koushikddutta - Tumblr blog

[koushikddutta]

Make In India

World’s largest sovereign, socialist, secular, democratic and republic country, India has already created its presence as one of the fastest growing economies of the world. It has also been ranked among the top 3 attractive destinations for inbound investments. Since liberalisation, the regulatory and policy environment in terms of investment especially foreign direct investment (FDI) has become investor friendly.

Honourable Prime Minister of India, Mr. Narendra Damodardas Modi has taken “Make in India” initiative on September 25th 2014 to encourage companies to manufacture their products in India to focus on 25 sectors of the economy for job creation and skill enhancement.

Market Size

India has emerged as one of the strongest performers in the deal-street across the world as mergers and acquisitions (M&A) which has increased in 2014 with deals worth US$ 38.1 billion being concluded, compared to US$ 28.2 billion in 2013 and US$ 35.4 billion in 2012.

M&A activity saw increase in the inbound and domestic segments which together contributed over 80 per cent of the total M&A values. Value of inbound deals in 2014 was up by 35 per cent compared to last year’s value that stood at US$ 8.7 billion. The value of domestic deals in 2014 increased by 189 per cent over 2013, though volumes increased by 43 per cent, according to the 10th Grant Thornton India Llp annual deal tracker.

Private equity (PE) investments, excluding real estate, increased 11 per cent in terms of deal value to US$ 11.42 billion in 2014 from US$ 10.32 billion in the previous year, according to the provisional year-end data (until 29 December 2014) from VCCEdge, the financial research platform.

Policymeasures to encourage investment in India under Make in India Programme

In August 2014, the Cabinet allowed 49% FDI in thedefence sector and 100% in railways infrastructure. 

100% FDI allowed in the telecom sector.

100% FDI in single-brand retail.

FDI in commodity exchanges, stock exchanges &depositories, power exchanges, petroleum refining by PSUs, courier servicesunder the government route has now been brought under the automatic route.

Removal of restriction in tea plantation sector.

FDI limit raised to 74% in credit information &100% in asset reconstruction companies.

FDI limit of 26% in defence sector raised to 49% under Government approval route. Foreign Portfolio Investment up to 24% permitted under automatic route. FDI beyond 49% is also allowed on a case to case basis with the approval of Cabinet Committee on Security.

Construction, operation and maintenance of specified activities of Railway sector opened to 100% foreign direct investment under automatic route. 

Incentives to encourage investment in India under Make in India Programme

Mr Narendra Modi, Prime Minister of India, has launched the 'Make in India' initiative with the aim to give the Indian economy global recognition. This initiative is expected to increase the purchasing power of the common man, which would further boost demand, and hence spur development, in addition to benefiting investors.

Central Government Incentives

Investment allowance (additional depreciation) at the rate of 15 percent to manufacturing companies that invest more than INR 1 billion in plant and machinery available till to 31.3.2015.

Incentives available to unit’s set-up in SEZ, NIMZ etc. and EOUs.

Exports incentives like duty drawback, duty exemption/remission schemes, focus products & market schemes etc.

Areas based incentives like unit set-up in north east region, Jammu & Kashmir, Himachal Pradesh, Uttarakhand.

Sector specific incentives like M-SIPS in electronics.

The Government of India has planned to set up a Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) near Bina, Madhya Pradesh with an investment worth around Rs 1 trillion (US$ 16.12 billion). This would be the fifth PCPIR in the country and the first in a land locked state.

The Government of India plans to implement infrastructure projects worth Rs 2 trillion (US$ 32.24 billion) this year to underline the priority of the sector in the overall economy

State Government Incentives

Each state government has its own incentive policy, which offers various types of incentives based on the amount of investments, project location, employment generation, etc. The incentives differ from state to state and are generally laid down in each state’s industrial policy.

The broad categories of state incentives include: stamp duty exemption for land acquisition, refund or exemption of value added tax, exemption from payment of electricity duty etc.

