IIPM PUBLICATION AND ARTICLE: February 2010

Wednesday, February 24, 2010

company sells power on merchant basis

According to a report by Indiabulls, “the company sells power on merchant basis through short-term PPAs; such agreements command high realisations of around Rs.5–8 per unit.”On a standalone basis (the steel business), while net sales grew by Rs.76.46 billion (a growth of 41.7%), net profits grew by a relatively modest 21.7% yoy to Rs.15.36 billion. This is still far better than what most steel players have faced. Vikrant Gujaral comments on the situation, “We were among the early risers to the deteriorating conditions. However, since JSPL’s product range includes both long and flat products we were well placed to optimize our product mix in consort with changing market realities...” Also, the company relies a lot on the domestic market, where demand has continued to grow irrespective of recession (exports were only 13% of turnover); so they did not need to cut production. The report by Indiabulls further credits the good numbers to the 35.8% yoy increase in the average sales realisation of saleable steel.

Moreover, while a lot of steel companies were looking at horizontal integration as their strategic priority, JSPL has been looking at things differently. Gujaral puts it across thus, “No company in our space can hope to survive without robust backward integration. JSPL has always believed in this and assiduously built dedicated sources for key raw materials (ore, power and coal) in keeping with the integrated steel producer model...” The company has indeed believed in consistent investment, while maintaining a significantly low debt-equity ratio of around 0.8. However, with respect to Q1, 2009-10, the company saw a standalone fall in Net Profit after tax on standalone basis by 25% to Rs.3 billion due to low steel prices. Again, power business is helping them ride the cycle, as consolidated PAT rose by 123% to Rs. 9.88 billion. As steel prices begin their up cycle, the situation should further improve. According to Gujaral, “There are encouraging signs of demand picking up. Prices have increased by about 8-10 per cent in the domestic market and 7 to 8 per cent globally.” However, he admits that the recovery is still some distance away.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!

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Thank heavens for the power trip!

Jindal Steel & Power Ltd. has been able to comfortably manage the recession on the basis of sound strategies and its investments in the power sector, by VIRAT BAHRI

So is globalisation the road to paradise or to perdition? The events that unfolded in the past several months have provided cannon fodder for both points of view. Understandably, the prevailing economic turmoil gives companies that favour protectionism all the more reason to go further into their shells and stay away from everything that’s even remotely ‘global’.

Then there are companies like the Naveen Jindal promoted Indian steel and power behemoth Jindal Steel & Power Ltd. (JSPL), who seem to believe that the recession only strengthens the argument in favour of globalization. They go by the doctrine – nothing ventured, nothing gained. JSPL CEO Vikrant Gujaral, was in fact in Bolivia, heading the negotiations with the Bolivian government for JSPL’s $2.1 billion project proposal with regard to the El Mutun mines in Bolivia (the company plans to also set up an integrated 1.7 MT steel plant, a 6 MT sponge iron and 10 MT iron ore pellet plant), when he had an interaction with Business & Economy for this feature. The company had laid a roadmap for development of the mines and setting up of steel and pellets plants. But they had to face significant regulatory and political hurdles, wherein even Bolivian President Evo Morales had expressed his reservations earlier w.r.t. the project. Then there were also issues of royalty sharing. Finally though, JSPL’s project has been approved and a contract is expected to be signed soon. The reward for JSPL would be in the form of access to 20 billion tonnes of iron ore reserves, which would make it one of the largest players in the world.

As we mentioned earlier (refer the story on NMDC), iron ore is a thorny issue for steel players globally. In fact, most steel players were virtually sandwiched in FY 2008-09 by the double whammy of rising raw material prices on one hand and declining demand on the other. Iron ore and coking coal prices seemed to be defying recession like nobody’s business. Moreover, major markets, particularly US and Europe crashed w.r.t. demand. In this murky environment, JSPL’s numbers for FY 2008-09 look quite insane. The company posted a rise in net sales (consolidated) by 96.7% yoy to Rs.108.4 billion and the net profit jumped by 140.6% yoy to Rs.30.1 billion. It is not that the company was not impacted.

