Friday, November 30, 2007

'Power Grid initiated the bidding process as the CTU for the IPTC project'

Private participation in power transmission

Power generation and distribution have always garnered a greater share of news, compared to transmission, says Mr Tanmoy Mondal of Ernst & Young. “If the electricity sector has to grow with anefficient pricing mechanism, as conceived in the Electricity Act, 2003, ‘power transmission’ needs investment to match that for generation and distribution,” he adds, during the course of a recent e-mail interaction with Business Line.

A PGDM (IIM-Calcutta) and B.Tech (IIT-Kharagpur), Mr Mondal works with the Business Advisory Services of Ernst & Young. He has advised several clients in the energy sectors in India and abroad on matters related to process reengineering, reform and restructuring, financial modelling, policy and regulations, and private participation.

Excerpts from the interview:

'Analysts have to be careful in valuing a brand'

Comparative brand valuation across industries

“A brand valuation exercise in India is typically a more subjective exercise compared to a business valuation exercise in India,” says Mr Sanjiv Agrawal, Partner and National Director, Valuation & Business Modelling services, Ernst & Young. “This is primarily due to the limited availability of data required to apply the usual methods of brand valuation,” he reasons, during the course of a recent e-mail interaction with Business Line.

Mr Agrawal has through his 20-year career conducted valuations for/of companies across various sectors, including metals, consumer goods and retailing, media and entertainment, software, telecom, and financial services.

Excerpts from the interview:

Monday, November 26, 2007

What IT requires is industrialisation

Shun `culture of waste

What are the vulnerabilities of the Indian IT industry, and what can be the counter measures?
Pat comes the reply from Rahul Patwardhan (Pat), CEO Global Service Delivery (GSD) India and Director - Application Services, LogicaCMG, thus: "The Indian IT (information technology) industry is currently resting on its laurels. It has to think ahead and move away from the current unipolar thinking."

Indian IT companies need to look internal to their business and see how they can reduce manpower on the bench (currently at average of 30 per cent), adds Pat, during the course of a rapid telephonic conversation with eWorld recently. "The industry needs to strive for utilisation that is similar to the manufacturing sector. IT seems to have gotten used to a `culture of waste' and productivity has taken a backseat," he rues.

Question that arises is how does one interpret the term `total turnover of the business' in the absence of clarity.

On how ambiguity robs the SEZ-sop of its sizzle

Our tax law generously speaks of a 100 per cent tax holiday, but it may turn out to be a mere theoretical benefit, fears Mr Bharat Varadachari, Tax Partner, Ernst & Young. "The issue is with the formula for computing income-tax deduction with respect to the profits of an SEZ (Special Economic Zone) unit under Section 10AA of the Income-Tax (I-T) Act, 1961," he explains, in the course of a recent e-mail interaction with Business Line. "Based on the plain text of the formula, it appears that companies that have established SEZ units in the same legal entity that houses other businesses/units may not be able to fully realise the income-tax deduction," Mr Varadachari elaborates. "If this were the result, it means that one of the stated fundamental objectives of the SEZ policy framework, which seeks to grant tax-free status to exporters, would stand violated."

Excerpts from the interview:

The largest complications arise at the technology level

Spectre of competition - sacrifice at the spectrum altar?

Any decision on spectrum should not sacrifice the long-term interest in favour of the immediate benefits, says Mr Bivek Anand, Associate Director, KPMG Advisory Services. Talking to Business Line about the ramifications of the currently strumming spectrum debate in the telecom space, Mr Anand insists that the regulator must guard against diluting the index of competition in the industry, in the long run, by acting in the interest of short-term benefit to the consumer.

“After all, a sustained and healthy competition among the various players is the key to enduring benefits to the consumer,” he adds, in the course of a subsequent e-mail interaction. “Any decision, which leads to a significantly higher competitiveness of any one player, while resulting in immediate benefits to consumers (in terms of more services, higher QoS or quality of service, lower tariff), will be detrimental to the industry’s competitiveness in the long run.”

Excerpts from the interview.

