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To become number 1, Hyundai needs to compete model to model with Maruti in the small car segment
India’s largest car exporter Hyundai Motor’s India Ltd. (HMIL) is busy mapping out its growth strategy and reinforcing its throttlehold in the small car segment. On September 23, 2006, Hyundai and its component makers announced a mega investment of $1.47 billion for setting up their second car & engine plant in India. Hyundai will invest $911 million, while the rest of the outlay will be deployed by the auto-parts suppliers. The company also launched the Hyundai Verna for the mid-sized segment on September 26. Hyundai will pump $528 million into the car plant, which is expected to be operational by the end of 2007.
 With this new facility, Hyundai will double its existing capacity levels of 300,000 units. It also plans to spend $263 million for the construction of an engine & transmission plant. Arvind Saxena, VP, Marketing & Sales, HMIL opines, “The investments are being made keeping the future in mind. We are very bullish on the growth on the domestic as well as on the export frontier. The new factory will mainly be utilised for producing new compact car models.” For complete information on IIPM Articles, please click here... , Also visit: Arindam Chaudhuri Initiative
Source: B&E and IIPM Publications
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Maruti Udyog Limited’s WagonR Duo that was launched in July this year, already has a waiting list of a month or more – but India’s largest car-maker is confident of clearing the waiting list by October. The duo is the tall-boy hatchback that comes with a factory-fitted LPG kit and runs on both petrol and LPG. Over the period of July-August 2006, MUL has sold 16,437 units of the WagonR compared with 12,526 in the same period in 2005 – an increase of around 20%, all thanks to the new look car (the duo is also a much ‘made over’ version of the earlier WagonR, and looks much less boxy). But evidently, the car’s sales can grow much faster – it’s the production constraints that are putting spokes in the Duo’s wheels. Which is probably one reason why MUL is not all out with the marketing of the deadly Duo that has an obvious product benefit. According to Maruti, the WagonR Duo gives a mileage of 17 to 18 kilometres to the litre, which is about 33 per cent less consumption than the petrol version. Are you ready for some fast action?
For complete information on IIPM Research & Publication Article, please click here...
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Contracts, particularly with overseas governments, must have contingency clauses
Contracts are meant to enshrine agreements in something like stone. But contracts covering long-term infrastructure investments in emerging markets are written in something closer to sand. As more companies invest in these markets – building roads, bridges, utilities and telecom systems – contracts must become flexible enough to account for the changes that political and economic instability create. In case after case, investors have seen agreements brokered with foreign governments change – suddenly and rarely to their benefit. One World Bank study of more than 1,000 long-term investments in Latin American infrastructure concluded that 30% of the underlying contracts were ultimately renegotiated. In the 1990s, two thirds of the agreements that supported 33 investments in independent power projects in developing countries were similarly revised, a Stanford study showed.
For complete IIPM Research & Publication Article, please click here...
Editor: Arindam Chaudhuri
Source: IIPM Publication
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When asked about ad revenue break up, Apurva Purohit, Chief Executive, Radio City elaborates, “The world-over, radio advertising is led by retail clients, as radio offers a local and cheaper option compared to other media vehicles. However, currently about 70%-75% of the revenues still comes in from the corporate clients.” But this phenomenon is in for a change; once radio reaches small cities or towns, it will be the only local medium available, thus giving a complete turn around to local advertising in India. “Local advertising is informative and meant for quick action, national advertising is usually about brand building and brand awareness,” adds Barua. Coming back to the million dollar question of who will survive and how? Considering India’s cultural and regional diversity, which has given birth to many successful regional brands, one is tempted to believe that a lot of regional FM channels will dominate the air waves. But Timmy Khandari, Media Analyst, PwC has a somewhat different view, “The one with the largest footprint in the country will survive, since national advertisers will get to reach out to a wider audience through them.” Well, local or national; general entertainment or specific, all will ultimately depend on the way channels package and modulate themselves (region-wise) to woo their listeners. After all, content is still the king. Ain’t it?
For complete IIPM Research & Publication Article, please click here...