The fourth Global Investors Summit in Madhya Pradesh has witnessed a group of central ministries and representatives of the industry making commitments to invest about Rs 6.79 trillion (US$ 109.47 billion) in the state over the next few years.

Special Dispensation under Make in India Programme

Special dispensations have been envisaged for NRI investments in the following :

Construction development

Ground Handling & Air transport services

NRI investing on non repatriable basis

FDI from NEPAL & BHUTAN is allowed in Indian rupees

Investors’ Responses towards Make in India

October 2014, Lava Mobiles CMD Hari Om Rai said Lava will start manufacturing from a Noida plant from April 2015. In November 2014, Lava was in talks with Nokia to buy its Chennai plant.

January 2015, the Spice Group said it would start a mobile phone manufacturing unit in Uttar Pradesh with an investment of ₹500 crore. A memorandum of understanding was signed between the Spice Group and the Government of Uttar Pradesh.

January 2015, HyunChil Hong, the President & CEO of Samsung South West Asia, met with Kalraj Mishra, Union Minister for Micro, Small and Medium Enterprises (MSME), to discuss a joint initiative under which 10 "MSME-Samsung Technical Schools" will established in India. In February, Samsung said that will manufacture the Samsung Z1 in its plant in Noida.

February 2015, Hitachi said it was committed to the initiative. It said that it would increase its employees in India from 10,000 to 13,000 and it would try to increase its revenues from India from ¥100 billion in 2013 to ¥210 billion. It said that an auto-component plant will be set up in Chennai in 2016.

February 2015, Huawei opened a new research and development (R&D) campus in Bengaluru with an investment of US$170 million.

February 2015, Marine Products Export Development Authority said that it was interested in supplying shrimp eggs to shrimp farmers in India under the initiative.

March 2015, Sony India's head, Kenichiro Hibi, said at the Mobile World Congress that they may open a factory in India.

Special investment opportunity in renewable energy sector : RE-INVEST

RE-INVEST initiative has been taken by Ministry of New & Renewable Energy to encourage ‘Make in India’ – for manufacturing and generating energy to attract large scale investments for renewable energy sector in India.

First major event for investment promotion in RE sector by Government of India, with active participation from the states.

Provide a platform to global investment community to connect with stakeholders in RE sector in India: central and state government officials of India, leading business leaders and top executives from the industry, academics and experts from around the world.

To bring foreign investment to new areas of RE such as offshore wind, hydrogen, bio-fuels and geothermal while further strengthening solar and wind energy sectors.

Various Investment/ Developments under Make in India initiative

With the improvement in the economic scenario, there have been quite a few investments in various sectors along with M&A in India. Some of them are as follows:

Gujarat Cooperative Milk Marketing Federation (GCMMF) is planning to invest close to Rs 5,000 crore (US$ 806.01 million) to set up ten new processing plants as well as expand the current capacity to touch 32 million litres per day (MLPD) capacity by 2020.

The Visakhapatnam Port Trust (VPT) has outlined a Rs 3,000 crore (US$ 483.61 million) expansion-cum-modernisation plan aimed at enhancing the port's capacity by nearly 50 per cent. The Rs 800 crore (US$ 128.96 million) or more than port will spend a fourth of the total planned investment, while it will seek private partners to invest the rest by way of public-private partnerships (PPP).

The Uttar Pradesh government has secured investment deals valued at Rs 5,000 crore (US$ 806.01 million) with companies like Samsung, Spice Mobiles, Lava and cellular associations for setting up mobile manufacturing units in the state.

Maxx Mobilink plans to start production of mobile handsets at its Haridwar plant, beginning with assembling devices from April at the factory where it currently manufactures accessories such as battery and charger. Maxx will invest over Rs 6 crore (US$ 967,241.29) initially in setting up the R&D lab, which will take care of device testing and software innovation such language packs, user interface (UI) and other utility-based applications.

