NEWSLETTER
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… a weekly news bulletin www.xedintellect.com 20th Sep 2012 – 26th Sep 2012

IN BRIEF
COVER STORY REFORMS AT LAST !!!
ECONOMIC INDICATORS
Brent Crude

$110/barrel
BSE

18,694.41 points
(as on Tuesday, September 25)

PERSONALITIES OF THE WEEK

Christine Lagarde

Sachin Bansal

CORPORATE INTELLIGENCE

BIG THREE MANAGEMENT CONSULTANCIES

NEWS DIGEST…
BUSINESS NEWS GLOBAL NEWS MISCELLANEOUS NEWS

Wal-Mart plans to open its first outlet in India within 12-18 months

More than two-thirds in USA live pay check to pay check

Foxconn unit in China closes after workers clash

ECONOMIC INDICATORS 2 COVER STORY 3 PERSONALITIES OF THE WEEK 4 CORPORATE INTELLIGENCE 5 NEWS ANALYSIS 6 JOB PROFILE 11

PART TWO

KNOW YOUR BASICS: DATA ANALYTICS KNOW YOUR BASICS: DATA ANALYTICS

D

ata analytics (DA) refers to examination of raw data for drawing meaningful conclusions usually with the help of the latest IT tools. DA is categorised into exploratory data analysis (EDA) and confirmatory data analysis (CDA). EDA refers to finding new features in the data (similar to data mining) while CDA is used to examine the validity of existing hypotheses. There‟s another category known as Qualitative data analysis (QDA) which is generally used in the social sciences to draw conclusions from non-numerical data like words, photographs or video. The term "analytics" has been used by many business intelligence (BI) software firms as a keyword to describe quite different functions. Data analytics is used to describe everything from online analytical processing (OLAP) to CRM analytics in call centres. Banks and credit cards companies, for instance, analyze withdrawal and spending patterns to prevent fraud or identity theft. Modern data analytics often use information dashboards supported by real-time data streams. It means the data is analysed as soon as it is recorded.

ECONOMIC INDICATORS ECONOMIC INDICATORS
Oil climbs to $110 per barrel (as on Tuesday) Source: The Economic Times

Brent crude has seen consistent fluctuations in its price due to a multitude of factors that are leading to uncertainty in the overall economic climate of the world. According to analysts, following factors are responsible for the upward movement of prices: 1) US cleared the way to impose tighter sanctions against Iran to curb its nuclear ambitions. 2) A faltering global economy and its negative effect on demand continues to weigh, especially after a survey on Monday showing German business sentiment dropped for a fifth straight month. 3) Pessimistic view of the investors after a series of stimulus measures from central banks in the United States, Japan & Europe could not do much to boost growth in the economy. Sensex 18,694.41 points (plus 0.11%) (as on Tuesday) Source: Reuters

The BSE edged higher led by gains in defensive and low-beta (less risk stocks) stocks such as ITC on value buying. A series of reforms announced this month generated significant interest in Indian stocks with the benchmark index gaining 7.25% and foreign investors pumping in close to ₨ 13,220 crore in September so far. According to Deutsche bank, continuing rupee gains and subdued oil prices will give a “rare sweet spot” for India, positively impacting the fiscal deficit, and give support to the central bank, which has been waiting for inflation to cool down. CHARTS & GRAPHS – Who’’s Scared of the Dragon? CHARTS & GRAPHS – Who’s Scared of the Dragon? CHARTS & GRAPHS – Who s Scared of the Dragon?
The Economiiistt The Econom s t The Econom s

Some countries see an opportunity rather than a threat in China's economic rise. As the American presidential election looms, so the electioneering moves up a gear. This week on the campaign stump in car-making, swing-state Ohio, President Obama announced that the government had filed a complaint against China at the World Trade Organisation for subsidizing car-part exports. Mitt Romney accused the president of not going far enough. China, meanwhile, lodged a trade dispute of its own on the same day, alleging duties levied by America on Chinese steel, paper and other products are unfairly high. A Chinese spokesman later stated that China's complaint was lodged first, and that America's filing had a "political goal". Nonetheless, a tough China stance is likely to play well in the campaign. Most Americans see China as an economic threat, according to the recent Transatlantic Trends survey by the German Marshall Fund of the United States. Indeed, of the 14 countries polled, only in France did a higher proportion view China as a threat. In contrast, despite being overtaken by China as the world's biggest exporter in recent years, more people in neighboring Germany see China as an economic opportunity.

COVER STORY : REFORMS AT LAST!!
Corporate India is overwhelmed & the media is abuzz with the recent news of economic reforms announced by the Government of India. These reforms seem to have given a new lease of life to the fledgling Indian Growth Story & a respite to UPA-2 which has been drawing flak for the Coalgate scandal & various other corruption cases. Opposition parties, as usual are up in arms. But it‟s the Prime Minister who is basking in the glory. Not long ago, the same international & domestic media which raised questions on Manmohan Singh‟s ability to take India‟s economy out of the woods, are now heaping praises on him. The government finally pressed the reform button when it announced that it will implement FDI (Foreign Direct Investment) in multi – brand retail, Aviation Industry & Broadcasting (which comes under Information & Telecommunication ministry). In a televised appearance, the prime minister explained the reason behind the diesel price hike. Bleeding oil companies heaved a sigh of relief & capital markets cheered as BSE breached the 18k mark & the Rupee strengthened against the dollar from 55 to 53 (resulting in the saving of a thousand Crores for the oil PSUs).

A long time over due: India Inc embraced the reforms & the common man was exultant. Economic pundits had

predicted another 1991 like situation, thanks to the subsidies offered in the name of socio – economic development. Consequently, the fiscal deficit widened & state debts mounted. The number of naysayers doubting India‟s growth story increased & those who had faith started to doubt. The economic reforms which were long overdue will certainly get India as close to its growth projection of 9 per cent in the twelfth five year plan as possible. Let‟s have a look at how these reforms can make things right for India.

Why reforms are needed? In the last few years, global slowdown & policy paralysis have badly impacted the

Indian economy. A number of economic policies were put in limbo. The government focused more on social schemes & kept on providing subsidies on diesel & food to BPL families. This year‟s Annual budget was so short on expectations that the BSE tanked by 900 points. Despite high production of food, spoilage caused supply deficit which aggravated inflation. The Rupee depreciated by 20 per cent in the last two years, which further widened the fiscal deficit as India imports 80 per cent of its domestic oil demand. Investors, who earlier were so optimistic about India‟s story, started withdrawing their investments. Something revolutionary was needed & this flurry of reforms has certainly revived business sentiments as evidenced by the inflow of ₨ 13,500 crore in September so far.

