Industry

Public Private Participation in India – Issues & Challenges

Infrastructure development had been identified as a critical prerequisite for sustaining the growth momentum of the Indian economy. Given the huge infrastructure deficit that India is facing, government has increased the target for infrastructure outlay during the twelfth plan period (2012 – 2017) to one trillion dollars, about half of which is envisaged to come from the private sector, including an annual $30 billion in foreign direct investment (FDI) inflows. Attracting such astronomical sum of investments will require the government to create a conducive environment with robust institutions and improved governance standards to ensure consistency and predictability of returns for the investors and to mitigate the risks of financing. Ensuring improved governance standards has so far emerged as the main challenge in meeting the country’s infrastructure shortages. The infrastructure projects, though significant for the economic development, are highly capital intensive, require investments with a long time frame and hence are fraught with uncertainty. So Public Private Participation (PPP) are being seen as an efficient way to bridge the country’s infrastructure deficit, by engaging both the public and private sector and thereby distributing the associated risks.  PPP projects are basically implemented in Project Finance mode where the liabilities of the company…

Innovation

Invisible Innovation In India

Over the past few decades, India has become a global hub for back office services and software development’. This has created a common belief in the west that people from developing countries such as India are generally good as software developers. As Indians too, we often wonder that why as a country we have not been able to produce to produce world class innovations like a Google or an Apple so far. What is lacking in the country that holds back innovation? Dr Nirmalya Kumar, Professor of Marketing and Dr Phanish Puranam, Professor of Strategy at the London Business School say that a part of the answer lies in how we look at innovation.

Strategy

How far will the Jaguar leap? Corporate Turnaround of JLR

Tata Motor’s acquisition of Jaguar Land Rover is one of the most discussed cases of a successful outbound acquisition by an Indian company.  Since the past few years, Jaguar Land Rover Plc (JLR), the UK based subsidiary of Tata Motors has consistently been the major driving force behind the revenue and profits for the company and has helped the company to plug losses in the domestic business. The trend continues, with Tata Motors’ profit having tripled in this quarter of 2014, on strong Jaguar, Land Rover sales. Such splendid performance of the acquired company was almost unimaginable for many in 2008. Flashback to June 2008. Tata Motors had acquired two iconic British brands – Jaguar and Land Rover (JLR) from the US-based Ford Motors for US$ 2.3 billion. This was the biggest buy-out in the automobile space by an Indian company. Ford Motors Company (Ford) had acquired Jaguar from British Leyland Limited in 1989 for US$ 5 billion. After operating it for losses for few years, in June 2007, Ford had decided to divest the brands as a part of its restructuring strategy. Tata Motors was interested in acquiring JLR as it would reduce the company’s dependence on the Indian market and facilitate Tata Motor’s…

Strategy

Marriage Made in Heaven – Post Merger Integration

With the announcement of merger between Mahindra Satyam and Tech Mahindra yesterday, analysts are upbeat about the future prospects of the company. The combined entity will become the fifth-largest IT company in terms of market capitalization. It will cater to more industry verticals in comparison to the standalone basis. So it stands a good chance of getting bigger business and more clients and breaking into the top tier of Indian infotech companies. The benefits of the merged company will be made possible by a successful integration between the two companies. The company management foresees a period of six months for completion of the ‘complex’ post merger integration (PMI) process. The integration process may touch upon several areas. It will entail the integration of the MIS platforms of the two companies. It appears that Satyam had close to 190 MISs earlier, many of which were not integrated, resulting in manual intervention for transposing data from one system to another. According Mr Vineet Nayyar, Chairman of Mahindra Satyam, this left scope for discrepancies in many cases. The MIS systems at Mahindra Satyam will now be integrated with the Oracle- PeopleSoft platform being used at Tech Mahindra. The post merger integration of the…

Strategy

Building Blocks – Reliance Capital

Reliance Capital, one of India’s leading Non Banking Financial Companies, is in news for chalking out a profitable growth path and de-leveraging its balance sheet. Reliance Capital is a portfolio company with different lines of businesses such as asset management, life insurance, general insurance, broking and commercial finance. All these lines of businesses are individually headed by their respective CEOs, who in turn report to the Corporate CEO. In a recent news statement in the Business Standard, Sam Ghosh, CEO – Reliance Capital has said that his objective is to make each line of business profitable by using different strategies for different business. This statement leads to a very basic question. If each of the individual LOB is to become a profitable entity, what then would be the requirement for having a corporate portfolio company over these LOBs? Initially the corporate office served the purpose of capital infusion to the individual LOBs. However when these LOBs become profitable and self sustainable, capital infusion from corporate office may no longer be needed. One could wonder what purpose the corporate office will then serve. Will the corporate office simply be an overhead, with no revenues, removed from the individual businesses? Is this corporate…

