Wednesday, December 12, 2012

3 days is all it took...

...to sell-off a fortune to a rookie named Apple!

“How about earning $1 million worth of my company’s equity for 3 days in your garden (that’s where you basically do your research!)... Deal?” What if your competitor proposes this to you? Great deal, isn’t it? Well, not really... Cut to 1979, officials at Xerox Corp., learnt this lesson the hard way. Xerox, under David Kearnes then, had allowed engineers from Apple Inc. to learn the Graphical User Interface technology (GUI) during a 3-day learning session at Xerox’s Palo Alto Research Center, for a consideration of $1 million in Apple’s pre-IPO stocks. What followed shocked Xerox. Apple’s engineers soon launched a GUI-clad personal computer named ‘Apple Lisa’, arguably the first hit product from Apple! Jobs’ foresightedness for the technology and Xerox’s myopia, gave Apple the much needed lead in this regard. “When a company is new and small, it doesn’t seem like a giant competitive threat, so doing deals with it is not important enough for anyone to pay attention to. These companies become large competitors and the deals that were done years ago, which made sense back then, don’t make sense anymore,” supports Jeff Kagan, a Tech analyst. Well, the GUI technology today forms a part & parcel of every major OS in the world.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Sunday, December 9, 2012

C‘z’eck and mate!

Klaus must follow a wait and watch strategy before taking any step

The Czech Republican political scene has been quite erratic since the 1989 revolution. So it came as no surprise when on March 24, Prime Minister Mirek Topolánek's government lost the no-confidence vote in the Parliament. Losing the fifth no-confidence vote for the Civic Democratic Party (ODS), Christian Democratic Party (KDU-CSL) and Green Party (SZ) coalition (since it took power in January 2007), has also jeopardised the country's international reputation and worsened the pressing domestic issues. The government had to go through the whole exercise after one of its member shifted loyalties from ODS to the leftist Social Democratic party. The government lost the vote of confidence by just one vote.

To keep the tension in the country at bay, both the left wing and the right wing parties have now agreed to hold early elections. “There was an agreement on holding early election, but not on a date yet,” says Jana Bartosova, Spokeswoman, ODS. Czech Republic is currently sitting on the post of EU presidency and the political trouble brewing within the country would have an implication on how it handles its responsibilities in EU. And that too when the Czech presidency of EU has always been questioned from day one. Its stand to not ratify the Lisbon Treaty has been looked down by many EU members.

In such a scenario, it leaves President Vaclav Klaus with only one solution – to find the new government as soon as possible. But while Klaus looks for a quick fix solution, the problem is that none of the big parties are strong enough to form government.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Friday, December 7, 2012

M & A

Are companies strategising their inorganic growth any better amid global turmoil? B&E presents an in-depth analyses of some top global and Indian M&As...

Boa: merrill lynch
Weekend fun!
Dine, wine and buy a company

The credit crisis sweeping across the American financial system has helped sound buyers to claim opportunity from ordeal; Bank of America (BoA) happens to be amongst the sound buyers. In a gut wrenching weekend when Lehman Brothers was headed for a possible liquidation and AIG was facing the investors’ wrath, Merrill Lynch (ML) was quick to strike a deal with BoA. In a deal valued at $50 billion ($29 a share with 70% premium over the last traded price of $17.05 a share), BoA acquired ML at about two thirds of its value a year ago and half its all time peak value of early 2007. The dramatic deal, a marriage of a commercial bank and an investment bank, which took less than 48 hours to be finalised, is one kind of a deal that has earned a dubious reputation.

Given the deal’s size, scope, complexity, and the short time in which the deal was completed; even a child could say it is humanly impossible that a thorough due-diligence could have taken place. Analysts argued that it will set a record for merger integration disaster and the fact that BoA’s shares have been massacred by 78% ever since the deal was announced on September 15, 2008, goes on to justify the same. According to Marco Boschetti, Towers Perrin’s Head of Global M&A and Restructuring, “Market turmoil has conjured up the concept of Express M&A… but increased speed brings increased risk and makes prioritisation critical.” The risks associated with the merger were not analysed and the shareholders were kept in dark that Merrill had hemorrhaged $13.8 billion during the final three months of 2008, leave alone the fact that ML had to write down $52 billion of credit related losses.