How FDI will impact the economy? The government has put some stringent
List of reforms 1) 51% FDI in multi – brand retail. 2) Foreign Aviation companies will be now allowed to invest in Indian aviation companies. 3) Approved 49% FDI in power Exchanges 4) 12% hike in diesel price conditions global retailers like mandatory investment of 50 per cent in the back end infrastructure, which will make the supply chain system efficient (cold chains, refrigeration, transportation, packing, sorting and processing). This will lead to lower prices benefitting consumers at large. International retail companies will have to procure 30 per cent of the raw material from SMEs (small & medium enterprises). Infrastructure in India is already in a very bad state; introduction of FDI will only improve it. The good news for the common man is that the number of jobs will increase by millions & the highly unorganized sector will begin to get organized, benefitting Indian economy eventually. Indian airline companies are in dire need of capital due to accumulation of losses & mounting debt levels; investment is what seems to be the need of the hour. In the long term, FDI may certainly help the Indian aviation sector. One can only hope that these reforms will pave the way for other reforms & put the Indian economy back on track.

Other areas of concern: Poor IIP (Index of Industrial Production) figures

suggest that there is an urgent need to revive the manufacturing sector. India‟s fiscal deficit is at an all time high and warrants immediate action (Indo-China trade deficit is a staggering $27 bn). Public transport & public education are the other two important areas that require the government‟s attention. India needs to learn a lesson from its neighbor & Asia‟s biggest economy. China has become the manufacturing hub of the world, it‟s cities & airports are some of the best. All this has happened because China took measures at the right time, whereas, in India the old story of “unless there is a crisis we won‟t act” continues.

Conclusion: When the entire world is looking at India, the government needs to make sure that it lives up to their expectations. India is touted to become the next super power. Politics of self interest is the biggest hindrance, if they want the economic development of India. By deciding to allow FDI in critical areas, the government has taken the first step towards development & restoring its people‟s trust. Its next focus should be to ensure that every spectrum of the society benefits from the reforms. Let holistic development be the objective!

PERSONALITIES OF THE WEEK PERSONALITIES OF THE WEEK

Christine Lagarde –
(IMF)

MD & Chairman of International Monetary Fund

Paris born Christine Lagarde took charge of IMF when the world was fearing another recession; economies still recovering from the 2008 crisis; Euro zone in trouble & Greece in complete shambles. She was appointed as the IMF head on 5th July 2012. With an exceptional talent and a broad experience she has provided invaluable leadership for the indispensible institution. She recently announced that the IMF will get involved in designing and monitoring the implementation of ECB‟s bond buying programme. The support came on the backdrop of the view that large, debt-strapped euro zone countries Spain and Italy had taken enough action to repair their finances to merit aid from the rest of the European currency union. Born on 1st Jan 1956, Lagarde was raised by her mother & grandmother after her father, an English professor at the Faculty of Rouen, died when she was a teenager. She graduated from Law School at Paris West University Nanterre La Défense & got Master‟s degree in Political Science from Aix en Provence Institute. Career!!! Lagarde at 25 joined US law firm Baker & McKenzie in Paris after completing her Masters. She handled major “Antitrust & Labour” cases & later rose to become the firm's first female chairman in October 1999, earning a reputation as a sharp negotiator with endless stamina. She was France„s Trade Minister for 2 years before joining the ministry of Economic Affairs in 2007. On 28 June 2011, the IMF board elected Lagarde as its next Managing Director and Chairman following Strauss Kahn„s resignation on sexual abuse charges. Competence Sparkled!!! She was credited with an important role in securing a €750bn EU rescue fund at the height of a debt market crisis in 2009 and has also been instrumental in moves at EU level toward tighter control of hedge funds, despite British opposition. She has also spearheaded many of the initiatives during France's presidency of the G20. Media!!! Lagarde was portrayed by actress Laila Robins in the movie “Too Big to Fail” based on 2008 financial crisis. Laila snipes at Treasury Secretary-Hank Paulson for letting Lehman Brothers fail & urges him to save insurance giant AIG.

“Optimism

should not give us a sense of comfort or lull us into a false sense of security.”

Sachin Bansal –

Co-founder and CEO of Flipkart

Sachin Bansal, the man behind Flipkart‟s stupendous success, has redefined online customer experience and broken the online shopping inertia of Indian markets. He started Flipkart, along with his IIT batch mate and Amazon colleague Binny Bansal, with a modest initial investment of Rs.4 lakh and turned it into Rs.75Cr revenue generating business. Within five years of its incorporation, the online bookstore is the largest in India, with a user base of a million and sells nearly 20 products per minute. Genesis of Flipkart Bansal graduated from IIT-Delhi with a degree in computer engineering in 2005 and worked for Techspan for a few months. He later joined Amazon.com as a software engineer and started working with his IIT classmate Binny Bansal for building Amazon Web Services, which powered startups in the US. As a developer he contributed in developing great technologies for Amazon, but as a user he could not relate to them, due to the fact that these solutions were built for US companies. The desire to create a technology for Indian customers, with whom he could relate, coupled with his profound love for books, led to the inception of Flipkart. Bansal and his colleague, with their typical “software engineer‟s mentality” wanted to “create a software code and make millions of bucks”, without the running around that is typically required in other businesses. The primary idea was to create a comparative shopping engine, but since there was no user market in India, he decided to build an e-commerce company. Without any prior knowledge about business; but with excellent coding skills and infinite enthusiasm & optimism, he started his business venture. Bansal created the software code for Flipkart with his friend & colleague within a month and launched the website. Their achievement proved that “two guys sitting at home could do a better job than a whole team of engineers in a well-funded startup”. Currently as the CEO, Bansal is overseeing all customer facing activities of the company ranging from technology to marketing. He is also in charge of Flipkart's corporate divisions which include the finance & legal departments. An avid gaming enthusiast, Bansal likes to spend most of his free time with his family.

difference between buyers in metros and small towns is that while the former buy from online sites for convenience, the latter does it of nonavailability.”

