ALIRTEY(unjumble the words)---->>>>>Retail or Reality.

Reliance, bharti, godrej, Birla's .........the list might go enlessly after a decade but all these are synonymous and you may have guessed it right..........Supply Chain Management or Retail. Todays ET prompted me to write my views on this topic. The views will be grossly biased as the article has changed my perspecive towards Retail completely.

Till yesterday i belived these retail giant will revolutionize the 400$ retail market amongst which only the 2% belongs to the organized sector, but the article focussed on these kinds of popular myths. Indeed when you see all the newpapers putting only one view in resonance then you tend the narrow down your thoughts. Now we get to serious business.............

The most lucrative aspect which prompted these big corporate houses to put huge some of crores at stake was
the ROI, which they thought would sum up to as large as 40% of the capital invested. Did any of them had a look at he underlying risks involved all in a hurry they fell for the pie and it may be possible they all are licking thie wounds in years to come.

So what are these risks. Mckinsey report suggested that 25-30% of the perishable goods gets destroyed in the inefficient supply chain, coupled with middlemen the ROI rises to 40%. Other reports sugested that farmers are being grossly underpaid close to only 10% of the actua; market value of the food product, and this can be harnessed into by integration of the fragmented supply chain.


Now the truths about these report cannot be defyed but they did not mention that these inefficiencies can be easily coverted into bucks on table. This is where the pit lies. It is impossible to convert one form of energy to another without loosing some in the processes. Does supply chain also follows same laws after all its a chain of processes.

to be continued......

Kntting MAYAjaal

Friday was 'D' day for indian political system with Uttar pradesh waiting in frenzy for its new chief minister. It was already decided in the deluge of exit polls that Mulayam Singh getting reelected was as disillusioned as India winning a world cup, a impossible by any standards. Even mulayam would have got vibes ling before UP actually went for polls.

My Friend broke the ice by giving me a dismal news that Mayawati has sweeped the UP polls with a clear majority. It was disheartening, may be because of the OBC quota controversy keeping the general candidates high and dry, for a change they felt to be children of lesser gods. It seems you have to be backwards to move forward.

By the night the news has thoroughly swept my mind by a majority. channels were airing a salwar clad iron lady cheerfully thankful to upper and the lower caste for choosing her a unanimous leader. The next morning newspaper was no different. As the days has past by, the victory of dalits truly sanked in my mind that i accepted my defeat, defeat of urban middle class ignorant about the very meaning of word 'dalit', till i read today's newspaper about the dalit girl raped in UP village a fortnight back and police refusing to lodge an FIR because of the upper caste accused. Even the hospital turned its back to a DALIT girl.

This has not been a one of incidence but to our vibrant middle class we turn page to these news pieces feeling pity many a times trying to reconcile and blaming the poor girls fate for the tragedy. The options could have been many in the minds of UP junta but they rejected the hindutva, youthism, muscle power to show full support for their caste because they have been duped, bashed, killed by BJP, congress and SP. Little they could have done except proving a point to all these parties by their invaluable VOTE.

It might be tough journey ahead for the oppressed with crime deep rooted in the minds of muscle men. For a change they have something to smile and a hope to cheer. Good luck UP.

Mera Number kab aayega?

A saying goes, "it's tough to reach the top, but often times, it becomes even tougher to maintain that top position", Today this saying was defyed by the australians. They made team like South Africa seem like minnows in semo finals. I wondered an anti competetive law must be slapped on the australians for destroying the enthusiasm of the Semi Finals. It made me to ponder over the position of numero uno and how some companies make it look so simple to retain despite the competetion.

Intel has done it over the years and now i think AMD has gotten used to of it and would have stopped trying to even eye the market leader's position. Last year Mr Rahul Mittal must have taken a cue from the australians otherwise how can someone even think of aquiring its immediate rival and destroying the compitetion with such ease. Mittal steel now is undisputed leader and will remain so for decades to come.

Google might have given Bill sleepness nights but have not yet come out with a product in tussle with Microsoft Windows. Though standford graduates went a step ahead and changed the rules. They took Microsoft unaware abount the potential in the online market and captured the majority share in no time. Carefully planned aquisition of You tube has also helped them maintain health lead of microsoft which now seems unconquearable by any standards.

Enough has been said on leaders, while i was watching finals yesterday(it has been long i tried to complete my article) i noticed a perculiar thing at barbados. All the brands flaunting their logos on the grounds had major presence in India. Be it Hero Honda, Hutch(now Vodafone Hutch), Korean brand LG, and many mare were banking on Indian team putting atleast a respectable show at world cup. I feel sorry for them but a quick thought crosses my mind, all the money they bet on Indian cricket has be routed from our homes so we should rather be sorry for ourselves. God bless us......

