Friday, April 28, 2006

Hotels, serviced apartments

What is the difference between a hotel and a service apartment and where would you stay given a choice? A hotel you would say. But a hotel charges you more, a serviced apartment charges you less. Theres a kitchen in the service apartments, an ironbox and other conveniences that makes it living in your own house except that "room service" maintains the place in spic and span condition. Unlike a hotel where you cant wash your clothes, many serviced apartments provide washing machines or a dhobi who comes and does the clothes for a not so exorbitant price as the hotels. Some provide a refrigerator or microwave too. Now would you choose a hotel or an apartment? Well, depends.

Usually serviced apartments are preferred by the corporate sector. If you want to stay for longer durations, it is better from both the company and the employee - the company gets good rates, the employee feels like he is staying in a home and not in a hotel. Indeed many companies follow the serviced apartments model for their guest houses in various cities. They lease out a place, outsource the maintenance of it to an agency and a guesthouse is ready. It is far more cheaper than getting a hotel for employees.

The concept has not caught on in the non corporate sector though. The budget hotel segment would face good competition from a set of well maintained service apartments. Even upmarket apartments would meet most of the needs of the casual traveller. Wonder why it has not caught on in a big way.

Thursday, April 27, 2006

Carnival of the Capitalists will be here

The Carnival of the Capitalists - one of the blogospheres premier carnivals, will be hosted by this blog for the coming week. This is the first time that the Carnival is being hosted out of India. Barring force majeure clauses, it should be up sometime on May 1, IST, thats April 31 EST.

How do I enter a post?

For those who came in late, it is a blog carnival on the wide ranging topics of business and economics, hosted weekly at a different blog.

Dont miss it.

Tuesday, April 25, 2006

We love micro...

Walk into a store in the US and the order of sizes you can see in anything is big, bigger and biggest. The more you buy or the bigger you buy, the more you save, or so they say. The whole point is towards generating mass consumption in the most gargantuan sizes you can imagine.

Go to India. Instantly, the size of the store is smaller than it is in the US, but what hits you is the size and quantity of the containers. There is very little that is big. It is smallest, smaller and small. We love micro.

Single use sachets of shampoo, hair oil, snacks, ketchup, juices, biscuits, cosmetics, even cough syrup have swamped the market. What started off as a marketing masterstroke, the Chik shampoo, now part of marketing folklore in India, is now a wildfire. Many of these sachets cost 1 rupee, 2 rupees or 5 rupees on an average. (1 USD = about 45 rupees, so figure) and are convenient both from a cost as well from a usage perspective. Bottom of the pyramid anyone? But the interesting thing is that, it is not just the "bottom of the pyramid" who buys them. The others at various points of the pyramid buy them too. While travelling for instance. Why bother to buy a big bottle of something you dont know is good? Small encourages experimentation. The packaging of these sachets costs more than the content for most of the product.

The trend of micro is not restricted to sachets alone. I am not sure if this is an effect or it is a reflection of the way we are. We dont mind spending trivial amounts on consumption (even if it classifies as meaningless), but we balk spending huge amounts. For a community which prides itself in recycling the things till that last drop of "juice" is extracted out of anything, one use satchets are amazingly popular for almost everything.

For things that involve a micro charge, like SMS, ring backs, ring tones, wallpapers and other "electronic trinkets" you would never think had a market, the market is booming and how.

I was reminded of this obsession with micro as I read this report from The Hindu Businessline titled "FMCG Microbranding in top gear". Check out the price list at the top of the piece which makes for interesting reading.

Cities in reform push

From Business-Standard:

The faces of at least 23 cities are going to be transformed in less than seven years.

Fed up of living in an overgrown slum? Does your city have no footpaths, no gardens, no streetlights and a municipal corporation that just does not care? All that will change soon.

In less than seven years, the faces of at least 23 cities are going to be transformed. Indian cities are going to be more orderly, cleaner and better governed.

In just four months, 23 cities have come forward to tell the ministry of urban development that not only are they ready to press forward with the reforms that are mandatory for the award of funds (see chart), but also that they would follow the time limits to put the reforms in place.

The 23 cities that have agreed to crush urban vested interests and have submitted city development plans and signed memoranda of agreement are: Hyderabad, Vijayawada, Visakhapatnam, Chandigarh, Raipur, Ahmedabad, Rajkot, Vadodara, Surat, Bhopal, Indore, Jabalpur, Ujjain, Greater Mumbai, Nagpur, Pune, Kohima, Ajmer Pushkar, Jaipur, Coimbatore, Madurai, Asansol and Kolkata.

Note that Bangalore is not in this list.

Janapada Loka and Lokaruchi

I had been to a visit to Janapada Loka a few days back. Janapada Loka, for the uninitiated is a 'folk village' situated on the route between Bangalore and Mysore. It has a few museums depicting rural art and crafts, paintings et al. There is an open air theater. The staff is very helpful, even knowledgeable, but it lacks life. The toilets are dirty.

Heres a profile :
Sprawling across 15 acres and idyllically located at Ramanagaram, 53 kms from Bangalore, on Bangalore-Mysore highway, this folk art world is a subsidiary of Karnataka Janapada Parishath dedicated to preserve and promote folk art and culture of Karnataka. This vast green belt area houses museums of folk objects, an art gallery, an open air theatre, a studio, and several areas marked for seminars, discussions and informal meetings.

Keenly interested in preserving and promoting the rich folk heritage of Karnataka, Janapada Loka reflects the essence of folk culture which includes literature, music, dance, theatre, festival, painting and life style.

