delve on the agony of being HDFC bank, which is in fact the agony of being an also- ran in the Indian retail banking space.

Let’s take a look at what numbers have to say in terms of retail advances (retail banking segment). On the face of it, one can easily predict ICICI bank as the leader, but one has to ultimately fall back on numbers in order to get a grasp of the yawning gap that exists in the retail banking space. While ICICI has a super colossal Rs.1276.89 billion, the second largest player in terms of retail advances, State Bank of India (SBI) bank stands at Rs.735.96 billion. Then we have HDFC Bank, with retail advances worth Rs.283.2 billon. A similar situation is with respect to the ATMs set up to serve the customers. While ICICI has 3300 ATMs, SBI has a mind boggling 6,473 ATMs (an anomaly, but that’s an offshoot of its 200-year old legacy), HDFC Bank is again the laggard with just 1605 ATMs across India. Quite palpably, the numbers show a huge gap, but they only tell one part of the story.

HDFC bank is today seen as one of the most aggressive players in the retail banking milieu. As Mokashi goes on to add, “HDFC Bank is amongst the new set of private sector banks which started operations in the early 90’s. It is a technology savvy bank and is a fairly aggressive player in the retail banking space.” For FY’ 2007, the banks retail advances grew at 33.4 % as compared to ICICI Bank’s 39% and SBI’s 20.53% growth. HDFC Bank’s core strategy speaks the same. According to Neeraj Jha, Head, Corporate Communication, “Our core strategy has been our focus on multi-product branch model, drive customer acquisition and cross-sell…”

Even if one takes a look at the Indian retail banking space as a whole, one could realise that HDFC Bank’s position is not that bad, as the segment has pretty much to offer more to every player. The Indian retail banking space is in fact quite huge and penetration levels are quite low. Indeed, therefore, when it comes to making moolah, HDFC can sit pretty comfortably at the number three position. But with regard to making it to the number 1 or number 2 position, the number 3, yet again, faces an uphill battle...
Edit bureau: Bikram Keshari Jena


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Source : IIPM Editorial, 2008

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

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Log onto triple play

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CAS and DTH are picking up fast; but will the real ‘viewing hero’ please stand up?

Akin to an arms manufacturer landing a prized license to produce a new range of .22 long rifle load (which would provide a big boost to his business), Indian biggies like MTNL, Tata, VSNL, Reliance and Bharti are rubbing their hands in glee, while busy fine tuning their IPTV plans. Even as television viewers in Indiaare getting used to (albeit in bits and pieces), new concepts like Direct To Home (DTH) and Conditional Access System (CAS), IPTV is the next path breaking technology that is arming the telecommunication giants to take on future demand.

IPTV will come with features like high-speed internet access, recording facility for later viewing, video on demand and a host of other features. Branded as the next big thing to happen to the entertainment industry, MTNL has already given IPTV a soft launch in October 2006, and now (in collaboration with Aksh Optifibers) has even made the technology commercially available to all MTNL subscribers. “The quality would be similar to that offered through DTH but it comes with features like instant Video-on Demand (giving access to a library of movies at a push of a button) and VOIP,” says K. S. Choudhari, MD, Aksh Optifibers.

BSNL is also planning to roll out its services by the year end in some metros. The technology which transfers video signals via internet, is expected to contribute heavily to the changing dynamics of the industry by bringing more transparency in terms of subscribers and revenues.

Though, MNTL has done their bit in pricing their IPTV service as attractively as possible, what’s intriguing is the fact that the expected buzz around IPTV is missing. Only a tiny number are aware of the new technology and even a lesser lot actually understands the technology. Well, wait till the private players officially launch and join the fray... the ensuing marketing wars will ensure that you’ll become an IPTV know-all!
Research bureau: Surbhi Chawla

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Source : IIPM Editorial, 2008

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

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Honda Shine - Dream it. Do it

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CATEGORY : Online
BRAND : Honda Shine
BASELINE : Dream it. Do it.

4Ps TAKE : Honda is out to promote its latest offerings: the Honda Shine bikes and how! Through its latest online ad, Honda is positioning the Shine range in an innovative and youthful manner, customised to make the most of the ‘net’ benefits! The visual is attractive and appealing (and should definitely get all the right number of ‘hits’!) with the product and a colourful background. The body copy lists the new and stylish features of the rocking bike. The clinching benefits to the brand is its125cc engine and the quoted ex-showroom price – which should be quite a bonus for price sensitive Indians. Targeting the youth, this ad attracts them through its difficult to put down offer: take a test ride and win exciting prizes. So what are you waiting for? Get going!

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Source : IIPM Editorial, 2008

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

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‘Names’ people play!

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And here’s another re-christening saga! Now the Clinic Plus bottle, and the Pepsodent toothpaste in your bathroom cabinet have a different parent identity. Nearly 51 years down the line, Hindustan Lever Limited (HLL) has rechristened itself as Hindustan Unilever Limited (HUL), bringing its global name into play in the Indian market (ostensibly to reap synergies of its global alignments). Further, following its global identity, HLL’s famous green leaf logo is also soon to be totally replaced by the symbolic ‘U’ – Unilever’s global corporate logo. The only thing they’ve retained is the word Hindustan.

