GUNNING FOR THE SUN

Sun Pharma’s two-pronged strategy – of making low-priced acquisitions and its cost control mechanisms – enabled it to run effortlessly ahead when others in the sector were panting during FY09!

DILIP SHANGHVI, MD, SUN PHARMA

Once considered ‘destined for greatness’, Wockhardt and Ranbaxy are bed-ridden today when it comes to operational excellence and India’s pharma sector, once considered immune to downturns, stands battered. So is it all bad for the bigwigs in the sector? Not really. Sun Pharmaceuticals has surprised everyone with its mind-boggling performance even in a recession- hit FY09!

Here are some numbers that stand testimony – while most players saw a dip in revenues and profits, Sun Pharma grew its topline by a smashing 27.3% y-o-y to garner Rs.4,272.3 crore, and its bottomlines by another handsome 22.2% y-o-y to touch Rs.1,817.8. So what enabled this $4.5 billion giant to take control in a situation when goliaths around the world were crumbling to the ground? We asked Uday Baldota, VP – Investor Relations, Sun Pharma, about the most critical strategies that help Sun Pharma beat the beatdown and he outlined two of them, “Success at acquisitions and cost leadership…”

True. In the recent past, Sun Pharma has proven critics of M&As wrong, having acquired 14 distressed assets over the years (at low prices) and turning them into profit-churning machines. And these turnarounds, which helped Sun to diversify into new drug segments, are showing signs of being the key drivers of revenues for the pharma major today. For example, when it laid hands on Dadha Pharma (Tamil Nadu), Sun entered the oncology space. With purchase of Milmet Labs, they acquired expertise in the opthalmological space and with Valeant, gained entry into the controlled substances niche. And if its $454 million Taro deal comes through (as per Baldota, “The deal is still on, with some court decisions awaited.”), Sun will get another headstrong entry into the dermatological market.

Besides, Sun has always remained a cost leader in the generics drugs platform. As Baldota reveals, Sun’s net operating margin is a tremendous (43%), which for the other top ten pharma players, is only a modest 10%! Sun also doesn’t believe in over investing in R&D (its R&D budget allocation is only 8% of revenues, while that figure for the industry stands at a much higher 14-15%)! Further, unlike major drug majors, it faces no danger of patent expiry, as Baldota clarifies, “We don’t have any problems of patent expiries as ours is a generics company…” Yes, one can claim that cost-control has been a key reason for Sun’s ultra-superior bottomlines even as the slowdown monster was gobbling-up profitability all around. “Focus on costs has remained a top priority for us (even) in good times…” confesses Baldota. For some, the year gone by looked duller than ever, but we guess that for others, the ‘Sun’ just didn’t stop shining!

Steven Philip Warner

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Painting the skies red...

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When it comes to ‘services’ offered by an aviation company, there’s undoubtedly the ‘red bird’ that scores heavily over the rest... Steven Philip warner talks about what makes this a ‘best service’ reality...

You might have heard tales about the many ancient Indian kings being fanatic proponents of polygamy; and as noted by many historians, these ‘many beautiful ladies’ often became a status symbol for these kings – a sign of great services rendered to the monarchs!

Allow us to move away from ‘all’ matrimonial implications here, but even today, beauty and numbers go hand in hand; take Kingfisher Airlines for instance. The airline, which serves 77 destinations, with its battery of 75 aircrafts, has today become the symbol of top-class (read ‘Real First-Class’) service in the Indian aviation industry.

Type in “Kingfisher Air hostesses” in Google Search, and the first link that comes on your screen reads thus “India’s beautiful Air Hostess leads us to the Promised Land...” That is how closely, this airline associates glamour with service. [And its brand ambassador Deepika Padukone is a living example.] But is it just their charm that helped this airline to make it to the top of the ‘Best Services’ list in the ‘Aviation’ category? Certainly not. 4Ps B&M caught up with Sunaina Paul [name changed on request], who has seen there, done that, when it comes to living to deliver the top ‘Kingfisher service’ promises, made by the ‘king of good times.’ And what we learnt was actually surprising... “For us, ‘safety’ is more important than ‘service’... and even in the final exam [which we have to clear to become a Kingfisher hostess], about 80% weightage is given to safety,” says Sunaina. Moreover, while on one hand, ‘safety aptitude and physical’ tests are conducted externally [by IATA], on the flipside, all tests related to ‘service learnings’ are conducted internally; therefore it is but natural that more importance is attached to safety standards.

Today, Kingfisher prides itself for being a totally service-oriented airline, and has various cabin classes on-flight. On its domestic flights, it has three categories, Kingfisher First, Kingfisher Class and Kingfisher Red. The Kingfisher First category seats are nothing less than a treat, with 48-inch thick soft seats and a comforting 125 degree seat recline. Laptop and mobile phone chargers, steam ironing service and Bose noise cancellation headphones were phenomena unknown in the domestic aviation arena... until of course, Kingfisher Airlines was born 4 years back! Doubling on this, Sunaina proudly recalls, “Kingfisher was the first domestic airline to have an In-flight Entertainment system on every seat, including economy class...” Indeed, there is no dearth of service when it comes to delighting the consumer aboard a Kingfisher Airline. Large DVD screens, latest movies, 16 live TV channels and 10 channels of Kingfisher Radio are what makes for the complete audio-visual package.


