Investors waking up to the force of India rising

OVER the past decade, India has moved relentlessly towards claiming its place as one of the world's most powerful nations. Amid the cacophony that represents Indian politics, India's rulers have slowly but surely put together a fabric that allows business to prosper.

There has been a gradual opening up of the economy in key sectors and today, tangible evidence of reforms can be seen in the financial sector, consumer sector and the telecommunications industry, among other arenas. Never before has international big businesses been quite as interested in India as an investment destination, and for very good reason.

A giant landmass making up the bulk of an entire subcontinent, India is a country in which 1,2-billion people — of different languages, cultures and just about every religion on the planet — miraculously live together in relative peace and harmony, despite some deep schisms and fault lines emanating from those differences .

This melting pot of cultures has resulted in the country walking a tightrope amid the coalition politics that have kept the current government in power and still managed to bring about transformation.

Economic and demographic statistics make the picture very intriguing:

India has the fourth-largest economy after the US, China and Japan.

India is one of only 10 countries with a gross domestic product (GDP) of over $1-trillion.

At its current rate of growth, the Indian economy will add nearly one France every three-and-a-half years and one Australia every year.

The middle-income category is currently 50-million strong.

The number of middle class people is expected to reach 583-million by 2025.

One percent of the hitherto low-income group has been shifting into the middle class every year for the past 10 years.

In pure numbers, this is the largest segment of the population, of around 40 million people annually.

India has the highest growth rate of dollar millionaires and billionaires, yet 25% of people earn below $1 a day.

India's economy has grown 8% a year in the past decade.

Although India's employment numbers are very high, so is its unemployment rate.

India is such an interesting investment prospect because of four very powerful themes, which have underpinned growth:

Outsourcing and information technology. These already make up more than 20% of the GDP and are growing at a faster rate than the overall economy.

Consumption. Feeding and selling ordinary daily essentials to a 500-million-plus consumer base is a lucrative business.

Infrastructure. Meeting the challenges of growth in this country is a huge task. Already an estimated $1-trillion is being proposed for spending in the next five years.

Financial products: A huge opportunity in an increasingly urbane population, which, as matters stand, has only 5% of national savings in financial markets.

Most notably, information technology in India has successfully moved up the value chain. Whereas it was once a mere labour cost arbitrage-driven outsourcing business, today it is a highly acclaimed treasure house of intellectual capital. Ironically, this IT-led surge and increasing liberalisation have forced the historically lagging public sector companies — with their much-maligned bureaucracies and inefficiencies — to wake up and start to make dramatic changes.
This is a unique transformation, in which the public sector, instead of withering away as predicted, has become stronger and proved itself to be an able competitor to the private sector.

State-owned behemoths such as the State Bank of India, the Life Insurance Corporation of India, ICICI Bank, the Steel Authority of India and the Oil & Natural
Gas Commission, among others, have shaken off their historical images and confounded their critics by capitalising on opportunities available to them to become powerhouses in their respective arenas.

India has historically, thanks to its
post-independence state-subsidised education focus, produced surplus labour. This has changed and, for the first time, Indian businesses are now beginning to face a skills shortage. Long criticised for its failure to curb population growth, suddenly its young population is being hailed as its biggest advantage. India is therefore in the midst of a transformation few nations have managed. A sharply divided and highly politicised country with significant polarisation and populism set amid a long-suffering and largely "unconscious" electorate can be fraught with pitfalls. There are bound to be disappointments in the pace and quality of some of the reforms.

But India has become a relentless force with awe-inspiring momentum. The
energy and enthusiasm of the citizenry in India will pave the way for sustained growth and development. India is poised to become the most important economy in our lifetime and Indian-owned businesses are set to dominate the world markets. Admittedly, the jury is still out on where it will all finally lead to. But never in the history of modern times has such a story unfolded, and big business cannot afford to remain a bystander. "Go east" should be our mantra.

Gupta is CEO of Sanlam Investment Management Emerging Markets.

Goldman to launch Four Seasons in B’lore

Bill Gates & Saudi Prince Alwaleed bin Talal-Owned Hotel Has Aggressive Plans For India

Boby Kurian & Lijee Philip BANGALORE/MUMBAI

GOLDMAN Sachs is believed to be investing around $80 million (over Rs 320 crore) in a joint venture with Dubai developer ETA to launch luxury Four Seasons hotel in Bangalore. Microsoft founder Bill Gates and Saudi prince Alwaleed bin Talal-owned Four Seasons has unveiled aggressive expansion plans in India, even as fears of a slowdown in hospitality sector are being raised.
    Goldman Sachs is expected to hold a majority stake—up to 76%, but this could not be confirmed—in the JV estimated at about $150 million, including debt. The deal marks one of the biggest PE plays in a single hospitality project in the country.
    Sources said Goldman Sachs will be financing bulk of the project through a combination of equity and debt. ETA owns 4 acre adjacent to Mekhri circle, a mid-point between the city and the recently-opened greenfield airport. Further details of the project could not be ascertained. A formal announcement on the JV is expected soon.
    Last year, Citigroup said it was investing in a joint development with Nitesh Estates for India's first Ritz Carlton property in Bangalore, expected to be completed by June 2010, signaling PE interest in highend luxury hospitality segment.
    Four Seasons spokesperson said: "We are looking at various properties across India, and Bangalore is one of them. Currently, we can't say much as no official details have been announced." The Canadian hospitality giant, which manages 74 luxury hotels across the globe, agreed early this year to be taken private for $3.8 million by Bill Gates, prince Alwaleed bin Talal and Four Seasons chairman & CEO Isadore Sharp. In India, Four Seasons has identified six locations in metros and tier-I cities. It is looking at a mix of management contracts and equity investments. "We are very optimistic about the Indian market having a sustained period of growth. We are planning with a long-term vision," Mr Sharp had said ET.
    Goldman's interest in the project comes even as inflationary pressures and economic slowdown are believed to be impacting India's hospitality sector in recent times. But, sources said, the luxury segment may remain insulated for the time being at least.
    Four Seasons recently opened the 202-room hotel in South Mumbai, and is working on projects in Gurgaon, Hyderabad and Kerala. It is also looking to set up a resort hotel in Goa. Though BRIC countries are not contributing significantly to the Four Seasons kitty, the rate of development and growth, said Mr Sharp, in the next few years would grow substantially.
    Founded in 1960, Four Seasons has followed a targeted course of expansion, opening hotels in major city centres and destinations around the world. Currently Four Seasons has 75 hotels in 31 countries.

