Road ahead Sectors are loving the PE grace

When IIPM comes to education, never compromise

Real estate ruled in 2007. A look at the potential target sectors for 2008

After getting a brief idea about ‘what lies beneath’ and ‘what’s on surface’ the time has come to get a hang of ‘what lies ahead’. Amidst the rollicking PE investments that are sweeping various sectors of the Indian economy, one truth stands out for sure – the ‘sunrises’ of today might be the ‘twilights’ of tomorrow! And as we say this, we dare to add the natural truth that most definitely, some new sector(s) will lead the lap in the race to woo investors. Here’s a primer…

Statistics reveal that the year 2007 was ruled by sectors like real estate and telecom that counted first when it came to the PE favourites category. And this comes as a no surprise as it fell quite in line with the promises that these two sectors held. Therefore, investments in companies like GMR Infrastructure and Bharti Airtel were some of the noteworthy deals in these above mentioned sectors. In terms of percentage value share for the year 2007, sectors like real estate & infrastructure management led the pack, attracting 36% of the net investment share. It was followed by others like Telecom, Banking & Financial services, Media, Entertainment & Publishing and IT & ITeS, which garnered 18%, 17%, 5% and 4% of the total pie respectively. And now talking about what’s bound to happen in the future, let’s consider the following figures. According to a PE firm, SMC, “There are 366 firms claiming to be operating in India and another 69 that are raising capital with plans to be operating soon. Approximately, over 400 funds are active or about to be active in Indian markets. In total, they seem to be sitting on $48 billion to be invested between now and December 10, 2008.” What this clearly proves is that there is no dearth of money flowing into India through the PE route. However, which are the target sectors for these deeppocketed sharpshooters is still a critical and cloudy question to ponder over.

Sudhir Gupta of Planman Financial feels that, “Sectors like education, especially e-education, will rake in big PE money in the coming future. Then there are also other sectors like healthcare, which will also attract huge PE investments.” Well, believe it or not, from career counseling to preparatory tutorials to vocational training companies, education is one of the sectors, which is enticing PE firms big time. 2007 was a great year for healthcare and it seems it will of course remain in vogue. The year saw a whopping $400 million being poured into this sector, and this fad is still far from becoming history. Currently pegged at $34 billion, the healthcare sector is expected to grow to a whopping $40 billion by 2010. “We are certainly looking at buyout opportunities in the domestic pharmaceutical space this year,” opines Sanjiv Kaul, Managing Director, Chryscapital Infrastructure. Sure enough, a look at the figures would prove that the pharma industry has also been a roaring success amongst the money-laden PE firms.

Then comes common infrastructure with the road sector showing a lot of promise, as many firms already have and are planning to venture into the highway or road sector by not only picking up stakes in the infrastructure companies but also by taking part in the bidding process. “Today, if a traffic consultant projects ‘X’ number of vehicles on a certain highway stretch on a certain date, chances are that, in some cases, the number of vehicles would double or triple in just a small time-frame of a couple of years,” claims Debashish Mukherjee, Principal, AT Kearney. He further adds, “As there is huge promise in the road sector, it would not be wrong to say that here, good money is chasing good asset. In time to come, highway projects would figure as cash-cows in the PE firms’ portfolio.”

Edit bureau: Bikram Keshari Jena

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).

Read these article :-
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Rider of the Storm

IIPM, GURGAON

He’s blunt, bold and transparent. And he’s set his eyes on reversing Yamaha’s fortunes in India

“When I first came to India, this place (the Yamaha India plant at Greater Noida) was a zoo. The workers in the factory did pretty much as they desired. And at any given point of time, nearly 30-40% of the labour was not working,” is the brutally frank admission of Tomotaka Ishikawa, MD & CEO of Yamaha Motor India today. Sitting pretty in his casually elegant room in the plant, with an entire wall plastered with various pictures of him and bikes, he can afford to be candid. After all, since his arrival in India more than a year ago, he’s managed to not only resolve Yamaha India’s labour troubles, but has also crafted a ‘fun’ game plan to help the Japanese two-wheeler major break new ground in the country, which includes getting Yamaha’s big racer bikes R1 and MT01 to India.

