Wednesday, March 30, 2005

Gurgaon - building up!

On a recent visit to Gurgaon, I observed the great (relatively!) infrastructure (in place and being built) there. If a company wants to open shop in India, they should check out Gurgaon. My alternatives would be New Bombay-Pune or Chennai. Bangalore and Hyderabad would be last on my list for pathetic infrastructure and unstable politics.

Ceteris Paribus, if there were a battle of attracting companies between India and China, the only city that would hold fort for India (as perhaps the last bastion) would be Gurgaon.


Saturday, March 26, 2005

Invisible ads

I was reading Seths post here (one of my favourite bloggers) which led me to the piece here on searchenginewatch, about how research shows that people have attuned themselves to reading webpages in a manner as to ignore the ads placed on it. Those who have watched video cassette recordings of Bollywood movies of the 80s would recall how we were attuned to ignore the crawly ads at the bottom of the screen.

When I was a kid, it took me a long time to realise the existence of the Page 2 of a newspaper. For me, Page 3 was always Page 2. I had tuned myself to not see the left side of page 3 at all since it was filled with letters to the editor, classifieds and the things I was never interested in. It was only when I tried to locate an article which continued on page 3 that I realised that page 3 was actually "my page 2".

Similarly, I rarely read the ads from my own newspaper. I usually notice the ads when, say, a fellow traveller reads it; when it is at a distance. Otherwise, my eyes scan just the news. Even if I read an ad ( scan through an ad rapidly), I read it only if it holds my interest in the first few seconds.

Assuming that my behaviour is not irrational, its worth a thought for those who place ads in crowded spaces in newspapers or webpages.

Friday, March 25, 2005

Real estate boom in India (Bangalore)

There is an unprecedented real estate boom in parts of India. These are the National Capital
region, certain parts of Bombay-New Bombay-Pune and outsourcing Mecca - Bangalore. It is to a great extent, driven by the huge growth of the IT (Information technology) and BPO (Business Process Outsourcing) industry. As the IT industry grew, employees got onsite (literally - at the client site, as opposed to offshore) opportunities. Onsite typically meant being paid in US dollars and thus many employees earned a lot of money.

The demand for plots of land went up with the boom in industries. But with the cost of a 30X40 ft plot plus home going for the equivalent of 5 million rupees in a good residential area, apartments soon came into favour.

The buyers yearned a lifestyle equivalent to the lifestyles abroad, and they had the capacity to pay. This reduced the "matchbox" apartments on offering and has spawned a host of self sufficient complexes. Soft interest rates on home loans, a tax incentive on home loans and the
general growth mode of the economy are other factors driving the real estate boom.

New apartments complexes have recreation facilities, basement parking, security, power back up, good lawns and even swimming pools, all of which are very difficult to get when one goes in for an individual plot.
When every builder began to offer these, the bigger ones began to offer multiplexes, shopping complexes and schools. Not content with differentiation, it is now snob value (at a premium) - Complexes modelled on resorts, European looks, vast open areas, pools lined with Italian marble are the latest fad these days. While this is a good thing, in the recent past, real estate in Bangalore has reached crazy levels of prices.
Even now, a significant percentage of the buyers are genuine ( not speculators) buyers who intend to stay in the apartment they book. But when there is a genuine demand, speculators cant keep off.

Some buyers take advantage of the sprialling prices (driven by the builders to a great extent)
to book say, 3 apartments when they want just 1. As the price increases, they sell off the first one, and then the second effectively getting their third ( and the one which they intend to own) apartment nearly free of cost.

At the recent launch of a highly advertised complex in Bangalore, about 2000 apartments were sold in 2 days flat and there was a congregation of about 6000 people waiting to book apartments. Among those who booked apartments, many just got to choose the floor and pay the booking amount. No real apartment has yet been allotted to them. But they dont care. They will get to own a house in "Superduper complex" which will be finished in 2007-08.

Considering the pathetic infrastructure in Bangalore, it is surprising why the rates are so high. Just outside these posh apartment complexes and layouts (local name for plots sold for buyers to build their own houses), roads are broken, small and there is no sign of any public transport at all.

Is it a bubble or the beginning of one ? Is the bubble on its way to burst or if it will continue to grow for a while is something that will be decided by the growth of the economy.

Thursday, March 24, 2005

Indias innovators

From both and Red herring, this article on Indias innovators.

...Showing it’s good for more than outsourcing, the country moves into new industries, introducing its own star entrepreneurs and winning back expatriates. But it still dances with poverty...

The article talks of innovations in animation (Paprikaas Animation studio), biotech (Biocon), IT training (NIIT).

Sure, we are moving up the value chain from outsourcing low end software jobs, but we better keep moving...Theres competition everywhere esp China. Any slip from our end and we will be history. As I mentioned in this post, we need to move on with better infrastructure and facilities.