These colossal numbers can be credited, to a large part, on their power business. Jindal Power’s 1000 MW merchant power plant became operational during the year, and contributed significantly to the topline and bottomline.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-

The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!

Tuesday, February 16, 2010

NDDB has taken India’s milk production a long way forward with its cooperative model

…with a course correction! NDDB has taken India’s milk production a long way forward with its cooperative model. Now it has become imperative to turn that model on its head, by Virat Bahri

“There’s nothing really special about either the bulls or the farmers. Then how is it that the farmers of the Kaira District Co-operative Milk Producers’ Union in Anand, Gujarat are doing so well?”

The year was 1964. And these were the exact queries that went through the mind of the then PM Lal Bahadur Shastri, also hailed as one of India’s most diligent & enterprising prime ministers. He had been invited by the aforementioned union (which we know today by the brand name Amul) to set up a cattle feed plant. As he got a better understanding of the cooperative model being followed, and being the visionary that he was, Shastri realised its potential. He therefore asked the GM of the cooperative, Dr. Verghese Kurien to set up a board (of which Dr. Kurien would be Chairman), under the government, whose mandate would be to set up ‘Anands’ all across India. And that is why, when we talk about NDDB, it would be unfair to talk just about one Anand; the township that NDDB helped create actually spans a much larger area across India.

It was truly a daunting task, and required a lifetime of commitment, with success being anything but certain. But these weren’t Dr. Kurien’s concerns. He had only two conditions – one that the board will be set up in Anand and the second that he would not take a single rupee from the government; and that his salary would come from the farmers. It was his way of ensuring that he remained committed to the farmer’s needs. That was how National Dairy Development Board (NDDB) was born.

We often hear about deals that make money. Then there are the deals that lose money. But this was one rare instance of a deal that made history – a revolution that India proudly remembers as Operation Flood.

What was the model about? In Kurien’s words, “Combine the power of farmers, production, processing and marketing and put it in the hands of the farmers. They employ professionals to manage the business – professionals who are responsive to their needs.”

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-

The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!

Monday, February 15, 2010

Lion city lessons for us...

Singapore is a microcosm of what India and China can do together

For long, Singapore has fascinated the world with its incredible development story. So much so that this small island nation is not just one of the richest countries in the world (4th highest per capita GDP by purchasing power parity) but has also become a role model as to how cities should be professionally managed. It has also vindicated the fact that for prosperity, there can be no substitute to human ingenuity. If that is persistently present, a nation can become affluent even in the absence of natural resources. In terms of Human Development Index too, it has one of the highest rankings (22nd). Yet one of the most important facets of this nation which could have been a living example for the fighting giants, have been completely ignored. Singapore in one sense stands out as a microcosm of the miracle that can happen if India and China come together. While demographically Singapore has a predominant ethnic Chinese population (around 75%), it also has a substantial proportion of people of Indian origin. And not only they have peacefully coexisted for long, both the communities have significant contributions in the economic triumph of the island nation.

Time since the ascent of India and China as economic powerhouses of the future, the world has been strife with speculations about the possibility of a potential conflict among these two Asian or rather global giants, in future. Interestingly, in the current spate of global recession ignited by the banking collapse in the US and Europe, Indian and Chinese economy remained relatively steady amidst economic slide among many in the West and Japan. But instead of being euphoric, the D-day theorists are becoming increasingly paranoid. They consider that the competition among the two in increasing their clout in Central Asia and Africa as well as the race for oil reserves in those places can be potential reasons for conflict among these two energy starved nations. Needless to say, without energy the economic wheels in both the countries would come to a standstill. Add to this, ‘the fear of the unknown syndrome’ from which both these nations suffer. Each is getting increasingly paranoid and apprehensive about the objectives of the other, leading to an unprecedented arms race among the two as if both are bracing up for the inevitable. Each gets driven by the stereotype image of the other that the global media feeds. It is ironical that while China and India have almost become the production hubs for all the products and services that the First World nations use, in their own backyard, they seldom allow each to sell products to the other freely.

