Business models to serve lower income consumers
One of the truly remarkable aspects of the India Way is the way companies have developed entirely new business models to service lower income consumers. The dominant assumption among large corporations and multinationals had been that the bulk of the Indian population has limited purchasing power and thus did not represent a viable market. This assumption is largely incorrect, as C. K. Prahalad argued in The Fortune at the Bottom of the Pyramid…… Read More.
Indian companies have tackled the problem of low income consumers with creative value propositions: developing products – such as cars – that provide value at a very low price, thereby allowing people previously unable to afford those products the opportunity to purchase them, thus creating new markets. Corporations, such as Tata cialis vs generic cialis and Hindustan Unilever, have focused on presenting creative value propositions to their consumers, providing them with utilities and technology that were originally thought to be unreachable for those in lower economic classes. Realising that India’s mass market hungered for even lower cost transportation, Tata Motors swiftly designed the Nano from a clean sheet of paper to meet what appeared to be an impossibly low price point: 100,000 rupees per car, about $2,500 at the time. The sticker price of the Nano, presented as the world’s most inexpensive car when unveiled in January 2008 by Ratan Tata, chairman of the Tata Group, was to be on a par with the cost of a DVD option in luxury Western autos. They designed everything in the Nano from scratch, and they deleted many features that were taken for granted by car makers, including air-conditioning, power brakes and radios.
As in many developing economies, India has the added problem in finding out how to sell products to a largely rural population that is quite remote from the urban centers. This was a problem Hindustan Unilever sought to solve with Project Shakti. It developed its Shakti initiative to reach fresh customers in the fast moving consumer goods market. The concept was to draw upon women’s self-help groups that had already been set up by various non-governmental organisations and rural agencies in India. These groups would combine small amounts of cash toward a common pool. Credit agencies, such as rural development banks, would also offer additional funds to finance approved commercial ventures. Shakti entrepreneurs would borrow money from these self-help groups, apply it to the purchase of HUL products, and then resell them to their neighbours. The world today is paying attention not only to India’s comparative advantage in labour cost but also to business models emerging from India that can service large numbers of consumers who want effective products and services at lower price points.
Source: Economic low price cialis Times
Govt, ASEAN eye services
Trade ministers of India and ten-member Association of South East Asian Nations (ASEAN) on Friday asked their negotiators to step up engagement in order cialis fast delivery to complete negotiations on a services trade agreement by March next year….. Read More.
ASEAN countries at Da Nang, Viet Nam on Friday to review, among other matters, the India-ASEAN Services and Investment Agreement negotiations. The ASEAN include Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand, Singapore and Vietnam. The ASEAN Economic Ministers (AEM) and the Indian delegation met at the Eighth AEM-India consultations meet. Both sides should finalise the services text and concurrently complete negotiations on the schedules of commitments on the basis of the mandate of the leaders given in Framework Agreement of 2003 for substantial sector wise coverage and GATS-plus agreement. “Ambitious and commercially meaningful offers” would be exchanged between the two sides.
India and ASEAN signed a free-trade agreement in August 2009, paving the way for setting up a common market, and giving about 1.7 billion people the option to choose from a plethora of products across countries. Effective from January 1 this year, the pact will eliminate import duties on manufacturing products between 2013 cheap cialis professional and 2016. Both sides have drawn a “negative list” of products that would be outside the purview tariff reduction regime. Although the agreement will pave way towards eliminating tariffs on about 4,000 items being traded between the two, India will be able to protect its interests in agriculture by keeping 489 items out of the trade pact.
Source: Hindustan Times
India’s ‘Fault Lines’
Mr. Raghuram Rajan, in his new book “Fault Lines: How Hidden Fractures Still Threaten the World Economy,” says American politicians looked the other way as cheap housing cialis costs credit flowed to people in the middle class, letting them own homes and consume at a level that their earnings wouldn’t have allowed…. Read More.
“From the household perspective it means you’ve got consumption going up, wealth going up and you don’t focus on your stagnant income,” Raja said, calling it a “populist” solution to growing income inequality in the U.S. When he was in New Delhi for the official release of the Indian edition of the book, which has an extra chapter on India, Mr. Rajan drew parallels between the two nations. “There is a fundamental problem in India, which is that significant parts of the population best price for cialis are not benefiting from the growth process… This is very similar to what happened in the U.S.” said Mr. Rajan.
“There’s a lot of room to go in trying to bring this population into the growth process,” he said. “I agree there’s a lack of inclusion – too many people are too poor – but there there’s no doubt a huge middle is opening up…. In the bottom 30 or 40% not as much is happening as it should” said Mr. Montek Singh Ahluwalia, deputy chair of the Planning Commission commenting on the points raised by the author.
Source: WSJ.com
MNCs learn in India
Increasingly, companies are using what they have learnt in India to strengthen their competitive positions in other parts of the world. This is true not just for homegrown companies which have set up operations in other global markets….. Read More.