LUXURY LINE: Taking it ahead

MALL IDEAS BIG BUSINESS

From gaming to magic shows to fashion events, small players are cashing in on the growing opportunities in mall entertainment

THE prefix of shopping-malls just got swapped with entertainment. While shopping very much remains the staple, entertainment options within malls are increasingly becoming the numero uno draw. Gaming, magic shows and events today account for a considerable pie of mall monies. Industry players estimate the market for mall entertainment at more than Rs 1,000 crore and growing at an average rate of 15%. "By 2010, the number of malls in India is expected to cross the 600-mark and the mall entertainment business is bound to increase at a tremendous pace to attract consumer footfalls," says Sanjay Prabhu, GM, Inorbit Mall, Malad. Now this calls for a wide swathe of players who provide entertainment and event platforms to these malls.
    There are specialists who conduct magic shows, kids' amusement zones and video gaming importers and distributors, as well as providers of bowling alleys. SN International, a Delhi-based company, is into distributing entertainment machines, like Sketch Express, a machine that draws black-and-white and colour photographs of consumers standing in front of the machine.
"Apart from the metros, we are also
present in Shimla, Ranchi, Surat, Indore, and Bhubaneshwar. We are in 43 malls and still growing," says SK Narang, president of SN International.
    Besides, the company provides entertainment equipment, like Salto Trampoline, a product of Maxi Fun, Switzerland, which can make a person jump safely up to 25 feet without any training. And to add screens around malls, it has a tie-up with Photo Play, a product of Funworld AG, Austria, having the largest network of touch screen terminals in the world. The investment in such equipment, though reasonably large, rakes in good revenues. "The investment is around Rs 5 lakh but we do good business, especially on festive occasions," adds Narang. SN International has clocked a turnover of Rs 2 crore for 2007-08.
    On their behalf, mall developers either provide space to such vendors, or tie up with them. "The endeavour to start such a venture is in-house, but the facility is outsourced from a third-party. We provide space for these activities (entertainment), while companies like Amoeba, in our case, throw up gaming options. Malls are getting into such activities in order to become a one-stop-shop for consumers. It is also because nowadays children mostly drive a family's buying decision," claims Mridul Mishra, head marketing at Spice Malls.
    Take the case of the Rs 10 crore Kool Kidz, which ties up with developers to provide amusement material for children. "Presently, we are in 20 malls all over India. Apart from existing collaborations, we have also tied up with Ansals for their upcoming Greater Noida project, Ansal Plaza-II. We would also be in Meerut for the upcoming Melange Mall," says KS Gill, senior manager- corporate marketing, of Kool Kidz.
    "We have toys that require physical activities for children and are not batteryoperated, we also have soft toys as well rock climbing facilities and trampolene that caters to children in the age bracket of 8-14 years," adds Gill. Apart from malls, schools and educational institutions are also separate revenue streams for the company.
    According to a study by Colliers International, the average conversion for shopping accounts for about 20% of the footfalls, while for food and entertainment, it sits higher, at about 40-45%. Malls are increasingly tossing up a holistic experience to draw in footfalls. Earlier, multiplexes were a major draw for people to check out the malls. Over the last year or so, the revenue sharing agreement between exhibitors and mall developers has seen a sea change. Sources indicate that if it was 50:50 in the past, the more demanding exhibitors are now asking for as much as 60:40, or even 70:30 in their favour. So savvy mall owners are carving out their own entertainment options.
    Among them is Mumbai-based Miracle Magic Entertainment Company, which is helping break the clutter, literally by organising magic shows in malls. It also provides artists, mascots, caricature artists and other promotional products. "We are into this business for the last 10 years but it has been just four years that we entered the malls," says Ketan Lotia, CEO, Miracle Magic Entertainment Company. "Initially, we used to cater to companies, individuals and institutions but now with the malls, our business has grown manifold and we are being invited by mall developers as well as the retailers, which keeps us busy all year
    round," adds Lotia.
The firm, which has grown at 10-15% over the past two years to Rs 50 lakhs in revenues, has identified opportunities in the southern states and is on expansion mode.
    Again, take the case of Firstvision, which does bungee-trampolene, soft play centres and redemption games in a number of malls in Delhi. Anuj Matta, director of the company, says that the most feasible model today is the revenue-sharing model. "With mall rentals going through the roof, we are looking at revenue-sharing with developers. In fact, most of the developers are keen to share revenue today as they can earn better if the mall does well," he adds.
    Gagan Singh, head of Sandalwood, which is an integrated retail development and management service provider, and a JV between Jones Lang LaSalle and Colonial First State Property Management, says, "Revenue-sharing is the best way to go forward for both tenants and entertainment companies doing casual leasing of space in malls." Adds Paras Arora, associate director of Colliers International, "To promote shopping, developers today want play areas and newer entertainment options within the malls. This adds to the footfalls for sure." Arora explains that today, malls need to get the mix of retail, food and entertainment and the location right within the malls to be successful. Inorbit Mall in Mumbai, for instance, has facilities like air shooting, simulators, arm wrestling and virtual boxing, apart from a kids' amusement zone like toy train and virtual cricket. The gaming area covering a sprawling 30,000 sq ft, does Rs 30 lakh in turnover, and is managed by Time Zone Entertainment. Sanjay Prabhu, GM at Inorbit says that the mall works on a 7-10% revenue share arrangement with Time Zone.
    Jatin Desai, head-planning and strategy at Spectrum Strategies, says that his company's events attract at least 20-30% extra footfalls into the malls. Spectrum does a lot of events for retailers and mall owners. Recently, it did an Art of Living event at Thakur Mall in Dahisar, Mumbai, and an Ugesh Sarcar magic show for RPG, at another mall. A new event is also being planned in the form of a fashion show involving all brands within a mall. Apart from events, it also undertakes digital advertising within malls, using LCD screens, urinal TFTs and magic mirrors. Spectrum Strategies works with eight malls across Mumbai and is looking at going national too. "We have got offers from malls in Bangalore and Hyderabad but are held back due to lack of trained manpower," says Desai.
    Amoeba, one of the largest brands in the gaming and entertainment space, has 20 outlets across the country, including the metros and Tier-II centres such as Jallandhar and Surat. With about Rs 2 crore as its target investment per store, Amoeba is looking to expand to 100 centres over the next 2-3 years. "We will be adding five more stores within this year," says K Nandkumar, GM at HM Leisure, the holding company for Amoeba.
SHOW STOPPERS
Delhi-based SN International, is into distributing entertainment machines like Sketch Express that do instant people sketches Kool Kidz, ties up with developers to provide amusement material for children in 20 malls all over India Miracle Magic Entertainment organises magic shows, brings in artists and mascots with inputs from Ravi Teja Sharma

Real estate boom to continue in smaller cities in India: Study

NEW DELHI: World's two fastest growing economies China and India will continue to witness boom in the real estate segments in smaller cities as both countries are expected to record strong growth in residential demand in the coming years, says a report.

Further, investments volume in the two neighbouring nations is projected to go up in the next few years.

According to a report prepared by the research group of Germany's Deutsche Bank, the long-term growth prospects for both countries "remain very good."

"All commercial real estate segments continue to boom Tier-II cities will gain particularly... Investment volumes are still very low. This will change rapidly in the next few years," the report titled Real Estate Investments in China and India: Big returns in big countries? said.

Although, strong residential demand growth is expected, the bank noted that "dangerous exaggerations can occur."

An important growth driver for the real estate market would be the increasing urban population in both countries. India and China are projected to witness increased number of urban population especially by the end of 2050. From just about 30 per cent, India's urban population is anticipated to touch 55 per cent by 2050.