Next door is a restaurant, Kamat Lokaruchi. This place, is an eatery, but it is positioned, very conveniently next to Janapada Loka, as a rural eatery. Almost like (actually better) the theme of Janapada Loka next door, the whole restaurant is designed to look like an oversized village house complete with a cow shed with cows. Inside, waiters in rural costumes display robot like efficiency. A fair cross section of Karnataka food like Ragi dosa, Mudde Idli can be experienced here. A traditional meal can be had on plaintain leaf sitting cross legged on the floor in a special section. Though it is a restaurant, there are small shops selling wooden toys (a speciality of the region) and a few other things. The toilets are clean.

The point is that, Lokaruchi is not Janapada Loka, but very often what peope get to see in Lokaruchi is what people want to see in Janapada Loka. Indeed at my first visit to this place some years ago, the person who was leading our tour did mistake the former for the latter. Janapada Loka is a good place, a concept with lots of potential. How about a real bullock cart? or a corn grinder? or a manual water pump? or a traditional meal served on plaintain leaves? The place can really offer so much more and all one has to do is look next door.

Friday, April 21, 2006

A nation of self employed

...is what we are argues R.Vaidyanathan in The Hindu Businessline. His pieces are always thought provoking and he looks at something that is not very widely discussed/known and with hard data.

A major debate regarding decline in employment, particularly in the organised government sector, post-liberalisation, has concluded that unemployment has increased after the 1990s.

And we have seen this manifest in various forms in the Indian blogosphere in debates on the effectiveness of globalization in removing poverty and such like.

This debate does not take in to account the fact that India is a country of the self-employed, and not of employees.

Our economy is not that of wage earners and shareholders. A significant portion of the economy consists of the self-employed who are both wage-earners and shareowners. The share of the proprietorship and partnership forms of organisations in the national income is 35 per cent, that of corporates around 15 per cent, of government around 25 per cent, and agriculture around 25 per cent. Combine agriculture and the self-employed in industry and service sectors, nearly 60 per cent of the national income is generated by the self-employed and does not fall in the paradigm of either capitalism or socialism.

I would not want to replicate the data he has put together in the piece, but after all that, his conclusion is..

The large corporates are increasingly resorting to `outsourcing' their regular manufacturing activities to small and medium enterprises. Earlier companies in soap powder and biscuit and shampoo categories did it, but now firms in the consumer durables sector as also in technology and heavy engineering `outsource'.

Hence employment is growing. Not in corporates but in the self-employed segment. Self-employment is the answer to the Western choice of capitalism and socialism.

Perfect. But do our policy makers know this caught as they are between providing quota at various private companies or regulating courier companies ( there is a lot of casual labour/contractors/self employed at both these places).

It is interesting that the largest contributors to the national income and employment and capital providers are not talked about or considered in policy formulations. They are often dismissed as `unorganised' or `residual' sectors. India is one of the fascinating countries where more than 60 per cent of the activities are called `residual' sector.

He concludes it with this, but do read the entire piece for the full picture.

The opposing groupings, of the globalisers and the Left intellectuals, interestingly support the slow death of the self-employed group. Not only that, we seem to be bent on creating a huge mass of unemployable persons with the education having no links to trade and craft. The globaliser would like the entire country to be a giant corporation, FDI funded and owned, where every one is a wage earner. For the Left thinkers it is a historical, and an inevitable, process wherein the small entrepreneurs are destroyed to become workers. And jobs in public sector units are more important than the livelihood of millions of street-corner vendors. Due to faulty policies, supported by the metropolitan elite and the Marxist intellectual, we may end up having a huge mass of unemployable persons who are currently self-employed. The policies to be adopted in the service sector in retail trade, restaurants, construction, road transport, etc., are going to require massive employment guarantee schemes (EGS) even in the urban areas, which will make the state wither away.

The self employed really are the backbone of the nation, starting from the small tea shop at construction sites to scrap dealers to vegetable vendors and going all the way up to hotshot entrepreneurs. This is something we need to encourage, since it has been shown time and again that private entrepreneurship and initiative is, really, one of the big things about India.

(Cross posted on The Indian Economy Blog)

Start writing on really thick paper...

...in case the government goes ahead and does this.

or Use thick envelopes.
Write on blocks of stone/bricks.
Send mails with newspapers wrapped around.
Send 300 printouts instead of one.

The government sure has muddled priorities. There are efficient private couriers who pick up letters at your doorstep and deliver at whichever doorstep you want the next day, so why should I depend on a service that offers no guarantees, money back or any other facilities. In fact, I dont even know if there is a post office near my home or office. The courier guys have made it redundant. So, the way for both these guys to grow is grow via customer service not legislation.

Now it is a mandate for courier companies to not carry letters that weigh below 300 grams. Tomorrow if you weigh less than 300 kgs you will have to travel by Indian (Airlines) or I would have to use BSNL if I talk for less than 30 minutes at a time.

Why doesnt the government try and get going on bijli, sadak and paani instead?

Are we really up there?

Or are we lower or are we actually higher in terms of innovation? Bruce Nussbaums post on China and Microsoft had this link with details on the Innovation scores in Businessweek.

He rightly observes that more R&D money is headed to India and China and by that measure (Is your company planning to increase the amount of R&D it conducts in ...), India, 44.4% is slightly ahead of China (44%). India is only slightly behind Europe (48.1%). But then again, those are tentative numbers at best.