The financialisation of the economy and information control go hand in hand

Steer clear of ‘mass market investing’

Though there is nothing inherently antisocial about genuinely free markets, you should look at the language of politics and the markets with suspicion and examine things for yourself, cautions Lila Rajiva, co-author of Mobs, Messiahs, and Markets (Wiley, 2007).

“If ethical and productive individuals produce ethical and productive societies, then we all have much more power than we think,” she adds, on a reassuring note, during the course of a recent e-mail interaction with Business Line.

Excerpts from the interview:

Airlines typically increase surcharges as and when ATF prices rise

Hedging, the only logical option for airlines to control ATF cost

In Greek mythology, you’d read about King Minos who held Icarus and his father, Daedalus, captive in the Labyrinth, a prison. “The Labyrinth’s original purpose was intended to hold the horrible creature, the Minotaur, a bea st that was a product of one of the King’s mistress’s affairs with a bull,” informs Wikipedia.

To escape from the prison, “Daedalus fashioned a pair of wings for himself and his son, made of feathers and wax…” In the current story of Indian aviation, the Labyrinth may well be the high cost of fuel, even as the industry would like to fly high.

Tuesday, November 20, 2007

'A quarter million dollar investment return in less than a quarter!'

‘Speech expands reach’

In the world according to C. Mohan Ram, you ‘just talk’.
Simply talk, “Summa Pesunga”, “Bas Baath Keejiye” – that’s what he wants to promote through LatticeBridge Infotech Pvt Ltd (LB), Chennai, a company he founded in 2002.

“Speech Expands Reach,” declares Ram. He talks about reaching more people, more markets, and more profit, all through speech, while recently interacting with eWorld over lunch.
“We are also working on something like simple ‘tags’ with only speaker and mic and connectivity to a central sever (with ‘personal assistant’ for everyone) to do connections, transactions and search for information, etc, simply speaking through this simple device,” describes Ram about how newer devices, such as a minimal mobile, can help overcome the shortcomings of low PC penetration.

'Experience from mature markets suggests that MNP is unlikely to be a resounding success in the short term'

Will number portability port profits out of telcos?

We live in ‘interesting times,’ observes Mr Prashant Singhal, telecom industry leader in Ernst and Young (E&Y), applying a Chinese saying to the ‘number portability’ announcement.
“Interesting times, but good or bad?” you may wonder. “Either interpretation holds up well when applied to the recent policy statement on number portability by the Department of Telecom,” answers Mr Singhal, in an e-mail inter acion with Business Line.
“This exciting development in the telecom sector is bound to open new vistas for growth. It can be seen as a pragmatic policy move consistent with the movement in technology. But it might end up being a drain on the telcos’ profit sheets.”

Excerpts from the interview.

Stress management

Getting a handle on stress

There is no such thing as a single technique that fixes stress, says Dr Wolfgang Linden, the author of Stress Management: From Basic Science to Better Practice ( http://www.sagepublications.com/).

“Fixing” stress responses makes little sense if the causes are unknown and remain unaltered, he adds.“Stress needs to be understood as a process of individuals interacting with their environment. And it doesn’t help to push techniques if the life context of the individual is not understood,” emphasises Dr Linden, during the course of a recent e-mail interaction with The New Manager .

‘Welcome to the Linden Lab,’ greets the home page of the Behavioural Cardiology Laboratory, Department of Psychology, University of British Columbia, Vancouver, Canada ( http://www.psych.ubc.ca/). Research conducted in the lab, one learns, “is based on the firm belief that psychological distress can affect physical health.”

What can be tackled easier, however, is the unintentional evasion…

Is tech-driven compliance lending fizz to taxes?

How do you reconcile these numbers: Economic engine growing at 10 per cent and direct tax kitty swelling at 40 per cent? “Clearly the result of increased compliance,” says Mr Manasvi Srivastava , Vice-President Operations in BMR Managed Services, New Delhi.

“Since the growth numbers of taxes are so out of sync with growth in economy and the extra collection is indicative of increased compliance, the question of estimating the residual non-compliance assumes importance,” he adds, in the course of a recent e-mail interaction with Business Line.

“While the Finance Minister and revenue officials have expressed concern at the low growth in Central Excise revenue, the conclusions arising out of the galloping rate of growth in direct taxes as well as service tax should not escape our study.”

