Sunday, May 30, 2010

FDI in Indian Retail - Why is it a necessity step?

Thanks to Dr. Singh's attention, Indian Govt has seriously started looking at multi-brand retailing sector opening to foreign players. (

This is a welcome step and an important one. Large retailers will provide muscle of Finance, tools and techniques to currently budding organized retail sector in India. Lets look at some of the major factors where it could impact if done right.

1. Current high inflation can be attributed to 2 reasons,
a) Black marketing and local monopoly of unorganized wholesalers and
b) Wastage of thousands of tons of food.

Both of these can be controlled by good investment in back end supply chain operations that comes with these FDI policies.

2. In a country that has 30%+ food wastage due to lack of basic supply chain efficiency and modern warehouses; large organized retail sector is a must. Moreover govt would demand high investment in backend operations as per this proposal. Theoretically controlling food wastage to 5% can feed all below poverty line and make BPL disappear.

3. Farmers exploitation by local middlemen will reduce and even encourage farming sector to boost productivity.

Only pseudo socialists of Indian politics like Yadavs or pseudo communists like Yechury will oppose above factors.

4. Fair competition is always good for consumers and is proven 100s of times around the world. This will bring choice and shopping convenience to an average consumer.

5. Jobs and Labor Force: Backend operations of organized retailing will create lots of new jobs and front end store support would consume current local job losses easily. One could build a case for a net job addition due to this change.

6. Entrepreneurial encouragement: A fair organized sector will attract people with new ideas and innovations. Combine with open capital investment availability, this can be a boom for new Mittals and Murthys. Who knows we may have a Sam Walton or Jeff Bezos amongst us.

Well, some of the points above are true even right now and are happening already but a large backend investments and modern supply chain experience will take a very long time to come if large experienced players don't enter into the market. We have seen even Reliance and Birlas who invested by and large in front end stores and real estate were not much successful.


Wednesday, September 9, 2009

Is hacked???

Time of incident: about 10:30 PM EST
Date: September 8th 2009

My SSN and other sensitive information are compromised over internet. This problem happened when I tried to access website to pay my credit card bill. Following is step-by-step sequence of events:

1. I typed in on my laptop/MS internet explorer.

2. Entered login id and password for my account on website

3. Next page gave a form to fill up that read "To continue, please enter the information below to help us verify your identity." The webpage asked me to enter following information:
a) First name
b) Last name
c) Date of birth
d) SSN
e) Mother's maiden name
f) Card number
g) Card expiration date
h) Card CVV2
i) ATM Pin URL: Screen Shot:

4) I got suspicious about the webpage since should not ask all of this details so I closed the window and open a new one

5) On the new window I repeated step 2 and 3 and got the same web page. So I believed on the website and ENETERED ALL THE INFORMATION ASKED ABOVE
6) Next webpage asked me to enter my email id and email password. Then I got sure that chase can not ask email id and password. But that was too late as I have already given all the information. :(

Next I contacted chase over the phone and they confirmed that the information asked on the webpage is never asked by the bank. I provided screen print and URL to them on .

Bank's stand is that their website is safe and not hacked. They claim my computer may have virus for this phishing. However I have antivirus running all the time and my internet connection is secure.

I can now go to and pay my bills etc on the same computer and it does not give the same phishing web page.

I am concerned that my identity is compromised and if is hacked then millions of others are also at risk.

I have also contacted IC3 which is the govt agency for internet fraud complains.

Saturday, May 16, 2009

India Election Results

At the time when I am writing this; counting is going on for Indian parliament elections. Trends have come out for 80% of seats. The big stories that’s coming up are,

a) UPA is coming back. Dr. Manmohan Singh would hold on to PM’s post.
b) NDA will come distant second
c) Communists are almost out of picture in Indian politics
d) Maya’s dalit vote bank finally came to senses
e) End of Lalu’s era
f) Regional politics still a factor in the south
e) Third front as expected came out as a joke.

In my opinion these are the 5 reasons for these results:

1. Man Mohan factor: The 1 factor that has worked across the country above any region, cast, religion, language etc is the credibility of Dr. Man Mohan Singh. His sincerity, intellect and hard work are unparalleled and un-common among Indian politicians. This is one big differentiating factor.

2. Message crisis in BJP: Through out the campaign BJP or NDA did not have a single big consistent message.
  • They took a risk of attacking Dr. Singh and it didn’t work.
  • They talked about UPA being soft on terror but no other solution is provided except POTA which is too small for a huge problem we’re talking about.
  • They talked about inflation and economic issues but again how NDA will be different (and has been different) is big question. No solution again

3. Politics of Allies: Strategically UPA made better decisions in terms of
Whether to go with allies or not
Which ally to choose where
Sonia and Rahul should be given credit for this.

4. Leadership crisis in BJP: However Mr. Advani was projected as PM candidate but the way he projected himself and the line BJP has taken that a strong statements will place him like a messiah. Well the news is Indians can not be fooled like a herd of uneducated people who can be collected in large rallies to see their Neta. Though they have rightly projected Modi as a star campaigner but Advani-Modi-? There should have been one more leader who can play an inclusive part. Advani-Modi duo shows a more polarized picture.

5. Relative good governance: It is always difficult to judge in absolute terms that last 5 years are the years of good governance or not. However the fact is that govt has invested billions of dollars in many pockets of the country. Be it loan waiver scheme or metro or national highway scheme. Pockets of people are benefited due to govt policies and you mix it with credibility of Dr. Singh; it’s a formula to win the psyche of the people.