I dont know so much about R&D, but I do know that we are quite good with our jugaad. It will be good for companies that invest here if we can apply our jugaad brains and our day to day experience with uncertainities into good R&D.

In India the spotlight has been all along in IT, BPO and other labour intensive sector. R&D is a niche, so to speak. It is less about numbers and more about high end talent, unless companies can groom good candidates to that level. If more R&D moves to India, I hope we see more academia industry interactions, more bright engineers/scientists staying on to pursue research careers in India. It is a self generating cycle if it is kick started in the right way.

Tuesday, April 18, 2006

Global innovators

Businessweek has a cover story on Innovation, the current buzzword in companies the world over.

Hop over and take a look.

Infosys is there in that list at 32, which is good to see.

Outbound training

Business Standard has a piece on the rising trend of outbound training which uses an offsite to teach team building, trust and such. It is known as Experiential Learning (EL).

More and more companies in India are incorporating EL modules in their executive training programmes, acknowledging the superiority of this way over conventional methods of teaching several critical life skills.

Outbound training is far better than being cooped up in a room and getting fed on theoretical concepts. My personal experience has been that outbounds make for great team bonding especially when you want a new team to gel together or even incorporate some concepts into a team in a fun sort of way. Combine an office outing with some good learning as well.

Of course, the setting of outbound management development programmes (OMDPs)helps. People are pushed out of their comfort zone into a world they don’t encounter everyday — frothing rapids, sheer rock faces to rapel and, at times, no running water and electricity.

Another advantage of EL is that participants pay attention, not only because there are safety factors involved but also because it is fun.

Granted, EL gives you a high, but how long does the rush last? Can it survive being back in your cubicle, feeling the heat of approaching deadlines? Most management trainers recommend drafting a clear action plan after an exercise in EL, for both the individual and the team. And the plan needs to be reviewed in six-eight weeks.

EL is good money for training companies and resorts and far tougher to organize than regular trainings. The setting makes it impossible that participants doze off during training - something that can happen very soon in a room.

What was once a novelty, is now commonplace among Indian companies. Once you go to a couple of ELs, you begin to think if its the novelty that makes it fun or the learnings (and I have a feeling it is more of the former than the latter). At times though, the fact that you are at an offsite often overrides a lot of other learnings, unless it is reinforced through briefing, de-briefing sessions and refresher courses too.

Monday, April 17, 2006

Overloaded trucks

The Hindu Businessline carries a somewhat muddled piece on overloaded trucks. Per the Supreme court order, overloading by trucks by illegal. It is also a danger to both the truck and others on Indias highways, themselves not the safest place on earth, even without overloaded trucks. The piece has the usual cribs from "affected people" who are really, poor little rich transporters.

The Supreme Court order on restricting truck overloading is likely to have far-reaching consequences for the domestic truck and shipping industries. The restriction will increase cost of road transportation by 25-30 per cent and, in turn, shipping freight cost for consignees, say industry sources.

How that will happen, I am not sure. It is made to appear as if the poor transporters are taking the risk of overloading to save poor traders some money. Having seen overloaded trucks on almost any highway in India, it is partly greed on the part of the operator, partly knowing that "overloading chalta hai" and partly collusion with other stakeholders including the trader/industry, police, RTO that the whole process happens.

The court's judgement will have serious consequences for the entire trade. As transporters, the association members will be able to carry only one 20 ft loaded container on a 40ft trailer and this, obviously, means that the rates of the transportation will be the same as 40ft loaded containers. It is imperative that these guidelines are strictly adhered to, because in the event of the vehicle being caught with an overloaded container, the vehicle along with the container will be held by the authorities to reduce the weight. The penalties by the transport authorities will be recovered from the trade, the association said.

Why should it be caught if it is within the weight limit? And why should it not be under the weight limit? The piece ends on a somewhat sane note.

An impact analysis on the Supreme Court's order by Crisil Research and Information Services Ltd (CRIS INFAC), provider of business analysis and options, says that freight rates would reduce in the medium term from the current high levels and a one-time additional demand would benefit the commercial vehicles industry within the next six-eight months.

This additional demand will be in the range of 15,000-28,000 medium and heavy commercial vehicles.

India is in the midst of building national highways under the National Highway Development Programme entailing an investment of Rs 1,60,000 crore in the next five-seven years. The Golden Quadrilateral, and the East-West and North-South corridors are also under construction.

These highways, which are being built with huge investments, are expected to last for 10-12 years.

However, even a 10 per cent overloading of goods carriage in excess of the prescribed weight can reduce the life of roads and highways by 35 per cent, the report said.

I think in the long run it augurs well for Indias commercial vehicle industry which is a few decades behind the world. Overloading is not a cause we must rally by, in the interest of road safety.

Saturday, April 15, 2006

25 years of Infosys

Its a company, that has perhaps changed what India means to the world. Sure, footsoldiers of the IT outsourcing industry did it, but Infosys laptop warriors are the face of India today. Together with other Indian IT firms, all other things being equal, it was they who moved the perception of India from a land of Cobra to Corba.

And Infosys turns 25 this year. Here are a few reports (and I will add more if they come by!):

Business Standard: Guiding light

The positive outlook on a high base is encouraging especially since Infosys is known for its conservative guidance and has built in wage inflation and flat billing rates.

The confidence appears to stem from the company being able to ramp up its accounts: it now has 221 accounts of over $1 million and 9 clients with billings of over $50 million.

