Monday, April 30, 2007

Seth Godin visits the consulate

Indian consulate, obviously - and this is the feedback. Do read the whole thing.

With all the welcome to FDI chants, the least that the government can do is to fix experiences like this. For a first time visitor, this is their "encounter with India."

Many of the chairs are broken, leaving sharp steel platforms on which to crouch. And there aren't enough chairs, broken or not. The signs are confusing, the two clerks are protected by a sheet of glass a full inch thick (which is twice the thickness of a typical bank's) and the little machine that dispenses deli-style tickets is broken.

The first experience is "Broken" in a single word. Amazing impression this conveys, does this not? About the country?

Well Seth, the governmen treats us citizens worse than this. Yes, India has to change and India is changing but the government is the last, and unfortunately, all encompassing, frontier - it resists change and resists changing India. Many other things have changed, especially where the government is not involved. Hope you have a good trip...

Sunday, April 29, 2007

Creating visibility

Tata sky is on a roll in Bangalore. It is busy distributing these kind of displays, where the shop name is superimposed on a TataSky promotional piece. And it is doing this for just any T, D and H.

I spotted one for a bedding house (pictured - where there is some synergy), one tea shop, a furniture shop and then some.

Earlier ITC had used this to circumvent the ban on cigarette advertising. It distributed shop signages with the name "Wills" in the exact size specified by the legislation.

There is of course, nothing that prevents Tatasky from advertising, but this is a smart idea to generate visibility. There are not enough "Tata sky" shops, unlike paan shops and every few hundred metres to have a Tatasky hoarding is not viable, so this works.

Saturday, April 28, 2007

The afterlife of banners

The pics are not of the best quality, all taken through mobile phones.

This one, spotted on a shack nearby advertises for some apartment complex and the last sentence reads "International class flats". Delicious irony.

Here, a set of banners serve both as the shop front and side. "Namastey London" and "Planet M" if I am not mistaken.

This image, (courtesy Ravi) was shot at a multiplex, where such old billboards were being used to create temporary living spaces.

Friday, April 27, 2007

BEST Monthly Pass

BEST - the Mumbai bus service has come out with a monthly pass scheme. This pass allows you travel point to point - you can travel any number of times within the period of expiry. Very similar to the Mumbai suburban railway pass that you have at present. (Bangalore does have such a system - both on a daily basis and a monthly basis - N). Mumbai has never had a real bus pass system except for a brief period in the 80s.

This is a new system BEST is trying; replacing the earlier "tap-when-you-get-in" "tap-when-you-get-out" system - something that works wonderfully well in Singapore. However in India/Mumbai - you will always have most people not tapping in, i.e. free travel. Its good they got rid of that one. (if they had a lengthwise tapping system that tapped you automatically like your in-store thingies on the door that detect stolen items, it might have worked - N)

A few good points about the new pass by BEST - it is a photo-id system, you can travel as much as you want - much like Mumbai suburban railway pass, however the availability is a big issue(or so I think).

While a railway pass is available at just about every station - for buses it is only available at major depots/bus stops. Perhaps they should get the conductors to distribute the passes, once you have a photo-id card? Also why not a uniform pass for both Railways and Buses?

Just as an aside, Maharashtra conductors continue to use legacy ticketing systems with various monetary denominations i.e increasing the actual load carried by the conductor and his workload. Kerala (believe AP and Karnataka) conductors in state transport buses have moved to electronic ticketing machines though they are all on the long distance buses. Perhaps with some adjustment, Mumbai conductors can use them. How about moving to conductor less buses with fixed denomination routes - 10 rupee routes where passengers drop the money into a box near the driver - as in Bangalore?

Bikes go matte

Theres a new trend with the Indian biking arena. Bikes are losing their bling. From a phase when we had retina scorching colours and stainless steel trimmings, the newer bikes, notably the Apache, CBZ Extreme seem to be muted and matte.

The Apache for example has matte finished wheel spokes and a not so metallic red or black trim. The CBZ Xtreme too has muted trims. Makes them look good, I must say.

Wednesday, April 25, 2007

Which world cup now?

Now that advertising opportunities have been lost on this world cup, advertisers have come up with the ultimate dream. That we will win the next and the one after that. And there are no familiar cricketers (obviously, if anyone of todays players is still playing we are gone!).

