FLANKING AWAY TO GLORY

At a time when auto majors like Tata Motors have been painted in deep red, market leader Maruti Suzuki has been pulling all stops to move ahead SWIFTly

SHASHANK SRIVASTAVA, CGM-MKTG., MSI

Did you know that the design for Maruti Suzuki’s bestseller Swift was initially rejected on grounds of being far too radical? “Even months after it was launched in 2005, Swift wasn’t able to generate desired volumes for us,” avers Shashank Srivastava, Chief General Manager-Marketing, Maruti Suzuki India. Even Maruti’s long standing dealers doubted the potential of this car. They perceived it as ‘made for tech-freaks’ initially.

Today, honchos at Suzuki must be thanking their stars that they stuck with their plans for nurturing the Swift at that time with a carefully selected team of ‘Swift Champions’ to push Swift sales. Not only has the car delivered Maruti from the bane of being known as a small car maker, but the model also cornered about 70% of the market share in the premium A2 segment, adding significantly to the car maker’s bottomline in FY09. “You may not be the first mover in a particular category but catch that place in the consumer mind, the race is half won,” says Srivastava, referring to the fact that even though Hyundai was the first to launch a ‘premium compact’ car in India (Getz), in popular perception Suzuki Swift wears that honour. The launch of Swift DZire in March last year ensured that Suzuki created more than a splash in the sedan segment too during the last fiscal.

But this is not just about Swift. Fact is that Maruti, which sells every second car in the country, has been driving smoothly for a long time now. The key strategy is to create new segments within segments and flank its own offerings. Market watchers believe that it is this strategy that helped the company to smooth sail even during October-December quarter last year when auto sales saw a steep fall. Sure, like other auto majors, the year on year domestic sales growth for Maruti has been minimal, but the auto maker has registered mind boggling net profits of Rs.12.1 billion. While the steep profits were partly helped by its exports that registered a growth of 32% in the last fiscal, the bulk of the credit for beating the slowdown blues goes to the growth generated from clutter breaking models like Swift DZire and A-star. “DZire has eaten on to the sales of SX4 but overall it has expanded our share in the A3 category,” adds Srivastava.

In fact, experts believe that the A-star can be the next iconic product for Maruti Suzuki as the car is successfully positioned as one for the cool young urban consumer. Apart from creating new segments, the company’s expanded reach in India’s hinterlands has also helped it to maintain its profitability. Going forward, Maruti expects the rural contribution to its total sales to go up from the present 11-12% to 19-20% in the current fiscal. And then there is the high level of consumer trust and reliability that has been working in brand Maruti Suzuki’s favour even in times of slowdown. Just one worry though. Maruti is continuing to ride high on models made on the Swift Platform (DZire and Ritz), which can surely upset the company’s apple cart when a more innovative competitor saunters in. For now, Srivastava is also predicting a robust FY10 for India’s auto czar!

Pawan Chabra

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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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Airtel knows that the key to capitalise on its growth prospects is to provide its customers a consistent, high-quality experience...

Subscriber strength of 100 million and counting… that’s Bharti Airtel for you! One of the oldest and the largest telecom players in India certainly knows how to take good care of their subscriber base and the latest ICMR and 4Ps B&M research data is testimonial to that fact. Being one of the first players in the Indian telecom industry, Airtel got its hands at the la crème of the Indian consumer-base and over the years it has only strengthened its grip further to stay put at its numero uno spot. “At Airtel the customers are always at the heart of all the things that we do and we take extra effort to ensure their satisfaction,” Sunil Bharti Mittal, Chairman, Bharti Airtel tells 4Ps B&M the reason why the brand Airtel scores high in terms of customer service in the Indian telecom arena.

In the early days of its existence Airtel was seen more as a premium brand that gelled well with the lives of rich and famous. But, as the competition grew and mobile services became more affordable, Airtel did a seamless transition – from a niche brand to a mass brand that not only was known in all nooks and corner of India, but also appealed to all classes in a similar fashion. In fact, Airtel is always known to offer best in class service to all its subscribers irrespective of whether it is a high usage customer or not. What has now added to Airtel’s advantage is its huge network and its growing reach among the consumers. But then, with competition intensifying in the Indian telecom services market, Airtel now needs to focus more on developing new services, so that it could maintain its leadership in terms of subscriber base and set it apart from its competition.