The Hindu Businessline reports: We are 25, dreaming, daring.

After an "intense, hectic and rewarding" journey of 25 years, Infosys is now poised to "conquer the world," according to the Chairman and Chief Mentor, Mr N.R. Narayana Murthy. At 25, one is strong, young and full of energy, he said. "This is the time you dream of bigger things and are daring, ready to conquer the world."

Revenue tops 2 billion USD:

"It took us 23 years to reach the first billion dollars in revenues, while we reached the next billion in 23 months," said Mr Nandan Nilekani, CEO, President, and Managing Director.

Heres a link from Rediff: Infosys loves to match numbers. A sample:

Data available since the quarter ended June 1997 show that its sales matched its net profit after every eighth quarter till the quarter ended in March 2000. Thereafter, its net profit was either close to its sales or even higher than than that every 16 quarters.

The company may be criticised for not building a product or an operating system, but argue as you may, IT service is a business model. You can argue that it is all about labour arbitrage, but then again, it is a business model. Let us not be apologetic about it at all. If hot shot traders can take advantage of arbitrage in financial markets, Indias IT industry can advantage of arbitrage in labour markets. It is a model that has spanned 25 years, with its share of ups and downs. And then again, unlike stingy miserly bodyshoppers (who were hit thanks to Infy), this company shares its wealth with its employees and stakeholders. There are many others in the labour arbitrage business, right from the Gulf boom days in India, so why did not any of them make it big? Because they focussed on the short term, while Infosys (and some others in the industry) focuses, sharply on the long term. The company is a model of fairness and corporate governance. Sure you can find faults, but then show me one company where you cant.

May the code be with Infosys for another 25 years and more!

Mahindra and Proton?

Business-Standard reports that Mahindra is in talks with Proton, a Malaysian government company for the possible assembly of its Scorpio and Bolero in Malaysia and perhaps a JV in India. Mahindra was earlier talking to Renault to bring its Logan to India.

Sources in the automobile industry said the proposed alliance would work towards the assembly of M&M models like the Scorpio and the Bolero in the Malaysian market.

“In addition, in India, M&M can look at the possibility of a joint venture with Proton on lines similar to Mahindra Renault, the company’s existing joint venture with French car maker Renault to manufacture and market the latter’s Logan cars in the country,” said automobile analysts in Mumbai

Proton has been losing market share due to limited market penetration, competition in the domestic and global markets, and a lack of new models.

I hope the reports arent true. Why oh why, does M&M look to tie up with fuddy duddies such as Proton and get zero appeal models like the Logan into India? For a company associated with the Scorpio, I am sure they can do far better than this. Stand on the shoulders of giants.

Thursday, April 13, 2006

The Story of Yeshasvini

I was reading a piece about Dr. Devi Shetty and Narayana Hrudayalaya and the story of Yeshasvini ( a self funding micro health insurance scheme) caught my eyes. It is captured vividly on their pages, here. Here are a few excerpts:

How the program was conceptualised.

...In spite of having the best of doctors and facilities in place, the rural masses lacked the capacity to pay for speciality care. Which is when, we initiated the Yeshasvini Health Scheme, a healthcare scheme for the rural masses to access quality healthcare at a nominal amount of Rs.5 (11 cents) per month. The program went on to become a successful venture of the Co-operative Department, Government of Karnataka.

...In a startling discovery, through an informal survey, we learnt that occupancy of hospital beds in Karnataka on an average stood at a mere 35%. The utilization of operation theaters was even lower.

...Through the study we concluded that it was not the lack of infrastructure, but the lack of paying capacity of the working class and the poor, which was the root cause of the mammoth healthcare problem India faced.

...Hence, began one of the most ambitious, self-funding initiatives to bring quality healthcare within the reach of the masses - the Yeshasvini Health Scheme.

...The Yeshasvini Health Scheme provided over 17 lakh farmers and their families quality healthcare, and that included costs of critical operations of the stomach, gall bladder, bones, eyes, uterus, brain and heart at a nominal Rs.5 (11 cents) per month.

While thats a tempting sum to be insured for, even for a sum that low, it was not easy to get healthy people to sign up. Therefore they took the route of approaching grameen banks, SHGs who were already together for a purpose.

...The Yeshasvini Health Scheme was open to people who were together for a purpose. Be it as a co-operative society, a grameen bank or quite simply for a reason other than health. This criterion was of paramount importance for the success of the scheme, because opening the scheme to everybody would have resulted in only people with diseases becoming members. This in turn would make a self-funding scheme unviable.

...The Yeshasvini Health Scheme entirely depended on numbers to keep it afloat. Working around the axiom that it costs Rs. 10,000 for a life saving operation, the Yeshasvini Health Scheme was open to a large number of people because, among 17 lakh members only a few thousand members are usually the ones with diseases. The other members are generally healthy members who pay for the treatment of the rest of the diseased members. (Moreover, the Yeshasvini Health Scheme enrolled members already diagnosed with diseases.)

So, what is offered?

The Yeshasvini Health Scheme covered approximately 1,700 different types of operations which included operations of the stomach, gall bladder, uterus, eyes, heart and brain, entirely free of cost. The only exception being - the price of implants like heart valves, which are required in very few patients. The members get free outpatient consultation in all Yeshasvini recognized hospitals. In addition, they also get inpatient treatment and outpatient investigations at discounted rates in these hospitals.

