MIBytes December 2012


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MIBytes December 2012

  1. 1. Volume 2 , Issue 1 | DECEMBER 2012 IN THIS ISSUE: INFRASTRUCTURE:KEY DRIVER FOR GROWTH…...……..1 IMPACT OF FDI ON RETAIL SECTOR………...……….1 CORPORATE SPEAK …….…………….………...1 BIZ WIZ……………... ……………………...2 QUOTE FOR THE MONTH . ……………………….4 Masters of International Business , Centre for management Studies , JAMIA MILLIA ISLAMIA INFRASTRUCTURE: KEY DRIVER FOR GROWTH Why take example of any country, why follow a similar model and why look towards west. We should believe in our potential and growth prospect. Optimism is the best policy to come out from the dark and I am very optimistic about the growth of Indian economy. Economy and infrastructure is correlated to each other multi dimen- sionally. Growth of any country is very much dependent on the growth of the infrastructure of that country. Development of adequate and quality infrastructure is necessary for economic growth; if not sufficient condition to maintain growth momentum in any economy. So to sustain high growth, India needs to ensure that investment in infrastructure is significantly scaled up. The twelfth five year plan 2013-2017 is projected to double the infra- structure investment to USD 1025 billion which is a clear increase from 7.5%(eleventh plan) of GDP to 9.9% of GDP. Cont….on Page 4 IMPACT OF FDI ON RETAIL SECTOR. CORPORATE SPEAK FDI is the investment in a foreign country through the Mr. Jaideep Rathore acquisition of a local company, the establishment of a COO, new company, opening a branch or by framing a joint venture with a local company. In simple words FDI DIGI World(Videocon). refers to capital inflows from abroad that are invested to enhance the production capacity of the economy. 1.How would you say the journey for you has been as Sales & Market- ing professional since you passed out from FMS 18 years ago? Rationale of FDI in India: FDI can have both positive and negative consequence I passed out from FMS in 1994; I have not just been in consumer durable but also in but generally positive effects outweigh the negatives. telecomm and computers. I worked in Samsung for about 7 years and I have also Governments in developing countries perceive FDI as worked in the International markets. The journey has been quite progressive and a key investment of economic growth Rationale of satisfactory. The markets have changed over the years so has the industry and ac- FDI in India is in following forms: cordingly I have also changed my way of operations, team building, and promoting the brands. Cont….on Page 2 Cont….on Page 3
  2. 2. Page 2 IMPACT OF FDI ON RETAIL SECTOR. Cont…..from Page 1 1.It supplements domestic capital formation. 2.It provides access to the superior technology , superior manage- rial skills and bigger markets. 3.It provides Risk sharing capital financing. 4.It promotes efficiency and productivity through international competition of superior quality products. 5.It can ensure a number of employment opportunities by aiding the setting up of industrial units in various regions of India. 6.FDI apparently helps in outsourcing of knowledge from India especially in the IT sector. Why is FDI engrossed in Retail Sector?? Retailing can be said to be the interface between the producer and individual consumer buying for personal consumption. With a contribution of 14 percent to the national GDP and employing 9 percent of total workforce in the country, the retail sector is defi- nitely one of the pillars of Indian economy. The Indian retail sec- tor is highly fragmented with 94.5% of its business run by the unorganized retailers. The original retail is at a very budding stage. Organized retail trade employees are roughly 5 lakh people whereas the unorganized retail trade employees are 3.95 crore in number. In this context it is inevitable to exploit the unutilized resources from the organized retail sector. India’s retail sector is now taking new initiatives because of its growing peaks. Tradi- tional are making way for new formats such as departmental stores , hyper markets , super markets & specialty stores. India is Arguments Against FDI in Retail: now rushing in second generation reforms aimed at further & Those who are against the FDI is of the view that entry of foreign play- faster integration of Indian economy with world economy. As a ers now will most definitely disrupt the current balance of economy, result of various initiatives taken , India has been rapidly changing resulted billions of small and marginal retailers jobless by closing small from a restricted version to liberal one and FDI is encouraged in slit of opportunities available to them. Back –end procurement is still almost all sectors through automatic routes. remains a big problem. Once the giant foreign retailers have monopoly, they will start exploiting the market and in the long run it’ll not benefit Arguments in favor of FDI in Retail: Indian economy. 1.In short run it has the potential of having 3-4 million of new jobs. Conclusion: 2.Another 4-6 million jobs could be created in logistics , contract India has a tremendous potential to attract FDI at much more dramatic labor , housekeeping and security. level sip if accelerates its reform process. Indian society is passing 3.Expected to help develop logistics, cold chains, and warehouses. through transition phase nearly 25% of our population is in the age 4.Government revenue could get an additional $24-30 billion group of less than 30 years , which is ideal for the population of new age through various taxes. consumers. They are more concerned about preferences and value for 5.Help reduce wastage of vegetables and other perishables and money. So , this is the time to shift gears and accelerate the pace of retail help in taming inflation. development in India. 6.For consumer it could mean savings of 5-10% and farmers may get 10-30% higher remuneration. By— Kavendra Singh Sagar , MIB 2nd Year , JMI BIZ WIZ Q1.In 1872 Julius X started a company with the objective of providing nutritious meals to worker families. Julius X established its present HQ in the German town of Singen in 1897. It later diversified into making soy sauce substi- tutes and meat cubes. Today, in emerging economies, it has a blockbuster product which has no connection with the objective with which the company started. Identify X and you automatically identify the company. (Answer: On Page 4) Question By: Uddipta Pratim Hazarika , MIB 1st Year , JMI
