My Personal Blog

Organization growth and your own agenda

2009-11-15T13:37:00.009+05:30

Every employee, when he starts work at a place has his or her own plans for the future. After the initial few months or years they review their goals, modify or reaffirm their beliefs. Such actions have many common threads one of which is continuity and growth at the chosen place This is the accepted norm in the families of middle and upper middle class of working parents. The fresher or junior aspires to reach the levels of their mentor or the top post through diligent and dedicated work.

Growth in itself is gradual and graded. Definition of growth is difficult as it has different notations for each individual. For some it is synonymous with the best that has happened to their peers in other organizations. For some others growth it is to meet their cash needs caused by events at the personal front. May be it is due to life style changes or additions in the family, sudden expenses etc. The most successful career persons are those who do not fall into such traps and stay at the job which they like and manage their expenditure to the extent permitted by the salaries.

There is flip side to this. Management may take such individuals for granted and may try to deny their due. This is rare occurrence in progressive organization, but it will help for one to be vigilant about it.

The organization culture is another important aspect. If it is Multinational Organization, their agenda with respect to the country where you are serving is very important. If they are just willing to push the product manufactured elsewhere, without developing or manufacturing the products locally, it is time you moved on. As a professional one needs to have the larger picture in mind, when they devote their entire life to an organization.

If it is a national organization, owner driven, we need to see for professionalism exhibited in the key decisions taken by them, the consistency in their policies, tuning of the policies with times, and aligning the HR policies in line with the market trends. Lack of any one element is a concern, but manageable. Over time if it is not corrected or more unacceptable practices become the norm, then it is better to look at other better options.

The challenge for organizations, is to stay focussed and be responsive to the employees needs at all levels. Growth in the organization, will bring in many new additions and faces at all levels. While this opportunity will be used by the employer to weed out the non performing elements, the employee needs to be aware of the impact of such additions and additionally qualify himself or work harder or improve the functioning to deliver improved results.

Organisations move in directions in which its key persons direct it. Hence the top management are responsible for steering it propoerly for the benefit of all. Where it gets difficult is when there are major changes in the top management itself. It is at these times, one needs to stay and take a view of the changes (which percolate down due to the change) and then decide. There will be heart burns and individual loyalties which are challenged. But one should not allow such emotions to cloud one's decision.

Challenges at the work place

2009-11-11T20:53:00.002+05:30

There are many challenges at the work place which we need to tackle.

Every action, interaction, every new effort which you take, brings with it, its own challenges. If you are lucky you develop a liking to these challenges and that is the best situation. Some times you allow these tendencies to become addictive which turns you to a workaholic. This is another challenge which you need to manage as it may take a toll at the home front.

There are some challenges which makes you tense and if you encounter many of them in a day's work then it is time you realized that you are in the wrong place! As they say the moment the work which you do makes you tense, it is time you changed your work or the work place.

As you move on handling these challenges, certain events bring disappointments and sadness. It is at these times you need to believe in your self and get on with it. If the disappointments are caused by some whose actions you cannot control, then the situation may need a directional shift. Else it could be a simple chemistry issue. Whatever it is, it is must be faced and resolved immediately, lest it becomes a bogey and you start looking at it for excuses.

Sibling Rivalry

2009-10-21T14:24:00.011+05:30

It is with interest that one follows the court room battle of the Ambanis' in the Krishna gas field case. For some of us who still remembers the father Ambani, (as well as those who have seen "Guru"), these actions are painful. Painful because, the siblings have lost touch with their roots, shareholder base.

Dhirubhai mobilized large funds from public and deployed it very effectively. He created assets on global scale & quality which is delivering stellar performance over extended period of time. Some of the tactics used by him to secure permissions (through the control raj), market share and remunerative prices may not be acceptable to all, but he did it and shared the earnings with his shareholders, a modern day Robin hood if you will.

Having created huge wealth, (and the sons should be given due credit for their role as well, in creating this wealth) the siblings would have done well to focus and grow from these enlarged base. Unfortunately they have started competing amongst themselves and engaged in a one up manship game which does not produce any winner. It is a plain play of highly bloated super egos and will leave all the stake holders at a loss. Lawyers of course will be partly offset by the huge fees they will pocket, even though they may be loosing on their Reliance holding!

From another perspective the case which is being battled in the courts can be said to be - "Should RNRL take its profit before RIL does or after wards?" If the Gas is priced at $2.42 per MMBTU, to RNRL, RIL will take may be another 10 to 15 years to recover their investment, while RNRL will reap the benefits immediately. This is not natural justice as these shareholders did not share the risk of developing the field. They parted midway and have to therefore wait for their turn. They are however entitled to share the benefits having been the members of the larger family of Dhirubhai Ambani in the undivided Reliance Industries, the parent company.

So, RNRL share holder have their claim on the Krishna Godavari gas, which can be likened to their claim on ancestral property, being original members of the Dhirubhai share holder legacy. But since they have chosen to be separate, they will have to wait for their turn, which will be as per the policies guided by the Government of India.

Both the companies, the whole world knows can influence government decisions. It is therefore more or like the Two cats and monkey story, where the monkey eats the entire "Dosa", attempting to equally apportion the bounty. The Government monkey is already at work by artificially jacking up the price and promising major portion to RIL. RNRL is peeved and hence the case!

Wake up Anil bhai; have a heart. After all you are the younger brother and I am sure your turn will come. You are also equally capable of creating huge wealth in the field chosen by you Power & Telecom. Focus on that and create values, so large that the Reliance share holders start crying foul and the Mukesh bhai camp starts scheming to refer to the "Family Agreement". the all encompassing, dark invisible document.

My experience at the Endoscopy table

2009-10-20T17:46:00.010+05:30

The pain in my stomach which was intermittent over the last two years, increased in intensity and frequency, which caused a little bit of anxiety to me and family. This prompted us to look for a competent doctor near our apartment at Adyar. We therefore landed at Dr. JinaDas, who after preliminary examination, recommended that I do an Endoscopy to profile my internals.

Initially, I resisted; but wanting a permanent solution, decided to go for the same.

It was a Sunday and all was very nice. I went for my morning walk as usual to the beach and took in my day's quota of Ozone, together with vitamin D from the morning rays. That day's podcast was also very interesting; Podcast from "The Economist" - Technology Quarterly .

Since I was to report to the Endoscopy center empty stomach, I starved till 9:30 and reported promptly 5 minutes ahead of my appointment at the centre. The girls there were very pleasant and efficient. I believe it is in their genes being Keralites! I was put through the normal drill of basic measurements by the malu girls and then made to wait for the Doctor.

When it was my turn with the Doctor, I entered the room with my wife eagerly tagging along. I was briefed by the Doctor in a very professional way and I could sense that he was attempting to make me feel at ease.

After that he started working on his desktop and looking at the monitor he shot a series of questions at me; all to understand (and I presume record)the symptoms, habits, background, previous illness, causes of allergy etc. I presume he was satisfied with my answers and he did not show any strong reaction(which I presume is natural).

MY wife had to move out of the room, when the test started (and I understood through the process why she had to go) and in the first step I was given a portion of bitter liquid which i had to gargle for a minute and then swallow. The Doctor made sure that I had no dental problem before administering the dose. He had told me that the liquid was a local anesthesia, which would remove the sensation in the path through which the endoscopy probe will travel. I realized that the anesthesia had started its job, only when the probe was being inserted.

The probe is a small cable, some thing similar to the clutch cable you will find in cycle, but with an optic fiber embedded in it, At the leading end of the probe, a tiny camera with bright light source is attached. Patient's mouth is kept open by a plastic wedge which the patient has to hold between his teeth and the probe is inserted through a hole in the plastic wedge.

As the probe travels, it captures the images, which are recorded and simultaneously displayed on a small screen, which the patient can also see. The Doctor sees the same screen and this Doctor was giving a running commentary of the advancement of the probe(may be his voice was also being recorded). It was all nice as it started and all was pleasant.

As the probe was passing adjacent to my heart, I suddenly felt the sensation of the probe. Immediately my system took over and I was trying to vomit out the probe. I was pushing out the probe through my internal system with all the force I can muster and it was very scary. The Doctor banged the head table where I was resting my head and warned me that I could create a major situation if I continue to do try and push out the probe. I could sense that there was tension in the theatre as I could feel multiple hands presumably of the nurses, till then not visible, but now preparing to hold.

The Doctor was by now shouting "Relax there is nothing you can do; you will only harm yourself if you try to do something!!". Believe me; I consciously decided to listen to him. I relaxed and in the next few seconds everything was back to normal.

The probe completed the travel as planned and identified the Ulcer, which has just formed. I am now being treated for the ulcer.

The experience, has given me the confidence to face any eventuality with total resignation; may be that is what people call near death experience!!