So, you have a Pepsi Gold (whatever that is) commercial that begins with a bunch of kids walking into a tailors shop. They ask for oversize Indian cricket team uniforms (the actual picturisation is quite hilarious and nice) and the tailor asks "When do you want it?"
Pat comes the answer, "4 years later". "We will get the next world cup." (All in Hindi)

And advertisers, as usual, are thinking along the same lines.
Surf excel has this ad, picturised above. This one has our dreams fixated on 2015 -thats another 8 years to run this ad and without paying a single cricketer too.

Lessons in unreason

Pratap Bhanu Mehta, (yes, once member of the Knowledge Commission), writes to the IIMs. Very poignant.

There was also the odour of double standard in what you did. When Murli Manohar Joshi had, in the name of justice, sought to regulate fees, cries of autonomy immediately went up. When Arjun Singh passes an order that is at least as serious, if not more so, there is quiet acceptance. For those of us who have despaired of our successive ministers of education, this double standard is glaring. Do we now judge institutional proprieties by the yardstick of our ideological allegiances? Whatever may have been your reasons, the effect of your decision will have been to erode the credibility of institutions. The mark of an institution’s greatness, after all, is its ability to rise above the taint of partisanship.

Let me be clear. The issue is not reservations. The cause for concern goes even deeper. The IIMs are, in numerical terms, small institutions. But their power to define aspirations is large. In succumbing to the government, in the manner you did, you disempowered all those who are fighting for values you hold dear: institutional propriety, autonomy, and a proper matching of ends and means. One thing the history of institutions teaches us is that autonomy has to be earned, it does not inhere in mere statutes. Your faculty, your boards can leverage the power of their eminence to reform higher education, if they so desire. Those of us interested in, and associated with, India’s higher education already feel considerably diminished by the track record of so many institutions. The day IIMs succumbed was truly a sad day, because we felt even smaller.

Read the whole thing...

Tuesday, April 24, 2007

India Cannot Afford Rural Failure

When you see a title like that, you know what you are going to read about. I wrote this piece, even as I read it in another window. It is brilliant, beyond description.

In foreign media reports India is shining. Even India’s biggest English daily has begun a campaign called India Poised. But India’s leaders know that a deepening crisis facing India’s multitude of farmers threatens to spoil the party in Mumbai and Bangalore. India’s Minister of Finance Palaniappan Chidambaram put agriculture at the center of India’s latest budget.

The article quotes the Finance Minister who in all his wisdom, mentioned: "Everything else can wait, but not agriculture" and showed a red (hint, hint) signal, red (it is just a colour) flag at the same time.

The government’s challenge is to implement policies that promote growth but also provide relief to India’s stressed small-scale farmers, or else the country will have to reckon with much more than a missed growth target.

And then the article puts the cart before the horse, the effect before the cause and very nearly blames the medicine for the illness.

Large-scale industrial agribusiness will not work in India. Why? Have you heard of e-choupal? or contract farming?
Indian farmers have little hope of finding employment elsewhere. Have you tried?

Chidambaram admits that his government’s true challenge is not only to come up with the right policies and programs but “to deliver the intended outcomes.”
The success India achieved with its IT-led service and now manufacturing industries made it a poster child for globalization.

The two sentences above are not connected. Both the latter, IT and manufacturing grew thanks to government staying away and not because they framed the right policies. They simply had no policy (yes, there is a tax holiday and all that, but little beyond that).

Microfinance can help (even at an unthinkable 2% a month), but what if the land is arid? or too small as the article itself points out? Is it not important to develop alternatives other than agriculture?

What is stated as the "party" is the medicine. Success in IT, manufacturing and other areas that are now knocking the doors at the second and third tier cities. They will give an opportunity for farmers to work in factories - not necessarily as farmers - which is important. We have to give up our obsession with the "small farmer".

The small farmer is an animal that perhaps deserves to be extinct - we should not keep them alive on artificial respiration - they deserve to be free, and live as another species. Aha, but if they are extinct the remaining farmers would be counted as rich and then they would have to pay taxes, for electricity, give up subsidies, which, as we all know is another story to tell...

The end of CDs and DVDs?

Perhaps it is a long debated thing, but this is my thought process even as I debate if my house needs a "music player". Our music player has a broken CD player, the radio does not have a memory setting (it assumed that electricity in all parts of the world will be 24X7 and that we would never switch it off) when it is turned off. We are contemplating if we will ever buy a "music system" that big - or will it be a small cute thingie like the Samsung K5. Right now our mp3 players and phones serve us pretty well and I guess there are like 3 songs in the entire universe (which we have never heard) that all members of the family will like to hear at the same time.

Is itunes the small beginning of a blockbuster business? A tectonic shift from CDs and DVDs and other storage devices into the "virtual" world of hard drives and flash memory?