Unilever, cialis buy online which had a share of around 75% in the African laundry market, risked losing share to a low-cost competitor had it not been quick to build a portfolio of brands at the mass and lower-end of the segment. This was something which it learnt from its Indian subsidiary, Hindustan Unilever (HUL) three decades ago. Unilever also repeated the India model in Vietnam. “This is what we are exporting from India to make sure that we do it before anyone else does. In parts of the world, what happened in India sometime ago is going to be played out. We invented the biggest Indian cheapest cialis prices learning of straddling the pyramid and we are taking this learning to some of the other markets,” said Harish Manwani, chairman , Hindustan Unilever.
Asian Paints also reaped benefits of its learning in India when it entered the Egyptian market. For the Tatas and the Godrejs, the culture of good ethical and governance practices is paramount. On a priority basis, these practices are exported to new companies that come under their fold. The Tata group’s low-cost car, the Indica , has become a successful repeatable model in countries like Ghana. Plans are also afoot to launch the Nano, the world’s cheapest car, in African countries. “Consumer insights can also be transferred from India to other emerging markets by making certain local corrections,” said A Mahendran, managing director, Godrej.
Source: Economic Times
India’s Banga Brothers
“Credit cards are alive and well in Asia. There’s a huge runway for growth in the developing card markets of China and India,” says Ajay Banga, 50, who took charge as chief executive of MasterCard on July 1. The choice was symbolic of where the world’s second-largest card payment processor sees its future.
His office is filled with mementos of a career that has taken him to Southeast Asia, Europe and now the U.S. Banga’s older brother Manvinder (Vindi), who lives in London, had a meteoric career as a multinational executive. . Employed with Unilever for more than three decades, he was appointed chairman of the Indian unit at age 45 and then moved to bigger responsibilities at the London headquarters. Vindi was global president of Unilever’s food, home and personal care divisions.
At age 55 he’s joined as an Operating Partner acomplia receptors the private equity firm Clayton Dubilier & Rice known for its buyout of Hertz from Ford five years ago and whose other Operating Partners include Jack Welch, Alan Lafley and Edward Liddy. Last year it raised $5 billion for a new fund. As globalized as India’s business cialis 20 mg dosage elite has become, the achievements of the two brothers appear to be without recent parallel, at least for pairs schooled in India.
Source : Forbes
Air India May Shed 7,000 Jobs as Workers Retire, Union Says
National Aviation Co. of India Ltd., the state-owned parent of Air India, may shed as many as 7,000 jobs through retirements over the next three years as it seeks its first profit, according to the company’s biggest union.
National Aviation’s board is due to discuss a restructuring plan on July 25 and paring some of the more than 30,000 workers may help in meeting a government-set cost-cutting target. The company has been unprofitable cialis erectile dysfunction every year since its formation in 2007 as it struggles to combine two carriers and loses customers to Jet Airways (India) Ltd. acomplia canadian pharmacies and Kingfisher Airlines Ltd.
About half of National Aviation’s workforce will reach the retirement age of 60 years old, over the next five years, said Abraham, who will address the July 25 board meeting. The union has a “progressive” attitude toward restructuring, he said Internationally focused Air India was combined with domestic carrier Indian Airlines to form the company about three years ago.
Ground-handling Venture
National Aviation plans to transfer as many as 3,000 ground-handling staff to a newly formed venture with Singapore Airport Terminal Services Ltd. to pare costs.The company had total debts of 152 billion rupees ($3.2 billion) as of June last year, according to the government. On July 14, it extended the deadline for banks to bid on the refinancing of $1.15 billion of debt.
National Aviation has a 17 percent share of India’s domestic air-travel market, trailing Jet and Kingfisher, according to the aviation ministry.The company received 8 billion rupees in the form of new equity from the government last fiscal year. A further 12 billion rupees was also set aside for the airline operator in the budget for the current year, according to the ministry of civil aviation.
The government has said that National Aviation must cut costs by 15 billion rupees and boost sales by 12 billion rupees before it will consider injecting more funds into the company.
Source:[Business week]
A guage of Organized Crime in the Satyam Case
Ramalinga Raju and his family pocketed Rs 2,743 crore from the Satyam Computers fraud while stakeholders of the company lost a whopping Rs 14.162 crore, CBI sources have revealed.J L Negi, a RBI general manager on deputation to the CBI, said that the CBI used forensic accounting tools to detect evidence of the fraud.
The CBI discovered that manual entries were incorporated to facilitate fraudulent sales. Fake transacations were made using computers that could not be tracked. These fictious invoices were generated by a set of few people who were paid off by the promoter.63 invoices valued at Rs. 430.66 crore were raised. Rs. 31.18 crore was booked as exchange profit by the company on account of these fictitious sales
Orders flew in from non –existing companies like Mobitel, Cellnet, E –care, Synony, Northsea, Autotech and Hargreaves. Fictitious domains were created in rediffmail to show as if it originated from these customers. 63 fake invoices valuing Rs. 430.66 crore were raised and 31.18 crore was booked as exchange profit by the company as sales during the fraud period.