According to the report, another growth driver for both countries would be the rising population of working age. In the near term, that population is expected to touch a peak of over 70 per cent in China.

The working age population in India is projected to be on the upward curve in the coming years and would be above 65 per cent by 2050.

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India becomes most-favoured investment destination for Japan

The Ranbaxy-Daiichi deal attracted a lot of interest, which was only to be expected, since it was the largest Japanese acquisition in India till date. But the Japanese business association with India has been growing for a while now.

A recent survey conducted by the Japan Bank for International Cooperation (JBIC) shows that India has become the most-favoured destination for long-term Japanese investment.

While nearly 70% of Japanese manufacturers regard India as the most attractive country to do business over the next 10 years, around 67% preferred China. Russia came third with a 37% rating, followed by Vietnam at 28%.

During 2007, which was ascribed as the Indo-Japan friendship year, Anchor Electricals was sold out to Osaka-based Matsushita and Lumax industries was acquired by Japan's Stanley Electric world leader in illumination products.

In 2006, the Poonawala Group sold its stake in Eagle Seals and Systems to Japan's Eagle Industry. And 2005 witnessed two acquisitions, one was the stake purchase in International Tractors by the Yanmar group and the other was the acquisition of Chennai's SRP Tools by Mitsubishi Heavy Industries.

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The automobile sector has been the area where the Japanese presence is the most noticeable. But their interest has now spread to various sectors like machine tools, electronics and IT. According to India Brand Equity Foundation, Japan ranks fifth in terms of cumulative FDI equity inflow into India. Japan's FDI in India is projected to be around $5.5 billion over 5 years from 2006 to 2010.

Canon India President and CEO Kensaku Konishi says: "India is a growing economy, hence a lot of Japanese companies want to invest here. However, because of less work experience in this part, in terms of not only size but language as well as culture, acquisition is one of the better alternatives to enter Indian market."

Many sectors in the developed Japanese economy, which have a negligible growth rate, do not have much scope to grow. In view of this, Japanese companies need a presence in emerging markets to grow. Ernst & Young India Head, Japanese business services Amitabh Singh points out, "Till some time ago, for Japanese companies it was mainly China, Thailand and other south east countries. But now India has become so attractive that it can't be ignored."

Moreover, there is no dearth of funds as Japanese banks are ready to loosen their purse strings to fund the acquisition plans of their corporates. A senior executive from a Japanese infrastructure company says, "Traditionally Japanese have found automobiles, IT and now pharmaceuticals in India to be attractive. But now even other sectors are also being looked at. With India's growth forecast to slow down, a final decision on entering India has not been made."

Finance seems to be one of the attractive sectors being explored by Japanese companies. While Shinsei Bank has set up its investment arm in India, Nomura Holdings, Japan's largest securities firm, has already expressed its intent to venture into Indian markets. It is open to acquiring outfits involved in broking business and investment banking among others.

Growth of millionaires in India fastest in world

Growth of millionaires in India fastest in world

New York: In a sign of growing entrepreneurship and an expanding corporate sector, India created millionaires at the fastest pace in the world in 2007, according to a new report. India added 23,000 millionaires in dollar terms last year to its 2006 total of 100,000, according to an annual Merrill Lynch Capgemini report that compiles such financial data for its wealth and asset management purposes. More India business stories "India led the world in HNWI (high net worth individuals) population growth at 22.7 percent, driven by market capitalisation growth of 118 percent and real GDP (gross domestic product) growth of 7.9 percent. Although India's real GDP growth decelerated from 9.4 percent in 2006, current levels are considered more stable and sustainable," the report said. The number of people around the world with at least $1 million in assets passed 10 million for the first time last year, marking a 6 percent increase from the previous year. This growth, however, was lower than the 8 percent recorded from 2005 to 2006. The millionaires' bank accounts swelled too in 2007, the report released Tuesday said. The combined wealth of the 10 million millionaires grew to nearly $41 trillion last year, which is 9 percent more than in 2006. That means their average wealth was more than $4 million, the highest it has ever been. Home values were not included in asset totals. "The growth of their wealth is outpacing the growth of their population, and that's a trend that's going to continue in coming years," said Ileana Van Der Linde, a principal with Capgemini. Besides India, two other developing economies, China and Brazil, were also growing millionaires at a high rate, albeit the US continues to lead the list. One in every three millionaires in the world lives in America while Africa, the Middle East and Latin America together account for just one in 10. The birth of 600,000 new millionaires last year did not surprise economists. Brian Bethune, an economist with Global Insight, was quoted as saying that inflation and the expansion of the world economy accounts for the growth. Besides, the dollar is worth less now. The report noted steady growth in world economies in the first half of 2007 before the US housing and credit crises started taking their toll in the second half. Emerging economies remained largely unaffected though. Want to invest in Stock Market? Get expert advice on your mobile In a time of economic slowdown, the rich are seen to shift their money to safer investments such as bonds and money-market savings accounts, taking it away from investments such as real estate, the report found. Cash deposits and fixed-income securities accounted for 44 percent of the assets of the world's millionaires, an increase of 35 percent over 2006.

The tourism growth story

India's growth story is real and here to stay says Homi Aibara, partner, Mahajan & Aibara. By Neeti Mehra

Homi Aibara Partner, Mahajan & Aibara

India's blistering growth is testament to its progressive policies. The economic spurt has had a beneficial effect on tourism too. Says Homi Aibara, partner, Mahajan & Aibara, " The growth drivers that have given a boost to tourism are economic growth, along with an increase in air seat capacity and IT and real estate development."

But is India's growth story a mere hype or reality? Aibara avers, "It is reality. The hype is created by many overly ambitious premature announcements of hotel projects."

He says that even though there is a huge need for additional room supply, there is a bunching effect in several locations in the country, with development concentrated in certain areas.

On the flip side to growth are perennial bottlenecks. Apart from infrastructure shortcomings, tourism is impacted by a cumbersome visa process. To solve the former, private-public partnerships (PPP) are being explored, and he feels that PPP will have a bigger impact if land for development of tourism infrastructure is provided by the government. "We have woken up late," Aibara points out of what's brewing in South-East Asia, "China's hotel industry has seen significantly greater development than we have seen in India. China, Thailand, Malaysia, and even Indonesia are ahead of the curve compared with India."

About Mahajan & Aibara

Mahajan & Aibara was established in 1979 and currently employs approximately 100 professionals from varied disciplines. The firm is accredited by the Inter-Institutional Committee of the Financial Institutions as Industrial Consultants and its partners are members of the Institute of Chartered Accountants as well as the Institute of Management Consultants of India. The company provides Management Consultancy Services in hospitality, leisure , travel, tourism and retail practice. Mahajan & Aibara's offices are located in South Mumbai and has associated firms in Chennai, Delhi and Pune.

Aibara believes

The leading hotel development is the business hotels mushrooming in the IT/ITES sector. "Bangalore, Pune , Chennai, Kolkata and Gurgaon have the greatest development potential. However, these locations now have substantial room supply in the pipeline," he adds. While most locations will show growth in RevPars and occupancies for the next year, there might be a dip in Bangalore and Pune with the new supply he feels.