Ken Lewis, CEO, BoA, can continue to boast on the synergies and that acquiring ML was a great opportunity for BoA’s shareholders, but the reality is that investors have now filed a lawsuit against him accusing him of failing to disclose risks associated with ML takeover. And now after six moths of the deal, the only visible winners are the advisors of the deal, Fox – Pitt Kelton and J. C. Flowers & Co., who just reaped a handsome $20 million for a weekend’s work!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Thursday, December 6, 2012

Link-ups and break-ups…

Link-ups and break-ups… it’s all happening on the Internet.

One could praise this tech-creation for forging new relationships, but the same can also be the culprit of broken relationships. A space where youngsters log on to find that special ‘someone’, also has those who enter the cyber world to get away from his/her someone. The hit Facebook fad has seemed to catch on to all, young and old. If you’ve watched the movie, Mitr, you’ll know that there are circumstances in life which can make one resort to an alternate source of companionship, to which agrees Deepti, who has been married for seven years. “I have an account on Orkut and Facebook and there are times when I’ve added strangers from a common interest community to chat at times. Though I haven’t been attracted to anyone, it still, is addictive,” she giggles and adds that she wouldn’t find it surprising if someone gets intimate and perhaps even “romantically involved” through such sites. Priyanka, not a very net savvy woman, shares, “My husband is very fond of on-line chatting and keeps in touch with friends through Facebook. Sometimes, when he surfs for long hours, it makes me slightly insecure and although I shouldn’t, my mind still forces me to peep into his laptop and check on him!

Social networking sites, being a rather recent trend in India, haven’t been the reason for as many break-ups and link-ups as compared to the West. Pranav Akhauri, a student in New York says, “Facebook is almost like a ‘life-update wall’ for most people here. Many hearts meet and many hearts break on Facebook, and the world gets to know about it.” When asked about his opinion on this, he sums it all up saying, “Years ago, connections were made and broken through letters, then came the telephone, and then the SMS. It has all been developed to facilitate communication… Today it is the Internet and tomorrow there will be something else… and life will go on!”


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Wednesday, December 5, 2012

Reading the future

Reading the future of books and movies...

The story is quite the same in the west too. From romances like Gone with the Wind, Pride and Prejudice, My Fair Lady, to mafia dramas like Godfather to science fiction films like War of the Worlds, Journey to the Centre of the Earth, to fantasy films like The Lord of the Rings and Harry Potter – countless classic films have been made out of equally rivetting books.

Most would agree that the art of this age are movies, and since decades writers have made little money from their work. So, is it time for writers to ruminate about the subject of their books in context to their scope of becoming entertaining masala films? Ravi Subramanian, author of books like I bought the Monk’s Ferrari, opines, “Movies are one more viable option for authors to make revenue and get noticed. In Hello, for instance, the only person who benefitted from the movie was Chetan Bhagat. The movie bombed, the producers lost money, its actors didn’t profit much. The real benefit in terms of profile, money, visibility, was Chetan Bhagat. I think writing books with an eye on the movies, is not a bad option because it gives you a fair bit of recognition. The movies go far and deep in this country. In India as they say, only two things sell – cricket and Bollywood. If you can write a book that can be adapted to a movie, or if you can tweak your book to adapt around for a movie, I think you can be fairly successful. Though movie writing itself doesn’t pay you too much.”