Renewable Energy - A post from Green Group @ Google

2009-07-25T13:47:00.001+05:30

NDPL and Tata BP Solar Work Together to Set Up Solar Plants for a Green Delhi

North Delhi Power Ltd (NDPL) and Tata BP Solar are joining up to set up solar power plants in Delhi including rooftop solar plants which will be connected to the electricity grid. The plan envisages systems of up to 1 megawatt capacity.

The electricity, generated on rooftops, will either be consumed directly by the owner of the rooftop or exported into the grid and also sold to NDPL. Once operational these plants will not only augment power supply for NDPL consumers but will also be a source of income for them. NDPL has already set up two such solar plants of 4 kilowatts and 15 kilowatts at its corporate office in Hudson Lines and at its training centre in Rohini. Now NDPL proposes to set up a 25 kilowatt solar plant at the premises of DERC.

At a presentation by the alliance of NDPL and Tata BP Solar earlier this month, the DERC was enthused with the idea of roof top installation of this green power which will turn the electricity consumers as producers of electricity.

“In NDPL’s climate change and sustainability strategy, Sun occupies centre stage being the original source of all energy. Solar power is one of the most suitable and feasible source of power from the perspective of cost, scalability, environment and security of source.
The challenge is to make this source of power economically viable and I am sure that with Government’s support and encouragement in the initial years and, with volumes picking up, solar technology will become more competitive with grid power” said Sunil Wadhwa, CEO & Executive Director, NDPL.

If only 20,000 consumers come forward producing 5 kilowatts each, NDPL would manage to generate 100 MW of Solar Power by the end of this financial year. This success of this initiative would however depend on some initial capital support from the government to make solar power generation affordable for the consumers, Mr. Wadhwa added.

Apart from the consumers’ roof top initiative, NDPL is also going ahead with the setting up of a 1 Megawatt solar plant using the roof top of its central stores at Keshav Puram in North Delhi. The proposal to set up solar power plants in Delhi is also in line with the Delhi Government’s Climate Change Agenda 2009 -2012 for Delhi.

“We are excited with the prospects of working with NDPL and the opportunity it opens up for partnering in Delhi’s drive towards sustainable energy”, said K Subramanya, CEO, Tata BP Solar.

The Union Ministry of New and Renewable Energy (MNRE) had also recently launched schemes to promote and encourage rooftop grid-connect policy for solar power. The National Solar Mission set up as part of the National Action Plan on Climate Change (NAPCC) last year, is also reported to be targeting 20000 Megawatts from solar power by 2020.

Electricity Act and TNEB's Double Speak

2009-02-01T18:50:00.005+05:30

TNEB has been postponing the trifurcation of itself to fall in line with the central laws enacted as early as 2003. The models which were tried out immediately after the enactment of the Electricity act, had each its own advantages and drawbacks. It was prudent on the part of TNEB not to jump in to splitting itself immediately after the demand came. It was strategically correct to study the effects of the models, the benefits or otherwise of each of the models.

Having studied the model, postponing the splitting on political grounds is also acceptable for a couple of times. But to repeatedly do so is not conforming to the Centre - State spirit envisaged in the constitution. TNEB is much different from the other electricity boards. The act was not intended for efficient boards like TNEB; but the act was also enacted to corporatise the functioning of the Utility so as to make it independent of the state's budgetary support.

Another major purpose of the act is to bring in more transparency to its own functioning. It would bring in the elements in the system which is generating surpluses together with the sinks, which drain out more than these surpluses. It would have brought in more closer management attention as each of three major functions of the utility, Generation, Transmission and Distribution would get its own top management team who will not act on its own priority instead of having to be dependant on a super team!.

TNEBs maximum demand is nearing 10000 MW and its generation is slated to take a quantum leap in the years to come. As an integrated utility its contribution to the renewable sector is laudable. It has used its Hydro power effectively to remove the "Infirm" attributes of wind power and leverage its integral strength to allow these small generators to bank and wheel, effectively providing the much needed incentives to channelise investment. Here again it needs to do more now. We are now facing funds constraint to provide additional evacuation lines, up gradation/ enhancement of capacity of lines which will take the renewable generation to the next levels.

It is not automating its operations and is now lagging other electricity boards in this segment. It has to substantially enhance its Transmission Line grid and become independent of PGCIL by having its own 400 KV network. Other electricity boards have started planning 765 KV grid and TNEB is still comfortable with its 220 KV grid!

On the distribution front, capacity enhancement by way of implementing UG (under Ground)cabling, GIS (Gas Insulated Substations) substations and Distribution automation are the need of the hour.

TNEB always had a pride of place in the national electricity grid and its operations. Over the years it had to bear the ill effects of excessive political intervention, but has managed to still hang in there.

It may not be able to do so, if it does not quickly change its attitude now. May be a firm push from the Central ministry is the need of the hour to save the board.

Moral Policing

2009-01-29T22:26:00.010+05:30

Mangalore incident is very shameful. What is even more shameful and worrying is the fact that only a few high end TV channels, are opposing using intricate language which the upper class or the so called educated people who fell visiting Pub is ok wants to listen. Other than this no one worth the name has come out openly against this atrocity.

A few goons enter a place which other wise they are banned from and ill treat, beat up women who in any other place would be more than a match for them and the entire government is pussy footing over this issue. As if on cue, politicians have quickly caught the event and have used it to come on national TV and deliver high moral sound bites, which they themselves do not believe in. All this with a hope that it will bring in the marginal 1 % additional vote which is enough to tilt the scale in their favour.

The entire Mangalore Pub incident was well choreogrpahed and the TV crew was readily available to record the Reality show and beam it on National Channels. What are the names of the people who were beaten up? Which college they belong to or belonged to? What are the current students of that college, their colleagues in the office campuses doing about it?

Are they all so scared that they do not want to come out in the open objecting to it? Or they feel that the treatment met out to their fellow students or colleagues is what they deserved?

Another aspect which is abhorring and I fell absolutely horrendous about, is that this is being done in the name of Hindu Religion. Hinduism gives equal status to women. The scriptures always encourage tolerance and pardons; never brutal public punishment.

Politics and religion are getting dangerously close and upstarts are enacting scripted plays surprising unprepared small segment of persons and getting public mileage to sway public opinion. If we do not get a clear minded leader quick enough, to steer clear of this kind of abysmally low level of politics, we may go the Taliban way soon and our freedom may vanish.

I have stayed and worked in Mangalore and I have always enjoyed the hospitality of Udpi and Mangolereans. I am shocked that such an incident has been perpetrated on them. My sympathies and I prey that one of the localite be it a Hindu or otherwise take this up on himself as a challenge and mobilise public opinion fearlessly to sub due and clearly condemn the so called morale brigades openly so that they don't dare repeat such atrocities in future.

Satyam Saga

2009-01-18T11:05:00.006+05:30

I was discouraged in not writing about the Satyam Saga in the last few days, given my rather critical views and the impact it may create. But I can not hold on further - so here goes my views.

Satyam is a IT leader which has grown to this level through the sheer aggressive drive of its promoters, their commitment and the hard work of the many professionals whose dedicated effort also made this possible. Somewhere along the line, the same characteristics which made this company reach this level of operation, predominantly risk appetite, has gone awry. Instead of owning up the mistakes, and sharing the risk perception with the major share holders, the management had tried to save the situation and resorted to manipulative ways which drove them to cook up accounts.

The first major mistake which the promoters owners did was to continue to treat the company as their personal fiefdom in spite of becoming minority share holders. Employees and the many institutions which invested had implicit faith in the promoters who had brought fame and good returns to them in the past and were not cunning enough to think otherwise.

What the long term investors did not realise was that the promoters appetite for risk had moved on to more riskier avenues in which they had a belief for the future. May be it is still true; but legally and morally they were bound to take the larger stake holders in to confidence, especially the employees.

The fraud which has been done and is currently hurting the employees and other stake holders could not have been done by a select few and that too in a short time. Many of the 42 vertical heads, their vertical's financial controllers or accountants should have been aware of these. Similarly the HR group should be aware of the excess employee list or the fictional list and the money being drained out. Cash with drawal or miscellaneous accounting expenses (euphemism for political cash expenses) must also have been done with the knowledge of all senior officers of the verticals.

Such practises when not collated and viewed as stand alone events, tend to distort the overall picture. (Each one is doing only a minor bit and that too occasionally ; but put together it all adds up to a very large amount). Employees are caught between the devil and deep sea here. If these expenses do not take place, they may tend to believe that their prospects of revenue protection or statutory clearances do not come in as desired. Even when they know that the promoter is taking the money for his personal operations, they typically turn a blind eye as they believe they deserve it.