And you’d better believe the man. He may look unassuming and petite in his spectacles and conservative business suit, but this samurai is a fierce fighter all the way. Credited with the turnaround of Yamaha’s fortune in a series of south East Asian markets, his particular brand of strategies have particularly worked wonders in Thailand’s two-wheeler mart.

Faced with the rising onslaught of Honda and Suzuki, Yamaha was a dying bike brand in Thailand (their market share had plummeted to about 9% from the earlier 30%), before Ishikawa began to wreak havoc on competitors in 2001. “I gave the Thailand management three choices. I told them either you be a quick adaptor of lower prices like Suzuki; or you find Honda’s weak point; or else find a niche for yourself. We finally settled in for the third option,” affirms Ishikawa.

He introduced automatic engines, targeted the younger generation with stylized accessories, and introduced swanky new merchandising. Honda slashed its rates by 15%. The unconventional Ishikawa, instead of crumbling under pressure, retaliated by upping Yamaha prices. Ishikawa reminisces on how his distributors in Thailand at the time thought him insane, but the strategy ultimately paid off. In just 4 years Yamaha had got back to nearly 25% market share in Thailand. Ishikawa became the blue eyed boy of the Yamaha head office in Tokyo.

Ishikawa’s Thailand experience has set the alarm bells ringing for rivals in the Indian market. The two wheeler giant made its India foray in 1985, in partnership with Escorts, making inroads into the hearts of Indian bikers by offering them sporty, performance driven products.

The RX100 tasted phenomenal success, but the momentum died half way through. Ask him, what went wrong with Yamaha’s India strategy in the first place and you’re almost astounded by this CEOs honest and frank assessment. “There was a gap between what the Indian customers wanted and what we gave them. They wanted an RX100 type of vehicle but we gave them what everyone else offered – nothing unique or different. We got caught in the volumes game and developed products that lacked Yamaha’s genes,” he pointed out. Hero Honda and Bajaj had a better product line up and walked away with all the glory.

In fact, for the month of May 2007 Yamaha India saw a whopping 100% drop in sales! Ask Ishikawa and you get another straight Ishikawa-style reply: “We didn’t have anything to sell!” No mincing words, for sure.

Adrenalin levels in Yamaha India are at an all time high now. Since Ishikawa joined Yamaha India, Gladiator has already won the 125cc Bike of the year award in 2006. And with ‘Kando’ (a Japanese word meaning “Touching Your Heart”) – as their corporate ethos, the buoyancy has touched every Yamaha employee.

Ishikawa is borrowing heavily from his Thailand experience to get a one up on his Indian rivals, and that too with a planned investment of a jaw-dropping Rs.1000 crores. “We are just going to go back to the 4Ps of marketing for the Indian market,” he avers, adding that a new product line up had already been finalised. Refusing to divulge more details at this stage, he only says that, “The product will be affordable and attract the younger generation. It would be a product uniquely designed for bikers, and not commuters.” The idea behind the emphasis on bikers (instead of the earlier commuters) is to come up with hi-sense, hi-fashion, cool products that will be ‘fun’ and attract the younger generations. The new model line-up is set to be introduced in the Auto Expo in January 2008. “I’m not greedy, I’m realistic. We hope to grab 19% of the motorcycle market in the next five years,” says Ishikawa.

Believing the Yamaha India employees to be his biggest asset today, Ishikawa is in awe of the mathematical and engineering abilities of Indian people. “The Thai’s are just no comparison,” he says. He believes, that employee retention is one of the key factors that would make the company attractive in the eyes of the public. “I want people to say that God! I’m so lucky to be working with Yamaha.” In the same spirit, Ishikawa is working closely with his team to change the work culture of Yamaha India. In fact, he says that whatever HRM systems initiatives he has introduced so far, have brought fruitful results.