So they provide best service, but do the consumers complain still? To this, Sunaina avers, “Well, most of the complaints that we receive are for food types... whereby a non-veg customer has to be handed over a veg platter. And though the catering department is to be blamed for this, we speak out the sorries...” Very frequently, pre flight, the In-flight Manager (IFM, who is the senior-most hostess) ensures that the other hostesses are up to it when it comes to revising their service manuals, and if there arises a service issue on-board, the IFM discusses the problem(s) with the hostess(es). “We are taught to be polite and stern at the same time with passengers,” states Sunaina.

Of course, these service agents have no time for personal life, and the only thing that Sunaina remembers after she’s back from a flight schedule for the day is “crash”! “Also, we are given rosters for 15 days at a time, therefore any plans beyond that will call for a casual leave,” reveals Sunaina. Such is the life behind that charming mask from whom you expect alertness and the very best of service, every time you step onto a Kingfisher flight. No fixed work timings (you could have a reporting deadline at 4 am and you might land back at 12 am the next morning), close to zero social life, and absolutely nil vision beyond 15 days... and yet, they manage to give you the ‘best service’ amongst all other domestic airlines in the country as the survey proves...

Before we exited, we noticed that Sunaina’s charming smile hadn’t faded by even one degree, despite having invested more than 3 hours in incessant expression of her life as an air hostess in a most vivid manner. Perhaps that’s why Kingfisher Airlines is numero uno when it comes to service, for its folks never forget to serve even goodbyes with heartfelt smiles!

Steven Philip

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Mentos zindagi: the way of life

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Brand: Mentos
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Ever since its launch in 1999, Mentos campaign has been clutter breaking and hard hitting. Being a youthful and metro-centric brand, the campaign “Aam Zindagi, Mentos Zindagi” induced a tinge of humour and wackiness and inculcated a“Think Different” attitude amongst the youth. Says Namita Gupta, Group Product Manager, PVMI,on the online inititiatives:Mentos Helpline & Mentos Friendsline (which focussed on Mentos Zindagi proposition), “These initiatives were calculated steps toward tapping online audience and building a loyal brand community. The response to both these initiatives has been fantastic & repeat visits to the site have been higher than 50%.”

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Brand: Chiclets

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Chew, err, hum the chewing gum!!
When Cadbury hiked the prices of Chiclets from l0 paise to 25 paise, it anticipated a decline of 50% in sales volume. Unfortunately, the brand sales dipped by 90%. After such a shocker, the company came out with a smashing commercial, which succesfully steered the company through choppy waters. Says an FMCG analyst, “The campaign was brilliant as it turned around the notion of chewing gum as a product...” The commercial, which showed two boys wooing two girls, bagged the MTV ad of the decade award. Its jingle is still very popular.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Sutanu Guru wonders why ‘financial’ years start in April and end in March – not counting for the Ides of March followed by April Fool’s Day...

IIPM only B-school in India to be Ranked Ahead of The IIMs in so Many Parameters! Regularly!

Memories have a habit of fading into indulgent nostalgia. And in this age of villains and betrayals, charismatic heroes are so hard to find that nostalgia becomes a handy substitute for a reality check. Detroit feels nostalgic about Lee Iacocca. Microsoft feels nostalgic about Bill Gates as a nerd. Republicans feel nostalgic about Ronald Reagan. Congress workers feel nostalgic about the glory days of the dynasty in India. GE feels nostalgic about Jack Welch. Wall Street feels nostalgic about unbridled greed. And this April, many Americans feel nostalgic about John F. Kennedy (with due apologies to Barack Obama)

And yet, when it comes to fool proof strategies for April, John F. Kennedy will arguably go down as one of the worst examples in history. His Camelot administration was responsible for the notorious Bay of Pigs invasion of Cuba in April, 1961 which ended in both military and propaganda disaster. Fidel Castro ruled Cuba for more than one generation after Kennedy was assassinated and Americans are still trying to count the costs of that April strategy of combating communism with a steel fist. The Congress President Sonia Gandhi too will always remember April as a month she should rather shrug away in embarrassment. For, it was in April, 1999 that her trusted strategic advisors prompted Sonia to stand in front of Rashtrapati Bhavan and show a sign of victory. That ‘strategic’ victory turned out to be chimera. It was an alliance led by Atal Bihari Vajpayee that swept the marketing sweepstakes and won decisive market share in the 1999 General Elections. Of course, unlike Americans with Cuba, Sonia Gandhi didn’t have to wait for ages for redemption and recovery.

In the world of business and marketing, such ‘foolish’ foolproof strategies probably do not change the course of history. But then, they at least end up making history involved in such foolproof strategies. Just think about it for one moment. Have you seen a single new ad on TV, print, outdoor or web of Pepsi. Sure, there was that one about ‘Youngistan’. But honestly, it is already more than half of April, 2009 and have you seen any new Pepsi slogan? Don’t you wonder if it is a deliberate strategy of the soft drink giant? And what could that foolproof strategy be when Coke is going to town with high decibel pitches? read more..

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Hold on tight, brother!

