Monday, April 28, 2008
Pradeep Nevatia, President and CEO of Ninestars Information Technology Ltd, is passionate about the distributed delivery model for large-scale data processing, be it in the form of village BPO (business process outsourcing), college campus BPO, or as a CSR (corporate social responsibility) activity.
“Distributed delivery model is not a new phenomenon. The ‘manufacturing’ sector knew it long ago,” explains Nevatia. With the support of technology the concept should be taken to higher levels, he adds, during a recent interaction with eWorld.
'Assembled workforce is not recognised as a separate intangible, but is considered as part of goodwill.'
Did you know that the Jaguar-Land Rover mega deal struck by Tata Motors for a princely sum of $2.3 billion could be valued much less come 2009? Occurrences such as these are a possibility, says Ms C. G. Srividya, Partner (Valuation Services), Grant Thornton. “It is necessary to assess and account for the acquired entity, its assets and liabilities acquired not only at the time of acquisition, but also subsequently every year to ensure that the value originally accounted for has not deteriorated,” notes Ms Srividya in an exclusive e-mail interaction with Business Line.
Friday, April 25, 2008
' Providing future managers a strong foundation on business ethics would be invaluable to Indian industry.'
Living as we do in the post-Enron era, it doesn’t look like too long ago when the global energy giant went belly up, causing tsunamis in the accounting profession and the regulatory mechanisms. While Enron and WorldCom were watershed events caused by large-scale failure of business ethics, the ongoing sub-prime crisis seems to be a master class in failure of risk management, feels Mr Ramesh Venkataraman, Managing Director, Asia-Pacific, CurAlea ( www.curalea.com ), an international management consulting firm specialising in the areas of corporate governance, business ethics and risk management.
“How would you explain large global banks and investment firms not having anticipated the risks, when they should have been aware that mortgage lenders were chasing borrowers with lending practices that were too aggressive to be sustainable?” he asks during a recent lunch-hour interaction at Business Line.
Behind the glitz and glamour of the neighbourhood retail chain that you are fond of nowadays (the local kiranawalla is not a priority anymore) is a very efficient supply chain. The job isn’t complete if you happen to have just products stacked up in the shelves. Somebody has to manage the supply chain as well. This is where supply chain management (SCM) comes in. But as far as India is concerned, therein lies the risk too.
From movement and storage of raw materials, inventory, and finished goods from points of origin to consumption – the current retail boom in India can only sustain its momentum if supply chain management is given top priority by retail players. An underdeveloped supply chain cannot help retail stores. It will cause more harm.
“To achieve profitable growth over the longer term in the retail sector, supply chains need to be realigned into efficient, agile and adaptable networks that can handle larger volumes, expand reach, balance costs and address the demographic variations while providing scalability,” said Pinakiranjan Mishra, Partner (Retail & Consumer Practice), Ernst & Young, to BrandLine in an a e-mail interview.
In finance, derivatives are financial instruments whose value changes according to the changes in fundamental variables. Just like the Americans have heard about the term `sub-prime' for the last 12 months, Indians too have heard a lot about derivatives for the last month or so. Futures, forwards, options, swaps and what not? Financial products based on such complicated mechanisms will require more transparency.
But while transparency is certainly an issue as is understanding, the onus is also on the taker, that is, the company or the bank on its behalf. Systems and processes then become even more crucial. "It is like a race car, part of the performance comes from the machine and part from the experience and capability of the driver," tells Mr Omer Hevlin, Sales Director (Asia), SuperDerivatives (http://www.superderivatives.com/).
Monday, April 21, 2008
The name of the new `bond' on the Mint Street is FCEB or the `foreign currency exchangeable bond'. Recently notified by the Finance Ministry, the FCEB Scheme, 2008, enables Indian promoters to unlock value in their group companies, without immediate dilution of voting power or control in such companies, explains Mr Rakesh Dharawat, Executive Director, Tax and Regulatory Services in PricewaterhouseCoopers, Mumbai.
"The unique and flexible nature of FCEB has generated a lot of interest among large Indian corporate houses looking to raise funds overseas, for acquisitions or greenfield projects," he adds, during the course of an e-mail interaction with Business Line.
Mr V. Ramesh, CEO, Prabhudas Liladher Financial Services, replied to Business Line’s queries on various trends in the Indian stock markets through an e-mail interview.
As someone who has a wide exposure in mutual funds (MF), how do you explain the frequently-seen opposite movements as between the MFs and the foreign institutional investors (FIIs) when it comes to stock market investment? Are the Indian MFs making more return than the FIIs?
Thursday, April 17, 2008
The question is no longer about whether the US financial woes will impact Indian companies. The anxiety is to know the extent to which our economy is vulnerable when the US sneezes.
But wait. Are we talking about a ‘fear’ of US recession? We were, but now the fears have been ‘borne out,’ says Dr Shanto Ghosh, Principal Economist, Deloitte Haskins & Sells, Bangalore.
“The International Monetary Fund (IMF) recently released its World Economic Outlook, which is widely regarded as the most authoritative report on the world economy,” he adds, during a recent e-mail interaction with Business Line.