Speaking on stimulating leisure tourism in the country, Aibara believes a difference can be made by introducing measures such as visa on arrival, improved infrastructure, an increase in room supply in resort locations, apart from other steps. " Casino licenses, more practical CRZ/ CZM regulations, opening of new areas with airports in areas such as Hampi, Badami, Sindhudurg, etc will give an impetus to leisure tourism in the country,"he emphasises.

According to him, going wired is the way ahead. " Dynamic pricing, internet penetration, greater automation and efficiency are the trends in the hospitality segment,"he says. On the development side, he sees each segment on an equitable growth track.

What should the industry look forward to in the future? "Fractional ownership, sale and rent back and similar schemes are already being formulated for many projects both in cities and the recreational and leisure segment," he says.

The Indian traveller is becoming more wealthy and discerning, he says. And for the Indian globe-trotter who will evaluate the Indian hospitality industry on a global platform, Aibara believes that "Exposure is great education!"

Time to see urban affairs in a NEW LIGHT

If the Indian economy is to sustain a growth rate of 9% for a couple of decades, the bulk of India would have to live in towns, fundamentally altering the dynamics of Indian society and culture. T K Arun examines the critical issues involved and the way forward

    INDIA lives in its villages, according to Mohandas Gandhi. More's the pity. It's time India changed its habitat. If the Indian economy is to sustain a growth rate of 9% for a couple of decades, the bulk of India would have to live in towns, fundamentally altering the dynamics of Indian society and culture. The way inevitable urbanisation takes shape will determine what kind of a society India will become. We need coordinated policy and planning, involving governments at the Centre, the states and municipalities. Instead, we have a big, gaping hole that sucks in city dreams and converts them into living nightmares.
    In 2001, 72% of Indians lived in rural areas and only 28% in towns, according to the Census conducted that year. By the next census in 2011, the share of urban India would probably be 35% (it's already 35% in a state like Punjab). Fast-paced growth of the kind India has been experiencing in the last four years would accelerate the trend towards urbanisation. India would cross the half-way mark in urbanisation probably in the early 2020s. If we assume a population growth rate of 1.3% per year, India's population would reach 136 crore in 15 years' time. (Well known demographer PN Mari Bhat has estimated India's population to be 133 crore in 2020). If we assume that urbanisation already is 32%, the additional number of people who would have to shift to towns for half of India to become urban in oneand-a-half decades is about 32 crore. If we assume a population density of 12,000 people per sq km, that would mean creating additional urban space of close to 27,000 sq km. That means 18 new towns, each the area of Delhi (Delhi's area is 1,483 sq km). Do we have any policy in place to build new urban spaces of this combined magnitude?
    We have no such policy. We do have millions of migrants crowding into everexpanding slums in existing towns. Clearly, this is not the way to urbanise. By way of policy, what we do have is building Special Economic Zones, which are nothing but small urban spaces where industry and services can grow. The size of the largest SEZ cannot, by policy, exceed 50 sq km (yes, that is what 5,000 hectares means). The other relevant policy we have is for urban renewal, named after Jawaharlal Nehru, under which the Centre would give funds for urban development, provided the recipient towns agree to a modicum of policy reform. A high point of the present focus on urban reform is scrapping the antiquated Urban Land Ceiling and Regulation Act, which prevents decrepit mills, for example, from using their land for alternative use. Scrapping ULCRA would, admittedly, release a few hundred sq km of additional land within existing towns. But the area so released would be tiny, given the economy's requirement of urban land.
    Scarcity of urban land hits economic development in a variety of ways. It jacks up the cost of urban real estate. This, in turn, inflates office rentals, hotel tariffs, cost of residential accommodation, the cost of doing business, in general. But that's not all. New hospitals and schools find that land accounts for as much as 60% of their capital cost. Bye-bye to affordable education and healthcare for the masses. In other words, skyrocketing real estate prices become a constraint on expansion of education and healthcare, leading to a manpower shortage as well.
    Why is there a shortage of urban land? After all, there is plenty of rural land available, which can be converted, to increase the supply of urban land. There are two kinds of obstacles to conversion of rural land into towns. One is the Singur-Nandigram type — owners and other occupants of rural land have no incentive to give up their land for urbanisation; rather they'd lose their livelihood and face an uncertain future if they give up their land. Involuntary conversion of rural land can take place with compensation, as in Singur, or by means of terror unleashed by the henchmen of politically wellconnected agents who undertake to procure land for a new enterprise, as reportedly has been happening in the case of Posco in Orissa. The other kind of obstacle comes up where a farmer voluntarily wants to convert his land into urban land. The administration just would not permit it. Only when a builder acquires the same piece of land at a pittance does the administration grant the permission. The price of the land goes up dramatically after conversion, the politician and the babu get a share of that gain from the builder and everyone lives happily ever after — everyone other than the farmer who sold his land at a pittance and the rest of us, would-be users of scarce, expensive real estate.
    We clearly need a policy to release rural land for building towns that makes the farmer who loses his land into a stakeholder of the process, rather than its victim. One model is from Magarpatta, a township near Pune built by a company floated by farmers who pooled their land and now sell a variety of services to the town dwellers, apart from earning handsome dividends from their company that earns enormous rental incomes from the IT parks and other ventures that have located there. Another possible model is for all those who stand to lose their livelihood from conversion of land use (not just owners who lose their land) to own at least half the stake in a special purpose vehicle that would lease out its land for building a town, factory or SEZ. The lease income would offer minimum sustenance and their stake in the SPV would grow in value as the land appreciates on account of the new economic activity spawned by conversion of the land-use from farming to towns. Fair market value at the time of acquiring a farmer's land for urbanisation is no guarantee of a fair deal. An institutional mechanism must be found to give traditional users of the converted land a stake in the prosperous future being built on what once was their land. States must identify large tracts of land where conversion of land-use is allowed automatically. Farm productivity must go up, simultaneously, to compensate for the tiny share of arable land that would be lost to urbanisation.
    This, of course, is not the only challenge in building new towns. It is imperative to plan new towns to minimise their carbon footprints, going vertical, adopting mixed land use to organise work in close proximity to residences. Today's towns are built on the assumption that only a tiny elite would be prosperous enough to own cars. India's new towns must provide for both efficient public transport and the general populace's requirement of space for uses that were considered the privilege of the elite: parking, sports and games, other recreation.
    When towns grew around cotton mills in colonial south India, streets were earmarked for exclusive use by particular castes. Modern towns carry the promise of breaking the correlation between caste and occupation, through structural diversification of the economy. Their physical organisation must help this process, rather than hinder it. Ghettos breed crime and cultural backwardness and insularity. Towns must be designed to have no room for ghettos.
    Can we at least start thinking about urban affairs in a new light?
35%
Would probably be the share of urban India by the next census in 2011
136 cr
Is likely to be India's population in 15 years, if we assume a population growth rate of 1.3% per year
32 cr
Would be the additional number of people who would have to shift to towns for half of India to become urban in 15 years, if we assume urbanisation already is 32%
27,000 sq km
Would be the additional urban space requirement if we assume a population density of 12,000 people per sq km after 15 years
18 towns
Would be needed to be built anew, each the area of Delhi, in 15 years

10,000 cell phones sold in India every hour:

NEW DELHI: Every hour as many as 10,000 mobile phones are sold in India, thanks to the ever-increasing mobile services market and availability of entry level handsets that has brought phones well within everyone's reach, an IDC India report said.

