|Jan. - Feb. 2002|
|Vol. 2 No.1|
CII ON INDIAN ECONOMY
India’s economic growth rate for 2001-2002 could be affected by the global turmoil in the aftermath of the attacks on the United States, according to Finance Minister, Mr. Yashwant Sinha. The Indian economy, one of the fastest growing in the world, has been battling a slowdown since the very beginning of this fiscal year.
In a recent CEO poll conducted by CII also revealed that the majority of the respondents felt that the US-affect would most likely hamper the revival prospects of the economy and they did not expect a recovery before the second half of 2002-2003.
Expectations of a significant impact on FII inflows are in keeping with the actual trends witnessed in the aftermath of the attacks on the US. FIIs have been net sellers in equity almost every day since the attacks (US $ 77.5 million), except for a few days which witnessed marginal net buying activity. The recent announcement of a hike in FII limits has not been reflected in daily trading yet.
There are expectations of a moderate impact on trade. Given India’s marginal share in world trade (0.5 per cent) and its low share of trade as a percentage of GDP, the Indian economy is unlikely to be significantly effected by fluctuations in trade volumes.
A greater cause for concern is the significant impact that is foreseen in FDI inflows. With a slowdown in the global economy already reducing the quantum of FDI flows, any impact on inflows from our biggest investment partner would substantially affect India. The infrastructure sector is likely to bear the major brunt of a decline in FDI inflows.
Having stated the expected effect of the US attacks on several sectors of the economy and in the background of the global slowdown, the fact that needs to be stressed is that the Indian economy to a considerable extent remains insulated from global developments. Thus, it would be safe to say that the final direction taken by the economy would largely depend on the success of internal reforms. The global slowdown should not be an excuse for the poor performance of the Indian economy.
(Courtesy: Confederation of Indian Industry, India Economic Policy Update, September 2001, Vol. 2, No.9)
Public Relations Rationale
The group is fast changing. Tatas have undergone a lot of external and internal restructuring and have exited many a business. Now, they are taking initiatives in the area of the Tata brand. The different Tata group companies, which had outsourced its PR to multiple agencies, are today in the process of terminating their existing Group contracts with other PR outfits and signing up with Vaishnavi. In fact, some of its companies, such as Tata Chemicals, Tata Power, Tata Tea, did not even have a PR person!
Vaishnavi will be handling PR for 12 Tata group companies, including Tata Sons, Tata Industries, TCS, Tata Engineering, Tata Finance, Tata Steel and Tata Tea. By hiring just one PR agency, Tatas are in a bid to leverage the combined clout of the group and hope to achieve ‘‘a higher degree of quality.’’ They do not expect to change their communications strategy. Nor do they expect to save money by hiring just one agency. What they believe is that they will be more effective.
Today, for each and every organisation, understanding and coping with the human climate is as vital as dealing with the weather climate is to the farmer. According to Philip Lesly, President, The Philip Lesly Company, Chicago: ‘‘Understanding human institutions and the attitudes of their members has emerged as one of the greatest needs of our time. This understanding, plus knowledge of how to cope with these attitudes and direct them, is the rationale of public relations.’’
All of human society today pivots on communication. Public Relations (PR) deals with understanding and using mass communication.
Business goodwill today means not only the attitude of the consumer toward the company’s products, but also the attitude of its employees, the community, the government, the stockholders, the dealers and distributors, the suppliers ... all of whom are vital to the success of a company. The value of goodwill is most evident when it is absent.
Today, management executives across the globe have realised that along with production, sales, accounting, finance, engineering, their businesses must have the most expert assistance in developing and maintaining goodwill. That expert is a PR professional.
In the case of Voltas Ltd., selected efficient secretaries from Voltas were picked up and a pool formed. This pool was sponsored by Voltas to do a course in PR and, at the same time, given on-the-job training. Thus the Public Relations Department of Voltas was born.
Godrej realised the importance of creating goodwill way back in 1946 when founder-consolidator Pirojsha Godrej, on hearing a complaint from one customer, took back hundreds of safes from customers all over the country at his expense and due to no fault of his, changed the moisture-generating and fire-resisting compound compositions and carefully packed them and returned the safes to the delight of the customers, which created enormous goodwill for the Company*.
However, times have changed, rather deteriorated. Globalisation has resulted in fierce competition as also a manifold increase in corruption. There are a number of foreign manufacturers flooding the markets with genuine and duplicate products, luring consumers with ‘‘quality’’ at lower prices and quicker delivery schedules. In such a scenario, a qualified, well-trained PR professional does play an important role in marketing of products. It is a basic component of successful marketing. It can help insure that a product is not rejected for reasons that have nothing to do with the product. It can help the organisation take smart risks and avoid the bad ones. It can enhance the Company’s brand image built so painstakingly over the years. Of course, PR cannot succeed when called on to rescue a bad marketing decision. If a skilled PR practitioner is consulted early, he/she has the opportunity to influence a decision. If he/she is brought in at a point where management has just realised it has made a mistake, the PR practitioner can advise management to admit publicly that they did wrong and take corrective action. It is important to understand that publicity will occur, whether the organisation likes it or not. But, if directed, it can work to the organisation’s benefit. However, if the PR practitioner is consulted after the product has established a steady decline because of a mistake, it is usually too late to save the product.