Editor: Arindam Chaudhuri; Source: IIPM Publication
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Rashtriya Lok Dal chief is opposing the government, his party is part of
Rashtriya Lok Dal chief Ajit Singh has never been out of power. If he is not sharing power at the Centre, his party can certainly be found a part of the Uttar Pradesh government. He doesn’t mind colours of his ally’s flag. He has shared power with BJP, Congress, Left Front and also Samajwadi Party. His party has six ministerial positions in UP. Why is he, then, agitating against his own government? Because UP government is headed by Samajwadi Party Chief Mulayam Singh Yadav and the wily Jat leader has sensed that Yadav is fast losing on popularity. By opposing Mulayam, Singh is preparing ground to be a part of the next government in the state. And he has no qualms about it. “Our opposition to Mulayam is issue-based, and should not be linked to our support to his government,” says Singh. Singh has been demanding a Harit Pradesh, comprising 22 districts, to be carved out of Uttar Pradesh. The demand has been rejected outright by the Chief Minister. He has also opposed allotment of 2,500 acres of land in Dadri (Ghaziabad) to Anil Ambani’s Reliance Energy Limited at a throwaway price for a power project. He recently shared a platform with former Prime Minister V.P. Singh, whose avowed aim is to overthrow Mulayam. Ajit’s announcement of his intentions to contest 220 out of 403 Assembly seats in the state should have provoked Mulayam to harsh his ties with RLD. But the chief minister isn’t in a mood to pick up fresh confrontations. He is already fighting BSP, BJP, Congress and V.P. Singh’s Jan Morcha. Ajit Singh may shake hands with Congress in a bid to join the UPA government at the Centre. After all, he has never been out of power. With people like Ajit Singh at the helm, no wonder, UP is at the bottom of development index. Will UP’s electorate teach the Chameleon a lesson this time?
For complete IIPM Editorial Article, please click here...
Editor: Arindam Chaudhuri, Source: IIPM Publication
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Unless the Left becomes intelligible, their pan India ambitions can’t grow
In a move that threatened to pull down the UPA Government at the Centre, Left parties threatened to bring in a “Sense of the House” resolution in Parliament over the Indo-US nuclear deal. Fortunately, the move ended in a whimper with Left parties being left whining against the BJP. Yet, a few issues critically remain to be addressed. Like what will be the shape of Left –Congress relations in the future? But first, the opera’s sequence. A resolution moved by the Left and supported by the BJP would have resulted in the government’s defeat. The Congress did try to reason it out with the ally. Minister of State for External Affairs Anand Sharma even assured the Parliament that the bill passed by US Congress would not affect the spirit of the Indo-US agreement. When cajoling did not work, Defence Minister Pranab Mukherjee doled out a direct threat to the Left : “Any such resolution would mark the end of the government.” Two days later, the UPA Chairperson personally handed over a similar warning to the CPM Rajya Sabha member, Sitaram Yechury. It had the desired effect. The Left buckled and the crisis was averted. Says Congress General Secretary J. Dwivedi, “Such maneuvers are an integral part of coalition politics, but only till they do not destabilise...” Irked at being ignored by the UPA on issues like airport privatisation, the Left has continuously wanted to gain an upper hand. But more oft en than not, the Left’s arguments have either been thoroughly illogical (for example, while opposing FDI in retail, or airports privatisation) or simply worse (their garbled accusations on Swami Ramdev a benchmark example). What the Left has to realise is that what works in the West (as in Bengal) need not always be Right (for the Centre). And for the Left to hold any ambitions of one day having their party member as India’s PM, they have to change just one part of their arguments: logic!
Tags: iipm best b school, iipm business&economy, iipm editorial, iipm management institute, iipm news article, iipm publication
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About a 100 years ago when Henry Ford was dreaming of cars, he perhaps had little idea that four-wheelers would unleash a tidal wave of economic, social and cultural revolution across the world. Since the Model T days of Ford, hundreds and hundreds of automobile designs and makes have captivated the imagination of wannabe consumers and citizens aspiring to the better things in life. Cars are found in literature, poetry, music, movies, gaming-and of course, on roads in every nook and corner of the Planet.
 A car not only announces the economic status of the owner and her psychological inclinations (How would you describe the achiever with a vivid yellow car?!), the automobile industry also provides an idea of the status of the country in the global scheme of things.
The largest economy in the world, the Unites States, also sells the largest number of automobiles – about 13 million in 2005. In fact, there is a clear correlation between size, economic performance and automobile sales across economies. China is a rampaging dragon because 5 million Chinese purchased a car in 2005; the fact that just about 1 million Indians bought a car in the same year says a lot about the catching up that India has to do.
Till the 1980s, the Indian auto industry was literally primitive and virtually in the bullock cart stage! The arrival of Maruti triggered a revolution that really gathered momentum during the 1990s with the entry of global auto companies like GM, Daewoo, Ford, Hyundai, Toyota, Fiat and many more. Now, even Indians have a huge array of brands and models to choose from, with cars in every shape and size, suitable to every pocket, trying to lure the buyer.
In such a scenario, the core team at 4Ps B&M was convinced that an annual ranking of the best automobile brands in India will serve an extremely useful purpose for advertisers, marketers and Indian consumers who are inundated with advertisements of dozens of models every day on their TV screens, newspapers, internet portals and magazines. A one month long exercise was conducted by ICMR, using primary and secondary sources with rigorous research and selection criteria to zoom in on the best automobile brands.
For more information on IIPM Editorial Article, please click here... Source: IIPM Publication, Editor: Arindam Chaudhuri
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It’s not a matter of choice for Pepsi or Coke, it’s obligatory for survival...