This perception should change. Executives with delegation of powers in organisation should oppose such moves, even at their risk of being in the bad books of management. They may loose their job or hurt their career growth; but by tolerating they are becoming criminally liable for false fully accounting and misleading the public.

Another major issue is that of inflating the receivables. This is a practice that typically bring down many an organisation. Any responsible officer can not and should not inflate the receivables quarter after quarter, year after year and continue to report inflated profits. Even when they book the orders at competitive prices, they would have known that the profits are not realisable. It is therefore clear that many in the organisations would have known for some time now that the game is over, but because of their own selfish interests and foolish approach, they continued to believe that they will some how overcome the follies for which they have also been responsible.

This is never done and such an approach can only come to this disastrous end as is seen here. There are many lessons to budding executives here in the Satyam saga and I wish they pick it up for their own sake and the interest of the country at large.

Power up Trading

2008-08-14T20:21:00.001+05:30

Power sector being in the concurrent list has developed through the years with a state level bias and hence the developments vary significantly across the geography of the country. While the need for national level attention and need to frame policies from a national perspective was understood and action was taken as early as the late seventies, it was confined to Power Generation and Transmission of such power generated by these central plants. Only a few years ago, centre has provided funds and intervened directly for implementation of schemes at the distribution level.

This skewed thinking severely affected the Power market developing as a national one till the enactment of Electricity act 2003. The national policy and act of 2003 is an excellent guide and clearly envisages an integrated network where all key players have a choice which is the fundamental for any market driven approach to creation of a national asset.

It is now for the implementing agencies to come out in full force and provide the linkages which will help in interconnecting the grids and develop a national market for Power so that Power Traders can play a more active role.

However these linkages, as is now the practice, terminate at state level power injection / delivery points and from then on, it is the local network that provides the last mile connectivity even for large power consumers / demand centers. To free the market and Power up trading, it is this last mile connectivity which needs to be freed as envisaged under "Open Access".

To attract investments in this sector, the government has provided one major comfort namely a tariff based approach to guarantee investments, backed by a strong regulatory mechanism. There are severe execution risks posed by issues caused by non availability of right of way to environmental issues, which the promoters should grapple with. Such issues delay the project execution and increase the capital costs. These are beyond the reasonable control of the investor. Providing the incentive of long term cheap funds is one way of balancing these risks.

It is therefore essential that to increase cross regional power transfer capacity significantly together with last mile connectivity, government should identify sources of Long term cheap funds. It could be done by way of providing access to these investors to low cost Long term loans through the Infrastructure Funds being created with our foreign exchange reserves so as to reduce the capital costs of these projects.

The government, should do well to take these steps for bringing in the much needed integration of the grid and making the dreams of Electricity act 2003 a reality.

Credit Policy - Reddy has called it wrong

2008-08-10T20:30:00.003+05:30

Reddy has called it wrong this time.

Indian economy is not leveraged asCredit Policy, Housing, much as that of the other developed economies and it is the supply side dynamics which is contributing to the double digit inflation. Some even argue that this effort of the central bank may further accentuate the problems caused by supply side dynamics due to the capacity addition being delayed mainly due to the steep increase in funding costs.

The policy initiatives of the nineties have dismantled the Long term Funding institutions, which has pushed India Inc to look at the global markets for raising long term funds. Having taken this route they are now forced to call correctly the exchange rate movement. The companies which are not capitalized adequately, or are afraid to go to the international market for want of loosing control, silently suffer. This in the long term, affects the economy as planned capacity additions do not take place. Policy makers have failed to acknowledge this void and take steps to correct.

At the other end of the spectrum, the needy do not have any access to institutional funds. Attempts to eliminate the usury rates charged by the middleman have failed miserably. With the so called growth in bank credit being fueled by indiscriminate lending to salaried and self employed persons for consumer durables and lavish spending, it is repaying time for these institutions, with even the central bank taking special interest in these advances. Defaults in certain locations are a staggering 40 % in this segment, if we are to believe unconfirmed reports.

For lending to the housing segment and make it robust, we have important lessons to learn from US. The Fed had openly issued government guarantees to Fannie Mae the share holder owned financial institutions with a public mission. These institutions are private in nature but backed by the government. Hence these banks could approach the international market to raise cheap funds and provide funds exclusively for the domestic housing market.

It is time we also did the same thing. The government should guarantee the bonds issued by say a division of ICICI or AXIS or HDFC bank or a combination of the divisions of the banks with a caveat that funds raised thus are exclusively used for a defined housing market.

In the last 3 years the housing sector saw a robust growth and provided the much needed overall growth in GDP. The current attempts by the central bank to chase the inflation is hurting these segments and will once again deprive many a citizen the chance of owning a home in his or her life time. Will the government at least intervene?

Oil Prices and Policy options for the Government

2008-05-25T21:09:00.000+05:30

With oil prices zooming past US $ 130 and breaking new highs every week, policy makers have an issue at hand. Having relied heavily on prolific spending of the resources raised through indirect taxation of Petroleum products, the government is now being compelled to reduce the taxation to ensure that the recent spurt in the international prices do not hurt the economy and the poor alike.

This would mean that the government should look at alternate sources of revenue to bridge the shortfall in revenue generation as one can not expect the government in election mode to cut down on freebies / cutdown on salaries etc. The main options are Direct taxes from services and new segments. With large scale retail formatting taking off, it is necessary that the taxman look at ways of cornering the piece of the action. as after all large scale retailing does use more of the public resources.

Export of petroleum products should also be taxed and influential corporate houses can not be allowed to have their say on avoiding the taxation. If refining margins have risen up to US $15 from US $ 6 a few years ago, such company's can well afford to share some of the largesse. I am sure with the capacities available in India, international buyers cannot ignore us.

Two more initiatives need to be put in place simultaneously.

The first and foremost is to discourage the growth of private transport in cities and metropolis. To put in this practice the government should invest heavily in public infrastructure quickly. The other initiative is on natural gas and coal gasification process. Having identified huge reserves of gas we need to ensure that these are brought to market at the earliest possible dates and sold devoid of any subsidy from start. The deceleration of demand on foreign exchange which such locally available sources of energy can bring in, will have transformative impact on foreign exchange management of our currency and fuel the Indian growth engine to newer highs.

2008-05-25T21:01:00.000+05:30

With oil prices zooming past US $ 130 and now retreating from life time highs, policy makers have an opportunity to correct the policy stance. Having relied heavily on prolific spending of the resources raised through indirect taxation of Petroleum products, the government was compelled to reduce the taxation to ensure that the recent spurt in the international prices did not hurt the economy and the poor alike.

Two more initiatives need to be put in place simultaneously.

Clearing the muddle of Rising Food Prices

2008-04-23T20:33:00.000+05:30

Many column centimeters in leading newspapers, including your paper combined with interesting sound bites in all TV channels have put before us multiple reasons responsible for the spiraling price rise. Out of these a few stand out which has to be tackled by policy makers on a war footing.

The planned increase in agricultural production shall meet the increasing population, the additional demand created by new generations aspirations and affordability. This is best achieved by careful planning and timely implementation of irrigation projects, making available at the retail level advanced improved seeds, tested soil enriching techniques to improve the yield and above all easy rural credit with minimal collateral to the rural agriculturist. In the absence of such a coordinated approach there will be gaps which will leave us exasperating at the slow agricultural growth rate.

On the other hand diversion of land from wheat to Bio fuels in developed economies is one more self centered approach of the developed economy which we need to understand to live with. Financial centers have established and put in place procedures & mechanisms that make it easy for the non informed to bring in their savings in to commodities and make a fast buck on scarcities. We should have sufficient negotiating clout to bring them around to stop such a move which we sadly lack (as proved in various WTO forums).

Further, given the depth of scientific community available with in the country and the financial resources available with us (we have invested hundreds of billions of dollars in other country's instruments for a rainy day!) it is really surprising that a concerted approach is not being taken to solve this fundamental problem.

Politicians should take note that their continued neglect of this fundamental issue will shake them up and even dislodge them from their exalted positions.

US Sub Prime Mortages

2008-04-13T10:28:00.001+05:30

Much is written about the fall out of US Sub Prime mortgages and the impact it is likely to cause on US economy and the world at large. But an important lesson in it for India is that Sub Prime Mortgages served to prop up the US economy for the last 5 years at the expense of the Developing economy who had at the guidance of the developed economies, (had) developed a growth model which was predominantly driven by US consumption!

None of the planners outside US could foresee that such a model is not sustainable even in the medium term leave alone for ever. So the savings of poor countries like India, were being parked as foreign exchange reserves in US Treasury bonds which fueled the liquidity which boosted wasteful consumption. One must acknowledge the ingenuity of the US financial brains who planned this out and implemented it to the tee.

