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).

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“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).

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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...