Indostar Capital Finance Ltd and Reliance Capital Ltd have invested Rs 200 crore (US$ 32.24 million) in Alliance group, a real estate company. The investment will be deployed in two projects—one in Chennai and the other in Bengaluru. The company plans to invest close Rs 120 crore (US$ 19.34 million) in the Chennai project.

Oil and Natural Gas Corporation (ONGC) plans to invest Rs 81,800 crore (US$ 13.18 billion) to bring new discoveries into production and check the decline in output from ageing fields. The company has taken up 15 projects for development. Of these, seven are complete and eight are under implementation.

Infosys CEO Vishal Sikka met Prime Minister Narendra Modi recently with a double offering aimed at aiding the government’s new initiatives — a promise to allocate half its US$ 500 million venture fund as an “Innovate In India Fund” and share expertise to help smart cities. The money will be used to fund start-ups in innovative technologies and provide them an ecosystem to scale up. In return, these innovations will help Infosys climb up the value chain in the software services space.

Pune-based Suzlon Group has announced its plans to invest Rs 24,000 crore (US$ 3.86 billion) over the next 5 years on energy projects to generate 3,000 megawatt (MW) in Gujarat. This will also mark the foray of Suzlon in solar energy.

ITC Ltd will invest Rs 1,000 crore (US$ 161.2 million) for its ambitious foray into dairy and juice businesses which it plans to roll out in the January-March quarter. The Kolkata-based cigarette-to-FMCG-hospitality conglomerate will make the proposed investment in the short term on manufacturing capacity, marketing, brand building and distribution expenses.

In line with Prime Minister Narendra Modi’s ‘Make in India’ initiative to give domestic manufacturing a major push, the country’s oil and gas sector is expected to see investments worth as much as Rs 5-6 lakh crore over the next five to seven years. Manufacturing opportunity is expected to be created in the near-to-medium term across the oil and gas value chain including upstream sector (oil and gas exploration and development), midstream (gas pipelines and LNG ship building) and downstream (refining and petrochemicals).

The Centre would spend around Rs 200,000 crore (US$ 32.24 billion) over the next five years for the Swachh Bharat Mission, said M Venkaiah Naidu, Union minister for urban development. The minister also said the government would set up a 'Swachh Bharat Kosh' to provide tax and fiscal incentives.

Road Ahead

The International Monetary Fund (IMF) and the World Bank in a joint report has forecasted that India will register a 5.6 per cent growth rate this year and 6.4 per cent in 2015, due to renewed confidence in the market brought about by a series of economic reforms pursued by the government.

The amount of IT spending in India is expected to touch US$ 73.3 billion in 2015, which will be an increase of around 9.4 per cent from the 2014 forecast, as per research firm Gartner.

Also, the 'Make in India' initiative undertaken by the Government of India is likely to bring about positive economic reforms into the country as well as encourage more domestic investments in the next few years.

[koushikddutta]

2015 Budweiser Super Bowl Commercial “Lost Dog” | Budweiser #BestBuds

An ad which will touch your heart.

[koushikddutta]

This year, on 6th October India celebrated their best Diwali shopping ever. Full cover page of every newspaper had same advertisement. Yes, I am talking about the Big Billion Day. Two IITians Sachin and Binny tried to make a place in Indians’ heart.

Their simple target of achieving billion rupees sales within one day was not only a big challenge for their e-commerce, but also a challenge for managing the technology. The blockbuster BBD may sound new to us, but it’s not new. It’s imported from USA, Big Billion Day is imported from the practice of “Black Friday” of United States.

GMV Generated:

Flipkart authority never guessed about the reaction of Indians towards their Big Billion Day offer. Within just 10 hours they faced the situation of stock out of most of the items. They claimed that they have reached the sales level of ₹615 cr sales within 8 AM to 6 PM in Gross Merchandise Value (GMV), or the value of goods sold on the site, on Monday. The online retailer had been marketing its Big Billion Day sale for more than 10 days in TV, newspaper and online ads.