At its best, PR is a bridge to change. It is a means to adjust to new attitudes that have been caused by change. It is a means of stimulating attitudes in order to create change. ‘‘You really can change the world if you care enough,’’ said Washington-based attorney and civil rights advocate and founder of the Children’s Defense Fund, Marian Wright Edelman. If Tatas can CHANGE, can other corporates be far behind?
Information Technology Export
The ‘‘Industrial Economist’’ of 15-29 October, 2001 reporting on their interview with Ms. R. Rajalakshmi, Director, Software Technology Parks of India (STPI), Chennai, reveals that today Tamil Nadu is the most favourable IT destination.
Since 1995, when STPI-Chennai got established, software exports have moved up from around Rs.12 crore to a staggering Rs.3,116 crore today, which confirms the huge scope for export in Information Technology. The potential lies in Japan.
Of the total $6.1 billion software exports from India in the year 2000, only 3.5 per cent went to Japan, and 62 per cent went to North America. What’s more, it was found that Japan imported software from the US. To Ms. Rajalakshmi, it would make more business sense for Japan to look directly at India.
With this in view, she had 35 business meetings with the Japanese, and discussed 22 IT project proposals for promotion. According to her, the Japanese are looking for sustained flow of information on the investment climate in India, before they take any sound decision.
Till date Japanese firms have been targeting Bangalore for investments. But in reality, with the more focused development of the IT infrastructure taking place in Tamil Nadu, operations in Chennai are proving to be 20-30 per cent less costly than in Bangalore or Mumbai.
She feels that the present IT slowdown is a good opportunity for India to pause for a while and take stock of the situation. The focus for the future seems to be the IT enabled services. How are we going to handle the task of matching demand and supply is the moot question.
India, of course, is quite late in the race, she says. Already countries like South Africa and Belgium have perfected their systems and are far ahead of us.
‘‘Our concentration on the hardware is abysmally low. We have absolutely zero R&D investments in IT. This would mean that we could never comfortably say that we have achieved excellence in IT. The future holds a good opportunity. It is only up to us to make calculated and best use of these to our advantage.’’
Statutory Warning: Cigarette smoking is injurious to health. How often do we hear of this warning and how often do we flout it!
It is said that cigarette is nothing but a pinch of tobacco rolled in paper with fire at one end and a fool at the other. But may not be true any longer, implies the Jakarta-based International Pepper Community (IPC), which is exploring the possibility of developing spicy pepper cigarettes. IPC has already held preliminary discussions in this regard with some cigarette manufacturers, including the ITC.
Pepper cigarettes would soon be developed on the lines of Indonesian clove cigarettes. Indonesia, which produces 4,000 tonne of cloves annually, uses spice exclusively for manufacturing cigarettes. IPC’s Executive Director, Mr. K. P. G. Menon, told the Business Standard on November 23, 2001: ‘‘Pepper cigarettes would have tobacco, but the quantity would be comparatively less.’’ The IPC also claims that pepper cigarettes would be ‘‘good for the respiratory system.’’
Poison is poison. Whether you have a pinch of it or a handful of it, the consequences are dangerous. Therefore the words ‘‘comparatively less’’ sound rather childish and gimmicky. These are new methods to promote the consumption of pepper thereby raising its prices.
The round table meeting on the commodity development in Asia and the Pacific Region, has urged the common fund for commodities (CFC) to support pepper producing countries to enter into branded markets and to extend help to validate claim on the medicinal properties of pepper. But, at what price? The harmful ingredients of tobacco are surely higher than the medicinal properties of pepper. It is like an obese heart patient never exercising, enjoying a sumptuous, greasy meal and then having a Sorbitrate against heartache!
Organisations such as the International Automobile Association (which runs Formula One motor racing) and Fifa (the world football governing body) are backing WHO’s call to ban smoking at sports events and end tobacco advertising, promotion and marketing.
The point is that to change is good. But change for the better, not for worse. Godrej, for instance, has banned smoking for employees as well as visitors and made Pirojshanagar and all its premises a compulsory non-smoking zone.
The irony is that people know how harmful smoking is, that smoking is the direct cause of lung cancer, heart disease, complicates pregnancies..., they know all the poisonous substances in tobacco and know of the bad effects of passive smoking. Many smokers have given up smoking. I know of a person who in one strong angina attack gave up smoking forever. But why should people suffer in order to stop smoking? Somehow, somewhere, we are lacking in our communication, not just to the poorest of the poor, but also to the increasing number of young men and women who consider smoking as fashionable and a way to a modern, high-society life. Also, there is an increasing number of ‘‘hard smokers’’ (mostly in developing and under-developed countries) who smoke over a few packets of cigarettes a day. Organisations such as the IPC and ITC are using them as targets for their own selfish vested interests.