“The

CORPORATE INTELLIGENCE: “BIG THREE” MANAGEMENT CONSULTING FIRMS CORPORATE INTELLIGENCE: “BIG THREE” MANAGEMENT CONSULTING FIRMS McKinsey & Company - The leader in management consultancy earns revenues by addressing several challenges faced by senior executives in managing their business and provides solutions for the same. Since its inception, the company has served as a key advisor to various firms (most of them fortune 500 companies), institutions and governments. It has a wide range of consulting services and caters to almost all industries. As it works closely with top companies in the industry, it creates standard (benchmark) industry practices. With over nine thousand consultants deployed with various clients – helping other companies formulate strategies and run their businesses efficiently, McKinsey is also famous for its proprietary knowledge and analytical tools that have been used by many Fortune 500 companies. The core behind the advisory services is to maximize profits with reduced costs. The company also has McKinsey Solutions – a different kind of service line which offers solutions to customers with unique industry knowledge, tools & frameworks, and specialized expertise. Their business magazine – McKinsey Quarterly publishes various articles based on organizational & management theory.

McKinsey is also known for producing more number of CEO‟s that have led giants like Enron, PepsiCo, UBS, American Express, IBM, Morgan Stanley and many more. However, the biggest consultancy in the world also has its share of failures. It has made blunders with wrong recommendations on deforestation in developing countries, misguided analysis that the cell phone market will be a niche market, and recommending poor strategies that lead to the fall of biggies like Enron and Swissair.

Boston Consulting Group - Formed by a Harvard alumnus, BCG is recognized as one of the prestigious

management consultancy companies in the world with services ranging from customer insight to post-merger integration of businesses. It caters to companies in various industries formulating strategies for seamless functionality of businesses. With extensive research it has helped many companies optimize their business by understanding the latest trends & developments in fields like organization development, HR, Marketing etc and helping them implement solutions that exploit these developments. It has a history of introducing groundbreaking concepts like “Growth Share Matrix”, "Experience curve" and Advantage matrix which are used world-wide. The most famous BCG-Growth Share Matrix serves as a tool to form strategy and helps in taking critical decisions about the product, as it provides a layout of the different products of the company with their market share. The experience curve effect introduced in late 1960s helped businesses by providing an important insight into repetitive tasks helping reduce cost of production over a period of time.

Bain & Company - The consulting firm established nearly four decades ago, has

helped many companies gain long term results, find value across boundaries and develop strategic insights. With a vast product & services portfolio, it has worked along with various businesses operating in industries like Oil & Gas, Retail, Technology, Media and others. Bain & Co has always been known for its strong ethics and commitment as in the 70‟s, it catered to only to one company per industry – maintaining confidentiality & not catering to rival companies. It was one of the early birds to adopt the unique practice of measuring success by an improvement in the client company's stock price. The well known private equity investment firm - Bain Capital is a separate entity and not part of the overall consulting business. Like McKinsey, Bain & Co has also churned up a large numbers of chief executives that further took over at the helm of top companies like American Express, Dell, Zynga, eBay, HP etc. Also the company has stirred notable controversies with Guinness share-trading fraud and the theft of confidential proprietary information from Value Partners – a small consulting firm.

NEWS ANALYSIS NEWS ANALYSIS
1) Government cuts tax on overseas corporate borrowing, making foreign funds cheaper – BS/ET IMPACT: External Commercial Borrowing (ECB) is very popular among Indian companies. The cut in withholding tax from 20% to 5% will allow domestic companies access to cheaper funds from abroad. As the interest rates are low abroad, this move will enable low cost funds to come to India. According to Barclays Capital, this move of GoI can attract an additional $ 2 billion per year inflow in the medium term – a considerable sum considering that India has a Balance of Payments deficit of around $ 15 billion. The immediate impact of this reform would be a revival of both domestic and foreign investor sentiment. It might also help in boosting the Indian rupee. KEY PLAYERS: GoI, Domestic companies WHY IS IT IMPORTANT? Cutting the withholding tax to 5% will reduce the cost of borrowing by approximately 50 to 80 bps. With this announcement, the government has pressed on with reforms to boost economic growth – a process which started with last week‟s announcement of opening the multi-brand retail and aviation sectors to foreign direct investment. The Finance Minister has said that if companies fulfil the necessary general conditions‟, getting a case by case approval is also not necessary, which in turn, will help in reducing the time for getting funding. It is a welcome move for money-starved sectors such as infrastructure companies, road developers, etc which are facing a cash crunch. This move was long awaited as it was declared in this years‟ budget as well as for the reason that calls from both public and private players got louder for a reduction in borrowing costs to revive growth in Asia‟s third largest economy. It also gives an indication that the government is serious about implementing reforms even in the face of stiff opposition. 2) Wal-Mart plans to open its first outlet in India within 12-18 months – Firstpost/ livemint IMPACT: India is the world‟s second-most populous country and has a large (and growing) middle class and so, not surprisingly; it is an attractive destination for any sort of organized retailing. The Government on allowing 51% FDI in multi-brand retail has directed foreign players to use half their investment in infrastructure (such as warehouses, packaging, etc) as well as to source 30% of their products from SSI‟s. This might be hard as the business success of these companies depends on ultra-efficient management of a global supply chain to drive down prices. However, this move is expected to help in lowering product prices, reduce wastage of farm produce, ease supply-side inflation and reduce unemployment levels. It might even help in boosting the slowing growth rate and ease fundraising concerns. KEY PLAYERS: Wal-Mart and other global retailers WHY IS IT IMPORTANT? The Indian Government allowed FDI in multi-brand retail thus reacting positively to some of the world‟s largest retailers‟ lobbying to open up the country of 1.2 billion people to foreign store chains. Global chains like Wal-Mart and Carrefour had already entered the wholesale supply chain to prepare themselves for a potential move into India‟s retail sector. WalMart with its partner Bharti Enterprises already caters to vegetable vendors, restaurants, hospitals, etc. India as a market is important for Wal-Mart as it is facing slowing growth in its home country where it has hardly any presence in major cities. Its‟ plans to open a store in NYC recently got shot down over financial issues and in the face of sharp opposition from unions and citizens who were not ready to let the world‟s richest retailer enter their city. 3) Vodafone offers to pay ₨ 8000 crore to settle tax dispute – ET/BL IMPACT: Vodafone has offered to pay ₨ 8000 crore as settlement on the condition that the Indian Government waives the interest amount and the penalty that it had imposed on the UK-based company. However, the ultimate decision will depend on the Bombay High Court ruling of the Vodafone India transfer pricing case on October 5. Indian companies pay 30% tax on their income and a 3% surcharge. Transfer price refers to the actual price at which a transaction takes place between two related parties, usually belonging to the same group. Multinational and transnational firms use transfer pricing to allocate revenue between different divisions. It is used to ensure that a fair price is charged. The judgement will be crucial in settling a tense relationship between the two entities and might affect the tariff-rates and profits of Vodafone India. KEY PLAYERS: Vodafone India, GoI WHY IS IT IMPORTANT? In 2007, Vodafone Group bought Hutchison Telecommunications' 67% equity stake in Hutchison Essar for $11.1 billion. The I-T Department issued a draft transfer pricing order to Vodafone for this transaction and directed it to pay ₨ 8500 crore. But Vodafone disagreed with the premise of this order and moved the Dispute Resolution Panel against the I-T Department. While the Supreme Court ruled in the company‟s favour, the government amended the tax laws in this year's budget retrospectively, allowing tax authorities to tax overseas indirect transfers involving underlying Indian assets, virtually nullifying the apex court's ruling. This move brought sharp criticism local and international lobbies and business communities and even from foreign governments. Introducing retrospective taxation has never borne well for any government and October 5th‟s ruling will decide how it has turned out for UPA-II.