The hard lessons which we in India learn from this futile exercise, is that it is necessary to fund across sections to ensure growth and through growth consumption.

In the US with the treasury backing, funds have been extended on over valued assets to individuals who do not earn enough to even support their living expenses leave alone meet mortgage repayments and own assets. As reported in the press the abuse of credit facility, has been so rampant that even basic norms such as insisting on minimum down payments for availing mortgages have been waived off. All these to maintain excessive consumption!
Take a leave out of Sub Prime mortgages and cox banks to fork out up to a nominal 5 % of their advances to fund persons in poorer section of society, whose repayment capabilities are limited, but willing to commit to repay. Such an effort will spur consumption and through consumption inclusive growth. Such advances shall be refinanced by the RBI through long term instruments directly and eventually provided for in the budget.

Planners in India are staring at growing disparities caused by excessive urbanization and phenomenal growth of white collared jobs and compensation. While our financial systems are robust and fund these sections of society, it is time that we addressed the poorer sections across the board.

India is unique in many ways and needs novel solutions to maintain its growth path and achieve inclusive growth. It is necessary to be bold and the time is ripe to take such populous steps given the fact that this is an Election year.

Question waiting for an Answer !

2008-04-13T10:25:00.001+05:30

Question waiting for an Answer !

A thought provoking column from one of your regular columnist and a senior distinguished bureaucrat. The answer is obvious, but like the Roman citizen nobody wants to say the King is naked. If a Senior bureaucrat after so many years of distinguished service to the country is still waiting for an answer what will poor soul like us will do?

The reform process has not even approached the bureaucracy leave alone prepare a plan for changing the organisation and its people. Enough proof is available to all, on the capabilities of our entrepreneurs from the airlines and telecom sector. Scientists & technocrats of Indian origin, have made startling inventions and contributions which have been acknowledged world over. Some of these individuals have studied in India, but have been lured to the foreign shores by the ease with which they can pursue their passions abroad.

Even now it is not late. Let us encourage Venture capitalists to move in instead of hedge funds. They should be allowed to come in and move out freely and allowed to encash their inventions as is done in the valley. The risks which these venture capitalists bring in is negative compared to the chaos which the hedge fund operators and fair weather friends bring in.

If enough seed capital is there to pursue individual's passion I am sure the day is not faraway when we can boast of some radical inventions. We need to reinforce these efforts through greater autonomy for higher institutions, tax subsidies and inverted duties etc.

Let us think out of box and still not grapple with the question.

Stock Market Volatality & need to curb it

2008-04-13T10:24:00.001+05:30

Mature markets in the developed world seldom show intra day variation in excess of 1% in the major indices tracking companies across sectors like the S& P 500. This goes to reflect the maturity of the market and reflects that the players are in it for the long run. This is helps the long term players to plan their actions and book profits.

Any volatality in these indices is clearly interpreted as a sign of some of the players need to show more than actual profits in the short term. This results in manipulated trades with out sound fundamental forces guiding the action (other than plain hood winking) resulting in Rapid-fire Trades. This may either bring loss to him or gain at other participants loss. This though an essential part to guide in price discovery at extreme situations, can not be allowed to continue for extended periods lest the serious players loose interest in the market. New entrants will also shy away; Or become gullible with the distorted view that money can be made in the market in a short period and look for such opportunities.

It is obvious now that the build up in some scrips prior to mega IPO issues was due to such unhealthy trades.Since then our markets have been extremely volatile and the regulator has done little to cool it. Given the low volume of free float and the concentrated action on the bourses from some sections of the stake holders, our tendency to believe in new stories and theories (read rumors) we are allowing a few to distort the market. This exposes the retail investor to greater risks. For the retail investor even the Mutual fund route is not with out risks for the mature operators also fall prey to such large scale manipulations.

We are now becoming aware of another new threat through FII like the Bear Stearns, who are compelled to exit our market to save their day in their home base. We are not aware how many more are to follow! That the local Derivatives segment helps them in clouding their actions is another story.

It is therefore essential for the regulator to step in quickly to stop such actions.

Reliance Power IPO fiasco

2008-02-18T21:37:00.000+05:30

PO lessons

After the debacle of Reliance Power at the bourses, the way price discovery has been done through the book-building process will henceforth be questioned by retail investors who are typically not used to booking losses, and that too from the house of Ambanis, who, they believe, will never let them down.

The quota fixation for the QIB, which is believed to bring in a sense of measured valuation for new issues in an increasingly globalising economy, has been belied. QIBs, by their recent actions, have proved that they are not long-term investors but in for a quick buck.

The rating agency which gave the Reliance Power issue a Grade of 5 has derated itself.

The phenomenal over-subscription at the IPO counter quickly dried out and evaporated.

No demand was seen for the scrip on listing. The grey market which is functional has added to the distortion.

As reported in some sections of the press, this market was till recently competing with the registered exchanges! It is now apparent to the naive investors, how uncertain the entire process of IPO issue can be and that the gullible can easily be led down the garden path. It was a hasty exit for the member of the Ambani family at the listing quickly followed by the who is who of investment bankers.

On price issue, Reliance Power pales in comparison with its peer NTPC. Having said that, one cannot, of course, wish away the phenomenal clout and competence of the ADAG group to bring in value to the shareholder, and quickly.

Whether they bring it in by aggressive and open means, such as extending support to their stock or through innovative demerger, or merger of assets they hold amongst their various holdings including that of Reliance Capital remains to be seen.

For the sake of the retail investor and the public at large, it is hoped ADAG group acts quickly.

TATA Nano

2008-01-15T11:37:00.001+05:30

Some moments in history happen and others are planned & created, like this one by the house of TATAs. While the leader RATANji hogs the limelight as he truly deserves, this moment is the culmination of the efforts of the numerous dedicated engineers and workers, both with in the house of TATAs and those who over the years have reposed faith and extended unflinching support to the effort.

By any standards, an investment bet of Rs.1700 crores on an innovative product is no small bet. It again goes to the credit of the TATAs indomitable spirit, who believe in their convictions and to their social commitment of envisioning a world where an ordinary Indian need not drive in two wheeler with his two children! It was interesting to read about a few of the the very difficult choices they had to make in the process of finally deciding on the various components of the nano, which they did, to reach this stage of launching the product and honoring their promise. With such display of unflinching commitment of the team, the stake holders in this mega enterprise have reason to be proud of their association and ownership at this moment.

The launch of nano signifies amongst others, the coming of age of our design capability in the domain of the so called western world. That this has happened in India signifies that there is more to come. It also means that others can aspire to emulate and follow the foot steps of Narayan Murthy, Ratan Tata and the like. The government should recognize the revolutionary nature of this launch and support the product by way of rationalizing the tax structure and providing incentives for early recovery of the investments committed by the TATA house. That this is truly a people's care and caters to the basic modern day needs of the common man has its own political significance and the day is not too far when the politicians would catch it for credit irrespecive of their idelogies.

TATAs are special and we as Indians are truly proud of this Indian Multinational, who also make cars!!

2007-11-08T18:29:00.001+05:30

KARNATAKA FIASCO

2007-11-08T18:27:00.000+05:30

The Karnataka coalition drama has provided an opportunity to the administration, the protectors of the constitution and the well wishers of the Indian constitution to re look at the issues that affect the Indian polity today.

Given the increasingly fractured verdict which the Parliamentary system of selecting the representative is throwing up, coupled with voter''s apathy, it is time constitutional experts got their act together to preserve the intent and main aim of the provisions in the constitution regarding constitution of the governing machinery; namely provide stable governance.

Citing judgments of decade old cases in politics, is akin to citing the Red Herring to decide the course of next action. We need to look at the political realities of the day and take decisive actions to provide the bench mark for the future, lest future generations are compelled to live by what our fore fathers decided.

If the current combination of BJP - JD(S) is allowed to form the government, it will set a bad precedent. They have gained power at the first instant based on numbers, but with the solemn promise that they will provide stable governance. Now that they have failed, the Executive must exercise his powers to reject this alliance which has failed to stick to its original commitment made to the people and the constitutional authority in words (!) and spirit.

If the opportunistic alliance is once again allowed to assume power, be that as it may be for a few weeks, it will embolden those elements who think that merely winning a seat to the legislative assembly, guarantees them power and opens up many revenue streams. It would also encourage further splitting of the Parties and render the coalition exercise a mere number game. Coalition politics by intent and practice should not be degraded to a number game as it is being made out to be.

This opportunity shall be exploited by the administration and the judiciary to spell out clearly what is the form of Coalition government, that is acceptable to provide a stable governance. Opportunistic alliances can not be handed over power just because a judgment says that it should be decided by the numbers.