In line with this new vision, Ishikawa rolled out a new internal mission statement in July 2007 - New Yamaha, my promise dil se! And mind you, these are not just empty words. The CEO himself amply displays his heart’s commitment to turnaround Yamaha India’s fortunes, when he says that the primary reason why he has not invited his wife to come and live with him in India is because he needs “no distractions.” Now that’s really dil se dedication Mr. Ishikawa!

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).

Read these article :-
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
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The Indian Institute of Planning and Management (IIPM)
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Sleeping...? Still?

When IIPM comes to education, never compromise

Hope our ministers read this!

Ah! There you have it! The perfect answer to your wife’s unstoppable truculent Sunday nagging intended to make you work. Tell her you are suffering from a condition called ‘Chronic Fatigue Syndrome’, or simply CFS (leading to a serious drop in physical activity levels) for those ‘fatigued’ lazybones! Well, according to a BBC Research, even till as recently as 2002, “doctors had been sceptical as to whether CFS exists as a real disease or is ‘all in the mind’...” But most recent research, specifically the one conducted by the Journal of Clinical Pathology, proves that not only is CFS as real as your intelligence (!!!), but that, in fact, it may be linked to a common stomach virus! The research, which was headed by Dr. John Chia, tested 165 patients with extremely long-term CFS issues, out of which a whopping 80% and more showed gastro-intestinal virus complications! But hold on, you enervated brain fag! Before you rush to your bellicose wife militantly brandishing this research accusing her ‘virulent’ cooking for your woes, digest this. International research proves that only 0.2 to 0.4% of the global population suffers from CFS. Ok, we heard you... All this seems perfectly alright... Still, why do we have this lingering suspicion that all of this 0.2 to 0.4% is based out of India? And that they might all belong to the Indian Parliament?!?!

Edit Bureau: Pooja Priyadarshini

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).

Read these article :-
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
IIPM makes business education truly global The Indian Institute of Planning and Management (IIPM)
IIPM Campus

Wilfried Aulbur, CEO, DaimlerChrysler, India

IIPM - Admission Procedure

BMW has outsold Merc in some segments. Comment.

When you enter the market there is a novelty factor and they might have shown a high growth in a particular quarter. But, we are closely watching competition. Only we had the guts & determination to put our money on the table (in 1995) when nobody else believed in India’s potential. What’s the extent of localisation you enjoy in India?

The localisation in the C class is about 50%. This includes all the local value additions. E & S are less comparatively.

Potential of Indian market?

We are making money here and we have been doing that since the year 2000. Fact of the matter is that, India in 10 to 20 years will be a market you simply cannot afford to NOT be in.

What strategies to sustain Brand Mercedes in India?

There is a combination of various factors; one of them is strong products. Indian customers are very discerning and we make sure to offer the latest product. Plus, interaction with the customer is very important for us, reflected in our global golf tournaments & our support to Merc clubs.

Plans for the commercial vehicle () segment?

CVs revolve around cost of ownership, reliability and maintenance; therefore we will focus on after sales. With the experience of over a 100 Actros trucks already in India, we are confident enough.

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.
When IIPM comes to education, never compromise
IIPM, GURGAON
IIPM is A World of Career
Why Study Abroad When IIPM Gives You 3 global Advantages!

HDFC General Insurance

When IIPM comes to education, never compromise

T he good times are back again for HDFC General Insurance Company Ltd.. After breaking-up with its international partner, Chubb, the company has found a new partner in the form of ERGO, which is part of the Munich Re group, and has picked up 26% stake in HDFC General Insurance. This marks an important event in the history of HDFC as the new partner is set to bring in all necessary ingredients which would propel the company forward. The company registered total premiums of Rs.190.16 crores in FY ’07. As Deepak Parekh puts it, “I am convinced that ERGO will bring in the vast insurance expertise, top-quality technical and operational know-how that made the ERGO Insurance Group a leading player in Germany and throughout Europe to the joint-venture company.” Of course performance in the upcoming fiscal will give some indication to where this combination is headed.

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, GURGAON
IIPM - Admission Procedure
IIPM is A World of Career
Why Study Abroad When IIPM Gives You 3 global Advantages!