Insuring Faith.

It was match between Bermuda and Bangladesh that inspired me to make this thought a part of my blog. Indian Cricket team has let down millions of fans by their dismal performance in the world cup, but for most of us it will just be a passing phase. Gradually from the front page, to the third and eventually to the last before being disappeared in oblivion, but what we forget is that this one off instance must have given sleepless nights to many, obviously to the Indian Cricket team, but many more who perhaps do not own this tragedy. Lets take each one of them one at a time and count their losses which will be tough for them to reconcile in time to come.

Probably biggest losses will be suffered by Sony Entertainment Television (SET) which was banking on India's performance to make huge profits. India's 70% population shares passion with India Cricket team, with 1 billion + population 70% indeed makes a huge share. This craze attracts the brands and pester them to pay as much as 10 lacks for a meagre 10 second spot in India's encounter. With early exit this viewership is set to fall by 40-50%, and with most of the brands already committed with the spots, they are likely to suffer. And if they decide to pull back, its sure to hit SET's revenue margins.

Pepsi with its blue billion campaign comes a close second in terms of facing losses because of our own men in blue. I am sure Indra Nooyi must have kept herself updated with India Srilanka scorelines, although is most likely that she will not be a cricket fanatic. If you would have noticed Pepsi unveiled a new ad featuring SRK in India Srilanka encounter. That ad with host of others were decided to be unveiled later, but it seems all of them now have to take a curtain call without seeing the face of television. It will spell doomsday for Pepsi Co, with summer round the corner cricket or no cricket Pepsi will have to rethink their brand positioning strategy. Coke on the contrary played a safer bet by choosing neutral themes featuring Aamir. and this might prove to be a blessing in disguise.

An Indian media house have recently launched a magazine focusing on Indian Cricket:- which they proudly call First ever magazine focusing totally on Indian Cricket- Cricket Info. well the idea sure was not bad but timing couldn't have proven to be worse than the post world cup debacle. Indian Hockey too faced tough times after the hey days before being forgotten into oblivion. That day may be drawing closer with consistent pathetic performance by our champs whom we admired and on whose shoulder brands like LG and Samsung had built palaces in the hearts of millions. That's why i would advise insurance houses to start insuring faith which was instilled in by our own cricket team only to be brutally shattered later.

The A to B of branding

Vodafone has paved exit for the pug, quite rightly so because it would have meant extra burden in maintaining additional brand amongst its own in several countries. This recent demolition of “Hutch” brand and rise of “Tata” brand intrigued me to put on my thinking cap on the Branding industry and how does it work.

A “Brand” is collection of images, a product showers. The image could be of trust, integrity, responsibility, luxury and host of other emotions. I am going to illustrate the most popular brands and their journey to the top.

The opening slot will invariably be grabbed by “Google”. Goolge run to the top slot in close to no time has made him undisputed leader in branding. The brand Google stands for Innovation. Lately they have managed to dig inroads into the social responsibility by opting for solar electrification of their campus. No doubt these factors make Google the most coveted brand by the tech geeks. None of its competitors had ever thought of the hidden potential in web search but Google has transformed, or rather replace the word “search” in the dictionary. “Search the web” is slowly getting transformed to “Google the web”.

In India close second to the brand Google will be “Airtel”. The Brand spells Trust and leadership. Poor connectivity in technology by some of its rival brands have given it an unintentional edge but it will be wrong to take credit out of Sunil Mittal cap, Telecom Czar the the first one to launch the mobile service when it rested expensively in hallowed countries of the west. Few could afford then a single call. Though the Brand “Airtel” has taken a backseat in the minds of telecom king but it still leads the Branding Brandwagon in India.

Amongst the big commodities Brand how can we forget our own Big B as a magnanimous Brand. Even after sixty years on earth when a warrior is expected to retire from his proressional life, Big B has risen to endorse “Life after sixty”. His second innings had a sour beginning but we all know every Brand needs time to position itself in the market. Lets see if SRK does enough justice to his Brand in his new stint……..

Budgetery Times…….

Ones who would have read ‘A view from outside’ by Mr. P Chidambram would certainly agree that he has not done justice to his stature and respect. The trio of PC, M Ahluvalia, and Mr Manmohan Singh were certainly capable of ‘Big Bang reform’ as our finance minister would call it. None of finance minister in the history of India would have ever got golden chance of presenting a budget when GDP is growing by leaps and bounds, foreign exchange has touched an all time high, FDI inflows have touched double digit in billions and engines of various industries may it be services, telecom or retail are firing all their cylinders in full throttle. Mr PC has certainly lost the opportunity after a stupendous run the previous fiscal.

