Wednesday, March 27, 2013

Can He Read The Writing on The Wall?

While The US National debt Currently stands at a Staggering $14.235 trillion, The Federal budget deficit is Estimated at Over 10% of GDP for FY2011. B&E Catches up with The US Department of The Treasury, Moody’s Analytics and Others to find a way out of The Situation for The US Government.

Just as the US economy seemed ready to hit its stride, new threats have appeared to trip it up. Well, the writing on the wall this time is: Federal borrowing is likely to hit the statutory limit very soon. In fact, as of March 14, 2011, the total public US debt stood at a whopping $14.235 trillion (about 103% of US GDP, and more than $1,00,000 per US tax payer), or just $59 billion below its present statutory limit of $14.294 trillion. Confirms Mary Miller, Assistant Secretary for Financial Markets at the US Department of the Treasury through a communiqué to B&E, “The Treasury Department now estimates that the US will reach the debt limit between April 15, 2011 and May 31, 2011.”

Though one would argue that the situation is not new for the US policymakers who have increased the statutory limit 17 times since 1990 (the debt limit then was $3.195 trillion) to its current level, there lies a catch! Although Congress plans to increase the ceiling once again, several Republicans have vowed to oppose the increase this time unless the Obama administration commits to deeper spending cuts. And if the Republicans go by their word, the government would be in a position where it could no longer borrow to fund its day-to-day operations, which perhaps might result in a partial shutdown or a default on debt payments by the US. This could even force credit rating agencies to downgrade the country’s credit rating (US at present has AAA credit rating), which not only would affect the much-hyped American pride, but will also more importantly result in bond investors demanding higher interest rates, thereby adding to uncle Sam’s overall debt burden.

Moreover, the issue pops up at a time when large annual budget deficits (for FY2011 the federal budget deficit is estimated at $1.645 trillion, over 10% of GDP from just 1% in 2007) are projected to continue indefinitely under current laws. In fact, if current policies remain in place, the US Congressional Budget Office (CBO) projects that while the national debt, subject to the statutory limit, will exceed $25 trillion in 2021, deficits will total $7 trillion over the next 10 years.

Unfortunately, while the nation’s budget deficit and debt load are out of control (the highest since World War II), President Obama’s recently released 10-year budget plan doesn’t generate the much-needed confidence that the economy’s fiscal problems will be resolved anytime soon. Agrees Mark Zandi, the US based Chief Economist of Moody’s Analytics as he tells B&E, “Obama has put forth a budget that isn’t sustainable even on paper. Even with a freeze on discretionary government spending – the President’s principal response to the fiscal outlook – projected deficits are too large to stem an unmanageable rise in the nation’s debt.”


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Monday, March 18, 2013

Big Challenge is Positive Cash Flow

Ram Yadav, Head – Finance and Strategy, Orbit Corporation, In an Exclusive Interview with B&E’s Mona Mehta

Orbit Corporation has been one of India’s biggest redevelopment real estate players and has been much far ahead of any possible competition in Mumbai. Ram Yadav, Head - Finance & Strategy, Orbit Corporation, shares the current scenario for Orbit and its future plans and strategies:

B&E: How has this year been for Orbit Corporation in terms of financial performance (on basis of sales growth) and what are your future targets?
Ram Yadav (RY): The sales growth has been phenomenal for us in recent times. We clocked fresh sales of Rs.7.894 billion in FY10 as compared to a meagre Rs.851 million in FY09 due to the slowdown. In the current financial year, we have already registered sales of Rs.3.44 billion. We are targeting a 30% growth in revenues in FY11. To achieve the same, we are ramping up our human capital, execution capabilities and building efficiencies in the overall processes.

B&E: What’s your take on the real estate sector’s major challenges and what’s your suggestion to investors interested in realty stocks?
RY: Lack of transparency and industry level benchmarking in the real estate sector has created an environment of mistrust for the entire developer community. The challenge is to move towards greater transparency and better corporate governance for the sector. My suggestion to investors is that their time horizon of investment should be medium to long term as quarter on quarter results of a realty company is not a correct parameter of true value.