4) Europe’s recession worsens as business activity falls – ET IMPACT: The Markit Flash Euro zone Purchasing Managers' (PMI) Composite Output Index fell to 45.9 in September, the lowest in 39 months, from 46.3 in August. The composite figure combines services and manufacturing activity and a figure below 50 indicates contraction. This figure came as a surprise as the markets had rallied positively on ECB‟s announcement of a new bond buying plan to ease out the financial problems of debt-ridden countries like Spain and Italy. Markit‟s Chief Economist said that these figures are consistent with the zone‟s GDP contracting to 0.6% in Q3. Business sentiment in Germany dropped for a fifth straight month as its relative resilience to the debt crisis is slowly wearing out. KEY PLAYERS: Euro zone, Investors, global markets, Manufacturing Firms WHY IS IT IMPORTANT? In a way, this Index is a reflection of the world‟s economy where US factories are struggling, Europe is battling a three-year old debt crisis and Indian and Chinese economies are nose-diving. Shrinking new orders, rising input costs and higher oil prices are hindering the growth of Europe‟s economy. This data sheds more light on the difficult task facing global policymakers, particularly in Europe and the United States, who have tried to boost growth with aggressive monetary stimulus. The survey‟s results have reinforced expectations that ECB will cut its main interest rates in October from the record low of 0.75%. With German and French factories and serviceoriented businesses in troubled waters, the revival of the Euro looks messy and uncertain. 5) Decision to allow FDI in retail spurs action in job and placement market – ET IMPACT: Search and placement agencies are on their feet now that the Government has allowed FDI in multi-brand retail as they are hoping to bag contracts from foreign retailers planning to enter India. Many of these recruiting agencies as adopting a three-pronged strategy which involves hiring temporary staff, permanent workforce and poaching from retail companies to fulfil the retail chain‟s requirements. Experts are of the view that this may lead to a reverse brain drain as „returning Indians‟ will be roped in to manage posts of country heads once the new foreign retailers enter. Increased demand for shop-floor workers will also test the quality of Indian training instituteswhether their teachings reflect global training standards, as will be demanded by the foreign retailers. KEY PLAYERS: Global retailers, placement agencies, Indian workforce WHY IS IT IMPORTANT? The pros and cons of FDI in multi-brand retail are being constantly talked about in the press as well as among politicians and bureaucrats. Supporters of these retail reforms say that they will boost investment in cold-chain facilities and bring down post-harvest losses thus benefitting farmers as well as end-consumers. According to the Indian Staffing Federation the $450 billion Indian retail industry is the second largest employer in the country after agriculture, employing 6% of the 450 million strong Indian work force. This strength is expected to increase by 12 million in the next 10 years and the retail sector is expected to grow at 10-12 per cent per year needing more manpower to run its operations. 6) More than two-thirds in USA live pay check to pay check - ET IMPACT: According to a survey released by American Payroll Association, 68% of the Americans surveyed said they would find life difficult if their pay checks were delayed by more than a week. It is popular theory that Americans find it hard to save. Experts viewed the results of this survey „disturbing, but not surprising‟ as Americans have not yet succeeded in coming out of the recession. Half of Americans spend more than they earn without realizing it as they fail to make the connection between overspending and financial risk. Also, savings have reduced as more Americans are making lesser money than before. Critics say that this situation has mainly arisen because a lot of Americans have started to view luxuries as essential expenses. KEY PLAYERS: US citizens WHY IS IT IMPORTANT? The popular sentiment in USA (since the recession) has been that the country is being split into a collection of islands for the rich and a vast landmass for the poor. It is a third-world country pretending to be a first-world country. Policies promoted by ex-President Ronald Regan such as curbing government spending, reducing income tax and capital gains tax and controlling money supply resulted in speeding up the acquisition of wealth by the top 1% and in hastening the pauperization and impoverishment of the shrinking middle class. The theory that „ if you want to lead a comfortable life, you have to be rich‟ found many takers and gave rise to popular protests like „Occupy Wallstreet‟. It is a well documented fact that Americans do not follow healthy spending habits. In 2009, the latest year for which comprehensive data is available from the U.S. Bureau of Labour Statistics, Americans spent $1.13 trillion on discretionary purchases-considered by many as wasteful spending.