Business Zone

Impact of policy environment on funding start-ups in India

Funding has always been the biggest challenge that every venture has to face. Particularly the technology and knowledge based start-up enterprises that are based on intangible assets such as human capital and an entrepreneurial idea. In absence of physical assets, such start-ups find it difficult to secure bank financing and they need to approach equity financiers such as angel investors or VCs. Mostly start-ups do not even have access to working capital loans; though some finance companies offer collateral-free working capital loans to small enterprises with at least three years of operations. Like any other investment, the investment in start-ups is influenced by the policy environment prevailing in the country. The current policy environment in India is reasonably conducive for start ups, but still leaves a lot more to be desired. Domestic money to VC/PE funds are either restricted or prohibited in current regulatory framework. For example SEBI regulations for Domestic Venture Capital Funds do not permit registration of a fund which would have corpus of less than Rs.5 crore ($ 1 million). This makes it difficult for angel groups and seed funds to get registered and raise funds. Pension funds, which are the biggest source of money worldwide, are…

Strategy

First in the Race – Apple and Samsung

Apple and Samsung are embroiled in several legal fights; both are contending for global leadership of smartphone and tablet market, with Samsung poised to surpass Apple in the race in 2012. Smartphones are an interesting example of a product category where the second or third movers have considerably learned from the experience of the product innovators. Long before Apple launched the iPhone in 2007, IBM had released the first smart phone called Simon in 1993. Often the pioneers spend a lot of resources to come up with new and innovative products, demonstrate it to the users and test the market. In the meanwhile, newer companies that are more agile and are quick to see the opportunity, understand the product – market fit, learn from the mistakes of their predecessors, make a big bang entry and harvest the potential in the market already created by the earlier explorers. They survive and even make it big. Samsung, for example, has perfected the game of being the second mover. They study the market leader meticulously, copy every aspect of the market leader’s strategy in minute details, and further improvise on the execution of the strategy.  They end up not only in catching up,…

Personal Effectiveness

Planet of the Apes

. Putting up this comic snippet shared by a  friend that gives an interesting perspective into organizational inertia – how it is difficult to change the prevailing norms, values, beliefs and accepted patterns of  behaviour.        More often than not, people who try to change the existing culture are deemed as misfits within an organization and are pulled down by the others.          Organizations that have been successful in doing things in a particular way, often tend to stick to the same way of working even after it becomes obsolete, since they are accustomed to it and so they resist changes that might help them to compete better.   At times it is perceived to be easier to change employees than to change their culture. -Contributed by Shalini Verma

Strategy

Kodak – Image Blurred

On 19th Jan, 2012, investors woke up to the news of Kodak’s filing for Chapter 11 bankruptcy protection in US Bankruptcy Court in Lower Manhattan. This gives the company an automatic stay for 6 months during which it has protection from creditors and the time to reorganise itself. Founded in 1880, by George Eastman, Kodak became one of America’s most notable companies that established the market for camera film and then dominated the field. Neil Armstrong used a Kodak camera to take pictures on the Moon in 1969. Eighty films that have won Best Picture Oscars were shot on Kodak film and the phrase “Kodak moment” captured people’s imagination. Analysts feel that the firm’s late entry into the digital market is a key factor in its recent troubles. Although Kodak was one of the original inventors of digital photography in the mid 70s, it did not commercially begin to manufacture digital cameras for the next two decades due to the fear of the cannibalisation of film. As a result Kodak failed to keep pace with developments in the market and competitors steadily eroded its share of the market. Since the late 1990s, the sales of photographic film declined and the revenue…

Mixed Bag

What’s in a name?

“A rose by any other name would smell as sweet” quoted William Shakespeare in Romeo and Juliet; thereby implying that names do not really matter. This could not be farther from truth in the present times, when strategic acquisitions are made with a view to acquire a brand name. Chatting over a cup of coffee yesterday, a friend brought up the topic of SBC Communication’s acquisition of AT&T in 2005, followed by changing its name to AT&T Inc. SBC CEO Edward Whitacre had mentioned that they had factored the great name of AT&T & its strong worldwide brand in the acquisition decision. When a company is sold, it seeks to obtain a value over and beyond that of its tangible assets. This is referred to as `goodwill’ and can be thought of as a “premium” for buying a business over and above the fair value of the net tangible assets acquired. Firms sometimes pay large premiums for acquiring firms with valuable brand names because they believe that these brand names can be used for expansion into new markets. Conventionally the value of a brand has been regarded as part of goodwill, which arises only when a business is sold. As…

Customized Social Media Icons from Acurax Digital Marketing Agency
%d bloggers like this: