Saturday, February 9, 2013

MNCS IN INDIA: REGULATORY REQUIREMENT

A large number of MNCs might choose the delisting mode as they do not like to interfere their decision-making process. But there is myriad of scope and enough incentives lie ahead for MNCs in the country, says B&E

However, while discussing about the reasons for delisting, something that might just cross the minds of the honchos of these MNCs is that over the past decade or so, the Indian equities market has grabbed the attention of the whole world and with each passing day, global investors are gradually getting involved with the same. Furthermore, today when the global market economies are still struggling to recover, India again is eyeing for a growth rate of over 7%. And that has made global giants like Standard Chartered to look forward to the Indian market, to raise some more desired capital. In such a situation, this could be a golden opportunity for these MNCs to unlock their true value in the Indian market and utilise the same to reap some real benefit out of the fast growing Indian market.

Going by this logic, the MNCs would love to follow the path opted by few of their counterparts like Nestle and Colgate. During the ’70s, they listed themselves in the Indian capital market but today they are taking the benefits. On the other hand, several companies like IBM and Coca-Cola, which once walked out so boastfully, are again back in the country after understanding how critical India could be for them.

The new norm has certainly allowed the government to clear its ground for disinvestment in public sector units as they are the biggest league of companies on Indian bourses where promoters’ holding (government’s) is higher than 75%. Government also hopes to raise as much as Rs.400 billion ($8.5 billion) from the stake that it would need to dilute in the PSUs and reduce the country’s fiscal debt to 5.5% of GDP from 6.6% at the end of the last fiscal. In the process, the decision has brought in the dillemma of delist or dilute for the MNCs operating in India. But while the companies are busy in finding out what should they do, the government must understand the fact that these companies, even if constitute a smaller portion of the total market capitalisation of Indian bourses, have a huge potential for the overall growth of the market. So, while it necessarily make the MNCs dilute promoters’ stake, it must also take care of the fact that there should be enough incentives for them to go for it rather than just delisting themselves.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Friday, February 8, 2013

Rabindranath Memorial Awards

A Landmark Felicitation Ceremony

Amidst the widespread festivities of the internationally celebrated 150th birth anniversary of Rabindranath Tagore, the Indian Institute of Planning & Management (IIPM) added another exceptional feather. On May 16, 2010, IIPM announced a landmark movement in the area of literature, culture and fine arts – the inaugural ceremony of Rabindra Smriti Puraskar (Rabindranath Memorial Awards) was organized at the IIPM Kolkata campus at Salt Lake, Kolkata, where awards were handed over to the legendary personalities in the socio-cultural arena.

Explaining the philosophy behind the ceremony, Dr. Malay Chaudhuri, Founder Director of IIPM and Chairperson, IIPM-Rabindra Smriti Puraskar Selection Committee said, “IIPM has always believed in creating an enhanced consciousness in its students in the areas of art, culture and literature. This helps in creating not only a very different perspective in the young minds but also adds to one’s personality and helps in creating a more intellectual breed of new-age managers. Additionally, IIPM wants to touch the life of every individual around us and extend this consciousness for appreciation of art, culture and literature, which will definitely help in strengthening our social bonds and creating a more evolved society.” Famous Bengali writer and the Chief Guest at the award ceremony, Surajit Das Gupta said, “This award ceremony and the societal contribution of this initiative is highly praiseworthy and truly exceptional. Inspirations like these act as catalysts to spread Tagore’s philosophy amongst the newer generations.”


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Wednesday, February 6, 2013

CANCER RESEARCH: DEVELOPING COUNTRIES

Cancer has become a major concern worldwide. Billions of dollars have gone down the research river, but the results are only visible in developed countries. B&E’s Amir Moin argues that developing nations are the place where the battle has to be won

Cancer no doubt has become a big issue. Infact, Harvard Medical School says that cancer is second only to heart disease as the leading cause of death in the United States. Cancer kills one in four Americans and is the leading cause of death for women aged 40 to 79 and men aged 60 to 79. Society (common people and the scientific clan included) is doing all it can to spread awareness and at the same time fight this menace. At one end, you have cancer research institutes and the scientific community, working in order to make breakthroughs in the field of cancer cure. On the other hand we have NGOs and other non-profit organizations trying their level best to spread awareness about this deadly disease. For instance, Facebook went colourful a few days back. A strange yet unique – bra colour status updates – made its way into the network, but no one really knew how or why the what-colour-is-your-bra campaign took off. In case you are still confused and don’t see it, women were posting single word updates with the colour of their bra, hence the bombardment of ‘black’, ‘red’, and ‘nothing’ updates from your female friends. The colour update craze was started by women in Detroit who are trying to raise awareness around Breast Cancer. While all this was happening on the awareness front, scientists in Britain made a cancer breakthrough that could pave the way for tailor made treatment of breast tumours and revolutionize the way breast cancer is cured.

It was difficult to start this movement because earlier cancer research did not garner the investment interest from the pharmaceutical industry. This was because some methods, like Dichloroacetate and Coley’s Toxins, could not be patented. But with advancement in science and technology, cancer diagnosis, treatment and cure has become a huge industry. According to the ‘Cancer market trends 2010-12’ report by Reportbuyer.com, the global cancer market has seen a continued period of rapid growth. Global sales for cancer-treating drugs increased by 13.3% in 2007, primarily driven by growth in sales of innovative drugs. The global cancer market grew to $66.2 billion in 2007, a year-on-year increase of 13.3%. This market growth in 2007 was primarily driven by growth of 44.0% in innovative sales. There were a total of 21 different cancer therapies generating global sales in excess of $1 billion in 2007. The leading company by cancer sales in 2007 was Amgen, with sales of $11.1 billion.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Tuesday, February 5, 2013

FMCG: OVERSEAS ACQUISITIONS

Steering the expansion drive by way of inorganic growth opportunities seems to be the latest obsession amongst home-grown FMCG companies. But is it a viable strategy? Savreen Gadhoke finds out

“Achieving short-term growth through overseas acquisitions is difficult but not impossible. Take for instance Marico’s acquisition of South Africa’s Enaleni Pharma’s consumer division. Within two years of the acquisition, Marico has started driving immense growth from the buyout,” says D. Sadanand, Executive Director, Info Edgeline. Marico had acquired Enaleni Pharmaceuticals’ consumer division in November 2007 for Rs.93 million. Today, its brands Fiancée and Hair Code give Marico a 58.5% share in the hair creams and gels market in Egypt. Marico’s international business, which comprises of 23% of the group’s total turnover, achieved a turnover in excess of Rs.450 crore during the three quarters of FY2010. The recent acquisition of Malaysia’s Code 10 marks Marico’s entry into the South East Asian market. While Code 10 syncs perfectly with Marico’s expertise in the hair-care category; the fact that Code 10 has over 10% market share in Malaysia and a turnover of Rs.12 crore gives immense space for growth for Marico in the Rs.200 crore hairstyling market. Overall, Marico expects to achieve a growth of about 20% per annum during the next few years from its global businesses. Says Vijay Subramaniam, CEO, International Business, Marico, “Our focus on brand building in our key markets is yielding results. We’ve created winning propositions.”

GCPL, too, achieved 26% growth from its international business in the quarter-ending December 2009. GCPL had acquired South Africa’s hair-care brand Kinky in 2008 and posted revenues to the tune of ZAR 96.2 million for FY-09. And for the quarter ending December 2009, Kinky continued its strong sales growth, increasing by 39% over the corresponding period last year. During a conference call with analysts held on January 25, 2010, Dalip Sehgal, MD, GCPL said, “South African businesses have grown almost by 50% in terms of topline and that has resulted obviously in better bottomline growth as well. We have increased the footprint for Kinky, which used to sell essentially through 20-22 of our own stores; it has gone in to retail trade as well…”


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles. 