7) Govt in reform mode mulls several options across major sectors- ET IMPACT: It appears that the government is in a hurry to implement long standing reforms. The Prime Minister's Office (PMO) has come up with a list of reforms (under proposal) which could significantly speed-up investments that were stalled due to policy paralysis. Some of the major issues under consideration are: 1. Setting up a railway tariff authority to rationalise tariff and remove distortions in the inter-modal mix of transport 2. Pushing RBI to issue new bank licences 3. Putting in place a new policy for pricing of natural gas 4. Ensuring faster clearances for private sector oil and gas producers like Cairn and RIL 5. Setting up a National Investment Board (NIB) within a month 6. Clearing large urban infrastructure projects 7. Operationalise infrastructure debt funds Though, PMO has prepared this list in consultation with the ministries, consensus on some of the tricky issues is unlikely to occur. One of these issues is reducing subsidy on levy sugar under the PDS. However, the government does not have to worry about opposition, as most of the proposed reforms don‟t require parliamentary approval. KEY PLAYERS: Government of India, PMO WHY IT IS IMPORTANT? The Government‟s recent decisions have been able to create a positive vibe in the markets. However, it‟s not only opposition parties that are disagreeing with the government‟s policy decisions; BNP Paribas recently commented that the decisions taken so far, at best reduce the “tail risks” to the Indian market. Hence, PMOs proposals as mentioned above need to be approved in the coming days, if the government wants to see any near term improvement in the economy. 8) S&P unimpressed with the Govt reforms, cuts growth forecast to 5.5% - LiveMint, Firstpost, Moneylife IMPACT: Revising its earlier projection of 6.5%, S&P has lowered growth forecast for India to 5.5% for FY 2012-13. The downward revision also came for other countries in the Asia-pacific region. S&P said that the downward revision was impending for a while as the slowdown in China, crisis in Europe & a weak recovery in the US economy has made investors cautious. For India, all this plus a weak monsoon were accounted as an explanation for the change in the forecast. In April, S&P had warned that India has a one-in-three chance of losing its investment grade status. Fitch also came up with a similar revision of ratings. Currently India has the lowest investment grade rating of BBB-. Reacting to the latest revision, Prime Minister‟s Economic Advisory Council (PMEAC) chairman C Rangarajan said that S&P is wrong in its assessment. According to him, the growth will speed up in the second half of this fiscal and reach an average of 6.7 percent for the entire fiscal. KEY PLAYERS: S&P, Government of India WHY IT IS IMPORTANT? S&P‟s grim forecast underlines the fact that in the short-term, the growth-curve is unlikely to change much with the steps taken so far by the government. Even in the mid-term, the government will have to ensure that critical structural reforms like introduction of the single goods and services tax are carried out without further delays. 9) Realtors relying on Interest Subvention Schemes to woo home buyers – Hindu Business Line, DNA, BS IMPACT: As the festival season approaches in India, mid-sized real estate developers are betting big on the 20:80 scheme or the interest subvention scheme. The scheme, which is a modified form of a home-loan, is emerging as a popular marketing tool. It allows buyers to pay only 20 per cent upfront, while the remaining 80 per cent payment (in the form of monthly EMIs) can be deferred till the buyer gets possession of the home. Without having any need for taking construction loans at high rates, the realtors get sufficient liquidity with the 20 per cent upfront payment, while the rest is financed by the bank during construction. The bank creates a bipartite escrow account for the purpose. According to reports, the scheme is common in the mid-sized (Rs 25-65 lakh) market and more than 200 realtors in India are making use of it. Though, the scheme provides an attractive proposition to all parties; a lot depends on the credit history of the realtor involved. It also adds to the pressure on realtors to complete projects within given time frame. KEY PLAYERS: Real estate developers WHY IT IS IMPORTANT? NBFCs such as Indiabulls and DHFL have long been involved in such schemes, though now some banks are also chipping in. The scheme with all its advantages has some inherent issues. Many developers trick buyers by adding some fine-print to the terms of the scheme. Buyers may at times end-up paying higher EMIs than they might have agreed upon in the beginning. Global real estate advisory firm Jones lang Lasalle maintains interest rate subvention are “like sops”.

10) Domestic carriers getting into Price Wars – ET/Firstpost IMPACT: It appears that Air India has learnt little since last year when it initiated a price war that led the airline industry into a $20 billion debt slump. This year again it has resorted to similar measures announcing the Jaldi Jaldi scheme offering passengers up to 40 per cent discount (on tickets booked 30 day in advance) on various routes. A day after Air India‟s announcement, Jet Airways also announced a similar scheme followed by the budget airline - Indigo. SpiceJet is expected to follow suit shortly. The move by Air India was kind of expected ahead of the festival season as this year its market share has fallen to 18.2 per cent, putting it in fourth place among India‟s airlines. However, India‟s operating costs – which are among the highest in the world – and even higher fuel taxes put extra pressure on airline‟s profit margins. In such a case, offering discounts is not going to be a very easy exercise. KEY PLAYERS: Air India, Indian aviation Industry WHY IT IS IMPORTANT? The fare battle is likely to increase passenger demand which has slowed in recent quarters due to the high air fares. This strategy of lowering air fares is based on the fact that selling cheaper tickets is still more profitable than selling no tickets at all as most of the carriers are flying at 70 per cent capacity, while there are some flying even at 60 percent capacity. Festival season provides them with an opportunity to fill the vacant seats. 11) India is nowhere near 1991 crisis: Raghuram Rajan – ET/The Hindu Business Line IMPACT: India‟s chief economic advisor in an interview with ET has said that India is nowhere close to the 1991 crisis when it was two weeks short of running out of reserves. Among other issues he supported major decisions taken by the government, barring the decision on diesel pricing which he felt should be decontrolled. On the issue of FDI, he said that it‟s going to improve investors‟ perception of India; and at the same time it will solve the logistical issues that prevent farmers from producing more - eventually leading to high prices in the market. Interestingly, he added that consumption patterns in India have become different from what these used to be in the past. According to him, people are demanding more high-end food products such as milk, eggs, meat rather than cereals; hence, to fight inflation, production of these items should be increased. KEY PLAYERS: Raghuram Rajan WHY IT IS IMPORTANT? Raghuram Rajan has cautioned the government against overdependence on FIIs (foreign institutional investors). Betting high on India‟s reform initiatives, foreign investors have pumped in more than ₨ 9,000 crore (about $1.67 billion) into the country‟s equity market this month. He added that instead of taking comfort from FII numbers, decisions on FDI should be implemented soon as they open avenues for the safest and most preferred form of investments. 12) MTV launches six fragrances in partnership with Global Fragrances– Live Mint/ Business Standard IMPACT: Music channel MTV India is entering the personal care segment with expectations of capturing 2 per cent market share in next one year. Global Fragrances will manufacture and market the products for MTV India. The body sprays and perfumes market in India is worth ₨ 3,000 crore and has been growing at 30 per cent for the last few years. The market was just worth ₨ 100 crore in 2003. Over the next few months, both MTV and Global Fragrances plan to market the products across all major platforms. MTV is already present in product categories like footwear, apparel, adventure bikes, eye wear and other consumer product categories. Experts say that the high growth in this segment is a result of changing income levels as well as the attitude towards personal grooming. It is comparatively easier for new entrants to gain foothold in this space as such products in India do not enjoy same level of brand loyalty as they do elsewhere in the world. Most of the target clientele isn‟t particularly brand-conscious and wants to try out new products. KEY PLAYERS: MTV, Global Fragrances WHY IT IS IMPORTANT? Marketing for male grooming products and particularly deodorants has remained more or less monotonous in India. Arun Iyer, national creative director at Lowe Lintas and Partners says that most of these products are usually advertised with a common theme of attracting the fairer sex. This has cluttered the market; hence the newer brands have very little individual brand value. It remains to be seen if MTV would resort to similar tactics or offer something fresh to the market.