However, in the past few years there are many first that the company has offered keeping in mind the Indian consumers. For instance, Airtel claims itself to be the first player that offered its customers the lifetime validity option. “We realised that there was a big customer base in India that was using mobile handset only to receive calls and that led us to introduce lifetime validity option on the pre-paid cards. This is a unique offering that is available only in India,” avers Sanjay Kapoor, Deputy CEO, Bharti Airtel. Even at the pricing front Airtel claims itself to be the first operator in India to lower the tariffs for the long distance calls (STD) to a flat rate of Re.1.

Certainly Airtel knew that the key to capitalise on its growth prospects was not only to establish deeper and more personalised relationships with its customers, but also to provide them a consistent, high-quality customer experience. Now that’s how they have travelled sea to shining sea!

Surbhi Chawla

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

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Naukri on the prowl - Did you hear from them?

Professor Arindam Chaudhuri’s Profile

Brand : Naukri.com
Agency: FCB ULKA

H for Hitler, A for arrogant, R for rascal, I for idiot. The campaign with an original yet humourous storyline potrayed the employee’s psyche ‘not quitting their jobs but their bosses’ and succesfully positioned Naukri.com as the No.1 job portal website of India. Hari Sadu,the chief protagnist, a fictitious character, became synonymous with a pesky and arrogant boss. The message was clear, treat your employees well or Naukri is on the prowl. The campaign which defined employees right in terms of choice, won the Effie at Singapore & CASBAA Advertising award.

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

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Brand: Ericsson

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Agency: Enterprise Nexus
The One Cup Coffee Please ad, conceptualised by Prasoon Pandey, was made in an era when wireless telephony had just swept upon Indian shores. Ericsson became a rage and the campaign won India its first metal at Cannes.

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

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APRIL’S FOOL PROOF STRATEGIES

Four Phase of IIPM Global Plans

Much before April approaches, corporate honchos start having sleepless nights, crossing off days on the calender. The shivers come as much from the prospect of burning tons of midnight oil to prepare the financial report cards of their overtures (or failures) in the year gone by, as from the mammoth task of ideating and implementing fresh stwrategies for the new fiscal. Some of these strategies pay off and others don’t - waiting till next April to be praised or castigated in the next financial report card. Our team could not resist the temptation of compiling this snapshot of some fool-proof (or foolish) April strategies of the last few years...

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

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IN SEARCH OF SALVATION...

IIPM : One of the leading and most respected business schools

As far as front-end is concerned, Vishal Retail is either resorting to re-sizing, re-locating or shutting a couple of stores on account of non-performance. “If Vishal Retail is not getting adequate return on investment from certain stores, then shutting them down is a viable option,” reasons a Delhi-based analyst. In fact, out of the total 187 stores (including hypermarts and small format stores) across India covering 300 million sq. ft. of retail space; Vishal Retail has already shut down close to 7-8 stores. Few stores, where RoI (return on investments) is not up to the expectations, it has resorted to pruning of its retail space (which is averaged at 30,000 sq. ft.). “Bringing down the retail space helps us to save on SKUs, manpower, electricity and per square feet return increases,” avers Khemka. In other cases too, Vishal Retail has either relocated its stores or renegotiated land rentals with the landlord (to the extent of 50% in some cases).

But then, just consolidating its operations alone may not be enough for Vishal Retail to make its way through the high tide. The retailer has recently seen its key personnel resigning from the company. Even its expansion plans have come to a halt for the time being, with over 20% inventory pile-up. Moreover, the winter sales were also not impressive enough to write back home. Therefore, the main area of concern for the retailer right now is to improve sales and get rid off the high debt lingering over it.