Thursday, November 15, 2007

'Maintaining balance between business opportunity in India and business opportunities overseas is a key challenge'

Risk management can be a competitive weapon in financial services
Good credit management in financial services is all about data and covers the entire value chain of credit origination, credit decision and credit management, says Mr Ashwani Puri, executive director, Pr icewaterhouseCoopers.
“The Basel II guidelines also require the use of internal rating models and credit risk models, which again are dependent on historical and portfolio data,” he adds, during a recent e-mail interaction with Business Line.
“Initiatives like CIBIL (Credit Information Bureau India Ltd), use of credit scoring models and reduced reliance on judgment would go a long way towards improving the credit origination qualities.”
Excerpts from the interview:

'People do differ in how self-important, conceited, egocentric they are'

‘The best and most lasting changes are voluntary’
Human beings have great potentials for good and evil, says Mr Howard Gardner , the Hobbs Professor of Cognition and Education at the Harvard Graduate School of Education.
“We have Slobodan Milosevic but also Nelson Mandela. Both Goethe and Goebbels were outstanding in the German language; one created great art, the other fomented hatred. Mohandas K. Gandhi, in my view, was the most important human being of the last 1000 years,” mentions Mr Gardner in a recent email interaction with Business Line.
“No one is born good or bad. How they turn out depends on the values of those around them, the models that they observe, the reactions to their behaviours, the events of the wider world, experience and luck.”
Mr Gardner, a leading thinker about education and human development, has studied and written extensively about intelligence, creativity, leadership, and professional ethics. His most recent books include: ‘Good Work, Changing Minds’, ‘The Development and Education of the Mind’ and ‘Multiple Intelligences: New Horizons’. His latest book ‘Five Minds for the Future’ ( http://www.tatamcgrawhill.com/) was published in April 2007.

Excerpts from the interview:

Monday, November 12, 2007

There are eight priorities that Western companies need to focus on now

India plus China in ICT

Is it `India and China' or `India vs China'? It is the former, says James M. Popkin, co-author of IT and the East (www.tatamcgrawhill.com). There is an increasing recognition, he observes, that India and China possess significantly complementary skills in most areas of the ICT (information and communication technology) ecosystem.

"For example, China's overall success in the hardware segment and India's overall success on the software front, China's success being driven by high levels of FDI (foreign direct investment) even in the ICT sector, and India's primarily home-grown investment environment etc." Pooling best practices and learnings on what has contributed to the success in each of these areas will provide an order of magnitude of greater bene- fit to both countries, foresees Popkin, interacting with eWorld over e-mail.

Friday, November 9, 2007

Microcredit is a proven way to increase income

Microcredit is effective for women in self-employment

When working on poverty eradication, the first message that we must communicate is that poverty is not hopeless, says Mr Eric Thurman, co-author of ‘A Billion Bootstraps’ ( http://www.tatamcgrawhill.com/).
“People should not be trapped in horrible lives of deprivation. Microcredit can help. Currently more than 100 million families around the world are improving their lives thanks to microcredit. That number needs to be many times larger. The number is growing, but the acceleration can and should be much faster.”
Think about the poverty at its most basic level, he urges. “Economic poverty has only two root causes, a lack of income or a lack of assets. Some people are so poor that they lack both. Poverty diminishes as incomes or assets rise.”
The essential of ‘how to combat deep poverty’, therefore, is to help people increase their incomes and assets, explains Mr Thurman, during the course of an e-mail interaction with Business Line.

New consumers are playing a big role in driving oil demand

Are Indian oil companies ‘bidding on the riskiest properties’ overseas?

Oil price hit $84 a barrel a few days ago, amidst fears that the Kurdish rebel problem would lead to the snapping of Iraq’s supplies. And closer home, despite an appreciating rupee, we have been oscillating between ominous expectations of petrol and diesel price increases, to political assurances of ‘no hike now’ with short shelf life, though.

“An interesting and scary thing about high oil prices is that we realise how incredibly interconnected global economies are, and how little we understand the consequences of these connections,” observes Ms Lisa Margonelli, the author of ‘Oil on the Brain’, in the course of an exclusive interaction with Business Line.
“Despite the deep interconnections, we live very differently: after all, Americans continue to use this enormous amount of fuel per capita and that is simply not available to other consumers,” she adds.