IIPM : One of the leading and most respected business schools

According to official traffic data released by the Ministry of Civil Aviation, overall passenger traffic in January-February 2009 declined by about 8,00,000 – certainly not great news for the two largest players in the industry (Market shares for the two players in February 2009 stood at 27.6% for Kingfisher & 25.1% for Jet). Then there was the momentary joy that stabilisation in ATF prices gave the two players (which account for upto 40-70% of their total bill). Global recession played the spoilsport, as Hatim Broachwala, Aviation analyst, Khandwala Securities Limited points out, “The economic slowdown and sharp decrease in domestic air traffic has negated the fall in ATF prices and has thus severely hit the revenue base of both the players...”

Despite the handshake, operating cost-cuts still remain a far cry, as the two carriers own different aircraft types and source from different suppliers in many cases. Experts from the industry have thus reduced the duo’s cost saving estimates by a disappointing 56% to just a modest Rs.800 crore. Experts claim that both airliners have been able to save just a puny 3 to 5% in operating costs, which is easily negated by the sharp decline in passenger traffic and appreciation in other input costs. Even Srirupa Sen, Spokesperson, Jet confessingly explains the delay in results, “...it would definitely take time, as it is a big operation to produce desirable results.” There are also other problems that stare hard at the combine, radical route withdrawls being one. Surely, as many would agree, all strategies adopted in the name of route optimisation definitely don’t fall in the category of ‘route rationalisation. For instance, Jet withdrew its Amritsar-London flight, which was simply a photocopy of the Mumbai-Shanghai-San Francisco route withdrawal. Kingfisher on the other hand, has put on hold its Mumbai-London plan as Jet is already present on that route. Thus this walk down the aisle currently appears marred with problems, one that could also lead to misunderstandings in the future! But having said all that, clearly, the game is not yet over for the kings of the Indian skies. ‘Seeing it through the current ungovernable times’ however, remains the only remedy; but of course, at the risk of having to sell-off even their clothes for lack of working capital!

“Just because we don’t announce everything does not mean the deal is not working. It takes time to work things out,” is how Vijay Mallya, Chairman, Kingfisher justifies the (non)achievements... Yes Sir! We can all raise a toast to that spirit, and we’re willing to wait, for the love of brotherhood (Mallya-Goyal Inc.?)! [By the way, do tell us about your new JV & please, do announce it this time!] We’re holding on tight too, brother!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Vitamin ‘C’ means Vitamin ‘Cola’; right?

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The total size of the Indian beverages industry (including both carbonated & non-carbonated drinks) is Rs.7,500 crore. While a majority of it (80%) is dominated by the carbonated drinks segment, with fruit-based drinks being worth Rs.1,000 crore, the remaining Rs.1,500 crore is accounted for by the non-carbonated segment. Hence for drinks like PepsiCo India’s Nimbooz, Coca-Cola India’s Fanta Apple and Parle Agro’s LMN and Appy Fizz, there exists immense potential in the marketplace considering there aren’t many national players competing on this front. Elaborating on the potential this category holds, Alpana Titus, Executive Vice President-Flavours, PepsiCo India told 4Ps B&M, “The market for fruit beverages is too under-developed with not many players. If volumes go up, investment will automatically drive in the segment.” Interestingly, both Fanta Apple and Nimbooz have been launched under a strong parent brand – Fanta and 7UP respectively. Both these products (Fanta Apple and Nimbooz) have been pitted against Parle Agro’s Appy Fizz and LMN. Both LMN and Nimbooz are positioned as ready-to-drink, convenient and hygienic nimbu pani.

However, while Nimbooz is targeting the ‘on-the-go’ audience by thriving on the ‘Ekdum Asli Indian’ positioning; LMN is being promoted as a healthy drink for both youth and adults by highlighting the medicinal benefit of Vitamin-C in the drink. Commenting on the positioning of LMN, Nadia Chauhan, Joint Managing Director & Chief Marketing Officer, Parle Agro Pvt. Ltd told us, “Imagine LMN as a beverage that is found on business class of some of the most premier airlines of our country and the same beverage you find in the most rural markets of our country.” Both Fanta Apple and Appy Fizz are positioned as a youthful drink. Where on one hand, Fanta Apple compliments the bolder and expressive shades of the youth; Appy Fizz, on the other, is a drink for those fun-filled moments youth enjoys with friends.

But having a distinct positioning would not alone help these companies to capture a fair share of this price-sensitive market. Carbonated drinks have always lied in the low-involvement impulse buying category. Hence it is imperative that PepsiCo India, Parle Agro and Coca-Cola India get their pricing strategies right. The starting price point of Fanta Apple is Rs.8 and Rs.10 for 200ml and 300ml returnable glass bottles (RGB) respectively; Appy Fizz starts with Rs.18 for a 300ml stock keeping unit (SKU). Such pricing may prove to be a big blow to Appy Fizz, which although is a front-runner in the apple flavoured carbonated drinks segment, yet there isn’t much customer loyalty to the brand because the audience for the drink is niche and limited. Secondly, Fanta Apple carries the legacy of brand Coca-Cola India, which is the market leader. Fanta Apple also scores high with its 600ml PET bottle (Rs.22) as compared to Appy Fizz’s 500ml (Rs.25) and one litre (Rs.45) SKUs.

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An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Monojit Lahiri examines the face-off that continues to plague adville and attempts to play ‘referee’!

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Whether advertising drives reality or reflects it remains a ball-breaker, hot-potato and one of life’s enduring and unsolved mysteries. Ad-bashers vociferously insist that the adfrat – like Bollywood – continue to get away with blue murder, invariably falling back on that old, moth-balled ghisa-pita line – “Why blame us? We are only reflecting the times…” – each time an ad of dangerously dubious nature screams into focus. The ad guys beg this lot to shake off their Rip Van Winkle robe, wake up and look around. In a globalised, youth-driven world, firmly in the embrace of new-age attitudes and aspirations, this brand of stone-age thinking, they believe, is both regressive and ridiculous.

Okay, so what gives? Is ethics in advertising really an obsolete word in the age of Britney Spears and Rakhi Sawant... or despite all the new-age blah-blah, do basic human values remain unchanged and a hit in that direction spells doom… or are both sides just over-reacting to this issue and in the process, missing out on the much-needed perspective, focus and main plot?

Eminent media commentator and author, Uma Vasudev fires the first salvo. The veteran writer believes that in these irreverent and youth-driven times “it is a fashionable thing – by shallow, self-proclaimed intellectuals and liberated spirits hysterically anxious to get their posturing right by sounding young – to trash anything that is solid, wholesome, traditional or conventional.” While she heartily agrees that some people tend to get too touchy and hyper to some ads [Sprite, MotoYuva, Axe, Virgin Mobile, Colgate], she suggests that some kind of moral policing must happen. “Remember, one man’s humour can be another’s tumour!”

Ex-Motorola and presently Tata Telecom’s Lloyd Mathias – whose (earlier) MotoYuva TVCs feature strongly in this debate – reacts in his usual, laid-back fashion. “See, advertising is about dramatising, blowing-up and exaggerating slice-of-life moments to make them interesting, appealing and engaging to the readers/viewers, while triggering the purchase intent. This has to be done keeping the sensibilities of the target group in mind. A total connect with them is a given.” Mathias points to the ad where the father raves and rants at his son’s shabby room and sloppy everything, while the kid, with earplugs, rhythmically nods to the song he hears on his audio. “It’s a hugely today’s situation and totally identifiable by most parents of teenagers and also the kids themselves. The ad emerged from human insight and was a light-hearted social commentary on the parent-child scenario of the day. It is not and was never meant to promote parental defiance or disrespect. It’s a tongue-in-cheek take on everyday, real-life face-offs between baap-beta!” Same is the case with all the cheeky MotoYuva ads blitzing the ad space, he insists.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The Boomerang Karma!

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

According to a report by FICCI and KSA Technopak on fuel retailing, the size of non-fuel retailing sales in countries like United States stands at a huge 39% of gross OMC sales! Even in Europe, countries like France have a non-fuel sales contribution of a smashing 35%! Compare that with India, where non-fuel retail contributes a measly figure of only 2% (Rs.1,000 crore). Just imagine the potential!

But to their credit, Indian OMCs are not acting blind. Market reports do now suggest that some Indian OMCs are working double time to cover up. Companies like Hindustan Petroleum Company Ltd (HPCL) have already made it compulsory for petrol pump owners to have a part of the land for retailing. The above mentioned report does suggest that if Indian OMCs can exploit the segment optimally, the market for non- fuel retailing at petrol pumps is going to stand at a whopping Rs.7,500 crore by 2013, registering a minimum 50% y-o-y growth for the next five years. “Petrol pumps in foreign countries are actually developed as standalone shopping destinations in their own right. India has mid-to-long term potential for the success of these retail models, depending on how well it adapts to actual consumer requirements and psyche,” states Sanjay Chugh – National Head-Retail BD, JLLM.

Till now, among the major three fuel retailers in the country – i.e. HPCL, Bharat Petroleum Company Ltd. [BPCL] and Indian Oil Corporation [IOC] – BPCL is one that has been able to make a healthy net profit (with a whopping 25-50% margin, depending on the outlet) from non-fuel retailing mainly because of its own In&Out stores. At the same time, HPCL has recently announced that the company will provide retail space to Vishal Retail. “HPCL has a chain of around 8,000 outlets across India and according to the MoU, we will open our stores or set up warehouses at some select HPCL outlets,” says R. C. Agarwal, CMD, Vishal Retail. Some other Indian OMCs have now entered into exclusive tie-ups with many companies like Nirulas, Dominos, Café Coffee Day et al and even with various banks for their ATM usage to provide retail space at their petrol pumps.

Strangely, while OMCs are generating a lot of interest, airport retailing is still not getting the expected response from the companies, despite non-aeronautical revenues already hovering around 35% of gross airport authority’s receipts. According to the results announced (in mid-Jan 2009) for the bids of the world duty free shops at the six relatively small (if compared to global standards) international airports in India, there were no companies interested in four of these airports – Jaipur, Lucknow, Amritsar and Thiruvananthapuram. However, Coimbatore received two bids; one from a renowned Dubai based airport retailer Flemingo International Ltd. and the other from the state-owned Indian Tourism Development Corporation. At the Pune airport, Flemingo was the only bidder.

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PINING FOR PINT-SIZED WHEELS!

IIPM set to beat economic slowdown

Yeah... this too is about the US financial metldown and its after effects; but there’s more to the Indian consumer’s yearning for compacts than just less money in their back pockets...