In fact, Vishal Retail has already started playing aggressively with its pricing and promoting its private labels to beat the slowdown heat. “Of the total apparel inventory we stock in our stores, 85% is our own private label,” proclaims Khemka. A right move as the company gets huge margins from its private labels. For instance, while on branded FMCG products the company gets a margin of 16-17%, on its own FMCG products the margin is as high as 25%. Sources close to the company also confirm that the retailer has plans to tie-up with the local kirana stores to promote their private labels. In return, Vishal Retail will look after the kirana store’s supply chain and work on a revenue sharing model. However, Khemka has refuted any such tie-up in the near future and says there are no such plans.

Be that as it may, cornering Vishal Retail as an odd retailer with huge debt liabilities may not be correct. Consider this: Pantaloon Retail (India) Ltd. and Shoppers Stop Ltd. have increased their expenditure on interest by 77.50% and 311.07% (!!!) respectively for the quarter ended December 2008. It was debt of Rs.6 billion, severe liquidity crunch and inability to make payments to vendors that led to the closure of 1,600 Subhiksha stores. While the risk of Vishal Retail may be limited to 180-odd stores, but it is certainly a worrisome situation for the retailer as maximum profitability must be extracted out of these stores to overcome the liability. Although efforts are in progress, but Vishal Retail really needs a hard-hitting turnaround strategy to live up to its name, literally!

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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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This summer, marketers dare to explore the non-cola territories. And Savreen Gadhoke & Surbhi Chawla dare to forecast the outcomes...

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

You must have heard a wiseman say this long back: “Love is to the heart what summer is to cola companies...” Alright, I admit, I was the wiseman, but really, that line does make a world of commercial sense! Summers have set in with its usual severity. Scorching heat, temperature soaring above 40 degrees, horse-like sweat, parched throats – this is perhaps what most Indians associate summers with. And summers being the first love of cola companies, the age-old bloodbath known as cola-wars (of course between titans Coca-Cola India and PepsiCo India) continue this season too. A lot of brouhaha is doing rounds in the Indian cola industry. Ending its 13-year long association with King Khan, PepsiCo recently terminated its contract with the superstar. SRK’s IPL team, Knight Riders too dropped Pepsi from its portfolio of sponsors and signed Coca-Cola India’s Coke brand instead. But this newsy fight is passé and the war has moved a level up. Recently, Coca-Cola’s lemon-flavoured aerated drink, Sprite, zoomed past Pepsi (as per ACNielsen) and sat proud occupying the number two slot with 14.6% market share in soft drink sales in India. With Thums Up already at the top slot, Coca-Cola India reigns over the black cola market with a consolidated market share of 57.8% as compared to PepsiCo, which commands a much lower 35.6%. But, the fight will get more intense this time, as the brawl has moved beyond the obvious & into ‘non-cola’ territories.

Last fortnight, PepsiCo India launched Nimbooz, a non-fizzy lemon juice with no artificial flavours under its 7UP brand. Giving it competition is Parle Agro’s natural lemon juice, LMN. On the other hand, Coca-Cola India too extended its brand Fanta and launched fruit flavoured aerated soft drink, Fanta Apple. Hitherto, Parle Agro’s Appy Fizz was the lone player in this segment with a complete control over the market for fizzy apple drinks. As beverage companies demonstrate their fascination toward lemon and apple drinks, carbonated black cola drinks may take a back seat...

But why a sudden affinity toward fruit-based drinks? The Indian consumers have, over the years, grown to be more health-conscious. With increased awareness about harms caused by the consumption of carbonated cola drinks, the consumers are seemingly wary about their health. And quick to encash on this frenzy of health consciousness, marketers have flooded the market with their fruit-based drinks harping over the health-quotient of the drink. And the one who gets to eat the juicy market share in the end will be the winner of this fruity fight.

