Entrepreneurial India, Utopia??

Ok. So my last post was about the changing fortunes of the Indian IT companies due to a decline in the conversion rate. My closing line was quoting a hint to the Indian government to rise to the occasion to look for means and ways to prevent the IT boom going bust. But that’s not an easy effort. There are more than 1 billion people in the country. Out of this there are about 500 million children who are currently under the age of 15 who will soon be joining the workforce. Neither the government nor any large business empire can create avenues for employment and growth for these people. It is only possible by budding entrepreneurs.

There are far too few cases to talk about when it comes to Entrepreneurship in India. But the few cases are worth talking about. V.G Siddharth setting up a chain of outlets called the Cafe coffee day is a classic example. In days when coffee was considered to be a beverage only for the elder generation, Siddharth brought in a whole new hip look for the younger generation and having a coffee mug in your hand a style statement. He wanted the youth to come in and have their own choice of coffee, munch on their favorite cake or sandwich and even check their emails. Today the Coffee day is a successful chain not only providing delight to its customers but also providing thousands of employment opportunities.

A graduate of NDA (National Defence Academy) and after serving for some years in Indian army in the aviation branch, Captain Gorur.R.Gopinath decided to take voluntary retirement and return to Bangalore. One day he heard about a story of a Vietnamese woman who returned from Paris to start a helicopter service in Vietnam to provide access to remote locations. That made sense to Gopinath. He felt that the same concept was applicable to India as well where infrastructure remains poor and many parts of the country inaccessible. Air Deccan as an idea was born then. Today it is known as company that started a revolution in the Indian Aviation industry and as a pioneer in budgeted airline service bringing in the skies closer to the common man. Needless to say this company has brought in hundreds of thousands of jobs along with it.

Entrepreneurs create jobs. Jobs provide livelihoods. Livelihoods provide a sense of confidence to provide emotional security to people who depend on us. So, encouraging entrepreneurship should be a top priority for any developing country. If India has to see herself as a world economic super power then there has to be focus on encouraging Entrepreneurs. Institutes like EDI (Entrepreneurship Development Institute) are being established with a mission to provide training and guidance to encourage and ignite young minds to take up this responsibility. It’s an ideal situation a Utopia of sorts but in the end it’s a call the Youth of this Nation has to take!

Ravenous Rupee!!!

Gone are the days to be happy that the Indian Rupee (INR) is gaining space over the U.S Dollar (USD). The initial frenzy and buzz over this remarkable achievement dampened as quickly as it sparked. The Ravenous Rupee is not only feasting on the now feeble and frail looking USD but also is eating into the Indian IT industry that has so proudly boasted of its strength and might in the recent years. Reports say that the INR has been on the downside for more than a decade rising sharply from 25 Rupees for a Dollar to about 48 Rupees for a Dollar in 2002. That’s almost about a 100% rise over the decade. When we are talking about these figures in the context of currency appreciation of a country, that’s a huge deal. This phenomenon is hurting the SMEs (Small & Medium Scaled Industries) the more than anybody else. Lion’s Share of business for SMEs is from their US clients and so they are directly impacted by this dipping conversion.

Well for that matter it’s not just the SMEs but even the bigger players like Infosys, Wipro, and Satyam all have reported dips in their profit margins. There is no question about the fact that the impact is paramount. For every 1% appreciation there will be a 40-45 basis points impact on the net margins. This is because the INR’s stellar show against the USD also had ramifications into the European market. Since the start of Fiscal year 07 the rupee has moved from 87 INR to 82 INR against the GBP and from 59 INR to 55 INR against the Euro.

If this trend continues we may soon have to loose a lot of business to countries like China, Philippines who are considered as potential outsource geographies in the West. The onus is completely in the Indian Government to tackle this issue to come up with plans to keep encouraging the IT market that has been a splendid performer contributing to its economy.

I’ve got PR !

Almost three months of no blogging for various reasons has turned out to be a blessing in disguise for me and this blog. I finally have a Page Rank. Thats right folks my blog actually has a PR of 2. Thats more than what some of the ‘better’ sites would die for. This also turned out to be a source of inspiration for me to start blogging again, so much so that , Iam writing this post as soon as I discovered the miracle. I know all the hoopla about ‘Google Dance’ and all the elements of uncertainty that surrounds the consistency of sustaining an actual Page Rank for a significant time. But then, Iam going to relish this momentary state of bliss. Bless my Soul !

DELL@Sriperumbudur !