The directors, sponsored by Raju, got stock options at Rs. 2 against the market price of best cialis Rs. 500 and acted as rubber stamps with not even a single instance of dissent recorded .
In 1991, the promoters held 18.78% shares ,while as on December 2008, the promoters share holding was only 2.18% . Shares were sold through various brokers and benami transactions and amount received by the promoters was Rs. 767.73 crore .The promoters received dividend to the extent of Rs. 27.08 crore for the year 2007- 08 and 2008 – 09 where the actual profit after adjustment of fake revenue was Rs. 176.12 crore in 2007-08 and 269.16 crore in 2008-09. As per Company Law section 205, the promoters were not eligible to get the dividend .
The promoters acquired 6000 acres of land floating 327 front companies with most of them having Raju’s gardener, cook and domestic helps on board of directors. A consolidated 935 properties on 5757.30 acres of land worth Rs. 3454.91 crore were acquired by the Raju’s during the fraud period. Land purchase spanned over Andhra Pradesh, Tamil Nadu, Bangalore and Nagpur
On the basis of false and fabricated board resolutions the company had availed short term loans and advances of 1493.84 crore from HDFC, HSBC, Citi Bank, BNP Paribas, ICICI Bank, Fincity/Higrace and Elem Investments Pvt. Ltd. The loan amount was raised against promoters shares and used to pay salaries, acquisitions , payments and dividends. Interest of 37.62 crore against loans was paid and majority of loans were not shown in the account books .An equivalent amount was shown as amount being transferred from the accounts maintained at BOB New York. The fictitious sales were reported as realised and shown as deposited in the account of the company maintained with BOB, New York
The CBI revealed that minimum protocols were not followed by the auditors . V.P.S. Gupta the Chief Auditor was given stock option to off-load the shares and received Rs. 5.30 crore.
Against an actual bank balance of Rs 139.78 crore the company showed a balance of Rs 5160 .34 crore .The company had accounts with 36 banks in India and 7 banks overseas. The certificate shown to the auditors did not carry details of Fixed Deposit Number buy cheap generic acomplia . Accrued interest of Rs 375.53 crore on fictitious FDRs was shown against an actual interest of 7.42 lakh .
37 of Raju’s companies had given advances amounting to Rs. 1425 crore to Satyam . Of this , only Rs 194.60 crore has been returned back to 15 companies . The company claimed false overseas tax payments amounting to Rs 329.59 crore to claim deductions in India.
Raju and his associates now face the following charges under various sections of IPC :
120-B Criminal conspiracy to commit an offence read with-
409 - Criminal breach of trust
420 - Cheating
467 - Forgery of a valuable security
468 - Forgery for the purpose of cheating
471- Using as genuine a forged documents which is known to be forged
477-A Falsification of accounts
A team of 25 officers and another 40 investigators filed the chargesheet in benchmark 45 days Negi said ,and added “there will be one more chargesheet in this case apart from the supplementary chargesheet that has already been filed. The agencies including the Enforcement Directorate , are working on the properties that need to be attached under Prevention of Money Laundering Act. This includes those purchased with the proceeds of the crime.
Source:[Governance now]
Catch-22 situation for ITC
Not many companies have the luxury of being a monopoly (Despite the pricing in Cigarettes) in a sector in which most direct forms of advertising are banned. ITC is one such company. For the quarter ending June 30, 2010, the net profit of ITC went up by 21.8% to Rs 1,070.3 crore. This increase in profit was on the back of the operating profits (or the earnings before interest and taxes) of the cigarette business going up by 16% to Rs 1,305 crore. The operating profits of other divisions like hotels, paper and agri business also went up significantly to contribute to the overall cialis generic best price increase in profits.
With diversification into other areas of businesses and right timing with it: agri business, foods, soaps and detergents big time.This meant an operating margin of 9.1%.The foods, soaps and detergents business of ITC, which forms a major part of the non-FMCG cigarette business, continues to lose money. For the June quarter, the non FMCG business lost Rs 89.25 crore, down from Rs 99.77 crore during the same period last year .
For this quarter, the cigarette business brought only 42.5% of the total net revenue, in comparison to 46.2% during the same period last year.Given ITC’s near monopoly in the cigarette business in India, the kind of margins it enjoys are mind-boggling. The operating margin for rimonabant sale the cigarette business during the quarter stood at 52.5%. Now compare that to the 9 odd percent margin enjoyed by the agri business.
This means all the cash being thrown by the cigarette business is being deployed at extremely low margins to build newer businesses. Over the years there has been talk of bidi smokers migrating to cigarette smoking, and now there is talk about more women starting to smoke as the economy progresses.
Whether that happens, remains to be seen. In the meanwhile, it’s a real catch 22 situation for the company.
Source:[dna India]