B&E: Amidst a tight liquidity scenario, what are the major challenges for Orbit and how will you tackle them?
RY: The major challenges are to maintain positive operational cash flow and quicker maturity of projects under acquisition. To handle them, we are focussing on reducing inventory gestation and faster execution to shorten our cash conversion cycle and also on aggressive acquisition of projects under pipeline.

B&E: Is Orbit planning to enter into JVs for its upcoming real estate projects or looking at offering real estate services to other infrastructure/real estate companies?
RY: We believe that the real estate business is local in nature and the best way to expand geographically is through JVs with local developers. Our company keeps on evaluating such proposals for JVs on a continuous basis. As and when we see an attractive opportunity, we may go ahead with JVs.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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Tuesday, March 12, 2013

Sheran Mehra

Head – Marketing, Dhanlaxmi Bank in Conversation With B&E’s Mona Mehta
 
With an aim to become one of the top 5 private banks in the country, Dhanlaxmi Bank believes in investing continuously in micro marketing activities to educate consumers on the new brand, product and services. In an interaction with B&E, Sheran Mehra, Head-Marketing, Dhanlaxmi Bank talks about the rising importance of new design in organisational structure and discloses how the bank is planning to reach out to a wider target audience.

B&E: How has the regional private banking industry evolved over the past few years and what kind of growth do you foresee in the near future?
Sheran Mehra (SM): Overall the Indian banking sector has seen considerable development in the last decade. With improved regulations and reforms, Indian banks are in a transformation mode. Operating under the new economic environment, which is characterized by increased competition, Indian banks are investing in technology, people, infrastructure and marketing as an avenue for growth. The old private sector banks have started to reinvent in order to meet the emerging needs of customers. And they are set to grow at a much faster pace than the new generation private banks. With liberal licensing policy, new entities would foray into banking. In such a competitive scenario, banks would increasingly look at inorganic growth as a mechanism to scale up. As a result, there could be transformation in every sphere of activities of the banks in India. Banks would continually look at innovating to develop new business models to access untapped opportunities. Going forward, the enduring challenge of ensuring much greater financial inclusion would be the key for overall growth of the industry.

B&E: How is Dhanlaxmi Bank planning to gain over competitors?
SM: Dhanlaxmi Bank was the first amongst the old private sector banks in India to transform itself. It was the first to fundamentally reorganise its organisational capability to stay in tune with the changing market dynamics. Over the last two years, the bank has successfully invested in enabling capacity. It recruited a competent team of senior management, improved its institutional capabilities by leveraging technology to enhance service levels, created a brand new identity to connect with the young and the old alike, introduced suite of financial solutions and expanded its customer service outlets across India. Today, the bank is one of the fastest growing private sector banks in India with total business exceeding Rs.165.54 billion as on September 30, 2010. The bank’s balance sheet size has nearly doubled in the past 15 months from Rs.57.92 billion to Rs.114.13 billion. It has a pan-India network with 275 branches and 448 ATMs across the country. With an ambitious goal to be amongst the top five private sector banks, Dhanlaxmi Bank is well set to enter into its next orbit of growth.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles
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Thursday, March 7, 2013

Missing from Action!

Riding high on the success of her film Robot, and with Guzaarish and Action Replayy lined-up for release, Aishwarya Rai Bachchan is having a good year. Recently, she was to appear on Kaun Banega Crorepati with Akshay, but she cancelled without informing anybody. Sources swear that the proceeds from that episode were to be donated to Being Human, an NGO run by Salman Khan. Well, this might just explain her absence!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles
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Tuesday, March 5, 2013

Trading for a cleaner future

India stands 2nd in the global carbon trading regime under Kyoto Protocol, a spot which it ceded to China in 2006 and is pacing quite slowly to realize its full carbon reductions and energy efficiency potential