Yet one wonders what miracle can happen if these two giants or rather two-third of mankind can shed their inhibitions and come together. Not only would it create an economic marvel which would dwarf everything else, it would also make sure that Asia would never need the West ever again. Each has unique abilities which the other can use productively. While the Chinese are extremely meticulous, conformist and perfectionist which are indispensable in quality manufacturing, Indians with their ingenious ‘out of the box thinking habit’ and non-conformist attitude, have made India the hub for service outsourcing and global Research & Development. So while one creates the products of the day, the other services it, while one meticulously manufactures, the other designs for the future. One wonders that if 4.2 million people of Indian and Chinese origin can create the wonder called Singapore, what two-third of mankind residing in India and China can do together. For once, let Singapore show us the way to the possibly remarkable future.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-

The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!

Friday, February 12, 2010

Many precious lives can be saved

While Chidambaram has been extremely successful in galvanising the Union Home Ministry and the paramilitary forces under it into a coherent force and launch the much needed Operation Green Hunt against the brutal CPI (Maoist) which in its present form can be easily compared with the ruthless and dreaded Schutzstaffel or SS of Nazi Party of Hitler’s Germany. However, the decision of Shibu Soren to have a soft approach and insistence on talks would surely spoil all the chances of the forces to track down the Maoist leaders and bring them to justice. The question is what would the US Federal agencies have done, if a governor of any of the fifty states of the US had taken an independent line to go soft on Osama and his men and carried an independent initiative to talk and negotiate with Al Qaeda? To the least, he would surely have been charged of treason against the state. The moot issue here is that if India has to survive this century and beyond, it has to have strong federal laws like the Comprehensive Crime Control Act of 1984 of the US which would put its jurisdiction, if needed, much beyond its territory and also enforce federal laws in matters that were hitherto the exclusive domain of the states and the local police. If the Maoist leaders get safe haven in Jharkhand when chased in Chhattisgarh or Orissa, it can no more be a state's law & order issue and incidentally, the usual pretext of politicians to prevent federal action on their turf. India needs to make its agencies work the way FBI and the US Marshal Service works abroad and inside its territory. Only then, the next mayhem from within or outside will be avoided and many precious lives can be saved.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-

The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!

Thursday, February 11, 2010

Gunning for the Top brass

India’s offer for peace talks has been spurned by ULFA

The government’s offer for peace talks with the separatist United Liberation Front of Asom (ULFA) has been spurned by its leaders. They say that there can be no talks with them in jail. They want the Assam government to release all their leaders from jails, including Arabinda Rajkhowa — arrested recently. But the Union and state governments are not ready to oblige them.

Rather, they have accelerated their efforts to arrest all senior ULFA leaders — creating disarray among their ranks — and then forcing them to sit for talks. However, there is one hitch: the ever evasive ‘commander in chief’ of the outfit Paresh Barua continues to control the operations of the ULFA’s armed cadres.

That is what India hopes to put an end to. It has sought help from the Myanmarese government in tracking down Barua who is believed to be operating out of somewhere in the Kachin Tracts, an area that, incidentally, is beyond the control of the Myanmar government with rebels, such as the Kachin Independent Army (KIA) holding the area. On the face of it, though, Myanmar has responded positively, putting out an assurance of coming to the aid of the Indian government at a meeting of top officials at Nay Pay Taw.

The Indian side, led by the Union Home Secretary GK Pillai has held detailed discussions with Brigadier General Phone Swe of Myanmar in this regard. In Assam, meanwhile, the reactions are mixed. “We aren’t sure of Barua’s whereabouts. He might be in Myanmar or China,” said Khagen Sharma, Additional DGP and spokesperson of the Assam Police. Adds a source close to the militant outfit: “Chances are that Barua is in China.”