Cinema is a medium that has the entire nation hooked. So is it not high time authors tweak their Modus operandi? A strong relationship can be forged between films and books, what remains to be seen is how long this will take to blossom.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Monday, December 3, 2012

ISRAEL-RUSSIA WAR OF WORDS: SPAWNS GENERATIONS... LITERALLY

And on why mothers and grandmothers of this great nation play a critical role in the Israeli-Russia spar

Is it religious proximity? That doesn’t seem to be the case as Georgia is a certified orthodox Christian state compared to the predominantly Jewish Israel. While one can easily trace deep relations between Israel and Georgia – be their arms trade or the presence of Georgian Jews in Israel – what slips under the carpet magnanimously is the fact that important political leaders of Israel and Georgia are actually blood relatives. For information, the chairman of the Georgian parliament’s Foreign Relations Committee Lasha Zhvania has an Israeli Jewish mother. God rest her soul, the grandmother of scam-fam Israeli Ariel Sharon is buried in Georgia. The ubiquitously sweet Georgian defence minister Davit Kezerashvili, holds the citizenship of, god rest our souls, Israel!!!

Strangely, despite its Pravda-driven spiel [Pravda skims close to being certified a lunatic bandwagon, with the past month’s chief story, for example, being Condoleezza Rice’s Sexual Worries], the Russian political powerhouse actually is still a big supporter of Israel. It’s not just about the recent acceptance of a visa free regime between Israel and Russia, even Russia’s nuclear fuel supply to Iran’s Bushehr nuclear plant – despite US rhetoric – is in fact an extremely clever move to dissuade Teheran from enriching its own fuel.

But as they say, there’s only this much that Putin can take, and there’s only that much that Israel can flirt with. Till the time Israel looks beyond US influence – and dare we say, even their mothers and grandmothers – and realises that Russia is actually on their side, this great nation might actually end up in creating their biggest foe in history! For hell hath no fury as Putin scorned, and it doesn’t require Einstein to know that!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Sunday, December 2, 2012

RATAN TATA: CONTINGENCY FUND

Ratan Tata seeks a special contingency fund to be created by banks to rescue Indian companies who have taken dollar and euro loans. A script not so hard to decipher!

After the rupee fall, the $6 billion odd loan seems even steeper. The debt-equity ratio of Tata Steel has now increased from 1:1 in 2006 to 2.74:1.

By the end of 2007, myopic people like us were talking about an imminent global recession. But group company Tata Motors took over struggling JLR from Ford Motors sometime during late May 2008 for $2.3 billion and a couple of billions of dollars in debt! And then Citicorp (the bad boy shedding 50,000 jobs) has the gall to downgrade the ratings of Tata Motors to high risk! Of course the fact that UK sales of Land Rover crashed by 58% last month is but a minor detail. Even minor perhaps are details like the huge $525 million profit from selling Glaceau to Coca-Cola (wow, that did vanish fast!) and JLR seeking a 1 billion pound bail out from the UK government.

Pardon our temerity, Sir. We are not at all doubting your intentions with respect to the ‘special fund’. We are anyways just a bunch of ignorant pessimists! If we knew any better, we perhaps would have been leading top notch conglomerates on our own, wouldn’t we?


Source : IIPM Editorial, 2012.An Initiative of IIPM, Malay Chaudhuri

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Friday, November 30, 2012

Statutory Warning!!

While Delhi basks in the glory of post-Marathon mania, it turns out that running might just do more harm than good. Read on!

Last weekend, Delhi woke up to an event that is increasingly gaining spectacular proportions in terms of popularity – yes the Delhi Half Marathon – what with the who’s who of the Indian tinseltown descending on the capital’s streets to celebrate the one activity that’s known to man as the best form of exercise, and that, when done regularly, keeps the heart in good health. Remember – ‘Run Forrest run’ from the touching movie Forrest Gump where Tom Hanks, the protagonist, runs at lightning speed to save himself from a set of bullies and since then, runs thus to even travel from one place to another? Well, Tom Hanks might not have suffered any repercussions of such blind running, but research suggests that pushing your body to run 26.2 miles can cause at least minor injury to your heart. Such conclusions have gained world-wide attention after two high-profile marathon deaths last year – one in Chicago and the other one at the Olympic trials. While we in India are still warming up to a marathon culture, it is imperative for all to know the important aspects related to it. Since running has forever been considered a great way of keeping healthy, several choose to go for marathons without realising that ‘marathon running is, for the lack of a better word, an overdose of a good thing’. That’s why, one of the major reasons of running-related injuries is overusing the body. This is true not only for first timers or those inconsistent at workouts but also for the seasoned veterans who feel that their experience will keep them off any injuries.