Sub Prime Mortage Fall out

2007-11-08T18:24:00.000+05:30

We are reading different reports of the impact of the US Sub Prime Mortgage fall out on developing markets and emerging economies. The reports unfortunately have to rely on information which are handed over to you by the administrations and regulators, who have the powers to remain opaque.

Given the levels of visibility reached through satellite imaging techniques such as Google Earth, it is surprising that in large financial transactions running to billions of dollars, opacity stares at you. The crisis which is purportedly created by a few banks, seem to have had regulatory sanction, as you find the Regulators coming out openly in support of them, with the public fund. The Regulator in UK has come out openly to save a bank and the US Fed is reportedly injecting billions to allow some of the entrenched entities to move out in a more orderly manner. In a mature functioning capital market, it is indeed strange that we are seeing certain Regulatory actions, which can be clearly interpreted to be in support of defined entities who have abused the rules.

In such circumstances, given the opacity of the transactions, it is but natural that one would come to the logical conclusion that the excesses committed by these entities, have been enjoying the Regulators tacit support all along. No wonder, RBI governor in his inimitable manner has warned of surprises and indicated recently his resolve to take "unconventional" actions as necessary.

All these point to more major events in the immediate future. The tremors of Sub Prime Mortgage, are still traveling through the depths of integrated global economy sea. One is not sure where it is heading and which is the shore it is going to hit. There are no sensors to track this "Tsunami"(financial) and predict land fall.

Planners may be warned to plan for the landing and put in place emergency mechanisms to evacuate and provide "First Aid"

TNEB through the Years

2007-10-28T18:20:00.002+05:30

Tamilnadu Electricity Board (TNEB) , from the days of independence has always been at the fore front of managing the state's Power requirements fairly well. Especially so, when compared with like enabled boards and organizations, who also operate in similar regulatory environment. There are interesting lessons available in the recent initiatives of the board for those who are propagating the PPP, Public Private Participatory model.

Till the late eighties, the entire investment plans for the Power network, be it Generation or Transmission & Distribution (T&D) was fully managed by the state entity. Given the socialistic approach then practiced that limited the return to just 6% on your investment, the planners, realised the need to bring in robust billing and collection systems. This ensured that billing is done for the services used and what is billed is collected. Default in payment resulted in punitive action of disconnection, which has been practiced over the years. This helped build a good culture, where the consumers built a healthy habit of paying electricity bills. This is similar to the situation where no one questions, why one should buy a ticket when you board a bus.

Having built a system for strong revenue collection, the board could go about the task of implementing capacity additions to the generation and distribution network. Here again the planners understanding of the requirements and deciding on technical merits is there for all to appreciate.

There are Hydel stations, Thermal (coal & lignite) based stations, Nuclear stations, eco friendly Wind mills and sugar mills based co generation plants. These are spread across the geography of the state to assist in overall development of the state. The selection of Mettur which is land locked thermal station based on Indian coal is a case in point. There are coastal plants as well, which are not hampered by the conditions of local availability of coal. In the early seventies, it would have been unthinkable for any one to plan for import of coal given the impression of abundant availability of local coal and the controlled Export - import regime then prevailing.

Similarly the T & D network is built to deliver the generated power across the state. There are no un electrified villages in the state and there are not many instances of power connection being denied for protracted periods of time in the state.

During the Enron era of the nineties, the state also jumped in to the band wagon of liquid fuel power stations. The move was mainly due to the collective hype around these stations and Tamilnadu was not wanting to be left behind. Like other boards, TNEB also suffered. But here again, the board has distinguished itself from others by at least partly putting to use the majority of these plants.

Around this time the concept of Private enterprise building Utility assets was gaining momentum and TNEB adopted it. The main reason being the perceived in capability of the state government to fund capital expenditure of the board. But the board realised that it was being asked to explain their business model to the investor who was looking to maximise the returns on their investment with minimum risk. But the entire exercise has left the board poorer, but richer by experience.

When the signs of economic growth was visible in the mid 2000 and the board started seeing significant demand growth (over 14% in some pockets), they decided to look at alternate models for finding the investment. They have gone about the task in a very commendable manner and have also prepared a scheme for other states to emulate. They have encouraged Wind Power, reactivated dormant schemes and have signed joint development scheme with central organizations. Given the experience of the nineties, the board has this time placed its bets on Public sector entities rather than private enterprises. Plans are in place to double the installed generation capacity through these efforts in the next 8 years.

One awaits a similar approach to increase investments in the T & D Segment. New models, be it the franchise model of PPP (Public Private Partnership) or transfer of assets to joint venture, have to be put in place quickly to fully deliver the large quantum of Power that will be generated in the state. Otherwise one runs the risk of exporting this power to neighbouring states to earn short term profits.

2007-10-28T18:16:00.001+05:30

RICE STRAINS

From a country where, food shortages was an accepted fact and we had to go through periods when we needed administration's permission to host a family marriage lunch and dinner, we have come far. But the sad fact remains that all are yet to travel this distance.

While the intelligentsia, discuss in forums issues that need to be done to rectify this anomaly, little gets done at ground level. From the mid seventies till now, the misuse of funds earmarked for irrigation projects is a classic case in point. Where, irrigation projects got done and rivers regulated, we see prosperity. But the millions which were wasted on the canals which never got made or got built as per intended specifications, have brought misery to many.

Today, India is at cross roads, as your editorial points out.

Given the communication access to many even in the hinterlands of the country, today the rural urban divide is visible to many and increasingly people are demanding answers. With the increased thrust being seen internationally for allocating the necessary importance to increased food production, it is time our ministries got their act together, to bring in the next major thrust..

Today, the cultivated land share is reducing by the year due to rapid industrialisation. We had still not perfected the model of transferring the correct costs for the agricultural produce, before which, this IT led industrialisation has landed on us. Our Economy managers, are now compelled to choose between segments, which they cannot. If one has to pay the correct price for the agricultural produce, we run the risk of increasing inflation and more by way of inflation expectations. But before long one has to do something about it.

We cannot subsidise imported food, but we can extend subsidy to our own agriculturists. While we are moving towards a full fledged market economy, where services are paid at cost, it is essential that the sector which gives the maximum employment opportunities in the country pay the labour minimum wages in relation to industry wages. This has to be achieved through direct subsidies.

Subsidies, however need to be made in transparent manner and cannot again be routed through free services like the Free electricity or through corporations such as subsidised prices for fertilizers. Pay a remunerative price for the farm produce, but demand remunerative price for the inputs used by the beneficiaries of the subsidy. This demands a significant change in the mind set and political will, and one only wishes that our politicians see the long term benefits in such an approach.

Development efforts, to introduce new grain strains, which reduce the water intake, cuts down sow to reap time, is resistant to known strains of diseases , has to be encouraged with state funded initiatives.

It is a mission to increase agricultural production and therefore it has to be taken up with the same zeal it demands; anything less can damage what we have gained since independence.

2007-10-28T18:11:00.000+05:30

WRONG PRESCRIPTION

Any regulator would insist that the system where stake holders process their transactions capture trails which can be utilised to trace participants role leave alone their antecedents. He will be extra cautious about intermediaries, who transact on behalf of clients. The details of the clients though not available at the time of processing the transaction through the system, is an essential data which needs to be recorded. It shall be available to the regulator and the other participants of the transaction and cannot be the left indeterminate.

PN falls short of this and makes the transaction opaque. Especially, where the intermediaries are understood to have offered exotic products through their own financial engineering, the regulator needs to intervene to demand either transparency or prescribe different set of guidelines for such transactions to limit their scope.

Whether it is a cash market dealing or a derivative dealing the completed transaction over a period the owner parties (buyer or seller) to the deal are to be identified. It is therefore essential that funds behind PN needs to be identified and cannot forever hide from the purview of regulator.

While one may fault the manner in which the announcements have been made, the timing, the intent and the prescription are timely.

PGCIL share allotment

2007-10-20T09:23:00.001+05:30

A preliminary study of the Demand & Basis of Allotment of PGCIL shares makes an interesting case study from the view of the Basis of allotment of employees quota.

Here is a case of over subscription of the employee quota by 3,18 times and some of the employees have been denied FIRM allotment even though they have subscribed to the reserved quota. The shares available for allotment under the employees quota totals up to Rs. 72. 68 crores which has been subscribed for Rs.231.78 Crores. Given the fact that the EMPLOYEE quota no longer has the restriction of Lock in period, the overwhelming response needs to be discounted for the possibility of proxy subscription.

Under such circumstances, is the basis of allotment justified, in as much as it has denied original allotment to some genuine employees, while making allotment on a proportionate basis to the level of interest shown. It is a different factor that such employees can now definitely buy these shares from the market at a premium(more than 75% as per Grey market indications).