So, is it the end of big gargantuan music systems?

Lets talk of synergies

Do companies diversify to reduce risk or diversity just for the sake of it or diversity when they see any opportunity?

The other day I saw Fabindia selling Organic Foods through their stores. Yes they probably have a distribution network in the form of their stores but synergies, hmmm? Also associating Fabindia with organic foods seems a stretch. It is like Arvind deciding to sell snacks from Gujarat just because they are located there.

Is there a synergy between the existing business and the relatively newly business expect that they are probably potential cash cows or that they are sourced in the same region?

So, are cash cows always core?

Do companies think at synergies when they diversify into new businesses?

This used to happen pre 90s when companies basically bought a licence and started work on it, since the possession of a licence meant a "right of way" in that industry. Post that, we have a lot of companies give thought to their synergies and what they might want to diversify into. Now that the new economy emerges, there are opportunities everywhere - how many of these are for trial and how many for keeps?

Many 'synergies' are just about either for milking a cash cow or hoping that somebody buys your cow and gives you cash. Thoughts?

Monday, April 23, 2007

Reliance online trading

Reliance Money, ADAG has stepped into the online trading ring and has had the predictable effect of setting the cat among the pigeons. Their USP is two fold - the concept of prepaid trading cards and rock bottom brokerage.

The current leader here, ICICI charges anywhere between 0.5% to 0.75% as brokerage plus a yearly service charge. They are pretty good, having overcome many teething troubles like a slow server, overloading etc. Their charges are on the higher side though. Service, personally, has not been great. Just passable.

Most of those who use online trading portals expect a better level of service than what is given today. The online portals are far better and reliable than the physical world where the brokers had a field day. (If the market rose, your order miraculously never got executed and if it fell, it always went through - and then some).

Will Reliance ADAG change the game here? Unlike low cost airlines or low cost phones, the low cost online trading may not necessarily attract low end customers. First, a high level of awareness is needed here also, access to physical infrastructure like the internet - which is never free is also required. The synergy is there, if Reliance Infocomm, another ADAG venture can get some of the bandwidth (literally) and facilities (like their Webworlds, phones) onto this bandwagon. They are the only persons who are neither a bank or a trading firm (true, they are into mutual funds etc.).

There are those who feel that Reliance is messing the industry - I think it is a disruptive model and such models are needed if the industry has to move to the next level. Lets wait and watch.

Saturday, April 21, 2007

Indian IT - not doing much? Think again

There has been a lot of discussion on how the IT industry should do more for India. There are some out of touch views and some sane views. It is nothing short of a miracle that we are talking about an industry today, which was almost not an industry. The IT industry would not have happened had it not been for the foresight of some of those who laid the foundation of what is today a billion dollar industry.

My comparison here stems from the supply of Indian "skilled" labour supply to the Middle East in parallel to the bodyshopper mode, which was the way the IT industry began.

The Gulf boom was a labour market. Companies would operate through recruiters in India - some good, many shady - and work in supplying people to the foreign companies. Here, the companies had no interest in their people succeeding and to a certain extent, the people also couldn't care less beyond the money. Result, engineers were sent as plumbers, drivers - the agent would get his cut on a per person basis if the person served his contract. Almost all assignments were on contract - nothing like being a permanent employee with strong legalities if someone broke the contract. Some came back, some stayed, but nobody could protest or do anything, since it was a choice that most of them made. At the lower end, this has resulted in exploitation - but thats a different story.

The so called IT industry in India started exactly the same way as the demand for labour in the Middle East. It was not even an industry when it began. Companies, fly by night agents, would hire people and send them out on lucrative assignments to the US, UK or even the Middle East. They would send out people, "trained" (usually for not more than a few days and the rest of it would be picked up by the person themselves. Many people were trained in no more than house or a second hand desktop. The luckier ones found themselves going through organized training shops like NIIT etc. If it continued in this way, it would have been another story of missed opportunities, like the Gulf boom.

Fortunately, some companies, notably TCS, Infosys saw a way to make this work. By creating a company organizing people, skills, training they were able to create a lucrative business model out of IT outsourcing. Even then, when they began, most of these companies worked on a staff augmentation mode. Over time, they realized, very smartly, that their margins on a per person basis is much lower than their margin on a per project or assignment. Using the time difference to our advantage, using people here, using onsite coordinators they created a skillset, a repository of skills of their employees which they used to bid for projects. Try talking to an Indian IT biggie for "staff augmentation" today and you will be shooed away by the security guard at the gate itself. They bid for projects and usually are not interested in tidbits unless they see an opportunity beyond that.