India has shipped close to 85 million mobile handsets between April 2007 and March 2008, compared to under 66 million units shipped in the previous fiscal, registering an year-on-year growth of around 29 per cent.

In the last quarter of the financial year FY 2008, country's shipment has touched 22.3 million which amounts to around 10,000 phones every hour, stated IDC which tracks the Indian telecom industry.

It is up 24.4 per cent from 17.9 million units in the corresponding period of the previous year.

IDC India Country Manager Kapil Dev Singh said: "This growth comes on the back of a burgeoning mobile services market and lower entry barriers across various customer categories, as average selling values (ASVs) of handsets continue to fall in the wake of a highly competitive landscape populated by close to 25 vendors."

The year also saw growing number of high-end phones being shipped to India as EDGE and WCDMA-enabled mobile phones contributed 15.4 per cent and 3.1 per cent of the total mobile phone shipments in FY 2008 compared to 7.4 per cent and 1.2 per cent respectively, in 2006-07.

In India, overall, Finnish handset manufacturer Nokia has the largest market share, of 52.8 per cent, followed by LG at 10.2 per cent and Samsung at 8.3 per cent in terms of units shipped during the quarter ended March 31, 2008, IDC said.

The 10 top challenges for India

 India could be 40 times bigger by 2050, and may also have the potential to be larger than the US by that time. To achieve this, however, India needs to implement many changes.

These are the findings of a global research report on 'Ten Things for India to Achieve its 2050 Potential', brought out by Jim O'Neill, Head Global Research at Goldman Sachs, and Tushar Poddar, V-P Research, Asia Economic Research Team at Goldman Sachs India.

The reports lists a number of things for India to do, such as improving its governance, controlling inflation, introducing credible fiscal policy, liberalising financial markets and increasing trade with its neighbours. "Delivery of all these and more would ensure strong, persistent, medium-to-long-term growth, allowing India to reach its amazing potential," it says. Here are the 10 top challenges for India:

1) Improve governance

Without better governance, delivery systems and effective implementation, India will find it difficult to educate its citizens, build its infrastructure, increase agricultural productivity and ensure that the fruits of economic growth are well established.

Governance problems stem from the increasing inability of the government and public institutions to deliver public services in the face of rising expectations. A large gap between physical access to services and the quality of services provided is leading to a citizen satisfaction gap.

2) Raise educational achievement

Among more micro factors, raising India's educational achievement is a major requirement to help achieve the nation's potential. According to the basic indicators, a vast number of India's young people receive no (or only the most basic) education. A major effort to boost basic education is needed. A number of initiatives, such as a continued expansion of Pratham and the introduction of Teach First, for example, should be pursued.

3) Increase quality and quantity of universities

There is also significant need for better higher education. The likely numbers seeking higher education can be expected to grow by three of four times by 2020 from the current number of around 10 mn. The National Knowledge Commission has proposed an increase in the number of universities from 350 today to 1,500 by 2016. It has also proposed an increase in the 18-24 age group—to be educated to university level from 7 to 15 per cent.
 
4) Control inflation

For a nation that is rightly proud of its democracy and has a history of reasonable stability in terms of inflation, formal Inflation Targeting (IT) should become a centrepiece of a clearer, more defined and credible medium-term framework for macroeconomic stability. As part of this, greater independence for the Reserve Bank of India and the abolishment of all FX controls are recommended.
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We are well aware of some of the difficulties, both real and perceived, for India to adopt these choices, but it is in India's best long-term interests to undertake these steps. IT has given major benefits to a broad variety of countries, ranging from 'developed' countries (such as New Zealand, Sweden and the UK) to 'developing' ones (such as Brazil, Korea and South Africa). For India, there are probably broader powerful benefits.

5) Introduce a credible fiscal policy

India's gross fiscal deficit remains one of the highest in the world and, recently, government liabilities have been increasing at an alarming rate. The overall government deficit stood at just under 6 per cent in FY2008. In FY2009, this may accelerate to above 7 per cent, due to a large debt-waiver for farmers, a big wage hike for civil servants, increasing fertiliser and oil subsidies, and higher exemptions on income tax. At such high levels, government borrowing crowds out private-sector credit, keeps interest rates high, adds to already high government debt, and becomes a key source of macro vulnerability.

Further, the composition of spending is undesirable. Expenditures are directed less towards productive investment—especially in much-needed areas such as health, education and infrastructure, which could enhance growth—but rather on wages and subsidies. A medium-term strategy for fiscal policy, which reduces the overall deficit to a sustainable level, is critical for India.
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6) Liberalise financial markets

India's financial sector remains small and underdeveloped. The state still dominates the sector, holding 70 per cent of banking assets, a majority of insurance funds and the entire pension sector. Additionally, markets are lacking in corporate debt, currency and derivatives. This leads to a lack of credit and low financial savings. Total credit, at 50 per cent of GDP remains well below that of its Asian neighbours (an average of over 100% of GDP) and especially compared with China (111% of GDP).

Within this, consumer credit remains abysmally low (at 11% of GDP) compared with an Asian average of over 40% of GDP. Household savings tend to be in physical assets and gold, and risk diversification channels are not available.

To meet its growth potential, India needs to pursue financial reforms to channel savings effectively into investment, meet funding requirements for infrastructure and enhance financial stability.

7) Increase trade with neighbours

In the past decade or so, Indian trade with the rest of the world has ballooned. Lower tariff barriers encouraged by Indian authorities have been key, as has booming world trade. This impressive development needs to be kept in perspective, however, as it has come from an exceptionally low base.

India currently accounts for no more than 1.5% of global trade. India still ranks below the average of all developing countries. India's trade with China is rising sharply, and China now ties with the US as India's biggest trading partner. Again, however, it is important to recognise that trade with China remains very low. India takes just 1.93% of China's exports and provides just 1.46% of its imports. Total trade with the US in 2007 was just $42bn. For comparison, total US trade with China in 2007 was $405bn. Similarly, total Indian trade with China was just $37bn.

If India can be encouraged to think increasingly 'global', the virtuous benefits of trade with other emerging giants with large populations could be a source of considerable upside surprise for India.

SBI hiring may set a Guinness record

 THE country's biggest lender, State Bank of India (SBI), will hire 20,000 people this year in a recruitment drive billed as the biggest for any bank in the world. "This is the biggest HR initiative that any bank has taken around the world, and not just in India. It can qualify for the Guinness Book of Records," chairman OP Bhatt told reporters on the sidelines of the Indian Banking Conference organised by the Indian School of Business.
    The massive staff intake will help meet SBI's demand for manpower as it adds 3,000 branches in the next few years. "Bulk of the recruitment will be for junior level staff. Once the recruitment is complete, we will have around 1.85 lakh employees on our rolls," Mr Bhatt said.
    The bank was reaping the gains of its Parivartan HR initiative launched last year in the form of improved productivity, he observed. A programme called 'Chairman's Club' has been started, as a part of which successful branch managers and their spouses are invited to dine with the bank's chairman and his wife. "This is a non-cash incentive that we are providing to the bank employees thus motivating them to do better."