Indian Customers can now buy DELL machines for hopefully cheaper rates from July, 2007 thanks to Dell’s manufacturing plant that has been set up on the outskirts of Sriperumbudur. Michael Dell, the company’s founder and CEO made a statement on tuesday that the company is planning to invest as much as 30 million $ in the next five years in order to meet the rising demand of a growing economy. The manufacturing plant would initially start off with 4 lakh personal computers per annum and would rise gradually. Mr. Dell stated that the Dell’s Indian presence was really important for the company as the domestic sales grew about 70% year on year to $ 500 million since last year. Even the Server and Workstation sales have risen to about 19% when compared to last year’s 9%. The company is looking forward to touch the magic figure of $ 1 billion in annual sales soon. Mr. Dell said that the company is going to focus on alternative models and focus on the consumer segment primarily to increase market share. In a country of more than a billion there are only about 50million people who are online which is about 5%, one of the important strategies is to improve this percentage by providing technology at much cheaper rates. He said that the India research centre that has been working to produce world class designs will now start concentrating on domestic products too. The founder also said that the company was looking at introducing some local display shops in an effort to increase awareness of the brand in local markets. It really would be interesting to look at the range of products that DELL would release as its first line of products in India. Can’t wait!

Choppers on sale !!

The booming Indian Economy has definitely changed the lifestyle of many. Let it be funky electronic gadgets, trendy clothes , lavish cars, the Indian customer has never been left behind when it comes to owing them. Now, he can buy and own a helipcopter as well. Yes thats true, companies like Eurocopter and Bell are planning to launch their helicopters for sale in India and reports say that there are quite a few enquiries about this project already. Costing around 10 crore rupees these companies are lending their services to provide finance schemes if the customer wants to buy in montly installments as well. Well I wonder how long it will be before I write a post on planes for sale !!! Lageraho India.

Race to $100 Billion!

With cross broder acquisitions becoming a norm and with domestic mergers on the foray the race is on to reach the magic figure of $ 100 billion for most of the Indian companies. But India’s biggest and most trusted company Reliance Industries stands at No.1 position with a total market value of $ 43 billion sharing the position with India’s public sector energy gaint ONGC. Bharti Airtel which is India’s No.1 telecom company takes the third spot with a market capitalisation of $ 32 billion. All these companies have still a long way to go to reach the magic figure.

So are we giving way too much attention to this topic than it requires? Maybe or maynot. But what is true is that India’s Economy has never been better and the good news is that the party has just begun. The Indian stock market has been performing extremely well and has shown signs of standing pretty tall in difficult times which is always good in the long term. What is more encouraging are the projections that some of the top financial analysts have furnished. Even the most cautious ones are quite confident that the sensex can easily soar over 40,000 mark in comfortable time. Morgan Stanley said that the sensex will cross the 50000 barrier in about 10 years from now, which sounds unbeliavable , atleast this point in time. Earning a global footprint through foreign acquisitions and domestic mergers which would eventually unlock greater value through its operations are other strong reasons for us to be optimistic. Finally other businesses that are huge and have not been listed ,like the Retail sector, when listed will only help in realising the $ 100 billlion dream faster. What is defnitely true and maybe more important than anything else for the members of India Inc., to focus on is the fact that there will be tough competition and the the only way to reach the top spot is to sustain this competition. After all its the Survival of the Fittest !

Dear ‘O’ Dear !!!

Alarm bells started ringing in within the coalition members of the UPA and the Congress party itself when the country saw a new high in the inflation rate when it rose to 6.73% for the week ended Feb 3^rd. When compared to previous high of 6.58 % seen during the week ended Jan 27^th this new high has certainly started to concern the ruling party. What is particularly disconcerting is the fact that the inflation rate with the same government a year ago was at a mere 3.98 % well under the 5-5.5% that was fixed by the RBI. The government would have to do really well to sustain the pressure for the ever rising prices. The finance minister had admitted that this was a real concern and said that the rise in prices was really affecting the common man.  The main reason is that the sudden surge in price was observed particularly in the some primary food articles and some manufactured products. This has proved that the rise in inflation when it comes to the food segment is not seasonal and the rise in prices of food commodities like milk sugar, vegetable oil was certainly making life difficult to the common man. Immediate effects were seen when the government had reduced the fuel prices, petrol and diesel by two rupees and one rupee respectively. The Prime Minister stated that this reduction in prices should have a moderating impact on bringing down the inflation as often the transportation costs will have a cascading effect on the price of the commodities. With the budget season just around the corner there is a lot of thinking for the Finance Minister to do. As far as the common man is considered its not a pleasant waiting game for him until then. !!

The Tribunal Award!