The Gulf boom, could have led to Indian companies becoming infrastructure giants, could have led to the creation of atleast one good infrastructure consulting company or an architecture firm or an engineering firm or an accounting firm or if not anything else, a good human resource placement bureau. Did it result in anything? It did not.

The IT industry, likewise, could have become your friendly neighbourhood recruiting agent, sending people out of the country to become coders. Yet it grew from nothing. From unfriendly laws, difficult regulations to become Indians defining norm, otherwise we would still be known only for elephants and (paper) tigers.

Those who talk of or question social contribution of the IT industry might do well to remember this - and this, without the multiplier effect of the industry in India and the economy. Where we are today is a matter of pride, reached overcoming a fair share of obstacles. And we all know the multiplier effect of the gulf boom in India - except for large houses for those who went there, we have precious little to show.

(Cross posted at The Indian Economy Blog)

Wednesday, April 18, 2007

Multiplex multiplier

As I went through Rediffs box office standings, a thought came to my head.

If there is a hit movie running, for which tickets are not available or demand is greater than supply, does some of the demand spillover in favour of the other duds on view? My guess is that it does and if there is a hit movie running, some of the demand does go over to the other screens in the multiplex. So, does it pay to have a movie with high collections running in your multiplex, even if it is for just a couple of shows? The basis of it is my behaviour and the running conversations that happen while standing in the ticket queue.

This is an analysis that is doable and if true, so then producers can decide when to release a movie - it may be wise to get movies to get released on the same day rather than stagger it?

Tuesday, April 17, 2007

300, Tanaji and Disney

One of the rare times this blog talks about movies. 300 was a movie I immensely enjoyed, especially the treatment of the subject. Now Disney seems to have big plans for/in India.

I hope we get to see Indian stories too, particularly, a movie on Tanaji Malusare and his assault on Kondana (Sinhagad), animated or otherwise.

Skilled workers in demand

Skilled workers are going to be in demand unless everything in the world is automated, which is not going to happen anytime soon. This article from the Hindu Businessline focuses on the construction trade, though it is true for all industries.

Truck drivers, masons, carpenters, Teachers, nurses, doctors, accountants, even IT (you may not like the lumping, but they are all skilled workers) - it is true everywhere. Demographically, as the first world goes through a transition, there are bound to be shortfalls in skilled labour - especially as they move up the affluence curve, not too many want to take up manual/semi manual jobs.

But it is in the interest of countries like India that we dont become just a people exporter as we were (still are) to the Middle East. Unless the skills of those people are totalled up and used to create an industry/institution, it is a short term benefit.

If we train teachers, we must have great colleges - so that they hone their skills, so that they can come back. If its carpenters, surely, we must have a company that uses them to craft great furniture? Remember that the IT industry was built like this, there is no reason, we cannot do it in other areas.

Social cost

Global warming is in the air as are a lot of other social issues. The question that I have is, Are social costs reflected in earnings multiples of stock and their valuations?

A recent BBC show on Climate change blamed India's coal fired power plants as one of the reasons for increase in green house gas emissions - one of the prime cause for global warming. Interestingly, if you glance through the 11th Five year Plan of Govt. of India, around 65% of incremental power plants will be using coal to generate power. Yes, the obvious reason being India has a zillion (or thereabouts) tonnes of coal reserves (we are a part of the Gondwanaland mass that formed Australia, Africa and we still haven't discovered our potential mineral wealth).

Using coal to fire power plants has social implications and hence leads me to think that this social cost should be reflected in the earnings multiples. Tata Power and NTPC (to name a few) have bulk of their power plants running in coal, however the PE multiples are very similar to companies producing power using renewable sources of energy. Tata Power quotes in excess of 20x F08 earnings , NTPC around 19x F08 earnings. In India Suzlon - which uses wind as a source of power generation is quoting at 20x F08 earnings (Source: Bloomberg Consensus Estimates, Price as of 16th April 2007) - i.e a multiple similar to that of Tata Power and NTPC -Is this justified? .

Forging industry is another glaring example. Worldwide forging industries are being shut down and bulk of such businesses are moving to India. Bharat Forge is a darling of most fund managers - again quoting at 20x F08 earnings. The industry is known for excess noise pollution which is harmful for employees and hence they are all being shifted to "emerging" markets where environmental concerns are lax.