India's real estate to clock 30% growth in 10 yrs

The realty sector is projected to grow at the rate of 30 per cent annually over the next decade, attracting foreign investments worth $30 billion, with a number of IT parks and residential townships being constructed across-India, industry body Assocham

Currently, the domestic real estate market is expected to be worth $15 billion in which the FDI is estimated to about $6 billion, it said.     

At present, the foreign developers can undertake construction activities on a minimum space of 50,000 sq ft, Assocham President Sajjan Jindal said in a statement.     

The ceiling of 50,000 sq ft would be lifted by the government in want of more FDIs and would go to 2 lakh sq ft in next 10 years, as per Assocham's estimate.     

The sector would grow more as expected requirement by the IT sector (like IT parks) will be about 200 million sq ft space across the major and large townships, it added.     

It is also estimated that in the residential sector, the housing shortage is around 20 million units of which nearly 7 million units are estimated for urban India, it said.     

Commenting on the problem faced by the sector, the Assocham said that the involvement of Center and a number of state agencies in setting up of townships is needed.

Long-term India growth story still attractive: Quantum AMC

Moneycontrol.com - Mumbai,India

He said that 15% of the FY09 earnings looks attractive, if one believes in long-term India's growth story. Q: What is the call for the rest of this month, ...
See all stories on this topic

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Azim Premji: Leadership Essay Outstanding Business Leaders of Asia

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1.0 Introduction


"It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change."
Charles Darwin

Globalization has transformed the pace of change in the 21st century. In the early to mid 80's the pace of change was relatively slow. But since then Asia and the rest of the world has experienced rapid changes in the social, cultural, political and environmental contexts. This change has led to a shift in consumer needs, product changes, business expansion and an over all transformation of business ethics.

Alvin Toffler once said, that people, who fail to learn, unlearn and relearn will be termed illiterate in this new millennium. Organizations are subject to the same principles. No organization is devoid of change. Any business that does not respond to the rapidly changing social, cultural and political environments will cease to exist. To this extent the aphorism, change is the only constant in this world holds true.

Change involves people and wherever there are people there will be anomalies. The only way to manage change productively is through successful leadership. The old saying, 'You can lead a horse to water but you can't make it drink' provides good advice but more appropriate would be, 'You can manage a horse to water, but you must lead it to drink'. Herein lies the essence of leadership.

The difference between a great company and an ordinary one is the quality of leaders. Right through history we are reminded of this fundamental truth. Behind every successful business today is the benevolence of a great leader. Ford as we know it today exists because of the vision of Sir Henry Ford, the Virgin Group has reached unparalleled heights due to the efforts of Sir Richard Branson, and Reliance Industries in India emanated from the determination of Dhirubhai Ambani.

A leader as Henry Kissinger very rightly says is someone who gets his people from where they are to where they have not been. In the Bible, Moses led his people of out Egypt, Martin Luther King fought for the freedom of every black American and Mahatma Gandhi freed the people of India from the reigns of the British. These are all examples of great leaders who did extraordinary things.

India is fast becoming one of the most important countries in terms of developing world business. With an economic growth rate of 8% (with the aim of increasing this to 10% a year), and a middle class larger than the entire population of the USA, Indian business is set to have a global impact to rival that of China. (Source: Searjeant, G (2006). 'India to Increase its Public Spending', The Times, 1st March)

Indian business leaders have realized that their jobs are changing. They can no longer be benevolent rajahs. They need to explain their actions at home and globally. For this, they must educate themselves in the 21st century's key issues surrounding the "business of business": ethics, globalization, sustainable development, corporate social responsibility, corporate governance and climate change. In other words, honesty, integrity, accountability and business acumen. Leadership from the business elite that lacks these qualities has failed. Honesty and the trust are the very foundation of ethical values that must and will always be at the core of every company and business decision made in the pursuit of equitable wealth creation.

The personal integrity of a chief executive is at the heart of a company's culture and reputation. To lose it means a long, rutted road to redemption that may even be in vain.

One such Indian Business leader who embodies this change is Azim Premji.
He was running a small business until he saw the potential of computer software to change the world. He is now one of the richest men alive and has ploughed billions into a charitable foundation that bears his name.
Azim Premji is often referred to as 'India's Bill Gates'.

The way ahead is not easy; rather it is lined with tuff competition, increasing consumer demand, soaring growth rates and an unpredictable world economy. But the one to tread down the road less traveled is whom we call a leader.


"To be successful on a global scale for the year 2020 and beyond requires Indian companies to fast track the growth of their home grown management skills and leadership abilities to operate confidently anywhere in this world"
- Stephen Manallack

The new age business community is beginning to discover that a pessimist is not a good leader, but equally precarious is wild optimism that can lead to a kind of arrogance. While pessimism was a core feature of leadership in India, it is now hard to find with new leadership being driven more by dreams and determination. This wild optimism has seemed to have missed Indian business leaders at least as seen from their prudent decision making skills and public intonations.

Former U.S president Bill Clinton synopsizes this thought when he once said in a speech of his: "We all need to find as few demons as possible – and as many dreams as possible".


2.0 Azim Premji – Wipro Limited

Azim Premji founder and chairman of Wipro Limited, India's biggest and most competitive IT Company based in Bangalore is one of India's most successful business leaders. His success story is an inspiration to budding entrepreneurs. He has been India's richest man since 1999 with an estimated wealth of $ 6.7 billion. Yet his influence comes as much from his nonconforming personality as from his sheer wealth. His success can not only be attributed to his charismatic personality but also to his profound educational background which gives him the competitive advantage in business as used in business parlance.

At the age of 21, Premji was forced to leave Stanford University where he was pursuing an engineering degree to return to India so that he could take over the family business after the sudden demise of his father. At such a young age he had to shoulder the responsibilities that came with a business built by his father.

Self confidence, belief and determination combined together forms the bedrock of a great leader. Azim Premji's capability as a leader was first questioned at the first annual general meeting attended by him. A shareholder doubted his ability to handle the business at such a young age and thus advised him to sell his shareholding in the company. This infuriated Premji and gave him the motivation and inspiration to prove the rest wrong. The maxim 'Stand tall in the midst of adversity' has been proven true by Premji in not one but many occasions.
Under Premji's leadership Wipro has metamorphosed from a Rs. 70 million company in hydrogenated cooking fats to a pioneer in providing integrated business, technological and process solutions on a global platform. Today Wipro technology is the largest independent research and development service provider in the world. Thus it would be safe to say that he did indeed prove the doubtful shareholder wrong.

Another very crucial facet of a leader is foresight. He must possess the ability to think and look beyond his times. To explore hidden opportunities and cease them when the time is right. Premji dreamt a dream and when the time had come he went ahead and made it happen. What he inherited was a vegetable oils and soaps business but it is only because he had the foresight to see growth opportunities in the IT sector that he is today the chairman of one of the three billion dollar IT enterprises in India. Under his leadership Wipro has embarked on a journey of continuous expansion and diversification.