After years of oohing and aahing over luxurious sedans, high-nosed SUVs and adrenalin-pumping sports machines, compacts are once again the flavour of the season. If the hype around the imminent launch of Tata’s Nano is anything to go by, there is more at stake here than meets the eye. Even as naysayers were talking about the demise of the Indian small car market, the year 2009 began with the launch of Hyundai’s premium compact i20 and estimates suggest that of the 50 car launches this year, a majority would be in the compact category. Some 563,398 (SIAM) compacts were sold during April-Nov. 2008 alone and every car maker wanting a bigger slice of the Indian market has a plan for the compact segment. Toyota Kirloskar is setting up vast networks throughout the country in line with launching a Yaris derived compact in India in response to archrival Honda Siel’s plans with the Jazz. Both Honda and Toyota are investing massive capital for the same. Last year, with its new plant, South Korean car maker Hyundai also romped up production from the erstwhile 300,000 units to a whopping 600,000 units for its small car designs. When asked about the company’s plans for compacts last year, Heung Soo Lheem, CEO, Hyundai Motor India told 4Ps B&M, “As soon as our new plant comes up, we will bring in a sibling to the Santro.” He followed up his promise with the new i10 and there could be several new compacts in the offing. General Motors India–despite its plight globally–is also basking in the success of its Spark compact in India. Not to be left behind, premium player Skoda has unleashed the Fabia–positioned as a high end mid segment product.

However, according to Indian small car parameters, a car is justifiable as a small car only if it is within proscribed length limits. But the new generation launches will hardly meet these specifications, given that they are substantially larger. Most car makers have to be content with B+ positioning for their products–a segment that’s out side the purchasing purlieu of most buyers upgrading from a two-wheeler. But market dynamics are gradually changing. A mere look at compact sales figures show that the ‘A’ segment is on a gradual decline, while there’s a steady shift toward large compacts. It all began with the Suzuki Swift (in the B+ segment), which intoxicated the nation with its looks and competitive pricing, just as its sibling did in 1982 (in the A segment). Now, first time buyers are becoming more carefree about cost differentials and are rather driven by brag value. A look at the fast rising sales charts is enough to motivate car makers to bring in substantially larger, new generation compacts (almost like a saloon), proving government rules obsolete. After the launch of the Fiat Palio, Indians got a taste of large roomy perceived small cars that were affordable, comfortable and surprisingly easy to drive in congested cities.

Sure, the financial meltdown and liquidity crunch are the key persuaders for consumers opting for compacts instead of copious four-wheelers; but as the market stabilizes, chimeras like the Mercedes-Benz A-class and that lovely Volkswagen Golf GTi (premium compacts) are just as capable of giving a new flavour to the power of small.

Karan Mehrishi

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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FROM CHANDNI CHOWK TO CHINA, HE IS EVERYWHERE

1500-plus IIPM students placed across the country with 44 bagging international offers

FROM KHATRON KA KHILADI TO SINGH IS KINNG, BRAND AKSHAY KUMAR IS RULING BOLLYWOOD, THE IDIOT BOX AND THE AD WORLD!

His is a classic tale of beginning from scratch and making it big on the silver screen! After all, it’s tough for a man with no filmi background to make it so big in the cat-eat-cat world of Bollywood! But Akshay Kumar (or Akki, if you please) with his impeccable charm and effervescence has made it happen. With his no compromises attitude, this Dillii lad has established himself as a brand to reckon with over the last two years.

“Akshay has been in his true element since last 3-4 years. But the major reason for him being a brand is his great looks and modesty, as he represents the great Indian dream, equalised in true sense without any godfathers,” agrees Atul Kasbekar, Chairman & MD, Bling! Entertainment Solutions. True, but the one thing that has worked wonders for Akki is his single minded Khiladi positioning over the years – certainly an evolutionary brand rather than a revolutionary one. No doubt the former grows slowly but stays in action for a longer time. Moreover, Akshay has not just been a top-rung actor in films, but is also among the top grossers as far as endorsements go, with brands like Thums Up, Grasim, Microsoft Xbox and Levi’s already under his belt. But marketers are demanding more. Avers Jagdeep Kapoor, CMD, Samsika Marketing, “Akshay is one brand that has many more years to go. He is definitely incomparable when it comes to core values.” From selling food at a stall in Bangkok to selling pedigree brands, Akki has indeed come a long way. Agrees Kashmira Chadha, Director Marketing,

Coca-Cola India, “As a brand icon, Akshay Kumar has all throughout demonstrated his adventurous skills and has truly brought out the attitude of an Indian male. Action, attitude & adventure are qualities which one closely identifies with Akshay Kumar.” Akshay Kumar has been the brain behind building his own brand and has re-written the rules of the Indian movie business. He embodies the values of originality, sexiness and rugged masculinity that christened him as the global ambassador of Levi’s. “Akshay has lived his life unbuttoned... on his own terms, not dictated by box office norms, industry godfathers or stereotypes. He has challenged conventions throughout – just when the industry gave him the title of ‘action hero’, he demonstrated his forte in romance and comedy. And now when he is being appreciated for his comic roles in his recent blockbusters, he is going back to action movies,” avers Rajesh Gangwani, Sr. VP, JWT.

Even film critic, Taran Adarsh gushes, “Chandni Chowk to China looks promising as Akshay is on a roll these days with successive hits. Hopefully the year 2009 would also have something in store for him.” Now that’s what we call a simple story of a ‘King’ who pays homage to the classic formula of Bollywood movie ‘masala’ magic and that too from Chandni Chowk to Bollywood!