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

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DRAWING COMPARISONS

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“In the western countries, it is the cable wire that also delivers broadband, and the companies should be looking at making use of the cable wire that is going in every household to make broadband popular,” informs, Sukanta Dey, President (Emerging Business), Tata Teleservices. It does sound as an innovative solution but is a misfit in the Indian context. “The cable broadband would require an integration of the broadband with the cable operators but as of now the cable sector itself is highly unorganised,” explains, Prashant Singhal, Telecommunications Leader, Ernst &Young. There are a great deal of synergies possible between cable and broadband as is seen in several developed markets where IPTV (a combination of these services) has gained much popularity. However, even though cable operators have fired all cylinders for market penetration, strangely broadband operators have remained numb. As a matter of fact even players like Sify and Hathway, which offer both broadband and cable while being around for quite some time, have not been able to do much in this direction. Apart from these there are BSNL and MTNL who are offering triple play services but the lack of awareness of their offerings ensures that there are no takers. The telecom market leader has just entered this arena with the launch of its IPTV (available only in Delhi) and it is expected that it would undertake some form of branding exercise in order to increase awareness. Sagar Mahableshwar, NCD, Redifusion Y&R, (agency for Airtel telecom service) reveals, “We are working on a campaign on broadband and it would be on air shortly.”

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Pawan Chabra throws up a stubbornly interesting claim that airport authorities

and even oil marketing companies – should learn to make money from beyond the promised land, specifically, real estate...

It’s called the Boomerang Karma and it doesn’t need stuporous intellect to fathom. Pretty simple actually, and can be consolidated in my modified karmic conjecture – ‘What goes around, comes around... only if you throw it at the right angle!’ My conjecture centres around airport authorities and oil marketing companies and their ‘boomerang’, that is, the real estate they own; or rather, the investment locked within the huge tracts of real estate. And my hyper intuitive argument goes that to get their true returns on investment, airport authorities and oil marketing companies (OMCs) need to look beyond flying planes and selling oil! And where, dear Watson, should that be? Elementary, dear Holmes, just around the corner!

For the answer, ask yourself – the last time you were waiting in an airport lounge for catching a flight, what were you thinking of purchasing, other than of course cursing the fog for the delay? Bingo! There’s the answer. From selling food, drinks, books, apparel, accessories, shoes, gifts, to even providing for ATMs to get cash, airports are typical captive markets teeming with prospective consumers. And that holds considerably for even petrol pumps that can be exploited in more ways than just by selling fuel!

But what’s the real scene in India? “We make most of the money by our core business i.e. by fuel retailing and not by other activities. The scenario in India is very different as compared to the western countries,” confesses an HP petrol pump owner in Delhi requesting anonymity. It is true that the Indian retail industry is literally burning from the slowdown in the industry; and that’s the case with both low cost retailers like Subhiksha who are struggling to stay alive, and other regional retailers who are suffering a severe problem of cash crunch. But Airport Authority of India (AAI) and OMCs have the potential to make hay even while the sun isn’t shining. The reason is very simple – retail, despite the slowdown, is still one of the largest and fastest growing industries of India and with a contribution of over 10% to the country’s GDP, it accounts for close to 8% of total employment in the country.

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

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BOLLYWOOD IN ITSY-BITSY MODE

IIPM set to beat economic slowdown

Small has been beautiful for Bollywood in 2008 and as far as 2009 goes, the jam on Bollywood’s slice is all set to match the flavour

Like India Inc., the slowdown sentiment has bitten tinsel town - a place where suited buited corporate types have become the norm rather than an exception. “2009 is likely to see fewer movies and I think actors will see less but more interesting work,” says filmmaker Pritish Nandy, firing the first salvo.

So will 2009 have more small budget movies? “Yes,” if ex-editor of Screen and Filmfare, Rauf Ahmed is to be believed. Says the veteran, “In 2008, movies with a small or moderate budget worked well. We’ll see more of the same this year.” Movies (with budgets upto Rs.12 crore) like Mithya, Aamir, Welcome to Sajjanpur, Jaane Tu..., A Wednesday, Rock on, Fashion, Oye Lucky Lucky Oye, et al made fabulous moolah at the box office. “Jaane Tu is the biggest example of modest budget films working in 2008 and the trend will continue,” offers Shubhoshekhar Bhattacharjee, CEO, Planman Motion Pictures. Movies like Luck By Chance (from Big Pictures and Excel Entertainment) and Dev D (from UTV’s stable ) will be the first few movies in this genre to test the waters in 2009.