Big airline carriers in India are facing tough challenges. Jet Airways is reported to post a loss for its just-ended financial year while others such as Air-India and Deccan are fast losing market share. What could be done to swing a change in their fortunes?
“Airlines in India need to develop other income business models i.e. non-airfare related, take a hard look at their route and fuel strategy and focus on improving yields in order to survive,” feels Mr Kuljit Singh, Partner (Transaction Advisory Services), Ernst & Young (E&Y).
Australia's construction and contract mining group Leighton Holdings recently bagged two contracts worth one billion (Australian) dollars for developing and operating a coal mine project in Jharkhand. London-based Vedanta Resources is reportedly looking to invest billions in the Indian mining sector. Given the reserves India has in thermal coal, iron ore, gold, etc., and their strategic locations, it is quite understandable that foreign companies have queued up with great expectations. But there is a twist in the story.
"The (Indian) mining sector today faces two major issues - lack of technical knowhow and logistics, apart from the present regulatory environment," warns Ms Asha Katyal, Associate Director (Transaction Advisory Services), Ernst & Young.
Monday, April 14, 2008
We often underestimate the innovative prowess of the domestic players and have so far been looking for technological innovations from the West, rues Ajai Chowdhry, Chairman & CEO, HCL Infosystems. He is glad, however, that with the launch of innovative products such as the Tata Nano, the common perception is slowly but surely changing.
To the league of recent innovation closer home, Chowdhry likes to add the HCL MiLeap range of Leaptops. “With its ultra small form factor, offering mobile computing at an unbeaten price of Rs 13,990, MiLeap is set to create a new product segment in our country,” he mentions confidently, during the course of an e-mail interaction with eWorld.
Friday, April 11, 2008
Reason? “Controls alone are not enough,” observes Mr Steven L. Skalak, Partner, Global and US Investigations Leader, PricewaterhouseCoopers LLP. “Companies need to put in place a combination of culture and controls in order to reduce fraud risks. For instance, our surveys found that effectively-implemented whistle-blowing systems, and a corporate culture that supports them, have had a noticeable impact on detecting frauds,” he elaborates, during the course of an e-mail interaction with Business Line.
India Inc. is going global. They are acquiring much larger competitors, aggressively entering new markets and exploring various financial tools. But the moot question is whether they can manage the risks that emanate from such moves.
Intense global competition and rapid growth are forcing Indian firms to examine corporate enterprise risk management (ERM) elsewhere, especially in Europe, Australia and North America, where the process is more mature, concludes a report by The Conference Board ( http://www.conference-board.org/ ), a non-partisan and not-for-profit business membership and research organisation.
Monday, April 7, 2008
Hapless investors who have had enough of disappointments from stocks this year, could look at other opportunities. Short-term fixed income could be ‘one option’, says American investor and financial commentator Mr Jim Rogers.
“I am selling short longer-term fixed income assets in various parts of the world. Long rates will be going higher in most of the world,” he adds. “Commodities remain the ‘other alternative’.”
With Asian governments such as like India and China already beginning initiatives to douse the inflation fire, short-term bond yields may not drop further, making them relatively safe investments.
“The Chinese are rightfully trying to stop it as are several other governments. Once inflation takes hold, it is very difficult and expensive to break it,” Mr Rogers told Business Line from Singapore over the email.
'Delay in formulation and implementation of new rules is a disservice to investors and other stakeholders'
The recent direction of the Institute of Chartered Accountants of India (ICAI), requiring companies to provide for losses arising from measurement of derivatives at market value, has left many questions unanswered. At least, that’s what experts feel. Furthermore, companies are less likely to want to adopt accounting rules that require higher disclosure, or the application of which results in presentation of lower profit or assets.
Should the ICAI have made the disclosure norm compulsory immediately, instead of adopting a ‘go-soft’ stance?
But as questions fly thick and fast, there is little by way of clarifications coming. “I am confused about one issue. Why AS-30, ‘Financial Instruments: Recognition and Measurement,’ should be made recommendatory from April 1, 2009 and mandatory from April 1, 2011? And then what does it mean to encourage companies to adopt the accounting standard earlier than the stipulated dates,” asks Mr Asish K. Bhattacharyya, Professor of Finance and Control, Indian Institute of Management - Calcutta.
What is software quality? How can it be ensured?
“Quality is a hidden attribute or virtue that defines ‘worthiness for use’ of any product or service. It comes to light only under detailed scrutiny. Software quality is this dimension of the hidden worthiness, of software,” an swers Raghav S. Nandyal, author of Making Sense of Software Quality Assurance ( http://www.tatamcgrawhill.com/).
The best way to ensure software quality is to build it into the software product from the very beginning, he avers. “The earliest opportunity to build software quality into a product is at the time of requirements definition and elicitation.”
When you are an investor, there is nothing that happens around the world that will not interest you, says Mr Raja Pannir Selvam, an advocate practising IP law in Chennai. “You need to keep your ears and eyes wide open. Any news across the globe may affect your investment,” he adds, during a recent interaction with Business Line. Excerpts from the interview.