There are many such companies which have social cost attached

A lot of Fund houses do not invest in Tobacco stocks (due to the harmful effects of Tobacco) - again this does not mean Tobacco stocks trade at a discount to FMCG peers for example.
Maybe the stock markets in India are still at a nascent stage to embrace this concept.

Are such concerns reflected in valuations of stocks elsewhere?

Monday, April 16, 2007

India in the brand

This is a set of thoughts that I have strung together, perhaps I will put it together a little more coherently over some time.

As we are exposed to more and more global products, many products/brands are waking up to smell the coffee. In the face of international competition, is it better to play the game in their own category or take the market to another place? The other place is, India. Brands are in a game of oneupmanship in the race to repackage India. Marketers and firms are discovering that the answer to competition, as Indian philosophy will tell you, is within ourselves. India has always had strong brands, some of which were always niche, some of which were mainstream, but it seems to be only now that companies are waking up to its full potential.

Lays chips or not, Haldirams and Garden are going great guns marketing traditional snacks like Chivda, Farali Chivda, Moong Dal among their other variants. Pepsico is responding in kind by launching Mast Malabar and other local flavours - and not with international flavours.

Soaps and toothpaste are a sea change. Lux, today, has a chocolate variant among other things. But the market is moving in the direction of India with natural oils, face packs - soaps with multani mitti and what not. Medimix (my take - watch out for this new improved brand), Jeeva are some of the "new faces" of soaps. Even if Lux, Lifebuoy, Godrej No 1, Breeze and Nirma are the leading soaps, some of their variants are, distinctly Indian.

Dabur Red has a growing market share ever since it made its staple Dabur Lal tooth powder available in toothpaste form. In the supermarket, you will see a toothpaste by the name of Neem and if you see closely, the toothpaste is marketed not, by some local company, but by Henkel.

Another thing that is happening, is the rise of strong local brands especially in food - like pickles etc. And these are not chalu (fake/unauthentic) brands, they sell in the premium range with USPs such as organic, hand-made, preservative free and so on.

And talking of brands that are about India, how could I miss Fabindia?

The writing was on the wall, when only the "Masala" flavour of Maggi sold well, but now it is even more clear. Unless you are talking to a niche market (like those who only listen to English music -where are they these days), Indian is the flavour to go. So, whats the brouhaha about it. It may not seem remarkable today considering that almost every thing in the supermarket has an Indian flavour or a variant, but think back to a few years ago and you will realize what a transformation it has been.

Sunday, April 15, 2007

Least satisfied?

or most connected? As Rashmi rightly points out, perhaps it is a mix of both.

The thing with IT resumes is that IT people have connectivity right at their desks. The moment they see a new job portal, and they get some free time they just post it. They may not even be looking for a job! Most people post their resumes just for the heck of it: lets see if I get a call.
They post it on every job site and once they get a job, they never take it off. And there are a significant number of "freshers" with a lot of "experience".

So the resume just lies there. How many resumes are active? How many of them have a usable number/mail id on them? Just the number of resumes are a pointless statistic. Least satisfied, perhaps yes- most connected, obviously yes - better choice, more so.

Fabindia now a Harvard Case study says this article in The Hindu Businessline.

From personal experience, yes, this is a strong brand - and as it says here they don't advertise - dont recall seeing their advertisement anywhere. They sell decent stuff and are perhaps singularly responsible for bringing "Indian design" on clothes back into the mainstream on shirts, kurtis and back into fashion on casual Fridays.

Their clothes are not synthetic and they say that their clothes will fade with use since they use natural dyes, yet they sell well. Some may say that what they sell is overpriced - perhaps yes - but if it really benefits artisans, why not? And then again, those who buy them can afford it.

Fabindia has a nice niche market where it constantly innovates. The designs you get to see there are never old, always fresh.

Saturday, April 14, 2007

This is a national highway...

...and heres how we cross the median. Obviously, the riders are to blame, but the road was recently laid and the surface is now upto the level, indeed above, the road - result is what you see. Note the stones in the picture.

The stones are for, painting lanes, clearly visible in the second picture. This is the way we paint lanes on national highways. Note the car trying to take a turn like the scooter pictured above? It just did and I missed taking a picture of it. It is not just cars, an occasional truck, bus also does it and during peak hours. Enjoy.

Our infrastructure sucks and then our sense of rules makes it worse...

Friday, April 13, 2007

A Tale of Two Cities

Welcome to Navi Mumbai - screams a hoarding welcoming you to the satellite city off Mumbai.
However being a part of this township for over 10 years, I can tell you how not to welcome someone to a satellite city.