In boom time, the major focus is on top lines and attracting big numbers. But in a slowdown, people start focusing on the bottom line because that’s what helps to keep you going when the going gets tough. The risk in a small budget movie is less since a smaller investment is at stake comparatively. Even if the movie does average business, costs are easily recovered. Plus a greater focus on script at least ensures that the multiplex crowd is attracted. “You know that you don’t have a Shahrukh or Akshay to save you, so you work harder on the script,” argues Imtiaz Ali, the maker of Jab We Met. Producer Vipul Shah adds, “This year, the script will be the barometer of the film, not the star cast.” Sanjay Mehta, arguably the biggest film distributor in Delhi adds another dimension, “Multiplexes need small films as they have multiple screens and multiple shows in a single day. One obviously does not have a big film releasing each of the 52 weeks of the year to keep all shows running.”

But some disagree, arguing that big budget movies like Ghajini (which has broken all industry records, raking in over Rs.200 crore) are the face of Bollywood. They are not wrong. In fact, mega bucks and mega starers like Ghajini and Rab Ne Bana Di Jodi continue to conquer every movie-goer inhibition viz. terror attacks or tight pockets. But sample this: at least 15 movies (taking a conservative estimate) were released in 2008 with budgets ranging from Rs.20 crore to Rs.50-60 crore. Only three of them (Ghajini, Rab ne and Singh is King) became a rage at Box Office. Movies like Love Story 2050, Drona, Yuvraj, Tashan, God Tussi Great Ho were disasters. Race and Jodha Akbar did well, but they were nowhere near Ghajini or Rab Ne in terms of collections, leaving just the big three (above) balancing the Bollywood balance sheet for big flicks in 2008.

This is not to say that big budget movies won’t be made in 2009. But since liquidity is a concern, they’ll be made with a lot more caution. Movies with swanky Rs.50 crore budgets will certainly not be the popular choice for film makers; if made, every effort will go into keeping spends under control. Nandy agrees, “The industry has to rethink and get into a viable mode. Everyone needs to behave responsibly and make movies at reasonable costs.” Small indeed promises to be beautiful on 70mm screen this year!

Pallavi Srivastava

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

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“I WANT MY GUJARAT TO BE THE BEST”

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HIS ELECTORAL VICTORIES ARE NO FLUKE AND CAN’T BE CREDITED TO THE HINDUTVA ICON TAG EITHER. BRAND MODI ALSO SIGNIFIES ‘DEVELOPMENT’

Soon after his triumph in the January 08’ Assembly Elections in Gujarat, Narendra Modi in an exclusive interview to our sister magazine The Sunday Indian had emphasised his single minded focus on building a Vibrant Gujarat; something he seemingly values over even his own image. He said, “I don’t waste time on my own image building. I use my power, energy and time to build an image for Gujarat. I want my Gujarat to be the best.” Modi has lived these words ever since he accidently became Gujarat CM more than eight years ago (when incumbent Kesubhai Patel had to leave because of dissidence). Ever since, he has not just transformed the image of Brand Gujarat as a key investment destination in India, but himself has become a global brand signifying development and inclusive growth. According to K. V. Kamath, MD, ICICI Bank, “Modi has magically transformed Gujarat in the last 7-8 years from a drought-prone, power-starved state into one of the most developed states of India.” The praise is not unreasonable. As per RBI, during Modi’s tenure, Gujarat has received investment proposals of Rs.62,442 crore up to March 2008 (22% of India’s total investments). Further, sources in the government reveal that Gujarat’s development index has already surpassed nations like Singapore, Thailand & Brunei. And behind the makeover, there is the Modi mantra for inclusive development. Don’t go far, just look at the manner in which Modi wooed Tata’s Nano into his state with just a simple SMS – ‘Welcome to Gujarat.’ At the Vibrant Gujarat Summit in January, Ratan Tata had said, “Those who are not coming to Gujarat to invest are dunce.”