  3. 3. Volume 2 , Issue 1 CORPORATE SPEAK Cont…..from Page 1 I launched the Videocon brand when I came back to India in 2009, launched the complete new look of Videocon that’s the new V. I also launched it into different verticals, into mobile, telecom and services which was the toughest task. It was a challenge for couple of years to change the mindset of the con- sumers from mass brand into some kind of a premium brand. The journey is still not over and I am trying my best to succeed. From last 2 years I am heading a business in retail, our own retail chain called ‘Digiworld’. We started with around 40 stores and now in couple of years we have more than 500 stores. We already have a turnover of 1600 crore, now the challenge for me is to take it to nearly 2500 crore next year. Even the brand is putting emphasis on the retail domain sine the MNCs are also focusing on the brand shop. These stores do not just sell group’s brands but also other brands, we have also got Japanese brands on the products table. You have been always been in the Consumer Durable industry all your career, how do you think the industry has changed over the years with reference to Indian context. Industry has definitely changed a lot; adding on a technology point of view. The business has moved on to panel that is the LCD and LED. In the refrigeration and air conditioning business, some windows have been shifted. Refrigerators have gone from frost free to double frost. Products are gaining excel- lence, as a company we are leveraging on it. People are looking at products which are helpful, useful and for a short duration of time so that they can replace it. Accordingly one has to price the brand of the product-This is the new change in sales and marketing which has been happening. The focus is on R&D as a product is becoming most important, earlier ambassadors could be used but now the product competes in the market and it depends on the capability of the product. Our product is so good that a very strong marketing is not required. You have also worked for International Markets, what different challenges you faced there as com- pared to working for Indian market I initially worked in Korea for couple of years, then in Singapore, and in Europe I worked for nearly 3 years. I have worked abroad for almost half of my career and these markets are not very different from what Indian market is now, but they are more organized as compared to Indian markets. 90% of the business in India has gone to the Mom and Pop stores and only 10% is in the organized sector and I am a part of it. Though India is progressing, there is a big difference in the environment of the mar- "DIGIWorld is committed kets. In the next 5 years, even India would have 40% organized business. to provide the best service Yours is a very demanding and exhausting job. What keeps you motivated to do so well? What is your mantra of success? in the retail sector. From I spend a lot of time in gym to keep myself healthy and get energy from it. My mantra for success has evolving the change in the always been team work. The current team comprises of lot of young people and bright minds from varied backgrounds in order to bring the right mix to the table. existence of the electronic Sir, couple of years back Videocon group underwent a re-branding exercise? Do you think it was retail chain, DIGIWorld necessary? If yes how has it benefitted the Videocon group? The re-branding exercise was done by a firm called ‘Interbrand’ which boasts of branding for many has planned this alteration well established brands like Chanel etc. The exercise was required for reviving the firm’s image in the market which is highly competitive given the presence of MNC players. If we take a look at few In- in logo as well so as to cre- dian firms, they have already died in the market; Videocon has survived the cut throat competition. ate and maintain brand What challenges you see as the COO of Videocon group (Digiworld) after the successful re- branding exercise? proposition with the image. There are challenges which keep on coming every now and then as COO. The biggest challenge has Thus, Digital WOW is all been to change the mindset of consumers about Videocon products being a mass market product to a premium product. The cancelling of 2G licenses has also affected the business. The strategy should be about establishing DW as to let the product speak for itself as well as for the brand. the new identity. The expo- With the festive season around, how have you placed yourself to achieve the sales target of the year and what set of challenges and opportunities you see coming up your way? sition behind DIGIworlds The aim for this season is to be able to provide better inventory and supply services. The stocks and channelization of it has been a challenge for the organization which is being worked logo transformation comes upon and just in time deliveries are being focused upon. from our constant attempt Samsung, LG have made big inroads in the Indian Consumer Durable market and are eyeing a growth of 25% YoY, how do you see Videocon coping up with this challenge? to listen and respond to the Videocon group unlike the rest companies offer a basket of 6 commodities which is a source of great market fluctuation in India opportunity for us. The main focus as mentioned earlier has been to be able to channelize the products in the most efficient manner. The number of retail outlets for Digiworld is targeted to double in couple and overseas. While DIGI- of years. world has completely Sony, Samsung & LG have the promotional budget of 150 crores and they increase it at a rate of 30%, do you see this as the right strategy? With Videocons budget also close to 100 crore, what adapted the new tagline - kind of growth in sales are you expecting and is there a standard to measure its effectiveness? As said Videocon group offers basket of commodities and these figures might be for a single brand but Experience. Live. Believe, not for the entire group. Infact the budgets might be almost double of what has been mentioned. in every sphere of our op- How does a day for Videocon groups CMO look like? Nothing great as such, the day is like that of any other working professional. erating domain, today will What would be your advice to the fresh graduates coming out after doing MIB and how has the mark the beginning of an scenario changed according to you since you passed out as a fresh graduate 18 years back? In the recent times lots of opportunities have come up and there is a huge diversity in the available upheaval for customers of opportunities which fresh graduates can leverage upon. This is in contrast to what it was 18 years CDIT Products" back; the Indian economy was still opening up while in today’s time MNCs have become a usual phe- nomenon. —as said by Mr. Jaideep Rathore on I ask you this last question as we today represent 60 students of MIB who would be passing out next unveiled its new brand identity and year and ready to prove their mettle. Sir, what kind of opportunities should young graduates like us brand repositioning DW. seek at your prestigious organization? (Courtesy : ABP News) There are immense opportunities given the fact that we are almost doubling up with our outlets in couple of years.