The first obvious irritant is the toll (you pay the toll even before you see the welcome sign) - every time you zip crawl in and out of Navi-Mumbai you pay 25 INR for a 4 wheeler (it has been increased by 66% over the past 2 years). Toll was supposedly collected for development of Navi-Mumbai - but after almost 2 decades of Navi-Mumbai "development", the toll continues to exist, and the road bridges built over Mumbai are being funded by Navi-Mumbaities. I use the road bridges only when I travel to Mumbai - whereas Mumbaities always use them day in and out(and yes they don't pay a penny if they dont cross to Navi Mumbai in a car). Even local train tickets are at a premium - as always the mantra is development.

The latest gift for this township are the power cuts (I am talking of only scheduled power cuts) . Power cuts have gone up by a whopping 300% over the past one year. Now it stands at a wonderful 4.5 hours a day. Yes Panvel, Khargar and other areas of Maharashtra suffer more than Navi-Mumbaities. Newspapers scream about a proposed one hour power cut in Mumbai and almost everyone ignores what Navi-Mumbai is facing. This despite the fact that MSEB (the power generation company) meets the shortage of Mumbai at the expense of Navi-Mumbai . Navi-Mumbai meets this through inverters, which sadly is a very very short term solution and helps them make a quick buck. Property taxes are higher. Oh Yes, before I forget, petrol is cheaper by one buck because Navi Mumbai has no Octroi - but then I would rather pay that additional buck than go through the other troubles.

Connectivity is the biggest concern, Hongkong airport is built on sea and connectivity to mainland is through high speed trains. Time taken- under half an hour. Malaysia too has a similar airport - connectivity, same as HK. I take almost one hour to travel 30kms from Navi-Mumbai (and I am not talking about the airport.). Navi-Mumbai is supposedly the new destination for the second international airport and there is no talk yet of an express way to link it to the main land. Considering present traffic and road conditions it will take you 2 hours !!!

There are no direct bus services from this satellite township to the mainland either - the buses have to stop at a hundred stops in the city too. Harbour lines (trains that connect Navi-Mumbai and Mumbai) are neglected souls, the train frequency is a heavenly one every 15 minutes (Yes the HK airport express frequency is also one in 15 minutes but you need to travel here to realize the difference). The rake length cannot be extended to reduce the passenger load since the famed CIDCO who supposedly thought the railway platforms were state of the art have built them in such a way that its almost impossible to extend the length of the platform.

Now property supplements in newspapers scream that Panvel is the next gold mine (let them find the electricity to mine it) - the power cuts here are only 5 hours - slated to increase to 6 - thats half of a 12 day. Try reaching Nariman Point (India's business district) and you will spend 2 hours on a good day (Panvel train frequency is on an average one in half an hour !!)

Welcome to Navi Mumbai indeed!!

India needs more such townships (see this vision) i.e more urban areas to develop (so there are more Gurgaons to ease pressure on every Delhi); that was probably the objective of Navi-Mumbai. However nothing seems to have worked. What we need to do is to develop high speed connectivity, ease of commute, so that people don't mind staying away from the Central Business District. i.e develop infrastructure before you develop a township. We did the same mistake in the case of airlines (threw open the sector to privatisation without improving the airports), almost did the same mistake in Telecom (yes its a success but spectrum is still an issue and now expanding sub base possible but that will leave you with more "network busy" messages) and if Tatas small car is a hit, the same thing in roads. All this development of Real estate/townships is without adequate development of Power, water and connectivity to mainlan - the basic necessities. Caveat emptor.

Tuesday, April 10, 2007

Ship building

Some weeks back, I had postulated that the ship building industry in Korea is a model for our IT companies to follow. It now seems that ship building itself is an industry that is slowly making its way to India. Swaminomics column this week has a point of view on the same. Today I saw a small piece in Businessline that talks of a more orders at ABG shipyards. The beginning of a boom?

Water and the real estate fire

The water crisis gets worse by the day, in Bangalore atleast and we are not into summer yet. It is resembling Chennai (prior to the last few years downpour) with water tankers becoming a part of the traffic and plastic "lotas" adding colour to an otherwise uninspiring urban landscape.

Bangalore is a victim of unplanned development - so whats new you may ask - that is the case with all cities in India. It is also a victim of its own success, despite the best attempts of senile politicians to wreak havoc with its infrastructure - companies still flock to Bangalore. So, even as a new government tries, with some success, to put bang into the infrastructure buck, a water crisis is happening. Indeed, I found a water blog.