In this study, I will try to explore the reality and the myth of Big Billion Day. Being a Marketer I don’t think it was a success, indeed, it was their massive failure. Now how?

Promotional Strategy for BBD:

Flipkart simply promoted consumerism and used the virtual population. They primarily aimed to cover internet users to be the part of this game. Only ₹10 cr was enough for it. On that day, they promoted most of the unknown and new brands into market. Now the facts remain, consumers who don’t even know about the brand, they bought it. They have never justified the price of that particular product.

Big Billion Day Pricing Strategy:

It seems that the discounts were in fact the original price of products. Say a product X, which is sold at market with a price ceiling (MRP) is ₹1,000. Now Flipkart gave offer on the product Y which is a substitute product of X and in terms of comparison of quality both are almost same. What Flipkart did, they negotiated with the manufacturer or seller to set the MRP in unrealistic price at ₹10,000 and then they gave a discount of 85%. So ultimately the product Y sold at ₹1,500 in Flipkart.

Sounds unrealistic?

Cases of Big Billion Day:

Case 1. Transcend Pendrive

Let me share few examples, please have a look on the below snapshot and see the original price. Now you tell me is it possible that a 64GB pendrive cost is ₹49,999 which is more than 10 TB external HDD?

The MRP mentioned above is ₹49,999 and they claimed to offer the device at only ₹2,299 that represents 95% discount on the MRP.

On an average, a 64 GB pen drive’s purchase price will not exceed ₹2,500. So, the fact remains, they made the buyers fool by reducing the price.

Case 2. MacBook Air

Now let us talk about MacBook Air, which sold at ₹56,490 (after discount) on Big Billion Day. What was the price of MacBook during that time? On that day, Amazon and Snapchat was offering same product at only ₹50,000. Their discount promotion technique was simply aimed at making people fool.

Case 3. LG Microwave Oven

On Big Billion Day, LG MC28835MP 28 L Microwave Oven, was sold at ₹12,990 after giving 28% discount. Now have a look on the side photo.

Before BBD, Flipkart used to sell the product at ₹13,090 but on the BBD, they increased the price ceiling from ₹13,090 to ₹18,090. And then they gave a discount of 26%.

Case 4. Samsung Galaxy Neo 3 and Lumia Series

Yes, its true that they sold Samsung Galaxy Neo 3 at ₹1,390 after giving a discount of 90%. And even they sold pen drive at ₹1 also. They sold Nokia Lumia 530 at ₹4,999.

But, they had very limited stock of these realistic offers. Within 6 hours of BBD launching, most of the items got out of stock.

From one side, they were making people as I have mentioned above and similarly they were trying to enter into consumers’ mind by giving offer on Samsung Galaxy Neo 3 or similar products. It was reported in social media and newspaper that most of order got cancelled which were booked on that day or they received something else instead of getting the actual product. Next day the founder of Flipkart sent an apology to buyers, who were angry over technical glitches and price anomalies.

“We are truly humbled by the immense faith our customers have shown in us. And this inspires us to dream bigger,” -Flipkart

Consumerism effect

They have created huge impact on consumerism by endorsing new brands in the market. By BBD, they have generated huge traffic in their site. Most of the news brands like Xiaomi, Huawei Honor Holly are promoting their brand and product in Flipkart for promotional purpose.

Flipkart authority reported about their $100 million GMV revenue. Now if we talk about their revenue, it will sound differ. Through BBD they cleared the unsold stock of most of companies, which ultimately resulted in quick inflow of Working Capital and for that Flipkart got a percentage.

Sustainability Model

Every week Flipkart is getting new advertising proposal from new and unknown brands and all these new brands are choosing Flipkart exclusively as a preliminary stage of market entry. Even Flipkart is getting advertising proposals from Thomas Cook, Renault and many others.

It ultimately resulted in long-run sustainable strategy to lead the e-commerce market in India.