MISCELLANEOUS NEWS MISCELLANEOUS NEWS
13) Foxconn unit in China closes after workers clash – ET/ The Washington Post IMPACT: One of the factories of Foxconn, a Taiwan-based manufacturing giant in China was temporarily shut down after riots erupted in the factory. More than 2,000 employees were involved in the brawl and 40 people were reported injured. Though it is not the first time when labour issues have caused a riot in China, the news was hitting headlines all across the world as Foxconn is a major supplier of Apple‟s iPhone. Poor work conditions and growing economic pressures have made migrant workers unhappy in recent times. Foxconn and police said the cause of the latest riot was being investigated. However, in August when Washington-based Fair Labor Association audited Foxconn‟s Apple facilities in China, it had found serious violations of labor standards. The manufacturer had promised to improve working conditions ahead of iPhone5 schedule. Apparently, the conditions have not improved. KEY PLAYERS: Apple, Foxconn WHY IT IS IMPORTANT? Foxconn employees have complained about what some critics call military-style management. In 2010, Foxconn's parent, Hon Hai, pledged its guards would obey the law and refrain from using threats or harassment after a videotape showing several guards beating workers was circulated on the Internet. This is further complicated by changing demographics in the country, where migrant workers have started demanding more for their work. Hence, more such clashes are expected to occur in the future. 14) Arvind Kejriwal burns electricity bills, Questions CM over power tariff hike – HT/ India Today IMPACT: Protesting the recent 26 percent power tariff hike in New Delhi, Arvind Kejriwal along with his supporters burned electricity bills. He plans to convince the masses to join the civil disobedience movement against the government‟s decision. A day after these events, India Against Corruption‟s (IAC) Arvind Kejriwal posed a list of questions to Delhi chief minister Sheila Dikshit on the issue. These questions are based on a verdict given by Delhi High Court to the state government which Kerjriwal says points at the nexus between the officials and private discoms. The questions are, 1. 2. 3. 4. Is it true that an order was prepared two years ago to slash the power tariff by 23%? Is it true that the Delhi government had prevented the implementation of that order? Is it true that the Delhi High Court had snubbed Delhi government for not implementing that order? Is it true that you have given out government property worth Rs. 2,000 crore to private companies such as Reliance and Tata for a mere Re. 1 per month rent? KEY PLAYERS: Arvind Kejriwal WHY IT IS IMPORTANT? Arvid Kejriwal recently split with Anna Hazare over the issue of forming a political party. Arvind Kejriwal has said that he will form a political party and some announcement to this effect will be made on October 2nd. The party is likely to first test its strength in the Delhi Assembly polls next year, skipping this year's Assembly elections in BJP-ruled Gujarat and Himachal Pradesh. 15) Medical Council of India approves 3½ year course in Community Health – TOI IMPACT: The Medical Council of India (MCI) has approved the 3½ year medical course which will be open to students after they finish their Class 12. The graduates of this course will be taught “some module of clinical work” and be posted in sub-centres or primary health centres. This move has the backing of the Planning Commission‟s high level expert group as it will tackle the shortage of doctors in rural areas. However, doctors across the country protested against this move as they believe that it is impossible for anyone to be knowledgeable about modern medicine by studying only for three years. According to them, this policy will only increase the already high number of quacks. KEY PLAYERS: MCI, doctors, rural citizens WHY IS IT IMPORTANT? The MCI wants the graduates of this course to carry out a portion of a professional doctor‟s duties such as diagnose and treat basic medical cases, get involved in immunization programmes and administer extended first aid. India‟s medical care system is not doing a good job and is hardly seen in good light in developed countries. Policies such as these may not help in improving the condition. In the West, norms specify that a doctor needs at least eight years of medical training before he starts practicing. The Indian MBBS is thus not recognized in many Western countries. Reducing the duration further might end up reducing the quality of medical care provided in rural areas.

JOB PROFILE JOB PROFILE Part 2

PART TWO

Anamika Verma
Senior Business Development Executive, Flipkart Continued from last week…

Q

: Can you list some day to day difficulties in particular you have to deal with?

Answer: Getting margins is not that easy as MOP issues are always be there. MOP or Market Operating Prices are an issue where we see offline retailers disagreeing with distributors and brands for the prices which they offered us which is what we forward to the customer. So suppliers are very conscious about the margins which they provide and also procurement issues.

Q Q

: So it must involve quite a bit of negotiation?

Answer: Yes. We also have to keep a track of procurement and payment to vendors.

: Can you tell us something about your organizational structure?

Answer: We have different departments like catalog Team, Regional Procurement Team, Central Procurement Team, the Tech Team, HR, Marketing Team, Business Development Team and Logistics team. The reporting structure goes something like this; BDESR.BDE.AM BDM SR. MANAGERCATEGORY HEADAVPVPMD.

Q

: What kind of rewards and incentive system do you have in your organization? Are there any specific ways in which the organization shows its appreciation for doing a good job? Answer: Yes of course, like any other organization rewards and incentives are always there. There are a lot of monetary and non-monetary incentives. We have something called Hercules awards in each category for the top performers.

Q

: What kind of culture does your organization have? How supportive have your seniors and colleagues been? Also, being a woman in a sales profile is sort of the exception rather than the norm. Any comments on that? Answer: The work culture is awesome here! We can even play games during our free time. My seniors and colleagues are very supporting and friendly. We are a rather young organization and everybody is around my age (in their 20s) so that reflects in the culture. Yes it is true that this profile is completely male dominated but I didn’t find any challenge which makes me feel that I am a woman and I can’t do this or I won’t b able to do that. People are always there to help me out any time in our organization.