Neha Saraiya

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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And the final dope for 2009

1500-plus IIPM students placed across the country with 44 bagging international offers

Will number of movies reduce? Yes! But more because of worthless ones not even being planned. Will actor fees reduce? Yes! But more because they were anyway inflated till date. Will collection figures go down? Here comes the true blue Iacocca analysis from Shubho Shekhar of Planman Motion Pictures, “In simple and straightforward terms, if the movie is – simply put – good, and if there are no negative factors (like terror attacks) working against it, then recession or no recession, low budget or big budget, the movie will gross above average, if not better.” If Rab Ne Bana Di Jodi has grossed over Rs.60 crores till date (trade reports confirm Rs.25 crores domestic and Rs.8 crores overseas in the weekend itself) despite having an average storyline, we should be perhaps paying Lee Iacocca his rightful due, an apology. Oh yes, Iacocca never made a movie in his lifetime. And the company he ran – Chrysler – is about to file for a billion dollar bankruptcy...

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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On improving affordability...

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What reasons do you attribute to the prevailing slump in the auto sector?
Though the auto industry is witnessing a slow growth, but so far it still looks positive. It is a cyclical industry and is used to such downturns in the past. The overall economy is slowing and sentiments are weak, thus customers are postponing their buying decisions. With low penetration level and growing middle-class, the auto industry in India has a bright future, both in the medium and long term. Most manufacturers are betting on their future in India & China, where this industry is growing at its fastest. This is also evident from the fact that some more manufacturers are setting up base in India, taking advantage of the low production costs and growing domestic market.

So can we expect the end of this dark tunnel soon?
This is the time to tighten seat belts and increase efforts in terms of marketing and reach out to customers instead of waiting for them. It’s the right time for manufacturers to review their network strength, and build upon it, look at supporting the network to improve efficiency and financial health. This strong network will come handy as the situation improves...

What should the companies do to attract more buyers?
The companies need to focus and concentrate on small car production. India being a price sensitive market the manufacturers need to make cars more affordable...

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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The stink of a sink

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Ask Binit Somaia, the Sydney-based Director of Centre for Asia Pacific Aviation (CAPA) and he is quick to condone the Kingfisher-Jet alliance in view of the pathetic state of aviation businesses in the country. “This alliance will rationalise capacity and in turn should improve the financial performance of all players. There will be an increase in prices, but fare increase and higher load factors will improve the health of the industry,” he told 4Ps B&M. Clearly in favour of an increase in overall air fares, Somaia is obviously disturbed by the obscenely high operating costs in the industry.

But critics believe that the overriding fear of Jet and Kingfisher coming together is that of a price rationalisation, along with route rationalisation. They argue that the deal may invariably result in some sort of price fixing between the two, which will eventually lead to steeper air fares. Goyal has been in any case rooting for a hike in air fares from time immemorial. And if these full service carriers increase fares, then their respective low cost interests (JetLite and erstwhile Deccan) which they had acquired sometime ago will also reflect the upward pricing graph.

Now consider a situation that the combine (which controls over 60% of the domestic market) has upped prices in tandem. Obviously others will follow suit, including the till-now independent low cost airlines – Indigo and SpiceJet! So is this the end of the low-cost flying model that the country had embraced only a few years ago? Already due to fuel surcharges, the fare difference between a low cost carrier and full service airline has trickled down to as low as 6-7% on may routes. Any route rationalisation by Mallya and Goyal will mean cutting down supply further, automatically boosting demand and thereby prices. So, even without the high fuel costs, the low cost model seems to be in a flux of sorts.

Avers Narula, “Financially troubled low cost airlines would not be able to compete with the Jet-Kingfisher combine who control over 60% market,” adding that state-owned Air India too would hardly be a match for them.

But Harshvardhan, Chairman, Starair Consulting differs. “First of all this is not a cartel, it is just a short term alliance. And second, it can’t kill the low cost model. Low fares require cost reduction and taxation on fuel can play an important role. When this is reduced, low costs carriers will benefit disproportionately.”

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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If we are a caterpillar, we are a caterpillar on steroids!

H. E. Mr. J. Wutawunashe, Ambassador of The Republic of Zimbabwe talks about Zimbabwe’s readiness to accept Indian brands with Manish k. Pandey...

How is Zimbabwe different from the other African markets?
Zimbabwe’s market can be perfectly placed within the global context. In our interaction with the global market in which we operate, our tastes have been shaped in part by Africa, and in part by the world at large. The technology and products used by the Indian market have been found to be appropriate for Africa and Zimbabwe. Zimbabwean people have a high level of adaptability, in both production and consumption, hence great potential is offered to business houses from India & elsewhere.

While China has till now adopted a largely heavy industries led investment approach in Africa, India’s approach is more entrepreneur and brand led. How do you think these two different approaches are going to help Africa, particularly Zimbabwe, in the long run?
India, too, does have a capacity and an appetite for heavy industry, and has a high global profile in industries like coal and steel. Africa is ready for Indian brands, and some prominent ones like TATA, Swaraj, Mahindra, Sonalika, Kirloskar and so on are well known. A recent development in Zimbabwe was the arrival of Hindustan Machine Tools by way of the Indo-Zimbabwe Technology Centre project. We are convinced that the time has come for Indian brands to popularise themselves in Africa through deliberate efforts in market development, in the same manner in which these brands popularised themselves in India by developing the domestic market. This means setting up production units in Zimbabwe and other African countries, which is superior to merchandising from afar. The secret is to be actually present in the market in which you want to stimulate a demand for your product.