So what’s different about Coke sticking the needle into Pepsi’s bosom (or for that matter, vice versa)? Oh, haven’t we all stood alibi to the bitter romance between the two cola behemoths? Haven’t we? But something seems to be cooking this time. Yes, when it all seemed like a battle-too-old to discuss, a twist has come about in the cat and mouse ‘cola’ game.
Variance for survival?
The branding strategies of the two fizz-masters have been very formidable – all thanks to the colossal advertisement spendings. But lately, there has been a small alteration in their ‘perfect’ brand proposition, with the carbonated drinks receiving a step-motherly treatment by the customers in recent months. Yes, hysteria over the ‘black colas’ have definitely lost sheen when compared to the yester-years and this has effectively translated into their sales nose-diving. And now, when it all seems gloomy, these titans are concentrating more on the juices and energy drinks (leaving aside their core competencies) to get their long lost hyper margins on track.
According to the marketing guru Prahlad Kakkar, “Companies want multiple products to gain lost market share because carbonated drinks are not good for health and the consumer knows it.” And very logical too, pesticide headlines have created the rust that has weakened the iron-pillars of the cola-towers, thus denting consumer interests. Pepsi, on one hand, has already diversified its business with the addition of fruit juices and agri-retailing, while on the other hand, Coca-Cola is also gearing itself for the launch of its new fruit drink brand, ‘Minute Maid’ and also for the rural trek. PepsiCo. India also won UB Group’s contract to source 50% of their total annual requisite of barley on June 18, 2006 and is also setting its eyes on Heinz Group for supplying tomatoes. Coca-Cola, on the other hand, is not far behind as it has decided to get fruit supplies for its juice brands from India and plans to build up rural business hubs for the same purpose by supporting the farmers with technical know-how and dealing in processing-friendly variety of fruits.
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For more information on IIPM Editorial Article, please click here...
Source: IIPM Publication, Editor: Arindam Chaudhuri
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Copyright, 2006, IIPM
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For the Indian economy, which is aspiring for a double digit growth, this is surely not good news. Definitely, the era of cheap money is over, which is bound to have significant impact on industrial productivity. It is evident from the funds absorbed by RBI by reverse repo (the last time RBI injected funds into the system was in April, 2006) & the recent hike in auction size from Rs.50 billion to Rs.90 billion that RBI is having a tough time dealing with inflation. Even WPI stood at 192.3 as on May 28, 2006, a hefty 4.7% increase over December 2005. Rather than blindly increasing interest rates, RBI should immediately target specific sectors (like construction, energy) that are contributing to demand pull inflation, and limit credit flow only in such sectors. It’s a wonder they haven’t looked beyond blanket moves to curtail economic growth. Surely, the fact that despite all this India still grows, must be the 9th wonder of the world. And the 8th? RBI!
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Government has to implement radical reforms in SEZs
The magic word Special Economic Zone (SEZ) is at work again and this time, for Reliance Industries. In what is being termed as a giant step towards global economy, Reliance Industries recently announced the building of the largest Indian SEZ in the northern farm state of Haryana (Gurgaon and Jhajjar districts) to attract investments. “This project will bring the country to the centrestage of the global economy,” said Mukesh Ambani. Promising an investment of $5.5 billion into the SEZ, Reliance is aiming at developing this multi-product SEZ to invite technology & knowledge-based companies to invest. With the estimated cost of Rs.400 billion, the SEZ would be one of the largest infrastructure projects in the country.
Ever since 2000, when the government introduced SEZs in order to attract foreign investments, the Indian economy has seen major growth in this arena. With existing Export Processing Zones (EPZs) being converted to SEZs, the Haryana SEZ would be an addition to the list of 8 approved SEZs [Kandla & Surat (Gujarat), Cochin (Kerala), Santa Cruz (Mumbai), Falta (West Bengal), Chennai (Tamil Nadu), Visakhapatnam (Andhra Pradesh) and Noida (U.P), with four more – Hyderabad, Indore, Kolkata & Jaipur – in the making]. As B&E had analysed earlier (issue dated February 10, 2006), despite 100% FDI being allowed, and despite tax incentives, SEZs suffer from huge structural defects. For example, unlike Chinese SEZs, which have market friendly labour laws, in India, the labour laws applicable to the rest of the country are equally applicable in SEZs. O. P. Garg, President, FIEO, commented to B&E, “Poor quality of infrastructure, stringent labour laws, and complicated tax procedures, are factures aff ecting (SEZ) investment.” Despite the confl ict between the Commerce & Finance Ministries over SEZs (see related story in Pecunia), SEZs seem to be among the strongest factors for promoting foreign investments into various Indian sectors. Unless the government undertakes urgent and speedy reforms, India’s obSEZsion would remain a flash in the growth pan.
For complete IIPM Editorial Article, please click here...
Source: IIPM Publication, Editor: Arindam Chaudhuri Tags: bba, iipm, iipm ahmedabad, iipm bangalore, iipm chennai, iipm hyderabad, iipm new delhi, iipm pune, mba, national economic planning & entrepreneu
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