Any rise in interest rates would probably have intensified capital inflows into India

Sponging out the liquidity

The rise in CRR (cash reserve ratio), the sixth this year, will squeeze some liquidity from the financial system. “Yet, it should not hurt bank lending much, if at all, since banks are quite flush with liquidity,” observes Mr Ramkishen S. Rajan, Associate Professor, School of Public Policy, George Mason University, US. “This still begets the question why credit growth had slowed down in recent times.”

The tightening CRR policy clearly indicates to the markets that the RBI (Reserve Bank of India) is hawkish and is concerned about the liquidity flushing around in the system and views risks associated with this to far outweigh those related to possible growth slowdown, he adds, during the course of an e-mail interaction with Business Line, soon after the release of the mid-term monetary policy review.

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Monday, November 5, 2007

The best way to tackle change of any sort is through our behaviours

The higher you go, the less feedback you get from others

What determines your success? “It is overcoming your personal constraints that determines your success, rather than just playing to your strengths,” says Flip Flippen, author of The Flip Side: Break Free of the Behaviours That Hold You Back ( http://www.hachettebookgroupusa.com/).
The book is a guide to ‘top ten killer constraints’ that confront us at home and at work. These constraint types come with snazzy names such as the Bulldozers or the dominant ones; the Marshmallows that thrive in nurturing; the Quick draws, who are impulsive; the Critics, who nitpick; the Ostriches, characterised by low self-confidence; the Flatliners displaying low passion; the Turtles, resistant to change; the Volcanoes, visibly aggressive; and so on.
Personal growth, achieved by overcoming constraints, is more than just personal, argues the author, during the course of a recent e-mail interaction with The New Manager. “It is not ‘about me,’ but it is about those whom I serve and care about. When I don’t grow, it has a tremendous impact on others. Usually that impact is not good unless I am giving them my best – which I can’t do without dealing with my personal constraints.”

Flippen heads The Flippen Group, which he founded in 1990 with a simple philosophy: ‘We grow people’. A fast-growing leadership development organisation in the US, the company’s educational processes and curricula are in use in 5,000 school districts and campuses in 42 states, claims http://www.flipsidebook.com/. Excerpts from the interview:

Our workers in Gulf have to compulsorily save for their retirement and for returning to India

Strong Re & remittance-dependent families

Much has been written about rupee appreciation and its adverse impact, especially on exporters. Not enough, though, has been discussed about a huge section of the population that is dependent on foreign remittance, observes Mr Bhaskar Rao, Executive Director, Wall Street Finance Ltd, Mumbai.
“These people have lost their income by almost 20 per cent as compared to last year. This, coupled with the inflation and the high interest rate, has seriously affected them,” he adds during the course of an e-mail interaction with Business Line. “Rupee has appreciated beyond sustainable levels. The exchange rate is not justified by its fundamentals at the current level.”
Mr Rao, who was earlier CEO of the company, has about 25 years of experience in the banking and financial services sector, covering areas such as forex, treasury and global money remittance. Wall Street Finance Ltd is involved directly with the end-customers as a service provider for remittance.
Excerpts from the interview:

Tax treatment for FIIs

What happens when sub-accounts convert to FII status

Conversion of a sub-account to FII (foreign institutional investor) could potentially trigger tax consequences, which may well be significant, cautions Mr Vipul R. Jhaveri, Partner, Deloitte Haskins & Sells, Mumbai.
“Unless FIIs get to evaluate the same, they may expose themselves to a tax burden that they may neither have anticipated nor bargained for,” he adds, during an e-mail interaction with Business Line.
As per the market regulator’s draft proposal on participatory notes (PNs), FII sub-accounts will not be allowed to issue PNs; and an 18-month-period has been stipulated for winding up derivatives positions taken through the PN route.
“From the income-tax perspective, it would be very important to see the conversion process that SEBI (Securities and Exchange Board of India) prescribes and, in particular, whether it will involve a ‘transfer’ of securities under the Income-Tax Act, 1961 (the Act),” explains Mr Jhaveri.

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