Critics say that Africa is fast becoming the testing ground for India Inc.’s ‘brand’ war with corporate China. What’s your take on this?
Those critics should get real jobs. Why should brands that do not fight anywhere else be said to fight in Africa, a continent that has space for more brands than are on offer? Africa’s plan is to industrialise, and in our growth market, brand complementarity is the buzzword. In Zimbabwe, we are fortunate to have citizens of both Indian and Chinese origin, and for us the prospect of joint ventures between Zimbabwean, Indian and Chinese industrialists and entrepreneurs is not far-fetched. It must not be forgotten that, if ever there is a competition, Zimbabwean brands and brands from elsewhere in Africa will be in the mix, because we do have competitive brands in Africa. The arena for such competition will not necessarily be Africa.

Is the time really ripe to enter the African market?
Africa is an attractive continent, and that is why so many myths have been spread about her. It is true that in the past, those who were having it good in Africa at Africa’s expense saw advantage in spreading a distorted image of Africa to discourage prospective competitors, particularly competitors from Asia. Centuries ago, the Portuguese found vibrant trading partners in the Munhumutapa Kingdom of which we are proud descendants. The fact that colonialism interrupted Africa’s normal commerce does not mean we have lost the instinct. Visit the market in Lagos, in Dar es Salaam or in Zimbabwe’s Chitungwiza, and you will realise that all this talk about caterpillars that you step on – and why step on living things anyway – is based less on fact than on ignorance. Shall we talk about Zimbabwe’s gold and platinum, or the rapid pace at which vehicles are being assembled in Harare? What about the sugar plantations that give the highest yield per square meter in the world? What about the fabulous tourist safaris on the Zambezi or the sophisticated banking sector that gives good business to major Indian software developers? If we are a caterpillar, we are a caterpillar on steroids!

What, according to you, are reasons behind their (India and China) renewed focus on Africa?
Africa is a good source of energy products and raw materials, and it is natural that countries that are industrialising at a fast pace should look to our continent for a mutually supportive relationship in these areas. Africa is also a growth market that appreciates products from Asia, and it is a smart move for Asia to respond as positively as we can see in the various initiatives. Industrialists correctly recognise Africa as an opportunity for high returns on investment, as the headroom for production and marketing is high. Zimbabwe is keen on joint venture partners from India, who will benefit from concessions under our Look East Policy. A one stop investment centre, the Zimbabwe Investment Authority, is charged with expediting investment proposals.

What, according to you, are the emerging trends and markets in Zimbabwe?
The emerging trends and markets in Zimbabwe include: Mining (platinum, diamonds, coal, gold, phosphates, et al), Agro-based Products (cotton, tobacco, horticulture, fruits, et al), Agricultural Machinery and Fertilizers, Tourism (Victoria Falls, Hwange National Park, hunting, et al), Power and Water Infrastructure, Software, Pharmaceuticals and Industrial chemicals.

How do you think the West would react (rather is reacting) on the growing dominance of Indian and Chinese brands in Africa?
If I were a western entrepreneur, I would begin to worry about market share, and would adopt strategies to out-compete the newcomer, particularly by setting up more manufacturing units on African soil. If I were an Indian entrepreneur, I would try to be quicker on the draw.

What is your advice to Indian brands who want to be successful in Zimbabwe?
My advice to them is: emulate those whom you want to compete with – the West – who because of colonialism has been put exclusive. As you come from Asia you are welcomed but you must act accordingly and not hesitantly. It’s known the moment an Indian company stands ready to use its own resources, the moment an opportunity in America crops up for it. The same enthusiasm, if not more, needs to be shown by them in order to tap an opportunity in growth market like Africa. They should use their own resources and not wait for handouts from the Government of India. They are just supports & cannot be the main growth driver for them.

First, European colonisers. Now, global businesses.

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But Chinese brands are not far behind. In fact, if one considers B2B (business-to-business) transactions, they seem to be way ahead of their Indian counterparts, to the extent that China is Africa’s third-largest trade partner, after US and former colonial power France. A report by China’s General Administration of Customs says that bilateral trade between China and Africa will exceed $100-billion by end of 2008, two years earlier than predicted. The trend can be attributed to rising shipments of natural resources to China, especially crude oil, metals and minerals. In the city of Rwanda, for example up to 80% of all new roads have been built by Chinese money. In fact, during the first half of 2008, exports to Africa from China rose 40% to $23-billion (Chinese Customs Authority). On the flip side however, over 70% of Chinese investments are concentrated in just about four countries that include Angola, Nigeria, Ethiopia and Sudan.

So why has Africa suddenly become hot for Indian and Chinese brands? Says Saurabh Nanda, Executive Director, Nature’s Essence, an ayurvedic and natural product company from India, successfully operating in South Africa, “The uniqueness of the African market lies in its quick acceptance of new product categories, which is rarely seen in other communities.” Agrees Sudip Bandyopadhyay, CEO, Reliance Money, “Even the financial services market is under developed and the opportunity is significant.” Sood however cautions, “Private capital will flow where opportunities appear. But they cannot succeed without good governance in the long run.”