In 1975, the company diversified from vegetable oils to hydraulic cylinders and fluid power components. They also produced soaps, toiletries and baby care products. Wipro also started manufacturing light bulbs with General Electric. When GE moved out of India in 1997, Premji saw this as an opportunity for growth. That's when Wipro entered the IT industry. They first started manufacturing hardware and later went on to software development.

Fundamental also to the disposition of leaders is Integrity and Premji is known to be a stickler for it. He refuses to give bribes to get his work done. He had to wait 18 months to get an electrical substation for the vegetable oil manufacturing unit. The company incurred very high costs as they had to run the unit on captive power generation for 20 months. But he preferred the extra financial liability rather than abolish his ideals and values.

Every leader must strive for excellence. With the rapidly changing global economy everyone strives to be the best. Leaders cannot settle for anything less than being the best. Being average is just not enough.

In the knowledge based industry India has the advantage of being a quality leader. India has scaled the boundaries of quality when it comes to IT. At Wipro quality is their primary concern. Whether it is quality of product or service, to them the customers must always receive the best. Anything short of that is unacceptable. This belief in excellence propelled Premji to put Wipro on the world map by making it the world's first SEI CMM Level 5 software services company and also a leader in Six Sigma to quality in India.

"Wisdom lies neither in fixity nor in change, but in the dialectic between the two".
- Octavio Paz

Leaders must be willing to adapt to change. Wipro faced the need to change when Vivek Paul the CEO left the company. Premji promptly saw that the business needed to get closer to the customer and it was time to empower his resource pool of talent. The business was then segmented into sub companies and each one approached the customer in an autonomous way. With this reorganization Wipro tried to bring leadership closer to the customer and they achieved this by delayering the organization and empowering business leaders.

People are fundamental to organizations. They form the epicenter of the business and thus every leader must realize and accept this cardinal truth if he wants his business to succeed. Wipro's primary concern is its employees. Training is of utmost importance to the organization. As part of the regular on-the-job training, leadership is a core element. Leadership training is provided at the entry level and continues as the employee scales the heights of the corporate hierarchy. Azim Premji's success can be found in his approach to leading people to achieve more. "We give people major responsibility even if they are only 60% ready. Our experience is that people are pretty elastic when you give them responsibility, and they just grow rapidly with the job".

One of Wipro's oldest leadership development initiatives is the Wipro Leaders Quality Survey which started in 1992. Wipro endeavors to nurture top class business leaders. This framework comprises of 8 qualities which are based on the vision, values and business strategy of the company. This is a 360 degree process which starts with obtaining feedback from respondents and ends with each leader mapping a Personal Development Plan (PDP) based on the feedback received.

James McGregor Burns (1978) first introduced the concept of transformational and transactional leadership.

Azim Premji can be classified as a transformational leader. According to Burns a transformational leader is one who offers a purpose that transcends short term goals and focuses on intrinsic needs. The leader takes a visionary position and inspires people to follow.

Wipro's vision focuses on attaining leadership in the areas of business, customer and people. They aspire to achieve leadership in the following ways:

Business leadership – To be among the top 10 Information technology service companies globally and the No. 1 IT company in India
Customer leadership – To be the number one choice of customers through innovative solutions and Six Sigma process
People leadership – To be the top 10 preferred employers globally by creating an environment of empowerment, intellectual challenge and wealth sharing.
Brand leadership - To be among the 5 most admired brands in India

Thus by articulating this vision and leading his employees to see the long term benefits of his dream, Premji has very successfully built an organization that transcends its own need for financial gain for the good of the customer.


3.0 Shahnaz Hussain – Shahnaz Hussain Herbals


Look around the world today and you see a growing number of women leaders, whether it's in business, politics, sports or any other field. There has been a paradigm shift in the way the world perceives women. From being primary 'care givers' they are now considered as 'decision makers'. Today women mean serious business. Gone are the days when women dwelt in the shadow of men. Their lives centered on their home and family. Today they are more independent, confident and are well equipped to take on whatever the world throws at them.

Thus it would be just to say that some leaders are born women.

When it comes to leadership and management, women "tend to lead in circles rather than pyramids" (Brody, 1994). In other words instead of creating a competitive and hierarchical environment they prefer to work in a more co-operative manner. The success of women in managerial positions can be attributable to their superior creative problem solving and intuitive management skills. They adopt a more interactive approach to management by encouraging employee participation and also attempt to "enhance other people's sense of self worth to energize followers". (Brody, 1994)


Shahnaz Hussain is an excellent example of female entrepreneurship in India. She is one of the most prominent personalities of the corporate world.

Her company Shahnaz Hussain Herbals is one of the largest manufacturers of herbal products in the world. The Shahnaz Hussain group based in New Delhi, India was worth $ 100 million in 2002. She has received a number of accolades for her endeavor to take the beauty industry in India to unimaginable heights.
Some of these awards include, "One of the Leading Women Entrepreneurs of the world", "The Arch of Europe Gold Star for Quality".

"The very essence of leadership is that you have to have great vision"
- Theodore Hesburgh

At the epicenter of Leadership lies vision. Without this core element leaders will perish. It is in possessing a vision and inspiring others to embrace the vision that makes ordinary people extraordinary and that's whom we call a leader. According to Warren Bennis, vision is the "guiding purpose" and the "compelling goal". There is however a clear distinction between managerial and Leadership vision. The former motivates performance improvement and the latter shows an organization what it could become.

To that extent Shahnaz Hussain is a leader with great vision. When she first decided to enter the cosmetic industry in India, she wanted to do something different. Something no one had ever done before. So instead of using chemical cosmetics in her salon she decided to go the natural way. Her prime differential advantage was that she capitalized on the goodness of Ayurveda in cosmetics. Ayurveda is completely natural and no one had ever thought of this ground breaking idea before. No sooner had her products dominated the Indian market that it quickly gained global appeal as well. She took the ancient Indian tradition of Ayurveda to every corner of the globe.



Having conquered the global market she now wants to take cosmetology to where it has never been before – space. People who go to space suffer a lot from skin problems. Hence she is focusing her attention on creating products that would prove to be beneficial to astronauts. Who would ever think of using cosmetics in space – I wouldn't, you wouldn't but Shahnaz Hussain did.

As her company grew, so did the people who worked for her. She inspired people to share her dream. The ability to see into the future and cease opportunities that lies ahead is what defines a true leader. As Alan Kay said, "The best way to predict the future is to invent it".


An Inspirational leader functions from the heart, engages other people and provides them with an energizing vision. Shahnaz Hussain is an inspirational leader. Being a woman in man's world is not easy and achieving success to the extent that she has is both inspirational and provides other women the motivation to follow their dreams.