Least bothered about his detractors, Modi has concerned himself mainly on the development of Gujarat. “Politics for me is not ambition, but a mission,’’ he says. Small wonder that Adi Godrej refers to him as the CEO of Gujarat. He once said, “Whenever Modi says anything, we industrialists do not think that a CM or politician is talking. He is a CEO and whatever he says, he does.” Such confidence in a politician is remarkable, especially in a country where politics has almost become a dirty word. But Modi prefers to call himself a trustee of Gujarat, one whose mission is to accomplish Gujarat’s economic and social progress. He intends to make Gujarat the infrastructrural hub of India. “Gujarat leads the way on every front – be it economy or social. The Gujarat model of all inclusive development is benchmark,” he confidently avers.

Known in administrative circles for his strictness and demand for discipline, Modi has a 24-hour hotline number for the junta and promises that all complaints would be attended to within 48 hours. Even bureaucrats are under pressure to perform, having to routinely present their progress reports to him via PPTs. 24X7 electricity supply (Jyotigram Yojna) across Gujarat has been Modi’s greatest achievement. Love him for his progressive approach, or hate him for his regressive brand of communal politics, but you certainly can’t ignore this firebrand Modi!

Manish Macwan

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

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Return of the real McCoy!

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

But then, terror attacks or no terror attacks, one cannot disregard the fact that it is purely the global economic slowdown that has resulted in the overseas rights of films getting hurt massively. Vikas Sahni, noted Mumbai based film agent, reveals, “People have either stopped buying overseas rights or are very cautious about it. Companies like Neptune, CA corporation, Venus et al have bought no overseas rights for a Bollywood movie in past few months.” Even Eros has stopped buying rights for new films as of now. And that is surely a big hit, given that some so called ‘intellectual’ movies (or multiplex draws) do badly domestically, yet make up big time overseas – Siddharth Roy Kapur, CEO, UTV Motion Pictures, confirmed to us, “The industry has become quite reliant on such sales to make movies payoff.”

Industry veterans like Sajid Khan, Imtiaz Ali and veteran journalists like Rauf Ahmed share with us that this situation may be beneficial for the industry in the long run as a lot of non-serious filmmakers, who got into the business just for the heck of it, will be discouraged now. Imtiaz adds, “This will also lead to price corrections resulting in tighter budgets and huge slash in talent fees.” UTV’s Kapoor confirms, “We are already working out with all the partners in the value chain (including directors and actors) on how to make costs more rationalised.” Sanjay Dutt, Akshay Kumar, no name is big in the latest move to ‘rationalise’ actor fees. Connected to these are collection estimates. “The kind of collection figures that have been put out by producers in the past, the kind of numbers actors displayed as their fee worth, is unrealistic and unreliable in terms of current viability,” feels Nandy.

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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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Realty’s harsh reality!

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If you thought that a fall in inflation by 1.74% to 8.98% was enough to force banks to cut down on their home loan rates then you might be a little disappointed. This is because the major lenders, including ICICI and HDFC, feel that cost of money has still not come down to a level from where they can go for a rate cut. ICICI, in fact, has increased its home loan rates by 100 bps from 12% to 13%. No doubt, the Central Bank has been persuading banks to lend more to the troubled realty sector and to make it happen it has also reduced the risk-weights on banks’ exposures to the real estate sector from 150% to 100%. But this still has not been able to restore confidence among banks. So, for a rate cut, we think, the wait gets litter longer!

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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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Despite fears of creating a monopoly, one is almost sympathetic toward the deal. Reason? Pathetic state of Indian aviation

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When the MRTPC gets down to its task of evaluating the Jet-Kingfisher deal on whether it really is a monopolistic alliance, the overriding reality in its mind would pertain to the bright red on the balance sheets of every airline in business today. The year 2008 was of open distress and agony for Indian aviation players; a year when their dreams crashed; a year when they reaped disappointing losses in return for their colossal investments; a year when even the 3Gs of the industry – Glamour, Girls and Gizmos – failed to entice consumers and moneybags. Here’s a look at what prompted the two competitors to rub shoulders and announce this sweetheart deal.