In a short span of time, the Yeshasvini Health Scheme has breathed a new lease of life in bringing quality healthcare within the reach of rural Karnataka. With its dynamic structure that generates funds to run itself, the Yeshasvini Health Scheme forms a working model for more such initiatives across the country.

In the first 7 months of its launch, 5,000 farmers underwent various types of operations and 23,500 farmers had out-patient medical consultation, entirely free for just Rs.5/- per month. That is the amazing power of a self-funding health scheme in action.

The story of Yeshasvini is also a story of how business can really go and help where it is needed most. It is about innovation, catering to the bottom of the pyramid, micro credit all rolled into one. It is also a story of what could have been done long ago by our governments with just a little thought. I am not sure that there are more schemes of this nature available or if there is any equivalent scheme available elsewhere in the world. But this one is truly a model worth emulation.

(Cross posted on The Indian Economy Blog)

Tuesday, April 11, 2006

Tomorrows Industries: Tata group

This one is from Business-standard. The Tata group has identified industries that will power the future.

The Rs 80,000-crore Tata Group has identified infrastructure, real estate, bio-fuels, wind power, retail, food, groceries and home improvement as new growth areas.

As a part of its globalisation process, the group will also explore opportunities in Vietnam, Russia, Ukraine, Kazakhstan, Indonesia, Latin America and West Asia.

Tata is learnt to have explained to senior executives of the group how this annual event had, over the years, dwelled on areas like enhancing group shareholding and common identity, domestic leadership across companies, world-class products and services.

This year, the theme of the annual ritual was innovation
(emphasis mine) and growth in new areas

Elsewhere the article does say that the Tata group declined to comment. In any case, the industries they have identified are pretty much the industries of the future as agreed by most thinkers/analysts/bloggers today. Would be interesting to see how they go about doing it.

Innovation is now perhaps the single biggest fad every corporate wants a piece of. More and more companies are talking about it.




iTo(l)d you so

Got this from the Business2.0 blog.

Fischer-Price is reportedly going to sell a $78 MP3 player for three-year olds dubbed the iTod. The headphones will have volume restrictions and an iTunes-style store will sell only parent-approved songs.

Of course, that won't stop your tots from taking your iPod and claiming it for themselves. (Or you could just buy them a $69 iPod shuffle—it looks like it's designed for small hands anyway—and load it with kid-friendly songs).

Well, thats what will happen. Toddlers are smart. They will take away your iPod and they will hand you over their iTod (fair exchange that!).

Monday, April 10, 2006

STD booth

While speaking about post industrial platforms, its time to revisit the old STD (thats an abbreviation for Subscriber Trunk Dialling, localese for inter state telephone calls. The old trunk call had to be booked via the exchange, hence this one was subscriber trunk dialling) booth in India. These were central points of connection at bus stations and railway stations with people who, at the point of departure or arrival contacted their near and dear ones. And these places had booths which were not exactly angels. Jumpy meters, "no change", cross connections, broken phones were the rule than the exception at these places - in short most of these were the epitome of customer unfriendliness.

A recent visit to Bangalores central bus station affirmed something I had observed at a recent visit to a railway station. The number of people at STD booths is dwindling and how. This booth was small, as small as a handkerchief and he had 6-8 phones in this space, one next to another, without any cabin or anything. (Note to myself: Please take pictures of such places so you dont struggle to get the point across). There was a time when to get such STD booths in prime locations people would go armed with letters of "recommendation" from MLAs and the like. Today its not a great business to be in.

In their heyday (just a few years back), at such a booth, there would be people screaming and shouting into each phone (Imagine 6-8 lines next to each other), creating their own cross connections (and thereby increasing their talk time - cant hear you, can you repeat, theres a lot of disturbance - you get the picture). At that time he was king, you couldnt complain, take it or leave it. Well, the latter has happened.

Today he sits there waving off the mosquito which visits him and not for the phone call. A symbolic cobweb at this STD booth represents the gap between the old telecom and the new telecom web across the country.

Sunday, April 09, 2006

Sustainable energy and living

Sweden, has proclaimed that it will be off oil by about 2050, which is an audacious goal in itself. Sustainable energy and living is slowly becoming a much talked about theme globally. When will India move away from oil onto renewable energy? The movement away from oil has economic, environmental and significant political ramifications as well.

In India, we have been small strides and a few noises too, starting right at the top. We have run trials on bio-diesel trains (5% to start with), some Mercedes cars too. It was encouraging to see a few solar heaters and windmills in Tirupati. The Reva keeps getting better and can get better. Delhis buses run on CNG, as do the majority of autos and taxis in Bombay with some encouragement.

Wind power is something we have been exploring for the past few years. Gujarat has taken the lead in tapping windpower. TN, AP, Maharashtra are also there. I have seen windfarms in the Konkan in the 80s and in a few other parts and wind power is definitely on an upswing. Heres an excerpt from Suzlon's (6th largest in the world) website:

Pioneers of the concept of large wind parks in Asia, Suzlon has successfully established a host of large wind parks across the country, including Asia's largest - the 200 MW Vankusavade wind park.

But the big thing we need to do in a nation of abundant heat is to tap solar power. Like wind power, solar power too is moving ahead, but both these are yet, no more than a trickle in our energy hungry country. Tata BP Solar has a list of projects up at its website. (Its nice to see Infosys, IIMB among others on this list)

India is a nation that really should have led the world in sustainable living. The way our villages live is by itself a great model of sustainable living. Many houses in the olden days had their own pond, in any case the village had its own pond that took care of water levels. By having forests demarcated as sacred forests, we saw to it that biodiversity was taken care of. Indeed, the concept of a "kaavu", saw a demarcated space in almost every home that was a local micro biosphere. But as urban living became a trend, we moved away from wells, step wells and into borewells and piped water. The sloped roofs of yore became concrete structures and the cowdung front porch became a concrete path. But the ethos of sustainable living still lives on in the heart of most of us even today.