Q

: So how does the current profile fit into your overall career goals? What is the career progression like at

Flipkart? Answer: I would say Its more than a perfect fit right now. I have always loved the dynamic aspect of a certain job and this job and more so this industry gives me just that. Promotions are based on performance. If you perform well, then you might get promoted even within a year.

Q

: So what is it that you love the most about your job and company and what motivates you? Answer: I think Flipkart is a very bold place to work, with everyone liking a good challenge at work, but the best part that impressed me about this company is its open approach. It not a top down approach where the decisions flows only in one direction, the entire process is very interactive. Even the top managers are easily accessible. Most of the time people are happy to help others. Besides, a lot of importance is placed on ownership which is one of our core values. These factors are also what motivate me.

SOURCES Charts & Graphs: http://www.tradingeconomics.com/india/exports SOURCES FOR COVER STORY http://www.firstpost.com/business/why-reform-is-a-bad-word-in-india-466243.html/2 http://www.indianexpress.com/news/not-reform-vs-populism/1005572/0 http://www.dnaindia.com/money/interview_reform-by-stealth-the-originalsin-of-1991-has-come-back-to-haunt-us_1724348-3 http://www.thehindubusinessline.com/opinion/article3904349.ece http://www.thehindubusinessline.com/opinion/article3911207.ece http://www.thehindubusinessline.com/opinion/article3911206.ece http://www.economist.com/blogs/banyan/2012/09/indian-economic-reforms?zid=306&ah=1b164dbd43b0cb27ba0d4c3b12a5e227 http://www.economist.com/node/21563329?zid=306&ah=1b164dbd43b0cb27ba0d4c3b12a5e227 http://www.economist.com/node/21563313?zid=306&ah=1b164dbd43b0cb27ba0d4c3b12a5e227 http://defenceforumindia.com/indian-economy-good-riddance-pranab-mukherjee-408 http://www.moneycontrol.com/news/economy/evolutionindia-reformfactor-for-policy-gokarn_761757.html http://www.thehindu.com/business/Economy/article3755160.ece

SOURCES FOR PERSONALITIES OF THE WEEK: http://timesofindia.indiatimes.com/topic/Christine-Lagarde/quotes http://www.imf.org/external/np/omd/bios/cl.htm http://en.wikipedia.org/wiki/Christine_Lagarde http://investing.businessweek.com/research/stocks/people/person.asp?personId=160171&ticker=INGA:NA&previousCapId=874263 &previousTitle=Dexia%20Bank%20Belgium%20SA http://www.infoplease.com/biography/var/christinelagarde.html http://en.wikipedia.org/wiki/Flipkart http://in.linkedin.com/in/sachinbansal http://www.sramanamitra.com/2010/10/04/building-indias-amazon-flipkart-ceo-sachin-bansal-part-1/ http://indiatoday.intoday.in/story/india-today-youth-special-sachin-bansal-and-binny-bansal-flipkart/1/151569.html http://www.indya.me/sachinbansal/ http://yourstory.in/2010/05/sachin-bansal-and-binny-bansal-founders-flipkart/ http://bookshopblog.com/2010/05/24/an-interview-with-sachin-bansal/ http://www.iamwire.com/2011/07/sachin-bansal-flipkart-ceo-interview/ http://www.flipkart.com/about-us#profile http://www.hindustantimes.com/technology/IndustryTrends/How-Flipkart-broke-India-s-online-shopping-inertia/SP-Article1780440.aspx CORPORATE INTELLIGENCE: www.mckinsey.com/about_us http://www.mckinsey.com/client_service http://www.mckinsey.com/about_us http://www.mckinsey.com/insights http://en.wikipedia.org/wiki/McKinsey_%26_Company http://www.bcg.com/about_bcg/default.aspx http://www.bcg.com/documents/file19929.pdf http://www.bcg.com/media/factsheet_visuals.aspx http://www.bcg.com/expertise_impact/capabilities/default.aspx http://en.wikipedia.org/wiki/Boston_Consulting_Group http://en.wikipedia.org/wiki/Growth-share_matrix http://www.bcg.com/expertise_impact/publications/default.aspx http://www.bain.com/industry-expertise/index.aspx http://www.bain.com/consulting-services/index.aspx http://www.bain.com/about/index.aspx http://www.dailykos.com/story/2012/07/26/1113835/-Bain-Company-The-Other-Bain-Close-Encounters-Of-the-Worst-Kind http://en.wikipedia.org/wiki/Bain_%26_Company SOURCES FOR NEWS ANALYSIS (1-15) 1) Government cuts tax on overseas corporate borrowing, making foreign funds cheaper – BS/ET http://www.business-standard.com/india/news/govt-cuts-taxoverseas-corporate-borrowing/187796/on http://www.dnaindia.com/money/report_chidambaram-cuts-tax-on-foreign-borrowings-clears-rgess_1743514 http://articles.economictimes.indiatimes.com/2012-09-22/news/34022095_1_alternative-financial-instrument-equity-savingsscheme-tax-sops http://in.reuters.com/article/2012/09/21/india-overseas-borrowing-tax-idINDEE88K03Q20120921 http://www.hindustantimes.com/business-news/WorldEconomy/India-to-get-2-bn-yr-inflows-on-cuts-in-foreign-borrowingstax/Article1-934806.aspx 2) Wal-Mart plans to open its first outlet in India within 12-18 months – Firstpost/ livemint