First things first – the red dot of a mind-numbing Rs.10 crore per day for each of their airlines is what instigated Goyal and Mallya to move into a huddle. It is sad to even contemplate sustaining such massive losses continually, especially when even government policies are seemingly unfavourable for aviation players. In view of this, their alliance (spanning areas such as joint fuel management, common ground handling, route rationalisation and cross-selling of flight inventories) not only makes sense but also enables them to save millions of dollars each.

However, government policies were not made in a day. They have been the same ever since Goyal and Mallya started their respective air operations. What has changed now are the skyrocketing Air Turbine Fuel (ATF) prices, which have reached an all time high of 50% of the operating costs, as opposed to just about 25-30%, say even about a year back. From thereon, it has become a vicious cycle. The high fuel price increases operating costs, which in turn cause a sharp rise in air fares, resulting in a decline in overall passenger traffic. Analyse fuel prices and you find that on every Rs.2,000 ticket, about Rs.2,900 is levied as fuel surcharge (with passenger service fee, transaction surcharge and congestion fee charged separately).

Had the fuel cost impediment not been there, the sector would still have witnessed losses, but the financial bleeding would not have been so intense. In India, ATF is sold at almost 70% higher prices as compared to international markets like Singapore et al. This price differential is due to the sales tax ranging from 4-30% levied on ATF in India. Any reduction in this tax would spell glad tidings for aviation players. And it is this price differential and other operating cost expenses that compelled Mallaya and Goyal to sign the deal.

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Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
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IIPM’s 36th Glorious Year of Academic Excellence
Why Study Abroad When IIPM Gives You 3 global Advantages!

“Enthusiasm can’t always be a supplement for knowledge”

AMIT DEV, CHAIRMAN, EXPERT COMMITTEE ON RETAIL, ASSOCHAM

How do you forsee the growth of the retail industry in India?
We are one of the fastest growing retail industries in the world. But there is a need to reinvent because until now retailers were attracting consumers and now it’s time to look at the world through the consumer’s eyes. This way loyalty can be built and a win-win situation too can be created. Retail industry has the potential to meaningfully contribute to India’s GDP.

What is your take on international retailers entering India?
We welcome all international retailers whether they are catering to the bottom or top of the pyramid. And within the next one year, top 100 international retailers are likely to be here. But I think this year is not of international retailers coming to India, rather this is a year of consolidation of the retail industry. So when the big boys come next year, we will definitely have a strong foundation to welcome them.

What are the key challenges that the Indian retail industry seems to be facing at present?
There are not two or three but infinite challenges that the retail industry is facing in India at present. The nature of issues will keep changing as the industry will enter into a more matured phase, but I don’t see the number of issues decreasing in times to come.

Do you agree that few players, who entered retail without any knowledge, have spoiled the scenario of the industry?
I would not say that they had no knowledge, but lack of knowledge, which they supplemented with their enthusiasm. But enthusiasm can’t always be a supplement for knowledge. Every one entering the Indian geography with the motive to make it big in the retail industry will have to realise that there is no short-cut to success and they will have to work and fight hard to make it big in this industry.

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Source : IIPM Editorial, 2008