We may not like the lines of clothes hung out to dry from our balconies, but in reality thats the best thing to do, use the energy of the sun to dry the clothes rather than use a power hungry dryer. We may not throw out things (this is rapidly changing though), until we have recycled the last element of usability from it. After all, the coconut tree -kalp vriksh- (called so, because from the coconut tree no part goes waste, every part is used) is our model.

There is no better time than now to take this forward.

Friday, April 07, 2006

Haldirams, part deux

Haldirams, those ubiquitous farsan sellers have impressed me. This is perhaps my second exclusive post on them, having written about them in a few other contexts. Farsan in India essentially stands for fried snacks - for lack of a better word. Farsan, till Haldirams came into the picture was a non branded market. There were a few players who were branded, but their branding was atbest restricted to word of mouth, a few strategic billboards, strategic outlets and that too to a city at the most. A lot like the way sweet dealers are locally branded. So if you go to Hyderabad, Pulla Reddy comes to mind. Grand sweets comes to mind in Chennai and so on.

While some of the sweet dealers have taken small steps towards expanding their marketshare, Haldirams, has broken out of this local branding rut and how. Haldirams, has, over the years, with its colourful packaging, premium positioning, consistent quality and taste and a variety of sizes and flavours made itself synonymous with quality farsan. There arent too many places where you dont see Haldirams. Haldirams, (my personal experience) is ok on quality, not great, but far better and reliable than any other local brand.

More and more unbranded categories are slowly being branded as companies discover more money in serving Indians anything in a packet that they used to make in their homes once upon a time.

Thursday, April 06, 2006

Grassroots Banking and our banks

In a piece with some extensive analysis, R Vaidyanathan (prof at IIMB) writes in The Hindu Businessline about how our banks have effectively ignored the unorganized sector despite proclamations to the contrary.

The spirit of grassroots entrepreneurship, which is the basis of the country's growth, must not be snuffed out by software solutions that ignore human judgment, and half-baked policies formulated by the metropolitan elite who know more of Wall Street than our own Ranganathan Streets, Brigade Roads.

Sometime back, I had mused about how even as mobile phone service providers are going for micro recharges our banks have steadfastly refused to entertain zero balance or no frills accounts (this though, has changed, banks now do offer zero balance and no frills account).

Nagamma has been a flower vendor for more than 20 years in my neighbourhood in Bangalore. She has joined several informal `chits' at various times to save some money and generate loans. But many a time the persons running the `chit' have fled with the collections.

As a finance professor, I thought, I should do some practical finance and advised her to open an account with a commercial bank for saving her hard earned money and perhaps use that to get a loan some time later. The branch manager, a pleasant woman, has known the flower vendor for many years. But alas not the Core Banking Solutions (CBS) with its central server located in Davos or Basel. It will just not recognise Nagamma. The branch manager quite helplessly pointed out that the system decided about accepting new customers under the `Know Your Customer' (KYC) model.


The funny is thing is that if a bank lent a few thousands to a (few hundred) flower vendor(s) it will still lose far less than if it lent a few crores to a single errant broker or a builder who has all the documentation thats needed in the system.

So it is not enough that the manager knows the customer. The `system' should also recognise her using the Multi-Factor Discriminant Model of Non-linear Credit Rating. Nagamma was asked photos, proof of address, PAN number, proof of date of birth, references and also given exotic choices of using debit card and net based banking. It is sad that banks have moved away from the community-based recognition of new customers and particularly the small entrepreneurial class.

Read the full piece for more.

SBI strike

SBI, the behemoth of Indias banking sector, awoke recently and has made a few agile moves to consolidate its position as the big daddy of them all.

The ad campaign did remove some of the perception of the fuddy duddy image around public sector banks (we work 9 to 5 only, there are no online services, please fill 3 forms and get three referrals in triplicate for withdrawing your money types).

This strike has got back some of the images associated with SBI and its fuddy duddy image. Read the Business-standard piece for an incisive analysis of the strike and why their demands are untenable.

SBI needs much more than ad campaigns if it is to retain its place. Because of its size, it will be a while before it is overtaken, but its mindshare will steadily reduce in favour of the private entrants.

Where does the next idea come from?

Businesspundit speaks about how he finds ideas to blog about.

I keep a text file on my desktop with a list of several dozen ideas at any given time that I want to blog about. New bloggers, or people that don't blog, always ask me where I find so much stuff to write about. My answer is that to me, the world is just a fascinating place. But what can you do if you don't think that way?

I keep noting my ideas onto my cellphone or on a text pad or in my "Idea book". From there it stays as a draft on my blogger. After that at some point it becomes a post. I like the sentence above "the world is just a fascinating place".

Wednesday, April 05, 2006

The Indian way

A good piece by Anand Kurian in Business Standard, which is an excerpt from a keynote address he made recently at the Mudra Institute of Communications, Ahmedabad.

The Indian has always been an ingenious, inspired creature, almost cunning in making do with his scarce resources.

He goes on to talk about a problem that they tried to resolve for creating a natural lift off of dirt from dirty cloth in an advertisement.