Now, is there any pattern emerging here? The single largest factor that’s emerging in current India is that “Indian voter is becoming more and more intelligent with each election”. Our democracy is getting matured. Consider these examples,
Whom do we chose between soft-spoken Singh and iron-man Advani?
We are throwing out age old communists.
Nitish’s great governance wipes out lalu
Maya’s Dalit voters finally betray her based on her performance
Any hard polarization factor on any account did not work.

So I congratulate India for getting a stable government without any large ideological differences in its partners. I hope now they can move forward with reforms without much hindrance.

Sunday, December 21, 2008

Credit crisis and govt efforts

2 and half months and $350 Billion later,  the credit situation seems to be standing still. As if no action has ever taken. Now this week we heard Feds cutting borrowing rates to near ZERO levels. Hopes are that banks will be attracted to lend if lending cost is almost zero.  Here is this interesting article from NYT on Japan's similar experiments.  

If we believe the writer and Japanese way, the only thing that will encourage banks to lend is the confidence in the market and that will come from optimum regulations and policies. Just throwing money will not help. It somehow make sense. How much ever money I have, why would I lend it to someone who can go bankrupt any time. On the other hand if I lend money, may be the one can be saved from going under if he has a viable plan. So it becomes a vicious circle.

On the other hand this equation we see everyday on media about bailing out US auto industry. The 3 CEOs of Chrystler, GM and Ford are made virtually begging infront of congress to pass the loan and still it wasn't approved. They had to present viability plans and whatnot. Finally Mr. Bush announces $17 Billion 2 days back subject to a detailed plan presentation before March 31st. Frankly I liked those big fat CEOs being asked tough questions in front of camera. Their failure is public whole nation knows about it. 

However on the other hand we never saw any of the bank's CEOs on TV when $350 billions were distributed. I wish if same kind of grilling would have happened followed by tough oversite and strong strings being attacted; those $350 billion could have been in market by now.  Why Mr. Paulson's old pals are not under scruitny is something I don't understand. Perhaps my common sense is not enough and it need some special sense to understand. 

Monday, December 8, 2008

Recession Strategies

I started with a search of companies and industries that have been proven recession indifferent in the past. While I looked around, did some googling, read some articles and business histories, it was soon very clear that NO industry or company is actually recession indifferent. It touches every business but sometimes you can change the way it touches.

Business entities are made of people and sometimes striking similarities can be found in psychology of human beings and organizations. In this case it is the instinct to give their best during crisis. Viewing problem as opportunity has been a line of motivation for professionals but what I am finding is that it’s equally true in case of organizations. It is fascinating how throughout the history there have been various companies that performed exceedingly well during turbulent times. In fact many advent of ultra successful products like Fortune magazine, Revlon and Nescafe can be attributed to recession.

So what makes them click? What do they do differently? As per my modest research, we can summarize them in few basic strategies,

1. Recession is mother is of invention: Slowdown is the best time for entrepreneurs and disruptive ideas. This is the time when customers’ needs change, customers speak explicitly and their needs are clearly visible as compare to boom times. Read this story, In February 1930, four short months after the stock market crash, Time Magazine founder Luce launched an Audacious, bold, and vibrantly-colored arsenal of human interest stories in the form of new media product called Fortune Magazine. Not only did he have the gall to launch a new product in the shadow of the Great Depression, he launched an expensive new product. At the outrageously-lofty price of $1 per issue, Fortune launched with only 30,000 subscribers. By 1937, the magazine netted a half-million dollars on its circulation of 460,000. By the end of the decade, Fortune had become required reading on Wall Street. Innovation always matters. It must, however, be relevant to the needs of the market.

2. Creative and uninterrupted marketing: This is really a time when customers want to be informed and aware more than any other time. Cutting drastically on marketing is not an option. Note that the companies who have done strong marketing during bad times have reaped much higher benefits during and after recession. During the 1989-91 recession, Pizza Hut sales increased by 71% with Pizza Hut Pete and a $3.14 million advertising budget.. Pizza Hut increased marketing budget during those times. During 1990-1992, PepsiCo's corporate sponsorship of Pizza Hut included funding the Book It! National Reading Incentive Program, which encouraged higher literacy rates among young people. The reward for better reading ability was free pizza at any Pizza Hut. In 1992, the Book It! program involved more than 17 million students in North America alone, and Pizza Hut received letters of endorsement that year from President George Bush. Shrinking visibility in slowdown may give an impression that you’re in trouble and customer may want to look for other options.

3. Acquisitions: Companies can spend their way out. While many companies remain conservative by savings and cost cutting at every opportunity; the successful ones are those that take advantage of cheap deals of great value during recession. Ever wonder why Warren Buffet has invested $5 Billion in Goldman Sachs and $3 Billion in GE in last quarter itself. His investment of Coca Cola and Ridgley’s during 1989-1991 slow down are already classics in investment books.

In a research of 1989-1991 recession, McKinsey studied 1000 prime US companies from 1982-1999. They write, “Successful challengers, we found, maintained a greater appetite for acquisitions during the recession than did their less successful former peers. In periods of growth, these challengers were M&A laggards—they made 63 percent fewer deals
3 than their former peers did. But during the recession, while competitors brought their deal-making activity nearly to a halt, successful challengers dropped relatively few of their transaction plans, erasing the gap with the rest of their industries.”

4. Collaboration: This is the time when businesses need to share the strength of partners. Synergies are most needed now for 2 major reasons, a) To cut operations cost and b) to increase value to the customer. Just look around and we can already find great examples, Toyota focusing on being affordable by involving suppliers in the design process to save an estimated $10 billion. Secondly, it's focusing on being cooperative by giving free efficiency consulting to its own suppliers. The suppliers cut costs, pass the savings onto Toyota, who can, in turn, give its customers a break. We just heard today ITunes coming to Wal-Mart at $99. Ends meeting, literally!

Learning is ongoing and I'll keep this post updated.