  4. 4. CMS , MIB Quote For The Month “Progress is often equal to the difference E-mail: 2006.samik@gmail.com, between mind and mindset .” mohammadfurquan1985@gmail.com -Narayana Murthy Phone: 8285707738, 9716926240 Founder & Ex-Chairman , Infosys. INFRASTRUCTURE: KEY DRIVER FOR GROWTH. Cont…..from Page 1 domestic and international plan funds from the central Besides improving the marginal financial institution and gov- government financed around product of factors of production ernment agencies. 45% of the total investment like land, labor and capital, Government funds have com- in the infrastructure. The development in infrastructure peting demand, such as educa- remaining 55% was divided also helps in improving produc- tion, health and employment between debt financing tivity in the overall economy. generation however here is a (41%) and equity financing Infrastructure investment will limit to the government’s fi- (14%). It is noteworthy that need to increase from about nancing of infrastructure, spe- within the debt financing, EDITOR-IN-CHIEF: 8.3% of GDP in the base year cially in the context of a rule commercial banks alone fi- (2011-12) of the plan to about based fiscal policy framework. nanced around 21% projects 10.7% of the GDP in 2016-17. Between 2007 and 2012, $225 and other 10% was financed SUNAYNA KUMAR by NBFCs. And other source Financing this investment billion was invested by the Assistant Professor. would require larger outlay private sector in infrastructureof financing, such as external from the public sector, but this equivalent to 12% of the GDP c o mme r c i a l bor ro wi n g STUDENT EDITORS: has to be coupled with a more in 2012, much of it through (ECBs), equity, FDI and than proportional rise in private PPPs. Official figure suggest insurance companies finance MOHAMMAD FURQUAN. investment. Further the share of 758 PPP projects are underway less than 10% of the total NAMITA DHAMANI. private investment in infrastruc- or complete, worth $70 billion. infrastructure investment. SAMIK SARKAR. ture will in fact, need to in- Roads, ports and electricity It is a well known fact that crease to 50% in the twelfth projects account for the lions banks primarily leverage on INTERVIEW BY: plan. share. These are contracted short term liabilities and, as RUCHIKA PARMAR. In order to elevate GDP growth both at federal and state level such, their ability to extend rate to 9% +, the manufacturing and often involve multi public long term loans to the infra- sector needs to grow in double bodies. structure sector is limited. To CONCEPT & DESIGN: digit. To achieve this, India Interestingly government is avoid this mismatch, the needs to attract global investors aware of the importance of banking sector should be SAMIK SARKAR. through the creation of the encouraged to raise long term infrastructure and is also striv- world class infrastructure and ing to make it perfect. But re- liabilities earmark especially reduced logistics cost, sup- sults are murky as we have for the infrastructure sector. ported by an enabled policy number of examples where the Another game changer would framework. Development of projects are stopped or they arebe PPP model. PPP projects Answer of BIZ WIZ infrastructure would help coun- merged at the end. Reason for are based on the long term try in two broader ways, first it current scenario is lack of ac- contracts and may involve would help Indian manufactur- countability and cash trap. The delegation of the government ers and second it would help to models which are working in authority, such as that for toll attract foreign players. India are dependent on other collection, besides enabling Infrastructure projects are com- institutions for credit. Govern-private control over monopo- plex, capital intensive and have ment should provide the capital listic services. PPPs are ex- long gestation periods that in- to the players so that they can pected to augment resource volve multiple and often risk to easily complete the projects. availability as well as im- project financiers. Due to its Completion time is other im- prove efficiency of infra- non recourse or limited recourse structure service delivery. portant factor for rise in cost of financing characteristics and the project so execution is moreBetter risk allocation, better scale complexity, infrastructure important, as it would help in incentive to perform, genera- financing requires a complex maintaining the cost. tion of additional revenue and varied mix and contractual and improve public manage- arrangements amongst multiple According to the planning com- ment are some other pros- parties including the project mission, during the first three pects of advantage. sponsors, commercial banks, years of the eleventh five year By— Md. Furquan 2nd Year MIB , JMI. For Previous Editions Pleases Visit : www.jmimibytes.webs.com