In my opinion this basis of allotment is flawed as it ignores the fact that all employees are to be treated equal. We need to therefore ensure that

Minimum shares based on market lot considerations need to be allotted to all those who have applied for under the quota and
Full allotment of the applied shares are alloted to the maximum number of persons with out denying anybody allotment.

Such defined steps need to be followed to ensure a fair distribution. While, one does not see any foul play, it will be necessary for the management representatives (who are likely to be the main beneficiaries of this largesse) to be more proactive and ensure that the lower rung employees are not denied their chance of securing rightful ownership.

Determination of Price for IPO by auction

2007-10-20T09:22:00.003+05:30

Determination of IPO price by auction does increase the probability of pricing the issue much closer to the open market level as compared to any other form of discovery of price. By definition, the auction process is much closer to the open market but with out circuit breaker given the enabling controlled environment, effectively supervised by the Regulator for compliance.

Hence a solution could be, to put in place a system where IPO prices can be determined through auction, at the option of issuer, but with a lower limit on the price of the scrip, specified by the issuer, below which he may with draw the issue. With such an approach, the investor, especially the retail investor and HNI investors get a better role to play in the determination of price. This system will also usher in a mind set, where long term (read 2 to 3 years) outlook is essential to capture the value of the scrip.

In a developing economy like ours where the stock market is discovering new growth stories every month, we need to move to an auction platform quickly so that the issuer is provided an alternate option and is not necessarily compelled to accept the price suggested by the "Book Builder".

Determination of Price for IPO by auction

2007-10-20T09:22:00.001+05:30

Cheaper Credit? is it the cure for all?

2007-10-20T09:19:00.000+05:30

Cheaper Credit

It is true that high interest rates hurt and it hurts some setions more than others.

But if the government and the industrialist do come together and initiate steps which can cut down costs then there may be not an immediate need to reduce this impost. As your leader correctly points out there are sections such as realty, which have absorbed this impost (through external flows), which is once again hurting the same industrialist. Any early redemption of this impost could hurt the sections it is wishing to protect by causing runaway inflation.

As a first step the government can authorise free movement of goods across states to recognized Logistics providers who will be responsible for the movement of goods and the sales tax compliance there off. Given the ground reality of the infrastructure bottle necks, the least government could do is to reduce the transit time of goods and thereby reduce inventory and costs there off. Cost of compliance will also be low as the logistics provider can be authorised to ensure compliance.

The other area is that of the exorbitant taxation on fuel. The taxation on fuel be it used for the industry or as a part of the executive compensation should be vatable / modvatable. This will provide significant relief to the industrialist and int he long term act an incentive to the government to reduce the taxes per s

Grwoth Pangs - Engage

2007-10-20T09:17:00.001+05:30

Growth Pangs

Engaging the key stake holders in dialogue to understand their views and share the promoters' and governments' view is the need of the hour. Corporates, starting from Reliance should heed to this intelligentsia's call and engage the masses in a continuous dialogue.

Corporate giants moving in to retail business is definitely encroaching in to another business persons territory and it reflects poorly off the corporates capabilities to move into new territories where entrenched players exist. The rush in to occupy window's space in markets across the country with out understanding the locale conditions, can be described as simple bad planning

To retain the first mover advantage if the corporates like Reliance move in at breakneck speed, they may definitely maximise the foot falls at their stores, but risk causing irreparable damage to the entire model. Better sense should prevail on these organizations, who should engage well intentioned local NGOs, to explain their plans and address issues which may be thrown up in such engagements. They should move in to occupy in steps and not rush in as they have done now.

With the larger than life size image which these corporates occupy in the minds of rural folk (read Rakshashas), it is easy for other vested interests to move in to exploit and create panic.

It is still not too late for the corporate to appreciate the errors they have committed and correct it by engaging with the stake holders.

Prescription for PN

2007-10-20T09:12:00.000+05:30

Prescription

Power to Unlock

2007-10-02T11:05:00.000+05:30

There are significant pointers available to the policy makers in the phenomenal success of the PGCIL IPO, both at the state and central levels.

First and foremost, it is important to establish through policies, regulations and the administrative machinery, a viable business model. When established systems are unbundled or restructured, it is necessary to keep in mind the possible future options and decide on the policy frame work.

The second important pointer is that of the organisational culture and capabilities of the public sector entity, to benefit from the enabling environment. PGCIL through its employees, have established a bench mark in performance, which is comparable to its peers abroad.

Market is also rating the NTPC Scrip (another major player in the Power sector) with lots of expectations. NTPC has also benefited from similar policy initiatives and is a well manged and run organisation with committed employees. All these augurs well for the sector as a whole. The prevailing sentiment should be capitalised to bring in part of the enormous funds required to make power for all by 2012.

Forward looking state governments should be encouraged to corporatise packets of distribution network, along with or as a separate entity the transmission systems and approach the market for equity. Every state through the Electricity act have put in place a regulator who is guiding the policy issues. In the case of Tamilnadu for instance, aggregate commercial losses on a grossed basis may look marginally higher compared to what the market would like to see. But one can look at significant pockets(geographical areas) which can be spun off into separate companies and corporatised.

Tamilnadu should take the lead to bring in the much needed funds to improve the balance network with out loosing government's control.

Indian Governments need to be more proactive

2007-10-02T10:51:00.000+05:30

Choke Eases Even More

RBI has done its bit to unshackle the Indian Entrepreneur and industrialists from the chains of bondage to the Indian currency. The Investors are, by the day being encouraged to, explore new markets, compete globally to maximise returns on their capital.

It is now the turn of the Government to step in an unobtrusive way to support the initiative. In this era of globalisation, we need to ensure energy security, and committed linkages to commodities that help us meet our growing needs. This is best done through selective investments, which also translate to export of our capital globally. All these can be front ended by the nibble footed Indian investor, but he surely needs the unfailing commitment of the government.

We need politicians who will understand the dynamics of the Indian multinationals' support requirements and guide the policies. They should intervene to nudge friendly governments to grant a license or exclusivity. They should also provide the bureaucratic support to secure favourable terms for our capital such as Sovereign government guarantees, negotiate hard during bilateral exchanges with the Indian investors capital in mind.

Bulk of our increasing foreign exchange reserves are due to the earnings of Indian diaspora who are toiling away to bring in the riches to the country. It would befit all their efforts if the governments and Indian Entrepreneurs use this capital to further enhance the Indian growth story.

Wired Broad band in India

2007-09-23T21:56:00.001+05:30

Wired broad band is one of the most cost effective of building the backbone to deliver high speed connectivity to Tier II, Tier III cities and rural India. While providing "Open Access" on the existing fiber and copper is one of the best ways there are other interesting possibilities as well waiting to be exploited.

And that is the Optic Fiber run on Transmission Lines. Composite Optic Power Ground wire, which is run on existing Transmission Lines serve two distinct purposes. It acts as earth wire for the Line(shielding) and also provide Optic fiber (up to 24 fibers as a standard).

With the Electrical utilities, already having a ready made "Right of Way" , these Optic Fibers which are run on thees lines with the end equipments housed in various stations provide the opportunity to take Fiber along all the main state trunk routes. It also saves enormous costs for the utilities who are increasingly going on for Automation of billing, etc for which they are currently hiring broad band from ISPs.

With the enormous reach of the Electrical utility in the state and their established mechanism to provide O&M services, the Optic fiber once laid will provide additional revenue streams. It is also easy to break the fiber at intermediate Substations and add signals, This facilitates additions of intermediate stations which are other wise unattractive locations from the revenue point of view of Service Providers. One can also look at the possibility of leasing out space for the Mobile operators in the substations, along with back bone connectivity to provide wireless signals for the last mile.

For the utilities this provide a new stream of revenue and the government a cost effective solution.

Once the Optic fiber is in place connected, the Government can lease some of the fibers for its educational services, Telemedicine and e Governance. The surplus fiber can be either leased out as "Dark Fiber " or the utility can provide bandwidth as well.

TRAI shall take the decision to provide "Automatic" state level Service Provider's Licence to the Electric public utility as a starter.

PGCIL has already laid the fiber and is generating revenues. Some of the forward looking electricity boards are already working on it and has commenced the work. The time is right to take a decisive move on this initiative.

Olympic Myths

2007-09-23T17:27:00.000+05:30

Olympic Myths

An interesting locals perspective on the Olympics has been presented in this article. While I agree with the views presented, it would do us all lots of good if we look at a possible solution as well for this "distortion" to ordinary lives and permanent alterations(damage!) to the locale.

Given the proven business model of Olympics, any progressive thinker like you (Mike) should propose an alteration to the model so that part of the business model stays. Any effort to totally alter the scheme will bring with it the enormous clout of the forces that stand to benefit from this once a 4 year show.