Sadly, the hota hai, chalta hai attitude carries on. Corporates keep on printing warnings that are meaningless to them, the flouting of which continues, prices of cigarettes keep increasing, a pinch of tobacco makes a big hole in the wallets of smokers, and many lives are simply puffed away in smoke. We are like that only.
China in WTO
Asian countries wake upto China’s imminent entry to the World Trade Organisation (WTO) or fast losing out on foreign investment. Mr. Supachai Panitchpakdi, the trade body’s future chief, said on Tuesday.
‘‘This is not to alarm but to wake you up. We will have to get our act together, deepen our domestic reform, because now the competition is at the front door,’’ Mr. Supachai told a conference on Malaysia’s economic outlook — for 2002.
The former Thai deputy Prime Minister, who will take over as WTO director-general from New Zealand’s Mike Moore in September next year, said China would be a huge competitive force in the region.
(Source: The Financial Express, 7-11-2001)
New MSN Services
The Indian arm of Microsoft’s MSN Group will come out with more services and upgrade its existing offerings next year. The company has recently launched a new version of MSN Messenger.
‘‘Since few people actually log on to surf or read the content, we are focusing on the services. We are planning to come out with more compelling services,’’ director of MSN Business Group-India Shriram Adukoorie told Business Standard.
The new version of the messenger has features like drag and drop options in which one can segregate online buddies into co-workers, families and friends. It also has enhanced graphical user interface and video-conferencing and Net meeting facilities.
Commenting on the online advertisement market in the country, Adukoorie said: ‘‘The online advertisement market is estimated to be at around $ 10 million and will grow at the rate of 100 per cent every year. As Net penetration increases in the country, the online advertising market will also grow. We want a fair share of this business.’’
MSN has a tie-up with Britannia to promote its brand and products. ‘‘We would be going in for more such long-term relationships. We are in talks with a number of FMCG companies,’’ Adukoorie said.
He, however, refused to divulge any details. ‘‘According to a research, the e-mail market is basically a two brand market — Yahoo and MSN,’’ Adukoorie said.
MSN has 42 million users worldwide. The messenger service registers 36 million logins per month in India, while earlier it used to register just half-a-million users a month.
‘‘MSN Explorer is also doing phenomenally well. We’ve recorded 1,00,000 downloads since the Explorer’s launch on September 18 this year. Out of this, 75,000 are active users,’’ Adukoorie said.
(Source: Business Standard, 4-11-2001)
RBI mulls 20-year bonds
The Reserve Bank of India is considering issuing bonds with maturity period of 20 years and may be 30 years, too, as part of efforts to encourage long-term saving through insurance and pension schemes. Insurance Regulatory and Development Authority (Irda) chairman N. Rangachary, who is part of the high-level committee headed by the RBI governor, said the long-term bonds are also intended to address concerns about possible asset-liability mismatches among financial sector players.
(Source: The Financial Express, 23-11-2001)
Godrej deal in Pune
Godrej Properties, in a joint venture with a landowner Jehangir H. C. Jehangir, scion of the well-known Cawasji Jehangir family, is developing a Rs.90-crore-three lakh square feet realty project in Pune’s Shivaji Nagar area. In a spin-off deal, HDFC has picked up 50,000 sq ft of commercial space in the project for Rs.11 crore and leased it to chain retailer Shoppers’ Stop.
The JV involves the landowner contributing the land component and Godrej Properties chipping in with the construction and marketing cost as well as the technical expertise for planning, municipal clearances and execution of the project. Knight Frank Property Services has brokered the JV.
As part of the profit-sharing deal, the landowner has been paid a small upfront consideration as an advance together with interest on the value of his investment. This will be adjusted from the landowner’s share after the sale revenues are realised, Godrej Properties’ G. M. Milind Korde told ET.
The separate 50,000 sq ft retail block bought by HDFC was sold for Rs.2,300 a sq ft — a relatively cheap rate for retail commercial space — as it was in a semi- finished state with the interiors being done by HDFC’s leasee Shoppers’ Stop.
Besides the Shoppers’ Stop section, the Pune JV project has a residential 10- storey-90,000 sq ft apartment block, likely to hit the market early 2002. With an expensive finish, it is likely to be priced around Rs.2,200 a sq ft and will include a public two-acre nature park.
The project also includes a 9-story commercial block offering 1.6 lakh sq ft. A novel feature is the inclusion of car lifts to the parking area on the second and third floors. The retail section on the ground floor will be on offer at around Rs.4,000 a sq ft, while the commercial office is expected to fetch Rs.3,000 a sq ft.
(Source: The Economic Times, 11-11-2001)