“People with no heart problems won’t have any problems by taking part in a marathon. But someone with a history of heart disease is likely to have a problem, such as breathlessness, chest ache, or the person might collapse, unless they’ve been working out previously,” says Dr. Sumeet Sethi, Cardiologist at Max Devki Devi Heart and Vascular Institute.


Source : IIPM Editorial, 2012.

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Thursday, November 29, 2012

CORRUPTION: ABOUT BRIC ECONOMIES AND SOME MORE

Transparency International’s corruption index kills Russia’s image

Further to that, there have also been allegations against the party of using illicit funds for the election campaign, where Lula’s chief of staff Jose Dirceu, is now directly accused of corruption.

Though the rankings have been more or less as per expectations, a stunning surprise is Russia, whose malevolently glorious CPI score of 2.4 gifts it an equally glorious rank of 126 out of 180 countries covered. Even countries like Zambia, Vietnam, and Nicaragua are above Russia. Seen relative to the fact that even India – an accepted indolently corrupt nation – managed a rank of 85 [down from 72 last year], and communist China managed a rank of 72 Russia seems to be drowning faster than Medvedev’s media appearances. Does it matter to Putin? With a large and insolent oil supply, we guess not...


Source : IIPM Editorial, 2012.

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No can ignore

The reasons why Russia matters

We firmly believe it doesn’t take more than two columns – and similar spatial intelligence – to understand Russia’s undeniable presence in geopolitics. Strangely, we firmly also believe that George Bush and his advisors lack either of the above [any ‘intelligent’ guesses which?] for the better part of the past decade attempting to ignore Russia’s mammoth power inanely. Dear Mr.Bush, Russia – unlike the 2004 CIA WMD report that leaked how you lied about WMDs to succeed in the Iraq war – can simply not be wished away. Though USSR broke up way back, though Russia has fought its own debilitating internal battles time and again, and though quasi-dictatorial power within Russia has passed quite unstably since the time Andrei Gromyko jumped ship, Russia can ‘not’ be ignored. And why? Russia has 71 million military personnel. No can ignore! Russia is ranked the second strongest military power globally. No can ignore! As per Natural Resources Defense Council, Russia is estimated to possess more than 20,000 nuclear warheads; the largest stockpile of warheads across the world. No can ignore! Unfortunately Mr.Bush, your two terms, like our two columns, are over faster than the world would have wished.


Source : IIPM Editorial, 2012.

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Wednesday, November 28, 2012

Pirates prowl in Puntland

Scared marine companies don't report ordeals; sloppy tracking a boost to Somalian pirates

The frantic appeals made recently by Seema to save her husband Prabhat Goyal, the Captain of Stolt Valor, might not have found an echo on Indian ears deafened by the Delhi bomb blasts. Captain Goyal’s ship, with his 22-member crew on board, was recently hijacked in the Gulf of Aden by Somali pirates. The Indian government has ruled out involving its navy in the Gulf of Aden, citing a UN resolution; due to which the crew has not returned till date. Officially, Stolt Valor's hijack was 60th attack of its kind – in the precincts of Somalia alone – this year. The real toll is leaps ahead. Major General (retired) Syed Ali Hamid, board member, Kestral Defence Consultancy Services in Pakistan told this journalist at the DIMDEX conference in Doha this year that the official figure is understated by as much as 2,000%!

Hamid's claim might sound absurd. But then the International Maritime Bureau (IMB) does not deny what Hamid says. “There is definitely an under-reporting of the incidents. There is at least 50% underreporting in the cases in the Niger Delta,” says Cyrus Mody, a manager at IMB's London office. Reasons for the suffering marine companies maintaining a silence are astonishing. “The companies fear that reporting may bring a greater harm later. If the pirates pitied off physical harm to the crew members in the first raid, they might decide for physical injuries in the second. The ships have to move and the routes will not change,” Mody says. That the insurance companies would hike their premiums if every incident of piracy gets reported, is the less convincing reason for companies opting out of reporting their ordeals.