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Sunday, February 3, 2013

Those spaceships are long lost!

The IT bubble burst long back, and with it, did many fortunes...

The last decade of 1990s was a dream run for internet start-ups, and anything even faintly related to “.com” syndrome would be lapped by investors like hot cakes, without paying much heed to what the company does or the kind of potential it holds. This was where the bubble began, and this was in itself responsible for its bursting! It began in 1995, peaked on March 10, 2000 when the NASDAQ reached 5,048.62 points before bursting... During this entire period, the stock markets of US and other western countries saw the bulls in total control, especially with regards to the Internet and technology companies. Moreover, most of the Internet companies that were aggressive during these times were financed either by VCs or IPOs. And when this bubble burst, there was mayhem at the stock markets. What triggered the burst of this bubble was a massive multi-billion dollar simultaneous sell order from leading technology companies such as Dell, Cisco and IBM. Though it is said that this initial sell-off was just a coincidence, but it was too strong for investors at the NASDAQ to handle. Between March 2000 and October 2002, the Internet and technology companies shed a whopping $5 trillion in market value!

Different analysts have their own reasons as to what led to the crash-landing. Some say that it was a result of the ‘irrational crowd behavior’ that led people to believe that there was substantial value to be made in this field of business. Others however feel that this was a result of lack of information about this new domain, and their inability to ascertain the asset value, which drove rational people to commit this mistake. According to Rob Enderle, Technology Analyst, “The Dot com bubble burst, because it was feeding frenzy on Internet stocks and investments without any adequate financial controls or acceptable business practices. Folks acted like they were going to be measured on how much money they could spend in the shortest period of time.” Another opinion points out that the business model that these Internet companies followed at that time was flawed.

The idea of these companies was to work towards monopolising the sector that they functioned in, with the help of network effects and rope-in as many subscribers as possible, rather than think about ways to earn revenues from the same. What added to their miseries were the increased spending in the technology that would enable Y2K switchover. The companies soon realised that all these investments were of no use for them. Whatever be the case, this bubble is recalled as the worst that the Silicon Valley has seen till date. It wiped off almost 50% of IT-based companies across the world... rough patch indeed! Some of the prominent names that were shaven off were: Webvan, Pets.com, Kozmo.com and Floorz.com.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
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Friday, February 1, 2013

G: Germany, H: Hyperinflation

If you’ve never heard of inflation touching billion percent, read on...

Germany, hyperinflation and World Wars were once considered mere synonyms. The first was the great hyperinflation of 1920-23, which expropriated the wealth of the German middle class; the second catastrophe was the hyperinflation of 1945-48, a consequence of massive deficit financing of World War II. On both the occasions, Germany borrowed heavily; in addition to these debts, it faced huge reparation payments which cumulatively exceeded their GDP!!! While Germany was struggling to pay reparations, French and Belgium troops gave another blow to Germany by capturing Ruhr, Germany’s main industrial area. Without its major source of income, the German government opted for printing money to fund its expenses. It reached a point where the government was financing almost its entire budget through money printing. What happens after that came to used in business schools as a classic first definition of hyperinflation. At its peak, the monthly rate of German inflation reached a mind-boggling 3.25 billion percent!!! In simple words, prices were doubling every 49 hours.

Thomas M. Humphrey, Federal Reserve Bank of Richmond, in his white paper ‘Eliminating Runaway Inflation: Lessons from the German Hyperinflation’ analysed, “The authorities adhered to these theories (some fallacious theories like money supply should accommodate themselves to the needs of trade, and the central bank can stabilise nominal market interest rates simply by pegging its discount rate at some arbitrary level) to a ludicrous degree.” Hilariously, German authorities blamed external non-monetary factors for the inflation and explained that money growth was the consequence of, not the cause for the hyperinflation.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

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