Post the declaration of the Copenhagen Accord, the face saving last minute attempt by heads of state of some of the world’s biggest carbon emitting nations to pave some way forward to “take note of” the nonbinding commitments by its signatories, the biggest backlash occurred from the EU with many members feeling snubbed and sidelined by USA and the BASIC (India, China, Brazil and South Africa) states. Then UK Prime Minister Gordon Brown accused a small number of nations holding the Copenhagen talks to ‘ransom’. Interestingly, Kyoto Protocol, the only legally binding emissions reductions treaty existing till date has its biggest signatories as the EU states while lead emitter US hasn’t even seen the long elusive Climate Change Bill even being tabled in its House or Senate. The most significant element of Kyoto, the Clean Development Mechanism lets non-Annex I states (mostly developing nations) get credit from Annex 1 states (industrialized nations mostly from EU) for investing in projects that produce carbon emission reductions (CERs), which can then be traded on exchange markets like those in EU, have a far greater potential of reducing emissions in countries like India. But the market is far from realizing its full potential in India and a domestic carbon trading scheme is not even been talked about. India currently stands at second place behind China in no. of CDM projects registered and the total CERs being generated The potential of India to have a flourishing carbon market can be gauged from the fact that the first project in India got registered under CDM in 2004 and till September 2010, the number of CDM projects in India had crossed 2350. According to a study by CRISIS Research, the number of CERs generated in India till November 2009 stood at 76 million (1 CER is equivalent to reducing 1 metric tonne of carbon dioxide or equivalent) while by December 2012, the total CERs generated will surpass 246 million. CRISIL study also claims that CER issuance in the renewable energy sector, from registration of existing and new renewable energy projects alone, will increase to 76 million by December 2012 from 14 million in November 2009 with the percentage of renewable energy projects in India’s total CDM tally rising to 31% by December ‘12 from 19% in November ‘09. The total potential of revenues from carbon trading for India has been attributed to be about 10% of the global carbon market which stood at over $144 billion in 2009.

However, the ‘honourable’ 2nd rank (India was 1st till 2006) in CDM projects registered is little more than one third that in China which accounts for almost half of all CDM projects globally while also boasting of around 2/3rds of the total CERs issued globally. Though India has less than a third of China’s total carbon emissions and around one fourth of total per capita emissions, it is also true that India needs much greater investment in the long term in energy and infrastructure to uplift its hundreds of millions out of poverty (which China has almost achieved). This entails greater dependency on carbon intensive technologies unless the emissions reductions market is not developed to its full potential soon here.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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Sunday, March 3, 2013

“I don’t see why we shouldn’t be back to where we were...”

Sunil Dutt VP, HP India PSG reveals HP’s perspective on the quarterly numbers to virat bahri of B&E

B&E: What are your views on the latest market share data and the reasons for HP losing its leadership position?
Sunil Dutt (SD): I believe ups and downs are a part of the business and the last few quarters was definitely challenging for the economy at large. We are jointly addressing the challenges, and making good progress. I don’t see why we shouldn’t be back to where we were. We welcome healthy competition and believe that competition is only getting closer, which will result in greater efficiencies in the industry. HP PSG appreciates such constructive competition and we are working hard for a continued sustained growth across diverse segments like consumers, business, education and retail. In addition we are one of the few vendors who’ve stayed committed and not hesitated to invest in a technology, a market or a product. That has provided a strategic opportunity for our partners and us to gear up for the next decade. We are putting our entire marketing machinery to work by intensifying our customer and channel engagement programs in smaller cities.

B&E: Which product segments & markets will drive growth for HP PSG?
SD: In India, technology is enveloping every sphere of our lives. Whether it is at home or at work or while on the move, technology is fast becoming a companion we cannot do without. Consumers desire tgood looking technology gadgets for both information and entertainment. In the enterprise space, the spirit with which businesses and entrepreneurs cities are unleashing new possibilities and setting an example for their counterparts across is extremely encouraging. This is the new age India. We at HP believe that technology can boost business and engage consumers to the next level in the long run. HP’s strategic framework is built on HP continuing to invent and develop technology solutions for the customers we serve, capitalizing on industry trends and becoming best-in-class. Made up of three major components, the operating framework represents the interconnected levers we must focus equally on – cost efficiency, targeted growth and capital strategy to perform to our full potential.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.


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