Of the 19 central committee members of the ULFA, 12 are in jail, while three were, as reported by TSI earlier, killed in Bhutan. That leaves, among the top leaders, the outfit’s secretary Anup Chetia currently in Bangladeshi custody and Barua who is underground. With some top leaders behind bars in India, the government hopes to achieve what it has failed to do in the past 31 years: Bring the ULFA to the negotiating table.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-

The Sunday Indian:- B-SCHOOL RANKING SCAMSTERS EXPOSED!

Friday, February 05, 2010

l Unpaid Provident Fund dues of jute mill workers amounted to Rs 5 crore in 1977. They had shot up to more than Rs 200 crore by 2000, when Jyoti Basu handed over the baton to Buddhadeb Bhattacharya (a sobering history lesson for those who think Basu was busy creating a paradise for workers and the proletariat in West Bengal).

l The worst social development indicators and the worst representation in government jobs for Muslims happens to be in the ‘fanatically’ secular West Bengal (Another deliciously ironical historical nugget here. The devoted Marxist Nurul Islam died in police firing in 1976 during a food agitation. His death played a key role in Marxists coming to power in the state in 1977. His family was subsequently abandoned by the comrades and the brothers of Nurul Islam now actively work with Trinamool Congress!).

At least 13 out of the 18 major districts of West Bengal come in the category of the 100 poorest districts of India.

Not a single medical college was set up during the reign of Jyoti Basu.

Police firings on workers, tribals and farmers were routine during the regime. About 20 enquiry commissions were set up. Only one submitted a report whose recommendations were never implemented.

There is much more that can be proffered as evidence. But we know even voluminous tomes on the misdeeds of the regime will not sway the ideologically blinkered who are convinced that dogma is morally superior to facts. Yet, it is very important to set the record straight. There is no doubt that future historians will marvel at the naiveté of the nostalgic outpourings after the death of Basu when they contrast this with his actual track record. But such nostalgic naiveté can prompt India to make the kind of mistakes that Jyoti Basu and his fellow comrades, willfully or unknowingly, committed in their quest for Red glory. Quite simply, in this 21st century world of rapidly changing dynamics, India simply cannot help but renounce, abjure, condemn and castigate the legacy left behind by Basu and his Red warriors.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-

Tuesday, February 02, 2010

Politicians would have been the least expected to have mba qualifications

P. D. Rai, Member of Parliament from Sikkim, agrees that his knowledge helps him to do better planning with the funding he gets for performing activities in his constituency. “MBA is a capability qualification and so it can be said that analysis of issues would be done perhaps differently. An MBA is a professional degree and the attainment of professional outcome and values will certainly impact my own Parliament work and indeed in my political work. The domain is different but the principles of how to manage political issues versus say business issues do not change. In my own Parliamentary constituency, Sikkim, over the last 17 years, I have painstakingly built my political career and have balanced it with my professional work. This has been possible because of my educational qualifications.”

This is not to say that an MBA is essential in politics – in fact, it is not at all. For example, Rahul Gandhi, who formally joined politics in 2004 and has emerged within five years as a key strategist for the party, is not an MBA. But then, he too has worked as a consultant for a few years with management guru Michael Porter’s Monitor Group.

An MBA is becoming a more popular degree among current politicians in the US as well, especially experts in finance or management analysis. The most powerful woman in corporate America, Carly Fiorina, who once headed HP, plans to run for the US senate. She says that government spending is “out of control” and she may be able to make things better. Anne Mulcahy, Chairman Xerox, is a member of Obama’s Transition Economic Advisory Board. But popularity aside, from Manmohan Singh to Obama, it’s quite an accepted fact that qualifications in law, finance and related sciences beat management education hands down when it comes to the political circles. But then again, we have Chidambaram who not many know is an MBA graduate from one of the world’s topmost ivy league institutions, the Harvard Business School. Clearly, maybe one day, we could well have a Prime Minister who’s an MBA.

For Complete I I P M Article, Click on IIPM Article

Source : IIPM Editorial, 2009

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Read these article :-