Not A Happy Ending Yet

IIPM PUBLICATION

One of the critical success factors for the steel sector will be captive iron-ore mines. Principally because of this highly scarce resource, the sector is magnetising players like Posco & Arcelor Mittal. Both have plans to set up 12 MTPA plants each. But at the moment, the government is refusing to play ball, leaving the players high & dry. Additionally, with more and more foreign players like Sinosteel, Nisshin et al planning to set up steel plants in the country, this battle for captive-iron ore mines will become more malevolent. Besides, energy supplies, hurdles inprocuring raw materials, logistics et al can act as mood dampeners. Sustaining the low cost advantage will be another mammoth challenge.

The story for other metal sectors is not very different. For expansions, most players have taken significant debt and servicing them is difficult task. Currently, the debt/equity ratio of quite a few companies has taken a hit. K.M. Birla admitted on the Novelis acquisition, “The current debt-equity ratio of Hindalco, at 0.2-0.3 will definitely go up.” In future, it could become worse. Most of the metal sectors are now moving past their mid-points in the up-cycle. Overall plateauing of demand is a big threat, considering that these companies rely heavily on operating leverage. If this time the downturn comes up, the impact will be more severe. Are the metal players ready for this eventuality, or will those good ol’ skeptics be proved right once again?

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Aspiring for ‘More’

IIPM BEST B-SCHOOL

AV Birla Group now plans to diversify into retail

What is required to build a spectacular, unfatomable global footprint? The $24 billion Aditya Birla Group should know. The group has 50% of its revenues pouring from its operations across the world. The combined turnover of the group was $9 billion in FY ’07, as compared to $6 billion in FY ’06. Profits were at $1.25 billion in FY ’07, as against $0.73 billion in FY ’06.

The K. M. Birla-led group made reverberations with the entry in the telecom segment by way of Idea Cellular acquisition in 2006. The $6 billion acquisition of Novelis, an aluminum rolling and recycling company, in 2007 showcases a gargantuan appetite for expansion, which is also being seen in the cement & VSF, where the company is making massive expansion plans.

And now, albeit a trifle late in the day, the group wants to enter retail with the brand name ‘More’. Birla reveals, “Our mission is to change the way people shop. We will give them more.” Surely, the investors would not mind ‘more’ either!

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Capitalising gains & goods

IIPM PUBLICATION

The capital goods sector will continue to see robust order intake as economic activity in infrastructure, including power & manufacturing, remains strong


Ever since the planning process started in 1951, the Indian industrial strategy has been centered around the growth of robust engineering. The capital goods sector is the backbone of any developing economy and stronger the backbone, the healthier the growth. This backbone of the Indian economy has seen a splurge of growth for the last few years. Robust order book position, continuing and relatively high order intake, backed by investment growth in the country and strategic moves on the part of the industry constituents in augmenting capacity, upgrading technology, expanding product offering has helped the industry to sustain strong growth on a higher base at both earning and revenue levels. According to FICCI, the sector has grown at the rate of 17.8% in FY07, as compared to 16.3% in FY06 and imports at $54.7 billion, 36.8% higher than last year.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Public Interest?

IIPM going global

The State must get over its control mentality...

There appears to be a strange sense of déjà vu every time you watch or hear the Union Minister for Information & Broadcasting ‘reassure’ the nation that he is not keen on controlling the content that flows out of the dozens of private news channels across the country. In the same breath, the Minister criticises the news channels for peddling sensational news. Twice in 2007, Priya Ranjan Das Munshi has banned the telecast of two general entertainment channels for having the gall to show obscene visuals to the vast masses of India. In the backdrop of the growing intolerance of the Indian society towards freedom of speech and expression, the musings of the I&B Minister appear even more alarming.

There is no doubt that some news channels are making a mockery of the very word ‘news’. Stories of love affairs between professors and students, of a snake chasing a woman endlessly, of a man forecasting the precise time of his death, or even of a starlet claiming to be the wife of Abhishek Bachchan do stretch credibility. There is no doubt that television news channels in India are sometimes literally going berserk while providing breathless round-the clock coverage of trivia. Yet, it is incomprehensible to even think that the I&B Ministry and the bureaucrats in the ministry start dictating what ‘proper’ news is; and what isn’t. The logical destination of this creeping censorship would be a throwback to the dark days of Emergency, when freedom of speech and expression was trampled upon and destroyed. The Minister must recognise the fact that the freedom of the media is non-negotiable and that he cannot invoke tired old clichés like ‘public interest’ to try and gag the media as and when his whims take over. During the British Imperial rule, the State frequently invoked ‘public interest’ to perpetuate Imperialism and throttle voices of protest. After Independence, the Indian State took over the job of dictating what ‘public interest’ is. The I&B Minister really has no business to tell news channels that they should refrain from using terms like ‘Meena’ and ‘Gujjar’ while covering the recent upheaval in Rajasthan. How will telling it as it violate or disturb ‘public interest’?

Frankly, ‘public interest’ has become a bit of a joke as the term merely provided a fig leaf to hopelessly corrupt bureaucrats and politicians to shield themselves from scrutiny and accountability. That’s why you find bureaucrats not complying with requests under the Right To Information Law by blandly stating that ‘public interest’ is involved. The Minister must realise that bad old days of control and more control are over. A democracy needs a free media.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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