Tuesday, March 22, 2005

Amazing fact

Got this amazing fact from Tom Peters weblog, more precisely in this post

"In England more people are employed by Indian restaurants than in steelmaking, coal mining, and ship building combined!"

I am not sure whether thats a wow! or a woe...but its an amazing fact.

Sunday, March 20, 2005

Available in new colours

This post from Seth Godin, reminded me that I should post about something similar I saw in India.
Saw a (a few) ads from a leading two wheeler manufacturer. Their range of scooterettes and motorbikes, both highly renowned for their quality are being sold for, not the technology, not the quality, but for the colours they are available in.
Would you buy a TVS Victor because it is available in (say) orange and black ? Would you buy something you perceive is inferior just because it is available in (say) orange and black ?

Perhaps TVS is wasting good money that can be spent advertising the features of their vehicles ( and there are quite a few - their scotterettes have won design awards and their bike is the first truly Indian designed bike) or into research than to pay highly priced models.

Friday, March 18, 2005

Do it yourself...

Is it a bad thing to do things on your own? Rather, do your own things? Is it bad if you wash your own car, house ? Is it bad to do housework? cook? For a lot of people, this seems to be equivalent to a crime.
Continuing to what Rashmi has said, one of the other things we can learn from America, is to DIY. Do it yourself.
Here, in India, among the noveau riche ( through ESOPs, currency arbitrage, bodyshopping whichever) it is in fashion to say "I have a cook, a driver, a domestic help and perhaps a few PAs as well"We dont iron our own clothes, driver our own cars, cook our own food, clean our own house. We wont drive in our own nails, measure our own curtains.

Toyota Innova...

Took a look at the Toyota "Innova" on a highway. The car looks different, different from anything that we have seen on Indian roads. Its looks resemble a crossover vehicle, with the looks that pay obeisance to a salon, sedan, van and an SUV. But it does not fit in the stereotype of any single one of the "types". From initial reports, it looks as though there is good demand for the Innova.

Toyotas first offering, with looks that competed with trunk boxes, the Qualis, was a big hit because of its performance. Slowly people moved away from its looks to its real features, performance, much like the Santro did when it was initially launched. Qualis, today, is the mainstay of the cab industry and has left a void in that section.

It must have taken guts to withdraw a hit model (probably a first in India) from the market, considering that Tatas Sumo is still in the market (it was launched before the Qualis) or that the 1950s (or earlier) looking PAL and HM still try (with little success) to sell their outdated Premier Padminis and Ambassadors to this market.

Coming back to the Innova, it offers three row seating and can carry a decent sized family in it. Marutis offering on this platform - the Versa, Mahindras experiment with the Samcor have failed perhaps for the looks of the vehicles which had mini bus style looks. But it does look like the Innova can pull this one off. Unconventional, yet stylish looks with Toyota reliability and performance seem to be a great combination.

Tuesday, March 15, 2005

Indias budget airline markets flying...

Air Deccan is Indias first budget airline. Why is this a big thing? Deccan airways is not very big, not yet, but it has got noticed.

India had been dominated for a while by the state owned carriers (Indian Airlines and its subsidiary Alliance air) in airlines until this sector was opened up in the 90s. In the initial euphoria there was an East West Airlines, a Modi Luft, a Damania, NEPC and a few other small players all of which turned belly up at some point in time.

The second wave saw the emergence, from the ashes of these airlines, two carriers, Jet Airways and Air Sahara and each of these alongwith the Indian Airlines and Alliance air have their own set of customers today. They have, recently, started or are in the process of flying to foreign locations. Things were set for a dogfight in the Indian skies even as each of these above airlines fought on the same turf.

Air Deccan was launched as Indias first budget airline. Air Deccan is a unit of Deccan Aviation Private Limited, India's largest private heli-charter company. And instead of targetting the regular metropolitian cities fliers (For example, the Bombay Delhi airline route has a flight almost every 45 minutes) it targetted the second rung cities which the regular airlines have tried their best to avoid.

Air Deccan has minimal flight pursers/Air hostesses on board. It opened its seats/flights for inflight advertising and its planes are nearly flying bill boards. Snacks are not served on board, those who want some have to pay for it. There are no online auctions or periodicals to read. It also positioned its fares just a little over the Airconditioned class on railways, pretty much the only other mode of travel. Road travel in India is not as comfortable as the railways and driving can get very stressful on roads, where traffic can flow in any direction.Average speeds of both roads and railways are quite low.

Besides betting on the non metro traveller, Deccan also launched a super low fare of 500 bucks for select seats if booked sufficiently in advance. 500 bucks (The undiscounted fare via regular airlines is about 6000 rupees) for a Bangalore Delhi flight, translated into dollar terms is about 12 dollars for a distance that is the roughly the equivalent of the distance between Boston and Chicago. Needless to say, the tickets were snapped up in no time. With its slogan of "Simplifly", Deccan has simplified the business of flying.