Moreover, fuelling their growth at home, China and India are also desperate for new markets to sell goods. And Africa is the perfect destination. Further, the two countries must find more raw materials to fuel their boom and Africa suddenly pops up on their radar. China, which accounts for a fifth of the world’s population, has seen its oil consumption rise 35-fold in the past decade and it’s Africa that is now providing a third of it – a reason why state owned companies like CNPC, China Exim Bank, CNOOC, COBEC and Sinosteel are present there.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Surely, pure low-price play isn’t working too well for the giant

What’s in a name? Well, with due apologies to Shakespeare, there’s actually everything in a name; at least in the world of retail! Don’t you agree? Then answer this: what name first strikes a familiar tone in your temple when you hear the words ‘global retailing giant’? The chances are that almost every individual would return a punching response – Walmart! Now, that’s partly because of its low-cost offerings and partly because of Sam Walton and his vision for the brand. Today, this Arkansas-based retailer is the largest corporation in the world (no. 1 on the Fortune Global 500 list) and has therefore undoubtedly become the largest retailing mammoth in the history of the planet, as the numbers prove: a swashbuckling $379 billion in revenues for the year-ended 2007 (equals to 32% of India’s GDP) and is still hopeful of reaching newer heights in the face of the monstrously decelerating economic slowdown. But while the world of finance is crumbling everywhere around this gargantuan entity, it is snuggly seated in the cockpit with its low-price model of business giving to the consumers what they really need at a time when liquidity is not at its best for both the economy and the individual households. Surely, at a time when conspicuous consumption is slated to reach its lowest levels in over a decade and a half, Walmart stands tall above the clutter of retailing giants as Liz Crawford, President, Crawford Consulting confirms, “Some retailers will go out of business, and others may consolidate for economies of scale. But Walmart is at an advantage, because it already has economies of scale as well as integrated operations.”

Noticeably, this advantage is because the retail chain carries the legacy of Sam Walton who is the personification of the globally accepted ‘low-cost factor’, and which still stands as a truly reliable foundation for this retail chain. However, many experts also argue that Walmart hasn’t been able to add any extra pages in its book of success post the Walton era, except the fact that every year, for the past decade, it’s revenue has risen (something which was a direct spillover of global economic prosperity)! So has the company lost its sheen with time, and especially when we compare it to the Sam Walton era?

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

Tushar Dhingra

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Tushar Dhingra: Apart from creating content, the focus at BIG is equally strong on cinema distribution. And BIG’s participation in the same, starts from multiplexes and exhibition space (under Adlabs) to film processing and animation studios (through acquisition of Anirights) to distribution of music and home videos. And while Ramanathan takes care of content creation, Tushar Dhingra (COO, Adlabs), Kamal Gianchandani (COO, Bigflix.com) and Kulmeet Makkar (CEO, Big Music and Home Entertainment) handle the distribution in the entertainment value chain, although in different ways. Dhingra takes care of exhibiting movies content via Adlabs’ multiplexes (Adlabs also produces movies). An MBA from Institute of Management Technology, Dhingra was earlier with arch rival PVR Cinemas. Avers Dhingra: “All our businesses complement each other. Our cinema content supports the distribution business and vice versa. In future, we may look at releasing movies exclusively in Adlabs Cinemas.”

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Return of the Jedi?

When IIPM comes to education, never compromise

ICL is also planning to expand its Bollywood party and get some more glitzing star to add glamour. “We are in talks with a lot of Bollywood stars. A lot of them are showing interest. But it’s still too early to name them,” Shariq shares with 4Ps B&M. And it’s not just the stars from tinsel town, but even the blue-eyed boys of corporate India who are also in talks with ICL to pick up a stake in various teams. This may happen by next year as the valuations are still to be agreed upon in order to finalise the deals.

ICL is also gearing up to attract television audiences. The recent tournament will be shown live on Ten Sports and Zee Sports. However, the question is will the advertisers show interest in the ICL? Basabdatta Chowdhuri, CEO, Madison Media Plus is quick to answer, “There is an interest among the marketers for ICL because there are no other important tournaments in October this year. So marketers who are targeting the male audience are keen on ICL and will come aboard if they get value for money.” Companies like Rasna, Vadilal et al are negotiating sponsorship deals with ICL. According to the industry experts, a lot of advertisers (both national and regional) want to advertise with ICL as it would break the clutter during the festive season. Another interesting fact is that a lot of regional advertisers are showing increasing interest in ICL as the game is connecting strongly at the regional level with celebrities like Vishnu Manchu and Mithun Chakraborty on board. A hoard of regional advertisers from states like Andhra Pradesh, Gujarat, Punjab et al are interested in ICL. Last season’s sponsors like Dabur, Cotton County, Rishi Cements et al are expected to join this season too, “We are on the verge of closing deals with many new sponsors. By October 10, when the tournament commences, we are sure that we will be all booked up again,” adds Shariq confidently. “A good thing in favour of ICL is that the rate card to advertise is pretty low as compared to IPL or other international matches… this is generating a lot of interest among advertisers as they can strike valuable bulk deals,” says a media planner.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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4Ps Power Brand Awards 2007
Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...