...So we applied our nice, scheming Indian brains to the problem — we ground pieces of thermocol, painted them the colour of dirt and pasted the pieces on the cloth. We dipped it in water, the water gradually loosened the paste and voila, we had a lovely, “real” lift-off!

So some clever adfilm-wallahs in Mumbai had gone one step better than a giant multinational, right? Well, right and wrong! Because the multinational won in the last round (which, I am afraid, is what finally matters).

They took our method, put it down in their “Book of Learnings” and now, if they do a lift-off in Beirut or Borneo or Beijing (or anywhere in the world, in their far-flung empire), they know precisely how to knock the problem!

Which illustrates my point — the Indian way is ingenious but the multinational works in its well-oiled, organised way, records everything, plans patiently for the long-term and therefore, it must win in the end.

Does this reflect national character, does this hold good even in other aspects of Indian life apart from advertising?

He goes on to compare our ancient medicine and says, how there too, despite centuries of experience/expertise, documentation is woefully inadequate. Well, it is there, but not voluminous and in todays context, very few if any can read it.

Our Indian schools of medicine have evolved over thousands of years; we have observed the human body, studied it through centuries, examined it in motion and at rest, monitored it through various seasons, and at various times of the day.

Yet there is a woeful lack of verifiable data that it has provided. A doctor friend once commented when a Western pharmaceutical giant experiments with a couple of mice for three months, that test generates a mountain of facts, figures, statistics and records. Thousands of years of “have given Indian practitioners invaluable insights into the human body — but the oral tradition has meant that there is precious little verifiable data.

Of course, as “creative” people, we must learn to rely on our hearts, our instincts and our gut feel — but if we are to survive and win in today's ruthlessly competitive environment, our heads must travel along on the journey too.

The two styles are not mutually exclusive. In the Hindi film industry, look at Ram Gopal Verma. He is a pioneer, he has experimented with every genre, made each film differently and constantly pushed the audience into accepting radical departures from the formula.

The Indian IT industry has succeed because of the "Ram Gopal Verma" style, as he puts it. Every individual within the multinational Indian IT system (and documentation and processes) is an Indian and it helps the industry succeed like nothing else. Even our roads, cooking most of it relies more on intuition and less on practice and discipline. Our hockey team, cricket team are also of the same moult.

The piece ends it with

The “way of the heart” or the “way of the mind”; the Indian way or the multinational way — perhaps, as you leave this campus to explore the world outside, you will fuse, synthesise, and create a new and better way — your own way... There’s an exciting world out there, full of potential, rich with possibilities.

There is immense opportunity in getting the two together. The Indian IT industry is a good example, our shooters perhaps a second example - theres a lot more we can do if we get discipline into our creative shortcutting genius.

MVNOs

I was reading this post at Emergic on MVNO - Mobile Virtual Network Operators. And very soon found a wikipedia link too. Heres what Wiki says:

A mobile virtual network operator is a company that does not own a licensed frequency spectrum, but resells wireless services under their own brand name, using the network of another mobile phone operator. The first was Virgin Mobile, launched in the United Kingdom in 1999.

Naturally, the question I ask is, is there space for an MVNO in India? For those who think MVNOs is an alien concept, it is almost akin to the private "Travel agents" who dot our shopping landscape. They dont own a single bus or seat, but sell the seats, tours and journeys.

I think theres space for an MVNO here. A someone who can provide roaming, niche services (what - I dont have an answer right away), perhaps industry specific or cluster specific services. The only catch is perhaps in getting technology across CDMA and GSM spectrums - which again may not be a catch.

Super ATM

From Emergic(and NYT). Convenience stores in the US are becoming more than just stores.

Automated teller machines have long been a staple in these stores, but now several major chains are installing kiosks that are able to do a lot more. Way ahead of the curve is 7-Eleven, which is introducing its second wave of custom-made terminals called Vcom's this year. Often referred to as A.T.M.'s on steroids, the more than 1,000 Vcom's dispense cash, sell Verizon services, handle bill payments and let customers send money to other people.

Here we have EasyBill promoted by the Hero group (a group also known for Hero Honda), but thats not an ATM, just lets you pay bills of many services. Then we have bank ATMs which are rapidly becoming more than just ATMs where one can offer charity, pay for mobile recharges. These two services can see a fair amount of integration over the coming few years and no bank has yet exploited this space though banks offer online bill payment services. I think we will see a Super ATM shortly.

Tuesday, April 04, 2006

Meals ready

"Meals Ready" is a familiar board outside many eateries and restaurants (hotels, if you will) in India, especially the Southern part of India. (Note to myself: must remember to take pictures).

The idea of the board was to let potential customers know that meals - typically lunch late in the morning (11ish) till early in the evening (3ish) - or dinner likewise - are ready. A lot of eateries serve snacks during non-meal hours and only meals (no snacks) during meal hours. The word "Meals" is a hangover of the Raj and hardly anybody uses it on a day to day basis, but the word sticks on, in railway lingo and on the boards of these eateries.

For a while, these boards were written in chalk, a la fresh fish, to signify that the board is freshly written. Now of course, there are painted boards, that somebody just picks up and puts it in front of the eatery every morning. If you enquire early enough, chances are, meals wont be ready yet, just that they put the board outside - it has lost its entire meaning.

Phase out in cars

Hindu Businessline reports that some cars may be in the phase out mode.