The Kaveri river is drying up; not the river, but some of the reservoirs that supply to Bangalore, thanks to low rains in catchment areas last year. That is only part of the crisis. Kaveri water itself is supplied only to certain areas of Bangalore, but developers have covered Greater Bangalore and more in concrete from head to toe. That means, dependence on groundwater. Drill borewells ever so deep. There is a regulation in the offing for that too, but by the time it comes, Bangalore will not be drilling for water, but mining. Right now, the search is on for borewells on the outskirts of Bangalore - so that the city gets water - even if it is for washing facades and walls - and most of Bangalore does that. At the risk of making a general statement, Bangalore does not have a great culture of conserving water - many still use the precious resource to throw in front of their yard or wash their porch.

The concrete cover means water never seeps to the ground. Rainwater harvesting is supposed to be mandatory, but I havent seen too many buildings do it. As per a new regulation ETPs are mandatory too, for new apartment complexes, but most of the small builders will somehow sneak out of it.

All this requires space and Bangalore is heaven for building rule violations. Violations are the norm. And its not just big builders, even "poor" "exploited" small plot owners build end to end, no space that can be built over is left. Concrete and marble driveways, concrete basements are built over trees mown down so that beautiful walls are not torn down and beautiful concrete facades are visible.

In any new area, any water source, even groundwater will deplete within 2-3 years. So buildings are taking tankers on lease, borewells on lease, building pipelines from borewells in the hope that the problem will go away. But what they dont realize is that unless consumptions patterns change, rainwater harvesting and usage of non potable water for their lawns and gardens are put in place, the water crisis will not go away. So, what ever new apartments come up, whatever groundwater is left, once that is exhausted will find no buyers.

Thats some cold water poured over the real estate fire...

Monday, April 09, 2007

Probiotic icecream

Amul launched a probiotic ice-cream a few weeks back. Curiosity got the better of me and I tried to figure out what exactly it meant. The pack lists benefits like reducing cholesterol, diet, digestion among other things. If ice-cream could solve all health problems, why not! Taste wise I did not find any difference, though price wise, I did.

Heres what probiotic is, from Wikipedia.

Probiotics are dietary supplements containing potentially beneficial bacteria or yeast, with lactic acid bacteria (LAB) as the most common microbes used. LAB have been used in the food industry for many years, because they are able to convert sugars (including lactose) and other carbohydrates into lactic acid. <...> but acts as a preservative, by lowering the pH and creating fewer opportunities for spoilage organisms to grow.

Sure enough, all those benefits are mentioned in Wikepedia too. Wow! Ice-cream as panacea. Why not?

Sunday, April 08, 2007

Karnataka tourism

You can see these nice signboards on most places in the Karnataka Tourist circuit. They are a nice touch and quite a good thing to spot on a highway when you are trying to reach your destination.

Karnataka tourism is a goldmine waiting to be tapped - the place has the potential of a few Keralas put together.

Saturday, April 07, 2007

Peer to peer lending

This is an idea that will work, in India, once someone manages to pierce the rules associated with doing something like this. My guess is that in India this will fall under either the NBFC or a bank rules, which will make it difficult to enter. (link via Bangalore Tigers)

But, why doesn't a bank, get into this disruptive model themselves?

Time to revisit

A prediction, posted almost two years ago. Lets see how it goes. Heres a review post launch. Now lets wait for the market to decide...

What is it about health insurance?

And its low penetration in India? Health insurance in India beyond the regular Mediclaim or life insurance is low. (Even with them, penetration is low, but thats a different point altogether.) I used to visit this doctor who had his dispensary in a slum colony in Mumbai - I havent seen a better doctor than him yet.

First, our visits to the doctor (and leave the bloggers and self styled rich middle class out of this) is only when patience, denial, self medication, home remedies, prescriptions of the pharmacist -not necessarily in that order - fail to have any effect. So, by the time someone reaches the doctor, the case is usually pretty severe.

Two, there are many quacks than there are doctors. So, going to them is really cheap, cheaper than any insurance than anyone can think of (perhaps expensive in the long run, but...)

People rely on friends for medicine. "Lets see, last time I had a stomach ache, my doctor prescribed me this - infact I have some of it left - would you like to have it?"

People often walk up the neighbourhood pharmacist and ask him for advice - usually on the pretext that the doctor is unavailable - so thats another avenue for medication.

And of course, our alternative health systems and home remedies. These are good - very effective for many routine illnesses. Systems like Ayurveda work for many other illnesses - but these are long term and holistic - unlike allopathy which is as close to quick fix as it can get.