Despite the current correction denting investor morale and making the turnover on the bourses plunge, Mr Sudip Bandyopadhyay, Director and CEO, Reliance Money believes the Indian economy will cruise along steadily, albeit at a slower pace.
He advises long-term investors to buy blue-chip stocks while holding 15-20 per cent in cash to capitalise on opportunities that could emerge in the future, during a brief interaction with Business Line over phone. And we continue the conversation with Mr Bandyopadhyay through email.
The septuagenarian Mr Dan Gupta has decided to shed some of his responsibilities in UST Global ( http://www.ustri.com/). With Mr Sajan Pillai becoming the CEO of the US-based company, Mr Dan will continue as the Chairman, sources inform.
“What is the secret of your health and fitness?” I asked Dan, when we had met a few months ago, during one of his rare visits to Chennai. He was walking faster than most of us who were almost thirty years younger, and his answer was simple: a sprightly smile.
Singapore Airlines (SIA) is one of the vital cogs of the Singapore economy, says Mr Bharath Mahadevan, Manager Southern India, SIA, Chennai. “Being a country with no natural resources, Singapore had to position itself as a regional hub to survive,” he recounts.
Today, Singapore is a regional financial hub as well as one of the biggest aviation hubs in the region, and the Singapore port handles a large volume of container movements every day. Tourism is also one of the main contributors to the Singapore GDP (gross domestic product). “Singapore needed an airline that could turn this hub vision into a reality,” reasons Mr Mahadevan, in a recent e-mail interaction with Business Line.
AS-30? Derivatives? MTM? If you are a keen reader of business news, a lot of these accounting hieroglyphics have been appearing in the past few weeks.
There has been so much noise about accounting policies, but none of it has been music to either companies or investors in listed entities. Business Line attempted to get in touch with tax and accounting giant Ernst and Young (E& amp;Y) to present facts as they are. Mr Dolphy D’Souza, Partner, E&Y, gives us a few important answers taking help from the firm’s knowledge repository.
Wednesday, April 2, 2008
Singapore is well known as a tourist destination. So, is it still necessary to work towards the promotion of the place?
When posed this question, Mr Kiran Bhandari, Area Director - Southern India, Sri Lanka & Maldives, Singapore Tourism Board (STB), Chennai, agrees that Singapore has been enjoying top-of-mind recall as a tourist destination. R 20;However, as a destination, we are constantly reinventing,” he adds, during a recent lunch-hour interaction at Business Line. “We continue to evolve and transform. As such, our role, then, is to bring out the different facets of Singapore as we aim to maintain our top-of-mind awareness amongst our target audience.”
It may never ever be possible to spend Rs 30,000 crore annually to put up, every year, 750 hospitals of 250 beds each, to achieve the minimum WHO (the World Health Organisation) standards. Yet, using ICT (information and communication technology), we can provide healthcare to suburban and rural India, assures Prof K. Ganapathy, Head of the Division of Stereotactic Radiosurgery in Apollo Hospitals Chennai, and President of the Apollo Telemedicine Networking Foundation.
Much has been talked about `fortune at the bottom of the pyramid'. But do we find big corporates discovering the `fortune'? Does it make good economics for the companies?
"At the very bottom of the pyramid there are no fortunes to be made because purchasing power is so low," says Mr Paul Collier, Professor of Economics and Director of the Centre for the Study of African Economies at Oxford University.
"Further up the pyramid, however, there is huge scope for introducing such things as brands," he adds.
'Over 60 per cent of our revenues come from long-term contracts, where the impact from short-term fluctuations is minimal'.
Chennai, March 26 We can foresee three significant changes in the BPO (business process outsourcing) space, foresees Mr Arun Subramony, Vice-President (Global Delivery), UST Global.
The ‘three waves that can hit Indian BPOs’ are in pre- and post-processing services offered in the mortgage BPO, voice-based call centre services, and engagement/pricing models, he explains, speaking to Business Line.
“There is currently a big downturn in the volume of mortgage applications for the new and existing homes, sales of which are the lowest in 13 years. And the recent cuts in interest rates by the Fed have not triggered a surge in refinancing options,” elaborates Mr Subramony.
Forming joint ventures, raising private equity (PE) capital, and growing inorganically, to garner scale and market positioning, are the three things that will propel corporate activity in the fast-rising Indian retail segment, forecasts K.V. Ramanand, a retail expert with Ernst & Young.
The substantial growth potential of the sector has generated serious interest from first-generation entrepreneurs as well as large established corporates, he says. “More importantly, this has also caught the attention of the PE funds, which are more than willing to finance a sound business proposition,” observes Mr Ramanand, in an e-mail exchange with BrandLine.
'In each stage of process evolution, existing practices are made robust with the inclusion of more sophisticated practices.'
Why is it so very difficult to staff the software quality assurance with the right person? After researching on this question for many years, Mr Raghav S. Nandyal, author of Making Sense of Software Quality Assurance ( http://www.tatamcgrawhill.com/ ) comes up with an answer: “The root cause of this problem, I find, lies much deeper in an organisational idiosyncrasy linked to ineffective staffing which can at best be described as a bizarre and a cynical approach to staffing software quality assurance — ‘staff it with the non-performers’!”