I would like to highlight four characteristics of inspirational leaders and prove to you how Shahnaz Hussain possesses these very same qualities. Firstly, Inspirational leaders set the pace. They do not force people to do anything that they are unwilling to do. Rather they lead by example and inspire others to model and manifest their positive attributes. The Shahnaz Hussain brand has grown to include 400 different kinds of products and 200 different beauty centers worldwide. From the 1970's to date the brand has scaled great heights and continues to grow. All along the way she has provided her employees with passion and motivation to build a brand which is not only renowned the world over but a brand they are extremely proud of.

Secondly, Inspirational leaders believe in the future. At every step she didn't settle for the best. Her hunger to be better than the best provided her with the impetus to keep going and growing. After having established her brand on this planet she now wants to explore the realms of space. Her foresight is also reflective in the fact that she is a pioneer of vocational training in cosmetology in India. She started professional schools at a time when only apprenticeship training was established in India.

Thirdly, they connect people to the larger story. One fundamental responsibility of leaders is to provide people with the understanding that their lives have meaning and that their work matters. By continually researching and developing new kinds of products, providing solutions to growing skin problems etc Shahnaz Hussain keeps the hope kindled in the hearts of her employees. Hope that ensures that the best is yet to come and innovation can never cease to exist.

Lastly, inspirational leaders help people believe in themselves. It's not enough just to get people to share your dream but rather to get them to believe it is possible to change that dream into reality. Great leaders help people believe in themselves. The fact that the Shahnaz Hussain brand has grown so extensively goes to show that people are increasingly partaking of her vision and are willing to be a part of that dream.

As Joel Barker very accurately says, "Vision without action is merely a dream. Action without vision just passes time. Vision with action can change the world".


4.0 Conclusion

This essay goes to prove that leaders don't do different things, they just do things differently. Each one of us possesses the innate quality to lead. It's up to us to decide whether we want to capitalize on this gift and use it for the advantage of mankind. Be the change you want to see.

As Andy Warhol so rightly said,

"They always say time changes things, but you actually have to change them yourself". There can be no growth if we keep doing things the same way. Learn from tradition, cultivate ideas and embrace experimentation.

The macrocosm of business is experiencing a paradigm shift in both the needs and wants of consumers. Competition is more poignant and this has led to a growth of a large number of businesses around the world. The age of slow incremental change has given way to a more rapid and fast paced rate of aggrandizement. Thus the future promises to be both industrious and unpredictable at the same time.

India Growth Story Strong despite inflation

Saying that he was is positive on the India growth story, Luis Miranda, president and CEO, IDFC Private Equity, says that inflation was inevitable with the soaring crude prices. Miranda, however, said that inflation was not a major concern as India had today become a $1-trillion economy.

Miranda also feels that the capital flows are not a constraint as there is a lot of money waiting to be invested in India.

CNBC-TV18 shares with domain-b its exclusive interview with Miranda:

How are you reading the macro turf right now? We have got decent GDP numbers, but inflation is above 8%. Are you nervous about the next few quarters or reasonably confident?
There will be some uncertainty in the next couple of quarters. This is an election year so people are going to make sure that the economy does get on track before the elections.

I remain positive despite the inflation, which  was inevitable with crude prices rising to $135 per barrel. 

The India growth story is still very secure. Inflation is a problem, but today we are a trillion-dollar economy. It is going to be led by rising domestic consumption and infrastructure spending. Capital flows are not a constraint at all. There is a lot of money still looking to be invested in India. 

At the start of the year there was a lot of concern about the infrastructure sector about capital availability. Recently some  FII norms have eased a little. Do you think these efforts to ease up the capital issues for infrastructure will help?
Capital has not been the constraint; the main constraint in India is really the ability of the government to actually privatise or create more public-private partnerships.

Capital has always been available. Debt is also available, there is a huge amount of domestic debt that is available. There is a lot of equity money as well being raised for infrastructure in India.

There are just two concerns, one is the ability of the government to offer out the various concessions and secondly, is the execution. Both these are risky, so it is not the capital, which is the problem.

What is the opinion in the US about the commodity spike because it is affecting many of the companies you invest in, in the infrastructure space as well? Were people saying that this is a crazy super spike and it is a blowout stage and commodities will have to correct in 2008 or were people still chasing momentum there?
There is a lot of noise in the US and people are riding these rising commodity prices. It has to correct at some stage. There are signs, but for the short-term the commodity prices will stay where they are if not little higher but it is not something, which is sustainable over a longer period.

It will definitely have an impact on the way people look at some of these issues. We are going to be in an era where oil prices are going to be much higher than expected. I did not expect oil prices to be at $135 / bbl. This is something, we are going to learn to live with. 

The Fed is getting more involved in trying to correct some of these problems. So I think this sort of negative news is going to be there for some time but it is not going to be as long as people make it out to be. 

To come back to the macros for a second, how concerned are you about the fiscal situation that we are running at this point. Are those legitimate worries in your eyes for a sector particularly which needs a lot of capital like infrastructure?
Corporate India has learnt to live with the fact that there will be fiscal problems and that the government will crowd out corporate borrowing. Corporate India has been able to work around that. So while there is a slight cost attached, I do not think this as a major problem.

With oil prices at these levels and the farmer loans, etc, someone has to bear that cost and the question is "who?". When it comes down to the fiscal, the state government is picking it up, there will be some impact over there but I do not see this as something that is new or major, given the larger growth story in India.  

From the companies that you spoke to in the infrastructure sector, what signals did you pick up because we hear different kind of voices from corporate India in this earnings season. What is the signal you are picking up - are there real execution issues or are these companies pretty much on a blue-sky kind of track?
We have seen some reality checks happening. In 2007 there was a lot of euphoria and people ignored some of the execution risk.

That is now coming to roost and we look at across set of companies. Some companies have done better than expected, some not as good. Part of it is execution, part of it is being able to raise future capital which is more than just a procedural because of the way the markets are today and third is the ability to ramp up business.

There haven't been that many new contracts that have been privatized or set up a public-private partnership in recent times here. 

We will continue to see mixed reports from within our companies but it is good because it sort of brings in some stabilities and  some sanity into this market which we had lost track of in 2007.

HSBC looks to India, China as growth pillars

HONG KONG (MarketWatch) -- HSBC Holdings Plc. will look to fast-growing emerging markets in China and India, along with the booming Hispanic segment of the U.S. economy, as strategic pillars of growth, according to comments by Chief Executive Stephen Green cited in a published report Monday.

Green, speaking at the HSBC's annual shareholder meeting Friday, said it was difficult to gauge the outlook for the year ahead noting the bank sees opportunities and risks amid the tumult in global credit markets, The Wall Street Journal reported in its online edition. Green estimated India and China will eventually account for 60% of the bank's business.

 Europe's largest bank, has a relatively modest exposure to U.K mortgages, with a 3.6% market share at the end of 2006. The bank's robust Far East business is seen as helping offset other areas of the banking sector which are not doing so well, such as lending in the wholesale market.

Green dismissed calls from activist investor Knight Vinke Asset Management, which holds less 1% of the bank's shares, to dispose of its U.S. operations "as unthinkable," the Journal reported.

Green also noted the U.S. subprime mortgage market remains under stress and pledged to close various businesses, continuing a paring-back of operations that it started last year.