Maruti Zen, Opel Corsa and perhaps the Hyundai Accent too according to the piece. None of these cars are currently setting the market on fire, though the Accent is doing reasonably well. Zen, of course, is a one time hit in the market that has seen a few rebirths, but now faces declining sales as well as many competing cars from its own parent company's stable.

For a country thats yet to recover from the Ambassadors and Premier Padminis - two cars which are churned out even today in the hope of fooling a few buyers, this is good news. Toyota phased out Qualis, which really was the first car which was doing very well and was phased out. This was unheard of in this part of the world. True, a few companies have pulled out other models but they were never as high selling as the Qualis.

The thematic mutual fund

In a country where the stock market is racing on steroids, can mutual funds be far behind? Hindu Businessline reports on some new themes that have been launched.

A tidal wave of NFOs has hit the market in the last few years, many of them competing products that seem to be merely carrying different tags.

Sahara MF has worked out a fund titled R.E.A.L., an abbreviation that stands for Retail - Emerging And Leaders. Deutsche MF has conceived a scheme - Green India Fund - that will identity companies focused on rural India. ING Vysya MF has fashioned what has been called Core Industries Fund. There are others, each telling a story of its own.

This is but a tip of the iceberg. ABN Amro has a Future leaders fund. Sundaram has launched a fund with a rural focus. There was a recently launched that focussed on the new sectors - like mobile phones, multiplexes - I forget who launched it.

Reminds me of the last boom during 1999-00 when there were funds that tried to capture every pocket of the tech sector. Today most of them languish sub NAV. Where these funds will go, we will know in a years time when the markets have cooled off.

Monday, April 03, 2006

Touts, rip offs, and other practices

On a recent visit to Tirupati, I observed how so many of the basics of our tourism/pilgrimage/heritage industry is still so wrong. It exists right from the start of your journey. To take an auto to the place where you board the bus at night, you have to haggle (Bombay is perhaps the only exception). (When you return early in the morning, the auto guy starts off with a fare thats almost as expensive as your entire bus fare.)

The moment you reach the bus station or even Tirupati (or any other place), there are people who are selling stuff for more than their MRP. Sometimes you win in the argument, sometimes you dont, but point is everybody sells everything for atleast a rupee more than the MRP. Why?

Not just private even the government sometimes gets into the act. APSRTC has one of these luxury buses (luxury bus sir - better than express - more on this nomenclature some other time). The bus is an eyesore, a local bus painted with swirls of various colours and blue upholstered seats inside with enough leg room for a midget. The seats dont even recline. It is an absolute rip off. APSRTC for some strange reason does not allow any other RTC other than its own buses to Tirumala, the top of the mountain. And, the buses that APRSTC runs are as old as the hills. Thats perhaps a separate rant for some other day.

The ordeal does not end there. Most restaurants serve pathetic food. There is no guarantee that the food will be good at any place. Tirupati that way is far better than Guruvayoor which I visited some months back. These two places are perhaps the best; I shudder to think how it will be in other places.

And then there the touts...

There was a good exchange of comments at my last post on tourism in India, and how it has to go beyond glossy ad campaigns and get the basics right. There was a comment exchange between Markus and Steve Portigal. In that, one of the points that came across was that theres a lot of things unsaid when touring in India and any of these unsaid things might lead to somebody asking you money. Simply put, you get ripped off for nothing. People ask you money, tips for nothing etc. And this hurts. Each bad experience takes the experience further into a vicious circle.

A lot of this nonsense is not cleaned up simply because they are "jobs for local youth", but in reality thats just an excuse to not clean up this mess.

Sunday, April 02, 2006

Gaming, serious? Really?

Well, heres this piece in Business standard that seems to think so or atleast wants us to believe so.

Xbox is pretty similar to Playstation and offers more or less the same technical specifications. Though officially not available in India, it has still created quite a stir among gamers in the country.

And it is still big, eh?

PS 2 has sold about 10,000 units in the country so far and is expecting to see an upward swing when PS 3 is officially launched. PS 3 is said to be one of the most awaited gizmos and should be launched in November 2006.

The sound of big. Ten thousand units. Check out the console wars section of wikipedia for some dope on whats big.

Gaming is niche, niche and niche. It is not mainstream, not yet. In a country where PC penetration is yet to be "big", I fail to see how gaming can be big. One thing that does have potential is mobile gaming and here too, numbers are low, as Rashmi rightly observed.

Business standard on Real estate

A well written piece in BS by TN Ninan.

Two issues should get attention. First, it is natural for house prices to climb when the economy is doing well, incomes are rising and interest rates are low. All those factors encourage investment in housing, so demand increases and there is nothing wrong with that. The issue that should get attention is the supply side: What are we doing to ensure that supply grows with demand, so that prices stay reasonable? The answer is: Precious little.

Real estate is a tricky business, most politicians are either builders themselves or hand in glove with builders. Will they do anything to bring down the prices - not when they are laughing their way to the bank. Lakes are encroached upon, government land is encroached upon, quitely regularized and sold off to unsuspecting buyers.

The second issue is the negative impact of high real estate prices. They lock the majority out of the housing market, and make more distant the dream of owning a home—in a country where the majority in our cities are not home-owners, and the majority of home-owners crowd their families into one- or two-room apartments.

And then again who wants to build cheap houses when there's money in expensive ones.

What makes the picture move from “unfair” to “grotesque” is the fact that exceptionally high real estate prices exist with poor civic infrastructure and services (and this is the third issue).

Absolutely spot on.

A topic touched upon in this blog, here, here and here.