My prediction is that health insurance will not be a sunrise industry for many years to come - the only to penetrate it is through micro insurance (like Yeshasvini) or through corporates. If you still dream of individuals buying insurance, its a day dream, snap out of it. So, what about life insurance - thats for another day.

Wednesday, April 04, 2007

More beat on the street

Welcome two new members to interim thoughts...

One who has already posted, one who will, shortly.

Ramesh will cover Indian business from an equity market, funding and emerging business perspective - and more importantly, from the financial capital and emerging offshore financial hub of Mumbai. The post on Subhiksha is his (I need to figure out how to get the posters name on the post!)

The other, Manoj is a finance guy; he is anything but your dyed in the wool finance guy. He happens to be the person who introduced me to reading blogs and introduced some of the first blogs that I ever read. He is based out of Pune.

As usual, ecophilo will focus on Indian business (industry/design/culture and other items of interest) from a streetside perspective - where strategy meets reality. Feedback welcome on comments, by mail...

India Retail Story - Subhiksha

We have covered the retail story quite closely, from the street. As the Retail market enters a steady state phase (its still a long way away), different formats are emerging. There are the Food Bazaar, Big Bazaars , Dmart and the Hypercity (Shoppers Stop group). Where does Subhiksha fit in? Subhiksha is a contrarian model - or an Indian model - call it what you like. It sort of merges the traditional small front end with the economies of scale of the modern back end.

Subhiksha, the shop is a rudimentary shop with racks having most (no the smaller stores do not have a huge variety to choose from) of what a basic shopper would need. The stores are not air conditioned, the receipts are printed on dot matrix printers (not in deskjet ones!!). They are very similar to what Margin Free in Kerala is or what Apna Bazaar or Sahakari Bhandar are in Mumbai.

Will the Subhiksha model succeed when an Apna Bazaar didn't - but Margin Free is a success for sure (more on that later). There is not a huge pricing differentitation between say a Lux soap offered in Big Bazaar v/s that of Subhiksha. Why should people shop in Subhiksha?
Can Subhiksha compete on merely pricing? May be it saves on store setup costs, power costs, but employee and supply chain costs will not vary by much because of its scale. My take here is that Subhiksha does not, unlike Big Bazaar, try and change the consumer behaviour - which is a big big plus point. Big Bazaar except for those who live near one, is a different behaviour. Drive down, stack grocery and shop once a month. Subhiksha says, just do your regular shopping, we are your regular shop, plus 10% every single time, every single item. Their vegetable and medicine counter are also pretty good. Where Subhiksha takes a hit, more than the look of stores is stocks - here they have to improve.

Will people shop in a rudimentary outlet and save a rupee or two on products or shop in a Big Bazaar that offers more product categories, better ambience - almost like a one stop shop? Perhaps yes, perhaps no, but as of now, unless there is a Big bazaar near every Subhiksha one cant say, and then again we are comparing chalk and cheese. Who will win? Will it be just one winner? My take on it is that it will be Big Bazaar in the long run.

Monday, April 02, 2007

Call of the village

Hindu Businessline writes how companies are flocking to rural India and I couldn't agree more. A few weeks back I was at BR Hills. And the surprising thing was that the cell connection which worked, was, not BSNL - they on the other side of the rural/urban divide, but Airtel.

While the Government has said it is willing to cough up as much as Rs 1,000 crore over a five-year period to companies willing to set up shop in these villages, cellular firms such as Reliance Communications, Hutchison Essar, Bharat Sanchar Nigam Ltd and Idea Cellular have put in zero bids, which means operators are willing to offer cellular services in remote rural India without any subsidy from the Government.

Bharti Airtel has gone a step beyond and quoted negative bids, which means that the company is prepared to give money to the Government instead of taking support from the USO fund.

Elsewhere it says, Bharti Airtel, for instance, has adopted the `match-box approach' which essentially will ensure Airtel's availability wherever a match-box is available, even in the smallest and remotest corners of the country. "The other key initiative is our `Chapa Chapa' approach which supports our objective of reaching out to all towns with a population of less than 5,000. We believe that the next level of growth will happen from these geographies," says a Bharti Airtel spokesperson.

Growth or not, the cellphone will be the vehicle of prosperity of the rural areas as it has been in the rural areas- yes, roads will help, but Airtel cannot build roads and villagers will find out ways of getting progress to themselves. More power to initiatives like these.

I have held in the past that corporate India is a better bet to get India on the right path to progress than the government.