The complex and prolonged issue about sharing of the cauvery waters finally came to an end with the Cauvery Water disputes Tribunal finally coming to a unanimous decision yesterday. According to the award passed on by the tribunal there will be an equittable settlement on the sharing of the resources between the two main disputants , the states of Karnataka and Tamil Nadu. Though the initial reaction says that karnataka would be the aggrieved party there are substantial reasons for both the parties to feel good about the final award.

There is one part, Clause VII, of the settlement that may prove to be a loophole of soughts,  a means for anti social elements to take advantage and convert into a futile political agenda.  The Tribunal award says that in the event of an abnormal year where the monsoon did not contribute to the required water levels of the Cauvery Basin the allocated shares would be proportionally reduced. Considering the fact that this contentious issue has always flared up in the event of a distress year, the tribunal should have given extra attention to this fact.

Any settlement for any prolonged and complex issue can never be perfect. However under reasonable criteria , this unanimous decision should prove to be eminently implementable. The parties also should agree to work towards an amicable decision in the event of any future disputes.

Zapped!!!

Question : What do you think the Fastest Retail Website for American Consumers is ?

I would’nt be surprised if your answer is Amazon. But you are worng. The correct answer is Zappos.com. The emergence of Zappos from a tiny shoe retail store to one of America’s largest online business has been one of the most startling sucess stories for online businesses. The site, which was founded in 1999 had just $1.6 million in gross sales in 2000. This has risen to $600 million in revenue in 2006.

Zappos is derived from the word Zapatos which means shoes in spanish. Apart from shoes Zappos very recently started off with selling ladies and gents handbags. A part of its revenue model also includes in running ad campaingns in the form of banners on different sites and an affiliate program where webmasters get paid for refering customers to zappos. With about 4 milllion customers the company had about 1% of the Total american population buy something from them.

Being a Web retailer only means that IT plays a huge role. Part of the reason for their business success has been because they have managed to use power of IT in a smart and efficient manner. They follow a policy which states that IT should prove useful to the business and not to the developers.

Zappos doesnt manufacture shoes but does develop its own software.The compnay has a small team of developers and has built the majority of the tools using open source software like PERL, MySQL, Linux and Apache. This includes the website , Warehouse management system , Customer service tools etc. Zappos proves to be another example of how business can succeed by employing the open source movement.

It will be interesting to keep a watch on the strategies that Zappos will employ in the coming years to reach greater heights. All the Best !

Indian Multinationals !

I know its a bit late to post this topic, but better late than never. 2006 has been a year that projected the strenght of the Indian Economy onto the Global map. The outcome has been responsible for coining of the term ‘The Indian Multinationals’. The Indian companies have been more aggressive than ever in merging or acquiring companies worldwide. Some have been quite and smooth while some had to indulge in a bloody fight with competitors. I have listed some of the top catches by top companies

Tata’s acquisition of Corus Steel now makes it the fifth biggest Steel maker in the world. The Biz critics initially wrote the deal off as stupidity but when you have somebody like Ratan Tata on your side can you loose a battle ?? The man has the ‘midas touch’. The Tatas offered a 500 pence per Corus share, thus valuing Corus at $9.2 billion. This after the acquisition of Uk based Tea company ‘Tetly’ and US based ‘Good Earth’ has given the TATA group the long awaited international exposure.

With the Thomson acquisition Videocon has emerged as one of the largest Colour Picture tube manufacturers in the world. It also has recently acquired Electrolux Kelvinator Ltd (EKL) the loss making Indian Arm of Swedish major AB Electrolux. All this was after they managed to strike a deal with the Korean debt-burdened Daewoo Electronics for $700 million (Rs 3,150 crore)

Next in the list would be the public sector gaint ONGC Ltd. It made news when it stated that it had acquired Texas-based Exxon Mobil’s stake in the Campos Basin Oil Fields in Brazil. It had acquired the full 30% stake valued at $1.5 billion. The other big buyout was along with the China’s Sinopec when it offered a $850 million to the columbian oil firm Omimex for a 50% stake.

Suzlon Energy Ltd was in news when it acquired a 100% stake in Belgium-based EVE Holding NV for Euro 465 million. With this Suzlon got hold of a neat footprint in the United Kingdom, Australia, Brazil, United States and South Africa.

The others in the news were acquisitions like Ranbaxy-Terapia, Vijay Mallya’s UB-Whyte & Mackay, Wipro-Quantech Global, Reliance/Vodafone-Hutch Essar deals that made the biz headlines.

What would be interesting is to see the strategy of the Indian companies in the coming year. Would the party continue in 2007? or will it be different.

Wait n watch !!