Some of my suggestion are:

Leverage technology: With the enormous capability of technology one can synchronize multiple locational events and present a coherent continuous spectacle to the Television audience which is the key funder of such extravagance.
Allow to bid for hosting specialized events only instead of the entire games. Such an effort will make it easier for new comers to look at creating a part of the facility and not burden itself with the issues of hosting the entire paraphernalia of the Olympic teams. It will drastically reduce the logistics effort required to move men and materials for the event, while bringing in more live(read physical) participation to encourage the sport and the participants.
Make use of the created facilities game after game. Such large facilities can be wasted away for a once in life time function. It has to be reused to conserve energy if not anything else. It also brings in enormous savings in costs of hosting subsequent Olympics.
Such an approach reduces the risk of security and partly saves the games from the efforts of evil minded eliminating the possibility of whole some interruption.

What would be the objections and who would be the objectors? Policy makers should think it out and act out the next steps.

Accounting for Power

2007-09-23T17:23:00.000+05:30

Minimizing the human effort at the stage of collection and assimilation of consumption data through IT enabled environment will bring in the much needed transparencies and accountability to the Power Sector. Data accuracy will improve and so will the revenue. Efforts are needed to bring in this change across all levels of consumption.

Under the Accelerated Power Development and Reforms programme (APDRP) an effort to bring in energy accounting system was launched. This failed to take off, for the consumers did not see the benefit from this. The consumers were not educated on the likely benefits which accrue to them due to the possible reduction of commercial losses. A lesson is available for all, to therefore not repeat the same mistake when we grapple with new technologies and initiatives.

To bring in IT enabled accounting system, as your leader suggests, should be done with innovative tariff mechanism with inbuilt incentives for the consumer. A classic instance is that of the group accounting system. Each of our multi storied apartments has a dedicated transformer (if not more). Each of these transformers shall be metered and reconciled with the energy consumed as measured through the individual meter recordings to record the losses. Allowing for technical losses, the rest of the losses shall be recovered from all the consumers at a flat rate. This brings in a collective responsibility to the consumers in that apartment block as they see immediate benefit to themselves. The same model can be replicated across a commercial street where the losses could be substantial because of influential elements interests. Villages, with the promise of continued supply will also join the effort if for instance a scheme is drawn up where say for the "day and peak power" the villagers pay and the "night power" it is free.

Today technology (read IT) is available to make this whole effort automatic and with minimum human interface. Once the system is established the housing society's representative (or the local representative of the commercial street) can themselves tally and zero in on the reasons for losses. To start this entire exercise we need to prepare simple and easily understandable tariff models.

Today the tariff for say, TNEB is uniform across the state for identified slabs and has factored in it the aggregate commercial and technical losses as allowed by the Regulator. As and when we move to collective accountability system the new tariff called "Group Tariff" which shall not have any losses loaded in the base tariff (Losses as applicable for the appropriate voltage levels) but will have provision to load at actuals arrived at every reading.The recovery for the cost of providing this IT enabled environment should be spread over say a 5 year period, through BOT models for which I am sure we can find dedicated and competent firms.

One should put in special efforts to educate the consumer after launching such an incentivized scheme, so that popular will supports the implementation and minor vested interests are not allowed to derail the effort. Data generated through such dedicated IT enabled metering system could be used for planning, monitoring and establishing the performance of equipments and systems, so on & so forth.

My comment of AVOIDABLE BURDEN - an Editorial in Business Line

2007-09-09T12:49:00.000+05:30

AVOIDABLE BURDEN - an Editorial in Business Line

Dear Editor,

Due to our inadequacies in handling the globalisation process we allow ourselves to be surprised by the international prices of Wheat or rice or pulses or other commodities. As in the case of price of crude oil, which the "Oil Cartel" has hijacked to the ill fate of so many, the trend is continuing to other commodities. We saw the coffee prices zoom a few years ago and recently Rubber was very volatile. Base metals copper and Zinc played out their scintillating run towards the latter part of 2006.

Now it is the turn of wheat which affects many who are otherwise normally not concerned with globalisation.While we may believe in the strengths of market economy to provide the best to the consumer, we cannot be seen to be doing nothing in the case of wheat a basic commodity which will hurt the poor very badly.

It is therefore essential to build a system where the poor and needy are insulated from these shocks, lest the "price shocks" sway the government itself. As a first step it is essential to bring in efficiencies in handling the farm produce. As your paper through its numerous articles on related topics, have highlighted, there are serious inadequacies in proper storage, Distribution and logistics. As the leading industrialist of the country opined in a popular channel, there are forces both in and outside the administration who have vested interests, which do not drive efficiency.

In an era of globalisation, where some of our actions are influenced based on happenings elsewhere in the globe which are beyond our control, it is necessary for us to have in place an efficient system which is lean and functional. It is time non performing monoliths like the Food Corporation of India are given a quite burial and the handling switched to more efficient hands. Technology (read IT) should be brought in to bring in transparency and accountability. Functional and independent management shall be assigned the responsibility of driving down holding costs and create surpluses.

The need to purchase wheat at $390 dollar per tonne, should galvanise the government in to action to bring in more efficiency and transparency int he whole management of the farm produce.

Regards,
Balakrishnan

An interesting Article from my favorite columnist Swaminathan Ankaleswara Iyer (with my editorial flourish)

2007-09-09T09:38:00.001+05:30

The slump in global stock markets since July has wiped out an estimated $5 trillion of wealth, five times the GDP of India. So, world inequality has fallen dramatically. Are poor people across the world celebrating the great reduction of global inequalities? Are socialists celebrating increased equality ? No, not at all.

But why not? For years, analysts have worried about rising inequalities in India. Rapid growth has sent the stock markets soaring, and several Indians have entered the Forbes list of top billionaires of the world. Simultaneously, 300 million remain below the poverty line. This stark contrast has evoked much outrage.

Prime Minister Manmohan Singh says that unless the poor participate in fast growth, uprisings could disrupt our nationhood - over 150 out of 600 districts are affected by Maoist violence. The same theme is echoed in a recent study of Asian inequality by the Asian Development Bank. The ADB chief economist has been widely quoted as saying that high levels of inequality disrupt social cohesion, and could lead to civil war.

If this were really true, then the stock market slump should have healed social tensions. An Indian Express story on August 12 estimated that the richest five Indians had lost more than $10 billion in the previous fortnight. The total wealth lost by all shareholders was $52 billion (Rs 210,000 crore), almost equal to the GDP of Bangladesh.

So, inequalities in India have fallen dramatically. Not even the most draconian tax measures could have reduced the wealth of shareholders by $52 billion.

But are the 300 million poor people of India celebrating? Are landless labourers in Bihar delighted that the wealth of the Ambanis has suddenly fallen by billions? Are the tribals of Chattisgarh and Jharkand joyous that the Tatas have become poorer? Are illiterate Dalit women, the most oppressed and powerless section of our population, ecstatic that the stock market slump has improved income distribution?

Of course not. And this has consequences for theories of social tension. Now that the stock market slump has significantly improved India's Gini coefficient of wealth, will Maoist insurgents in Chatttisgarh give up insurrection? Will ULFA in Assam cease its depredations because of greater equality between the people of Assam and those of Dalal Street? Will the militants in Kashmir become less militant because of an improved income distribution?

To even suggest this would be farcical. Yet that farcical notion is deeply entrenched in much socio-economic analysis. The millionaires of Nepal are deeply invested in Indian stock markets. Does the ADB think that their stock market losses, which have reduced inequalities, will ease tensions in the neglected Himalayan region of Nepal?

Economists focus on measures of inequality like the Gini coefficient. But ordinary folk have very different concerns. Bihar is the poorest state and Goa the richest, but the poor Bihari does not worry about the disparity. He knows that his travails are due to local politicians and mafia, not rich Goans. He is not interested in impoverishing the Ambanis, he wants to become rich himself. He welcomes a booming stock market that might bring investment and jobs to Bihar.

Many analysts think society is happier when inequalities fall and unhappier when inequalities rise. Really? In an economic recession, profits fall much faster than wages, so equality improves. But do the poor enjoy a recession , with its unemployment and weak wages? Not at all. They far prefer an economic boom, even though profits rise much faster than wages.

People want more income, not better Gini coefficients. They are concerned with inequality only when they see some powerful people gaining at their expense. They don't grudge Sachin Tendulkar or Shah Rukh Khan their riches. Both these gentlemen are from families of modest means, and have become billionaires through talent. That makes them role models, not hate objects. They are examples of what ordinary Indians seek - a chance to become rich and famous themselves They do not want a slice of Mao's China, they want a slice of Deng's China. They want the opportunity to rise.