http://www.firstpost.com/business/wal-mart-committed-to-india-expect-first-store-in-18-months-463554.html http://www.livemint.com/Industry/PySQ4bw63TmhcXZTB7PbgI/WalMart-expects-to-open-first-India-store-within-1218-mont.html http://www.cnbc.com/id/49115145 http://tribune.com.pk/story/440311/walmart-aims-for-first-india-store-within-18-months/ http://online.wsj.com/article/SB10000872396390443524904577652150504054984.html http://www.bloomberg.com/news/2012-09-14/india-eases-rules-for-foreign-retailers-wal-mart-to-benefit.html 3) Vodafone offers to pay ` 8000 crore to settle tax dispute – ET/BL http://www.thehindubusinessline.com/industry-and-economy/info-tech/article3918948.ece?homepage=true&ref=wl_home http://www.thehindubusinessline.com/industry-and-economy/info-tech/article3929492.ece http://articles.economictimes.indiatimes.com/2012-09-21/news/34002346_1_financial-officer-andy-halford-vodafone-s-indian-taxauthorities http://www.livemint.com/Industry/ZN3nRZX1gYm9npNwFUFPZP/Vodafone-transfer-pricing-Court-adjourns-hearing-till-5-Oct.html http://articles.economictimes.indiatimes.com/2011-11-11/news/30386920_1_transfer-pricing-rohan-phatarphekar-tax-liability 4) Europe’s recession worsens as business activity falls – ET http://articles.economictimes.indiatimes.com/2012-09-20/news/33977032_1_debt-crisis-markit-ecb http://uk.reuters.com/article/2012/09/24/us-germany-ifo-idUKBRE88N09B20120924 http://rt.com/business/news/eurozone-crisis-pmi-september2012-571/ http://www.businessweek.com/ap/2012-09-20/survey-points-to-deeper-eurozone-recession http://in.reuters.com/article/2012/09/20/global-economy-idINL4E8KK49I20120920 http://www.bbc.co.uk/news/business-19659506 5) Decision to allow FDI in retail spurs action in job and placement market – ET http://www.firstpost.com/india/retail-fdi-do-we-need-more-amuls-or-walmart-467664.html http://articles.economictimes.indiatimes.com/2012-09-20/news/33977034_1_retail-sector-global-retail-development-indexsangeeta-lala http://www.ndtv.com/article/india/fdi-in-retail-lk-advani-slams-prime-minister-for-laying-red-carpet-for-walmart-271138 http://business-standard.com/india/news/fdi-in-multi-brand-retail-to-help-farmers-pawar/188199/on http://businesstoday.intoday.in/story/fdi-in-retail-not-a-threat-to-grocery-shops-montek/1/188336.html http://en.wikipedia.org/wiki/Retailing_in_India 6) More than two-thirds in USA live pay check to pay check - ET http://articles.economictimes.indiatimes.com/2012-09-20/news/33977216_1_paycheck-online-survey-dan-maddux http://jagoriade.blogspot.in/2012/09/more-than-two-thirds-in-us-live.html http://en.wikipedia.org/wiki/Reaganomics http://www.bworldonline.com/content.php?section=23&title=More-Americans-living-paycheck-to-paycheck&id=58825 http://www.investopedia.com/financial-edge/0512/the-spending-habits-of-americans.aspx#axzz27YiFm8Ed http://www.huffingtonpost.com/2012/05/17/americans-spending-more-than-they-earn_n_1523920.html 7) Govt in reform mode mulls several options across major sectors- ET http://economictimes.indiatimes.com/news/economy/policy/pmo-draws-up-list-of-reforms-railway-tariff-authority-gas-price-policystake-sale-on-radar/articleshow/16535237.cms http://www.moneylife.in/article/rapid-reforms-in-government-policy-not-good-for-economy-says-bnp-paribas/28633.html 8) S&P unimpressed with the Govt reforms, cuts growth forecast to 5.5% - LiveMint, Firstpost, Moneylife http://www.moneylife.in/article/sp-cuts-indias-growth-forecast-to-55-for-fy13/28643.html http://origin-www.livemint.com/Politics/NVyxrMIpuYnA0QMne0cdfN/SP-cuts-India-GDP-growth-forecast-to-55.html http://www.moneylife.in/article/sp-cuts-indias-growth-forecast-to-55-for-fy13/28643.html 9) Realtors relying on interest subvention schemes to woo home buyers – Hindu Business Line, DNA, BS http://www.dnaindia.com/mumbai/report_slump-hit-builders-offer-20-80-scheme-to-lure-homebuyers_1698649 http://www.thehindubusinessline.com/news/real-estate/article3926921.ece http://www.business-standard.com/india/news/interest-subvention-scheme-tricks-home-buyers/461497/ 10) Domestic carriers getting into Price Wars – ET/Firstpost http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/after-air-india-and-jet-airwaysindigo-cuts-ticket-prices-by-up-to-40-to-lure-travellers/articleshow/16550544.cms http://www.firstpost.com/business/airlines-start-jaldi-jaldi-scheme-to-return-to-price-war-468704.html http://blogs.ft.com/beyond-brics/2012/09/26/indian-aviation-only-itself-to-blame/#axzz27dJL6SgQ 11) India is nowhere near 1991 crisis: Raghuram Rajan – ET/The Hindu Business Line http://www.thehindubusinessline.com/industry-and-economy/economy/article3935847.ece?ref=wl_industry-and-economy http://economictimes.indiatimes.com/opinion/interviews/raghuram-rajan-i-dont-think-we-are-anywhere-near-1991crisis/articleshow/16550210.cms 12) MTV launches six fragrances in partnership with Global Fragrances– Live Mint/ Business Standard http://www.business-standard.com/india/news/mtv-aims-to-tap-2rs-3000-cr-body-sprays-perfume-market/188583/on http://origin-www.livemint.com/Consumer/FtUnrB0jzZCbT4KQ5dYQFL/Deodorant-makers-sweat-it-out-to-build-brand-loyalty.html 13) Foxconn unit in China closes after workers clash – ET/ The Washington Post http://www.washingtonpost.com/world/asia_pacific/foxconn-riot-in-china-unlikely-to-be-the-last-expertssay/2012/09/25/1e6828b8-071c-11e2-afff-d6c7f20a83bf_story.html http://articles.economictimes.indiatimes.com/2012-09-25/news/34082827_1_apple-and-foxconn-foxconn-technology-group-newiphone 14) Arvind Kejriwal burns electricity bills, Questions CM over power tariff hike – HT/ India Today http://www.hindustantimes.com/India-news/NewDelhi/Kejriwal-puts-five-queries-on-power-tariff-hike-to-CM/Article1-935224.aspx http://indiatoday.intoday.in/story/arvind-kejriwal-to-make-political-announcement-on-oct-2/1/222139.html 15) Medical Council of India approves 3½ year course in Community Health – TOI http://articles.timesofindia.indiatimes.com/2012-09-24/news/34061137_1_cadre-village-health-guides-rural-areas http://india.nydailynews.com/newsarticle/50479d7bee412b2871000003/india-s-emergency-medical-care-system-in-tatters http://articles.timesofindia.indiatimes.com/2012-06-26/bangalore/32424224_1_doctors-protest-indian-medical-association-work-inrural-areas http://www.deccanchronicle.com/channels/cities/bengaluru/doctors-protest-against-new-bill-018