E-Commerce War

Then, the Flipkart-rival Snapdeal, which also ran a Diwali Bumper Sale of its own on Monday minus much of the negativity that surrounded Flipkart’s Big Billion Day, announced it clocked sales of Rs. 1 crore per minute, roughly translating to similar numbers as Flipkart’s, when extra-polated to the entire day.

[koushikddutta]

Splitting HR: Is it Justified?

In the era of globalisation, competition has become global phenomenon and change has become a part of corporate culture which ensures continuous learning and development opportunity. Now the time has come for Department of Human Resources.

Ram Charan’s Idea: HR-A vs HR-LO

Prof. Ram Charan, who is a world famous business advisor especially to the CEOs of top companies, author and speaker, recently found that CEOs are very disappointed with their CHROs while had a discussion with group of CEOs. He found that CEOs cannot use their CHROs like CMOs and CFOs which leads to the disappointment. Prof. Charan has also claimed that most of the HR people are generally process oriented generalists who are having expertise in personnel benefits, compensations and labour relations and they are generally aimed on internal matter such as engagement, empowerment and managing cultural issues. Besides this, he has urged that CHROs hardly relate the HR practices to real world business world.

Ram Charan has suggested to remove traditional position of CHRO and advised to split HR into HR-A (for Administration purpose) and HR-LO (for Leadership and Organisation).

HR-A should report to Chief Finance Officer (CFO) and job role should be Manage compensation and benefits.

Where as HR-LO should report directly to Chief Executive Officer (CEO) and must focus on improving the people capabilities of business .

Counter Views of Splitting HR: Retooling HR

In reference to this, Prof. John Boudreau, who is a professor of management and research director at the University of Southern California’s Marshall School of Business and Center for Effective Organizations, and author of Beyond HR and Retooling HR, has strictly opposed this “Splitting HR” concept.

In this new book, Retooling HR, he claimed to reposition HR activities rather than rigid splitting.

“…while he may be wrong, he may also be as wise as Solomon.” – Prof. John Boudreau. Parable of Solomon from the Bible: “The Judgment of Solomon refers to a story from the Hebrew Bible in which King Solomon of Israel ruled between two women both claiming to be the mother of a child by tricking the parties into revealing their true feelings.” “In the parable, Solomon’s suggestion to cut the baby in half motivated the baby’s true mother to reveal herself by imploring Solomon to give the baby to the other woman, rather than see it killed. Everyone can see the harm in cutting a baby in half, so the maneuver works.”

Prof. John has compared Ram Charan idea of Splitting HR with the suggestion of Solomon and he suggested to optimise HR & talent pool by “retooling HR” like

• Retool leadership development using options theory and portfolio risk optimization.

• Retool talent development using a supply-chain framework to optimize talent flows like IBM.

• Retool performance management using engineering frameworks to optimize the return on improved performance (ROIP).

• Retool total rewards using product design and market segmentation to optimize the “deal” and balance customization and standardization.

• Retool employee turnover analytics by using inventory management frameworks that integrate employee acquisition, development and separation.

20-60-20 Model for HR restructuring

Every organisations are different, in terms of their VMOG statements and also in culture & talent resources. Research has already claimed that, every organisation typically follows 20-60-20 rule but it is totally variable factor because it varies from company to company.

According to 20-60-20 rule, 20% professionals are exceptional who add value that helps organisation to move forward and give sustainable advantage and 20% folks are focused into a fixed mindset and lack either competence or commitment to deliver real value, and 60% are in the middle of these two people (Ulrich 2014). Being a management professional, I don’t think that it is fair enough to paint the entire profession with the same brush. My opinion is not to focus on top 20% or below 20% people.

I think the focus should be given on rest 60% mediocre people and only by ensuring holistic approach the maximum output from this 60% segment can be achieved. Holistic approach can be classified into two different dimensions, one- redesigning the organizational structure includes organisational hierarchy and innovating HR practices which comprised of people, process and performance.