Healthcare: An expressway to growth.

has been talk of the town that India will be next superpower. “Favorable Demographics” as many of us will quote the strongest factor in achieving double-digit growth but will the crippled population be able to handle the impending huge pressure. The key to India’s success in the global world will not be acquisitions worth billions but how we manage our 1.19 billion people power effectively. Statistics have not been very favorable to India’s health. 55.32 deaths/1000 births as against China’s 33/1000, skewed sex ratio, whopping illiteracy rates of 91% in some states and the recent surge in inflation due to stressed supply have tales to tell about sustainability of the growth. But the most important factor which either is the cause or the effect of the reasons above is poor Healthcare sector which needs overhauling otherwise India will soon lose its demographic edge.
With more than 70% population in rural villages it will be uphill task to improve the ailing health. Recent finding have brought out startling facts about expecting mothers delivering infants in absence of medical supervision in Madhya Pradesh, Tamil Nadu and Kerala’s hospitals reusing the syringes and exposing the patients towards diseases like AIDS and Hepetitis B. Its will be very tough journey ahead for Ministry of Health.

Its about money, Honey....

The budget is due next week and recent rise in CPI and WPI must have given our own finance minister sleepless nights. The huge task at hand will be to keep the Inflation within acceptable limits of 5-5.5%.
The debate over inflation has pestered me to reasearch on the Indian currency: rupe and its stability vis-a-vis other currencies in the world. The currency system can be broadly classified into six groups i.e

Dollarization: When a country adopts a foreign currency for its transaction within
Currency Board: When the convertibility between the foreign and local currency is unlimited
Pegged: When local currency is pegged at foreign currency
Crawling Pegged:When currency is adjusted periodically based on foreign currency
Managed Float: Centrally managed but dependence on foreign exchange market
Full Floating: Dependence on foreign exchange but not managed centrally.

Indian rupe comes under Manged float type and it is one of the strongest managed floating currency in the world. The currency has dependence on the foreign exchange market however Central Bank has control over this dependence. In our case RBI acts as the central bank and keeps a close vigil on the excessive apprciation and deprication. Due to its dependence several factors are responsible for the value of the currency i.e Inflation, Interests levels, Income, Purchasing power, Productivity and Trade. The first four are interdependent while the last two effect each other.
If India's Inflation levels are higher than US which in the present scenerio is quite true then Indian Rupe face devaluation, and will effect interests rates adversely. High interests rates are detremental to investments which effect might curtail the growth momentum.
Income and purchasing power are correlated and end up depreciating the rupe against the dollor but this dependence is in less productive economies because it strains the resources and balance of payment sheets.
High productivity and International trade enp up appreciating the currency as it brings foreign exchanges and strengthens the currency in the global market.

Its high time Mr PC takes a stand on the FTA agreements with ASEAN and bring the tariff levels close to ASEAN levels so that India can boost its International Trade. Implementation of GST should be expidited so that Inflation can be curbed, with ofcourse rise in productivity in agricultural commodities. The talk of the town is sustainable growth and with rising Inflation inspite of (low crude oil prices) let alone being a superpower it will hard to even sustain till 2020

Its all about the GAME!!!

Jon Forbes Nash Jr....The name reminds us of Oscar winner Hollywood blockbuster "A beautiful mind" and to an extent superb role play by Russle Crowe, but what we often forget is the true picture of schizophrenic and his popular “Game theory” which has its application spanning across economics, biology, politics and philosophy. When I finished reading the life history of Sir John Nash, I was tempted toward Game theory the aspect which remained largely untouched in the movie.
It is the concept used in the strategy based game where the outcomes are known to all the players and they play in actual conditions to maximize their chances of winning the game often forgetting that the most mutually favorable outcome is not the beneficial to both(or all) the players individually. Lets take most popular “prisoner dilemma” problem and try to illustrate the solution

“Police have detained two criminals accomplice in a grave crime. But due to lack of evidence the personals decide to question each of them individually. The options with both the prisoners are to either accuse or not to divulge any details. The matrix below shows the possibilities and the outcomes

both the prisoners together serve minimum imprisonment of an year when they remain silient which is highly enlikely since if the other betrays then the law hit the silent prisoner hard.

one more example to illustrate the "Game Theory" is the "The ultimatum game" in which the sample space of the possible outcomes is infinite as aginst the one given above with sample space as 4 possible outcomes. This game involves dividing the share onto two parts with the the first gamer given the option of choosing the share fot both of them and the other given the liberty to reject knowing that both will not be given any share if it leads to rejection. Here the outcome favourable to both of them is that the second player accepts whatever is offered since(other than a zero) the desicion to reject will leave nothing to their disposal.