Source : IIPM Editorial, 2012.

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Mbeki finally mellows down

SA may lose democracy credentials due to its political tangles

Thabo Mbeki, former President of South Africa, was forced by African National Congress (ANC) to resign. He has been replaced by Kgalema Motlanthe. Jacob Zuma will replace Motlanthe after he wins the one-sided election, due in April 2009. The leftists within ANC, the Communist Party of South Africa and the federation of trade unions pulled Mbeki down, as they opposed his liberal economic policies. The criticism of the High Court was the proverbial last straw to work against Mbeki. Justice Chris Nicholson accused Mbeki of misusing judicial system to settle political scores with Zuma.

Mbeki was a dedicated ANC comrade who fought for the liberation of black people from the apartheid state. He transformed the image of ANC. He persuaded both international community & white South Africans to set aside their doubts of ANC ruling South Africa. But once he became the President, he centralised control and ran the country in almost Leninist fashion, his detractors allege. Like Nelson Mandela, he too didn’t take any major reformative measure to redistribute the wealth and replicated the neo-liberal economic policies. His strategy to tackle AIDS was a failure. Mbeki's adamancy not to allow the medical community to distribute anti-retroviral drugs to AIDS patients killed millions. The big question now is whether democracy will survive in South Africa. Prof. Hussein Solomon, University of Pretoria, says its uncertain. “The successors, though they say they will redistribute the wealth, will follow Mbeki's policies. If ANC continues to be all powerful without strong opposition party the country may become a banana republic,” he adds.


Source : IIPM Editorial, 2012.

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Monday, November 26, 2012

NAVEEN PATNAIK: ELECTION PROSPECTS

It’s time for Naveen Patnaik to prove his ability as a mentor

As per a WHO report, 40% of the medicines sold in the state are fake. Total turnover of such medicines in the state amounts to nearly Rs.10 billion. But Naveen’s government is yet to initiate any strong action to control the situation. His work in NREGA hasn't been phenomenal either. Panchanan Kanoongo, erstwhile Finance Minister of Orissa, avers to B&E, “A man is known from his companions. People around Naveen are corrupt and he himself has picked them for those positions. So what else can you expect?”

The time has come when Naveen Patnaik has to prove himself once again. But this time, it’s definitely not his prudence as a politician, but to 'market' his ability as a great mentor who can guide Orissa to a new age.


Source : IIPM Editorial, 2012.

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Sunday, November 25, 2012

India becomes the best place to bet on

Major auto manufacturers are on a prowl for the ideal location just as India becomes the best place to bet on. There are mind-boggling investment figures involved here, B&E’s Pawan Chabra investigates...

Players like Hyundai, Toyota, Maruti, Volkswagen and GM have already announced their plans of their Indian sojourn. Speaking on the topic, Arvind Saxena, Senior Vice President (Sales & Marketing), Hyundai Motor India asserted, “We are exporting almost 66% of the cars that are being exported from this country.” This explains the importance and acceptability of Indian manufacturing. Volkswagen on the other hand has brought a massive investment of an incredible Rs.24.5 billion for its Pune plant. Honda Siel (HSCI) on its part has already announced a Rs.10 billion Jaipur unit. The Detroit duo GM and Ford has ambitious plans as well with the former already investing a whopping Rs.12 billion in its second plant at Pune. TATA’s investment of Rs.15 billion at Singrur for the production of the much hyped Nano has also been attracting attention for long. It seems that the players in the industry have realised the potential in the Indian auto market and have begun to take it very seriously. Discussing about the potential of the new plant Janeswar Sen VP, Marketing & Sales, HSCI avers, “North India comprises of 40% of the market in India, and hence the proximity to the biggest market has been a big consideration for us. This area is on the dedicated Rail freight corridor notified by the Government of India. Therefore we can expect good infrastructure and logistics facilities here.”