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

THE BIG MEN BEHIND ANIL AMBANI

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Mahesh Ramanathan: The two most high-profile men in the BIG gang are Mahesh Ramanathan (COO, Big Motion Pictures) and Tarun Katial, for now, CEO of Big FM, but if our sources in BIG are to be believed, then the new head of BIG Broadcast – Ambani’s to-be-launched bouquet of TV channels. But first, about the cinema guy. Mahesh Ramanathan, the suave ex-COO of Percept Picture Company came on board last year to head Big Motion Pictures, the backbone of ADA’s media & entertainment jamboree. An IIM-A graduate, Ramanathan may look a little out-of-place in his pin-striped blue shirt and staid black trousers (as he was dressed when we met) in the otherwise creatively attired film industry, but hear him speak and you see the grit behind this otherwise mild-mannered honcho. “Motion Pictures is the key driver for content in Big Entertainment. Be it our radio, TV, music, home videos or online presence, film entertainment content is a must have,” he explains. So Ramanathan is expectedly pulling all stops to deliver on his promise to ADA and Sawhney – of delivering not only Hindi, but a pan-Indian spectrum of high quality films with versatile actors. In the pipeline for now are over 70 movies across languages. To enable more strategic fits with Ambani’s media empire, in times to come “Big Motion Pictures will also get into content and platform specific films, noticeably tele-films, DVD-films and TV films,” says Ramanathan. In fact, ADA’s dream of having a strong foot in Hollywood has also taken a major leap recently - BIG has signed a $1.5 billion deal with Steven Speilberg’s DreamWorks SKG to finance at least 32 movies over a six year period. Earlier in May, ADA had entered into alliances with production houses of stalwarts like Nicolas Cage, Jim Carrey, George Clooney, Tom Hanks, Brad Pitt and more, to co-produce Hollywood movies. Quiz Ramanathan about ADA’s aggressiveness in Hollywood and he says, “Hollywood is the largest segment in the global entertainment industry. On the contrary Indian movies make for just 2% of global pie.” Clearly, the strategy is not misplaced!

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Source : IIPM Editorial, 2008

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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Naysayers wrote off ICL, but this dream child of Subhash Chandra is sporting ahead with a steady approach. pallavi srivastava finds out more...

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Don’t raise your eyebrows if you find Kareena & Saif, Katrina & Salman (or may be even Akshay ;-)) or Deepika & Ranbeer cheerleading the Hyderabad Heroes and the Mumbai Champs for the Indian Cricket League’s (ICL) coming tournament in October. The grapevine has it that the second season of ICL would have much more excitement then ever before. “We are planning something very interesting and innovative around the concept of cheerleaders for the upcoming ICL tournament, but I can’t disclose the exact details at this point of time,” said Shariq Patel, SVP (Operations and Marketing), ICL.

For the uninitiated, it was ICL that pioneered the entire idea of the T20 format, having teams on the lines of English Premiere League (EPL). However, due to its hype and star power, the IPL (Indian Premier league) swept the first round of the face - off. Now it seems that Subhash Chandra’s ICL is in no mood to be rated as a second grade cricketing tournament (as branded by BCCI). As a matter of fact, ICL is gearing up to confront the BCCI’s apple eye IPL and has rolled up a huge marketing campaign, investing a whopping Rs.50 crore (three times to that of the previous year). This will create a huge buzz around the brand ICL, just when every one thought that ICL did the disappearing act. To counter the stellar creatives that IPL had come out with, ICL has now roped in FCB Ulka as its creative agency in order to devise a brand new ad campaign. This new campaign would soon hit the television screens and would get equal support from other media avenues such as outdoors, radio, Internet et al. To give itself a distinguishing edge, ICL’s communication strategy would initially focus on the players. This is in-line to ICL’s core idea of nurturing local talent and helping the sport in the country. Apart from the multi-million dollar multi-media campaign, ICL is taking a lot of ground promotional initiatives to connect with the audience at a deeper level. For instance, in July 2008, it has launched the ‘Youth Mobilisation’ initiative. The idea behind this was to support various youth ventures like inter–collegiate festivals, events, workshops, seminars, et al in association with various educational institutions across the country. This would allow the cricketing body to connect its brand with the youth of the nation. Talks with IITs and management schools are already in final stages. “ICL is a brand that has given young Indian cricketers the platform to perform. We are extending that identity to all segments of youth. We want to be associated with college related sports events like marathons. We would also send our coaches and players to interact with them to inspire them. The idea is to promote sports and ICL as a way of life by increasing the youth involvement,” explains Shariq. Connecting with the audiences with the help of initiatives like these, might actually help to gain a wider acceptance.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

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

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Programme :- SUPERIOR COURSE CONTENTS
Now IIPM's World-Class Education... for everybody!!
IIPM INTERNATIONAL - NEW DELHI, GURGAON & NOIDA
IIPM - Admission Procedure
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION
IIPM’s 36th Glorious Year of Academic Excellence
When IIPM comes to education, never compromise
Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...