When a study is incorporated amonsgst many games played then a 50:50 share is most favourable amongst the players since all the other outcomes invauriably are more favourable to the first player dividing the share since he will keep his share to be more or equal to the second player.

the extensive representation of the conditions are shown as tree diagram as against the normal diagram shown for the "prisoners dillema" game above.

The MRI scan of the brain of second player in the study dipicts that the rejection is more often the result of revenge which is disastrous to both the player.

Studying these two games brings out a very interesting fact, in almost all the games played the most favourable outcome to all the player is often not the final outcome since it involves the rational thinking of maximizing the overall outcomes rather than the involving maximizing the indivisual outcomes.

This is one form of game theory in which the opponent is known. The other being rather unconventional in which the theory becomes complex in finding the outcomes.

CRR demystified.

After the recent hullabaloo about the RBI CRR hike by 50 basis points to curb inflation the first thing which comes to mind is what is CRR. Cash Reserve Ratio is the percentage of total money that Banks have to retain with themselves from the total deposits.
Lets take a simple example to take the inside view of CRR
Suppose a depositor has 20 bn $ as bank deposits. Lets assume bank invests the money and that same money again gets deposited in the bank. So essentially bank has now 40 bn $ assuming CRR as nil. If this money travel the same route then the money will keep multiplying infinitely.

Let the CRR is x% (x<1).>

In the actual scnerio this hike of 50 basis points from the current 5.5% to 6% will drain about 27,000 crore (5.4 bn $) from the market. In the next post it will be effects of the CRR hike on the interests rate, bond market and share market.

Keep smiling….

Valentine’s day :– commercialization of love.

A special article for a special day.

I am living the globalized era of 21 century with supporters of this day in aplenty. The proponents would argue that it’s their freedom of expression which is at stake when the bajrag dal activists take charge against this day. I do not support the shiv sainiks neither do I support the bajrang dal activists but I stand by the argument that these days do sow seeds of consumerism in the minds of innocent young couples.
. When a guy of 8th class of a reputed private school visits a hallmark gift shop on the eve of valentine’s day, he is amazed by the world engulfed in the small enclosure. The big corporate houses in their vested interests eye this innocence and trap the poor soul with their web of marketing stunts. The result is evident. If he finds his valentine the day after its happy ending alike a shah-rukh bollywood blockbuster, if he doesn’t then he moves on forgetting the day. But whatever be the outcome what is often overlooked is that he is traped in that seemingly harmless web and soon a victim of consumerism.
. It might be a happy valentine’s day at a posh upper class market in affluent corner of delhi but the outcome might be different for girl standing at the bus stop. The sentiments becomes so strong that a thin line between a proposal and eve-teasing is crossed by many.
It might be happy valentine’s day for a newly wed couple but will it be of same outcome to a debt ridden farmer in vidarbh who can think of a suicide because he cannot pay back Rs 2000 which is shade less than expenses equivalent to a evening show at PVR.
. It’s time we understand our responsibilities because this day has come in our lives not because we can afford it but because our country has toiled hard to make us afford this day.
Happy Valentine’s Day.

what India stands to gain from CORUS

31 January, i may be late but the limelight hasnt faded yet. Mr Ratan Tata, chairman Tata group (now the biggest group as per sales) must have come out of his plush room at Taj, Mumbai with more than a smile to his face. Reason, the biggest ever clinched deal by an indian company in the global arena. An anonymus line in biggest economics daily quoted "India needed a six on the last ball, batsman Ratan Tata did the needful by straight bat shot". Quite rightly so, there is more to it than just the 12 billion tag.
It will prove to be more than just an aquisition for India Inc. The manufacturing industry of India has been away from its growth story by miles crippled with the cliched problems of infrastructure clubbed with aversion of Indian minds towards innovation. It will put Indian manufacturing industry in the driver's seat. Tata's with their presence in manufacturing, power, IT and automobile have time and again proved their mettle by soaring profits in all the sectors despite the prevalent problems.
The deal has proved that despite being the consumer economy since 60 years, India Inc has courage and power to talk of billions worth of gobbling. India has proved its hegemony in the knowledge sector. Now it was time to prove a point or two in the manufacturing sector.
As if this was not enough, Mr kumarmanglam Birla went on to aquiring Atlanta based Novelis. What could be worse than this, his 6 billion seemed peanuts face to 19 billion worth Hutch buy out by UK telecom major Vodafone. Poor Birla, it will take him half a decade to come out of his agony, his deal of 6 billion was overshadowed. Hope this SAGA continues unabated.........

comments welcome.