How to change the mindset of people bought up on socialist moorings where being rich was a crime and where flying was done by just the rich? I have written here, here and here about the effects of online buying in general in India and about the innovative marketing practices of Deccan Airways in India.

Deccan has a good (not great) online booking application, but India has few people with reliable and fast connection online other than those in the tech industry. That leaves a huge segment to be tapped. Deccan has tried mobile ticketing shops, tied up with Petrol bunk owners, mobile phones (whose ownership significantly exceeds those with a computer and a net connection) and billboards at some fairly pedestrian locations.

It may not be that easy to break the socialist mindset and move it to something as radical as, people buying tickets as easily as a kilo of potatoes or a litre of petrol. "Honey, I bought a return ticket to Bombay while I filled petrol in our bike" may be a while away, but by making the airline aware and accessible to a vast segment of potential travellers, Deccan Airways may lure more people to the skies.

A lot has been written about innovative marketing practices in India by cellphone providers (with among the lowest cost of services in the world they still make profits). Windows is launching a stripped down version of its software. Nokia came out with its "Made for India" handset that sells for some 3000 bucks (80 dollars or so). Deccan still has some way to go before it gets its punctuality and service to the levels of the other carriers, but it has rewritten the rules of the market for the time being.

Competition on the budget airline front in India is hotting up with a host of airlines slated to take to the air in the coming months.

Friday, March 11, 2005

Deccan again...

Business Standard reports in this piece that Deccan airways is now selling at HPCL petrol bunks.

...HPCL has offered the space to the airline as part of the company’s sales promotion exercise for aviation turbine fuel (ATF). It has also approached other airlines with a similar offer.

Air Deccan, on the other hand, views this as a non-traditional ticket distribution mechanism which will be key for its growth as it is now looking at spreading its operations to smaller locations.

The move will help the low cost carrier expand its network considerably as it currently depends, mainly on internet and call centre based ticket sales...

I am not a great fan of the way the airline runs its show ( there are complaints of delays etc.), but their ideas of bringing new members to the fold of flyers continues to leave me impressed.

Thursday, March 10, 2005

Online mania

Deccan airways launched a new service from Bangalore to Delhi with super discounted fares of 500 rupees. (This is lower than the railway cost). The discounced tickets were snapped up in half an hour.

Of late, says my dad, the queue for railway bookings seems to gone down a bit. He was able to get a ticket in 20 minutes flat. Ever since Indian railways has launched service, it has quickly become the largest "e-commerce transactor" in India.

In a place like India with long queues all over the place, e-commerce - a late starter (including sms and net transactions), has quickly scaled up to let thousands of people access information quickly.

If only someone got the bureaucracy (RTO, Registrar office, Taxes) online with probably the PAN No (or something similar) as a login, it may well be a beginning to break the 'baburaj'

Thursday, March 03, 2005

Electricity Bill & Bangalore - China

BESCOM, Bangalores electric supply company has a fantastic system. If one pays the bill of one sub division ( their smallest unit of Bangalore after the meters) in another sub division, it will not be credited to your account.

So, why does the other sub division accept it ? Nobody knows. So much for the "silicon valley of India", "most wired city in India".

People who coin such epithets probably never ever in their life have taken the public transport in this city, or paid their electricity bill themselves or tried dealing with the police or any other government face. I wish companies move away from Bangalore to other cities which offer their citizens more - I can think of Dalian for one. The Dalian website takes a while to load, but when it does is pretty good.

This should spur Bangalore to pull up its socks or in the time that it took for the government to decide on a metro or an airport ( 9 long years), Dalian might well kayo Bangalore. Lots of Indian technology professionals are already in China taking it to the inflexion point that will spur growth. Infosys, Wipro, TCS are already there. Someday they might relocate entirely.

Tuesday, March 01, 2005

India budget - Withdrawal Tax

The Indian budget was presented yesterday and it had a curious proposal within it.
A new tax, withdrawal tax was announced. This tax is a tax of 0.1% (Rs 10) tax on cash withdrawals exceeding Rs 10,000 a day.

It is even touted as an anti-tax evasion measure. The black or parallel economy in India is estimated to equal the size of the white or legal economy in India. The black economy comprises, among other things, of semi legal cash transactions and unbilled transactions to illegal hawala ( routing of foreign exchange), smuggling etc. These transactions and the cash generated from them are usually in property, as cash itself, jewellery and rarely in banks. Therefore, taxing withdrawals from banks doesnt make sense at all.

On the other hand, with the prevalence of plastic money, people would be tempted to withdraw less and less cash. But will that reduce the dominance of the "black" economy? Probably not by much.

So what is a better solution? A tax on cash deposits into banks might be a better way to start. Plugging the loophole on cash purchases (how?) might also be a way out.