Interestingly, both Maruti Suzuki and HSCI have decided to open their plants in Manesar, Haryana and Rajasthan respectively (away from the present auto belts). Other than that, HSCI also has a plant at Greater Noida. Noticeably, India mainly has two renowned auto belts, one being in the reigon of Pune- Nashik- Auranagabad and the second in the southern part of the country. Interestingly, none of them came up with an intention to create such belts in that particular region but it happened automatically. The state governments tried to lure the auto players by giving tax-holidays and the rest followed. Moreover, the proximity to ports, supporting infrastructure and presence of other players was also an added advantage for these regions.


Source : IIPM Editorial, 2012.

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Saturday, November 24, 2012

CEO PROFILE: PHILLIP R. BENETT, FORMER CEO, REFCO INC.

Of all the July 4ths that Bennett hates, he’ll hate July 4, 2008, the most. While the nation rejoiced on this day, he had already been sentenced to 16 years in Federal prison the day before... all thanks to his Dark Knight acts at Refco

He was finally caught by Refco’s newly hired controller, Peter James on October 10, 2005. As James told Bloomberg, the only reason why he perhaps caught him was because he “was a fresh pair of eyes”. What James discovered was hideous – between 2002 and 2005, Bennett made quarterly arrangements for a Refco subsidiary to lend money to a hedge fund called Liberty Corner Capital Strategy, which then lent the money to Refco Group Holdings. This way, Refco prevented write-offs of bad debts. Worst, Bennett was paying for them with money borrowed by Refco itself!

Bennett stepped down after being confronted by an internal audit for the $430 million debt to the firm and on October 12, 2005, was charged with one criminal count of securities fraud for allegedly manipulating Refco’s financial statements. After years of appeals and re-appeals, July 3, 2008, saw Judge Naomi Reice Buchwald sentence Bennett to 16 years in federal prison and ordered him to report to prison on September 4, 2008. Post 2002, there have been many cases of fraudulent corporate acts, and there have been many indicted. The July 3 event raises a question again – is investor trust worth so little? The answer we believe is ‘no’; but then Bennett believes otherwise. Or maybe he’d rethink in peace, in prison; 16 years are enough we hope! 


Source : IIPM Editorial, 2012.

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Thursday, November 22, 2012

The Next Asian Miracle

Democracies are peaceful, representative – and terrible at boosting an economy. Or at least that’s the conventional wisdom in Asia, where for years growth in India’s sprawling democracy has been humbled by China’s efficient, state-led boom.

Consider the experiences of the following two Asian countries. In 1990, Country A had a per capita GDP of $317; Country B’s stood at $461. By 2006, Country A, though 31% poorer than Country B only 16 years earlier, had caught up: It enjoyed a per capita GDP of $634, compared with Country B’s $635. So, if you had to guess, which of these two Asian countries would you assume is a democracy? You might conclude that the better-performing country is authoritarian China and the laggard is democratic India. In reality, the faster-growing country is India, and the laggard – Pakistan. This certainly belies the notion that authoritarian states have an advantage in growing an economy compared with their democratic counterparts.

But surely, the familiar China-India comparison would support an authoritarian edge, right? The conclusion seems so obvious: China is authoritarian, and it has grown faster; India is democratic, and it has grown more slowly. For years, Indians have defended their democracy with a sheepish apology – “Yes, our growth rate is terrible, but low growth rates are an acceptable price to pay to govern a democracy as large and as diverse as India.” There is no need to apologise now. India has ended the infamous 2-3% annual “Hindu rate” of growth and begun its own economic takeoff. The Indian success is not only impressive in terms of its speed – growing at the “East Asian rate” of 8-9% a year – but also in terms of its depth & breadth. The Indian miracle is no longer confined to the much vaunted IT sector; its manufacturing is taking off. Even the historically lackluster agricultural sector is beginning to grow.

So where does this leave the “authoritarian edge” that China’s economy has supposedly enjoyed for years? The emerging Indian miracle should debunk the notion that democracy is bad for growth. And the emerging Indian miracle holds substantial implications for China’s political future. As Chinese political elites mark the 30th anniversary of economic reforms this year, they should reflect on the Indian experience deeply and absorb the real reason behind their own miracle.


Source : IIPM Editorial, 2012.

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