So how are they communicating this change to the junta? Yes! By flashing the new logo alongside the old HLL logo, after every ad for its myriad products. The strategy seems quite interesting, slowly and steadily nailing the new name into the Indian consumers minds as the previous one (which after 51 long years), won’t fade away overnight for sure. Unlike the name change of its subbrand Rin, when HLL made a bold announcement of ‘Now Rin is Surf Excel’, this time HLL has kept a low profile and why? According to Titus Upputuru, Creative director, O&M, “All brands evolve over a period of time; and now such a big brand like HLL is undergoing a makeover. HUL’s advertising is also evolving and for the better.” All in all, a good attempt with a fresh (albeit subtle) strategy. The idea: Consumers should not be affected and HLLbrand loyalty should simply transfer seamlessly onto HUL. Who said, screaming it out from roof-tops was the only good alternative?

Edit bureau: Romsha Singh

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Source : IIPM Editorial, 2008

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

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And Vodafone’s closely guarding it!

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Vodafone-Hutch is already in party gear, on the back of its recent success at dethroning BSNL to occupy the number two position in the GSM space. But things are all not happy! While Hutch has been busy with its glam makeover; rival Airtel has considerably widened the gap between itself and its closest rival. In FY 06, the gap between number one and two in the wireless market was only about 6 million; while the figure today stands at over 11 million.

Even though Vodafone boss Arun Sarin has publicly stated that Vodafone will mull long and hard before changing the Hutch brand name (there were also murmurs about having a dual brand strategy for some time), a company spokesperson told 4Ps B&M that “India would see a sudden brand change to Vodafone- Essar.” Vodafone is trying real hard to guard news of this change, but it is as well-kept a secret as that of the ‘Holy Grail.’ For the ‘seeing is believing’ lot, the only official word is that there would be a change and that O&M would be devising the communications for these changes. For the rest, just wait till... errr… October, will you?
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Source : IIPM Editorial, 2008

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

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• Hindustan Times Article - Publisher goes underground
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More beauty to slap on!

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Remember Oil of Remember Oil of Olay, that beauty fluid? That later went on to become a full range of hypoallergenic variants, cleansers and creams (with the aim of meeting the full range of skincare needs, whatever the user’s age or skin type), soap and body wash? And that finally became just Olay? Well, reports are out that the brand’s owner – FMCG giant, Procter and Gamble (that acquired the brand in 1985) – has launched $1 billion-plus beauty brand, Olay, in the Indian market. Although Olay is available in over 55 countries, P&G had never earlier, distributedthe brand in India (it was distributed here by Universal Corporation, a company based in Kolkata); now P&G plans to market Olay. Sushmita Sen has been roped in as the brand ambassador for the brand. In1999, P&G had unified the brand under a global name. It’s only in German- speaking regions that it is called Oil of Olaz (while in the Netherlands, it has been renamed Olaz). Going by market reports, Olay will be positioned as a premium brand in India, and the company plans to retail it aggressively across India’s top cities. This is good news for both consumers and the company! The skincare and anti-ageing markets in India are growing at an impressive speed, and everyone would love to slap on the beauty fluids called Olay, right?!

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Source : IIPM Editorial, 2008

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

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• Hindustan Times Article - Publisher goes underground
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Om Shanti Om: It’s the biggest of ‘em all!

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So you thought that Rajnikant’s superhit Sivaji – the rights of which were sold for an incredibly, mindboggling Rs.65 crore – was in a league of its own? Think again buddy! Word is out that King Khan is not going to let anyone steal this thunder! Shah Rukh has managed to sell the rights of his forthcoming production Om Shanti Om (produced by Red Chillies Entertainment, his home production company, and directed by Farah Khan) to Eros International for – hold your breath! – anything between Rs.72-75 crore, which is the highest-ever for any Indian film. For this amount of money, Eros will have the exclusive right to distribute Om Shanti Om in India and abroad, and will also have the movie’s satellite, DVD and new media rights. Not just this, Eros has got access to the film’s intellectual property rights for 15 years (instead of the usual 10 years). For both sides, it’s been a profitable exchange. As we’ve heard, Om Shanti Om – that stars King Khan and former badminton star Prakash Padukone’s daughter Deepika Padukone – is aboutreincarnation, murder, intrigue, mystery et al. It promises to be one helluva ride on celluloid, and is slated for a November release. It better be – after this kind of money having been spent on it! And yes,we are all dying to catch Om Shanti Om on silver screen!

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Source : IIPM Editorial, 2008

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

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Rashmi Bansal Publisher of JAMMAG magazine caught red-handed, for details click on the following links.

• Hindustan Times Article - Publisher goes underground
• Rashmi Bansal (Editor of JAMMAG)
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Britannia goes for yoghurt now!

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Now, hasn’t Britannia Industries Ltd. come a long way! There was a time, when the moment someone said Britannia, you’d think biscuits. After foraying to cakes, bread, butter and cheese, the company is now test marketing yoghurt in Bangalore; and if all goes according to plan – and we are sure it will – the company’s yoghurt will be launched across India. With competition hotting up in the biscuit and dairy segments, Britannia can no longer afford to be content with status quo: Upgrading and innovating its products portfolio is going to be the key. And it seems to have realised all this in good time! Already, it has an arrangement with the New Zealand based Fonterra for its dairy products. So can we now look forward to some Kiwi-style yoghurt?!

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Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
When IIPM comes to education, never compromise
IIPM, GURGAON
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Rashmi Bansal Publisher of JAMMAG magazine caught red-handed, for details click on the following links.

• Hindustan Times Article - Publisher goes underground
• Rashmi Bansal (Editor of JAMMAG)
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