The ADB review is dead right in its key conclusion: governments in Asia must do much more to improve equality of opportunity. In India, it is shocking that after six decades of independence and the spending of millions of crores, literacy is barely 65%, and most people who complete school cannot read simple paragraphs or do simple maths sums.

It is outrageous that every village does not have a functioning school and health clinic; does not have electricity, telecom and a pukkaroad ; does not have access to effective rule of law or judicial redress.

This is the inequality that I keep complaining about. Instead of doing something about it, socialists point fingers at the rising wealth of Ambanis and Tatas, as though that is responsible for the sad plight of our villages. It would be as ridiculous to blame Tendulkar and Shah Rukh Khan.

The shocking denial of access to basic facilities at the village level institutionalises inequality of opportunity, and prevents the poor from rising. Urban facilities provide some social mobility. But rural facilities are typically so pathetic as to become poverty traps.

For this, our netas and babus are fairly and squarely to blame. These heroes of the Left are the zeros that have ensured continuing inequality of opportunity, poverty and powerlessness. Their solution is to compete in offering castebased reservations, not in providing the equality of opportunity that might make caste irrelevant.

I too am outraged that 300 million Indians remain poor. I am outraged not that a few Indians have become billionaires but that thousands more have not, for want of equality of opportunity. I look forward to an India with thousands of billionaires and millions of millionaires. I do not wish to give the poor a few doles, keeping them as objects of pity. I want to them to be given equal opportunity so that they too can be independent and aspire to provide to their progeny what they did not have but always wanted.( convert them to millionaires, to objects of envy).

TRAI initiative on DTH

2007-09-09T09:18:00.000+05:30

(Telecom Regulatory Authority Initiative of India initiative on Direct Transmission to Home)
It is important to understand that at the core of the initiatives of the TRAI(Telecom Regulatory Authority of India) should lie the consumers interest and the investor's healthiness so that the consumer gets to access to latest technology at competitive costs over time.

It is therefore obvious that convergence of technologies need to be encouraged and starting from brand related barriers to technology related barriers need to be broken down. Today the business models of the telecoms have to be dynamic to capture the fast changing impact that technology advancements are bringing. While continuity in policy and guidelines to nurture an enterprise is essential, TRAI must be complemented in addressing the consumers interests simultaneously.

DTV is one such convergent technology tool which will have to be exploited to the larger consumers' benefit. Individual players who have outbid others to corner bandwidth(be it satellite or Air Spectrum) should not be encouraged to drive away consumers by imposing artificial restrictions which are purely based on short term revenues considerations.

(My letter to the Editor of Economic Times)

Going over the Hill

2007-09-07T21:06:00.000+05:30

I know that at some age one is supposed to feel old and that it is not fixed that one should feel old say at fifty. It varies from person to person.

But when you do feel it, it is shocking.

It is shocking because suddenly you are aware of things which are common knowledge to you but are historical facts for many!

It is shocking because, even though you want to do something, your body does not respond as it has been for decades and you know that you have to slow down.

It is shocking because, you eat less and you do not crave for food.

It is shocking because you have joined the walking group till recently you used to avoid because they were slow

It is shocking because that you know that you have limited (but still lots and lots) time to complete the things you set of to do.

One of the person whom I respect used to say that when you cross fifty you realise that the world can do with out you and when you cross Seventy the world is better off with out you. Now that I have crossed fifty, I do not have that feeling. I am relaising that the infinite energy and time which I had always assumed to be my birth right is no longer true. They are limited and I have used up quite a lot.

I need to commit myself to the job at hand more diligently and complete what I had been made for and that too as early as possible

OPGW - A communication solution for Power Utilities

2007-09-07T21:03:00.000+05:30

Any Power utility has to set up dedicated communication links connecting all its operating centers spread through out its geographical area. This network primarily conveys voice signals (conventional telephone conversations), data regarding the operating parameters of the system and electrical protection of transmission line. As on date this is achieved through Power Line Carrier Communication (PLCC) and Microwave. Microwave is weather Dependant and does see rare interruptions, but is expensive as the utility has to pay annual license fees. PLCC has a limitation as it can carry only narrow band signals.

The alternative is Fiber Optic based communication, which has phenomenal band width. For this purpose one has to lay the optic fiber physically connecting the end points. Since the electricity board has dedicated transmission lines Cris crossing the entire state, a scheme was thought of to exploit this "Right of Way" which is other wise lying idle.

In this scheme the earth wire ( a galvanized steel wire which is run on the peak of transmission lines) is replaced with a OPGW (Composite Optical Power Ground Wire) which serves the purpose of acting as earth wire and has an embedded stainless steel tube which carry a bunch of fibers.The transmission line terminates at Receiving stations or generating stations and at these locations the OPGW is terminated and the fiber carried to special equipments called Optical Line Terminal Equipments(OLTE). These OLTE are similar to the ones currently used by the major telecom companies and carry signals in the SDH format. ( An international telecom standard accepted across globe).

The signals of the utility which may start from their telephone exchanges or computer network such as Ethernet or their Data Commendation equipments called RTU(remote terminal unit) or connected to the SDH gateway through specialised equipment called Primary multiplexer at the sending end. At the receiving end these are again "dropped" out of SDH gateway through another set of similar equipment and connected to the exchange or ethernet.

Some of the major advantages of this system over existing comparable communication links of Electricity utilities are the phenomenal increase in band width at a low investment. With increased automation being taken by TNEB in terms of computerisation of billing and collection, accessing their main load center points and generating stations on Real time basis, this network will go a long way in providing fail safe & effective communication link.

Last but not the least - the replacement of existing earth wire typically should call for shutting down the concerned power lines. In this case M/s BGR Energy System, the agency executing this project on a turnkey basis are adopting a system called "live Line working" where they will replace the existing earth wire with optic fiber embedded Ground wire(OPGW) under live conditions, minimising inconvenience to consumers.

Once the Optic fiber is laid and commissioned, TNEB has in its asset a dedicated link which can be used by other state departments. TNEB can also lease out to outsiders after complying with the necessary regulatory compliance's.

Till recently PGCIL the central power utility has been implementing these schemes at the central level across states. TNEB's efforts is pioneering in this regard as this will connect their main data centers across the state with their own network

NOVARTIS Patents Case Madras High Court Judgement

2007-08-24T22:28:00.000+05:30

To Choose not to Choose is one of the most difficult choice any informed person can take on any given circumstances, leave alone under this extremely hyper sensitive NOVARTIS case. To exercise a choice becomes easier when the possible outcomes due to your choice are clear, especially if it were worked out on mathematical models or based on historical data. Not only the outcome in this case is unpredictable, the grounds which has forced one to make a choice is in itself challengable.

History will remember the Madras High Court Judgment on the NOVARTIS case as one of the steps which went on to undo the many damages which TRIPS, WTO has inflicted up on the developing economy in the name of globalisation.The case as widely covered in your paper, has two main elements - EFFICACY & INNOVATION.

The interpretation of EFFICACY and the way it is used to manipulate the protection granted to patents is being well documented. In the near future one can not be surprised even genuine discoveries get branded as manipulation due to this rampant trend of securing patents with tweaking of a few molecules, which is more of a streamlining of process rather than original discoveries.

INNOVATION as a tool has also been exploited by the developed world through a much more grandiose design. When the representatives of developing countries negotiated TRIPS and WTO with the rich countries to get additional foothold to the protected markets, they were not equipped and knowledgeable enough to appreciate the long term adverse impact on their health care system due to the agreements on Patents.For starters many of the countries did not have a government funded health care system and may be that is one of the reason why the impact was not properly assessed. For many in the poor countries it was the relatively well off who could afford many treatment and a little bit more additional cost on such select few, was not something they were willing to make noise about. The issue had not raised enough debate to become politically relevant.

The rich countries though, were fully prepared and argued their case and won the case for their multinational corporations. The result is working out to the disadvantage of many in the developing country and the pain & hurt is beginning to be felt. A wrong committed by ignorant few cannot be allowed to decide the innocent lives of many and that too public at large.

Another important aspect is the one related to the near absence of encouragement for INNOVATION in this country or for that matter in any developing country. Innovation, is achieved through incubation of ideas nurtured under experienced hands in carefully guided steps. It needs a steady supply of streams of young talented exploring minds well educated and trained. Their efforts are to be supported through adequately funded labs either by the government or private sector. Entrepreneurship backed by venture funds also make Innovation possible by fresh minds. All these efforts means, access to the best of infrastructure to continue their pursuits and earn enough to continue to be at it.

The near absence of such support therefore prevents an opportunity to have a level playing field across countries where due to globalisation one has to abide by the rules of Patents from a given cutoff date. Since the rules are framed by some one outside, centuries old home grown cures such SIDDA medicine, UNANI Medicine and AYUERVEDA are left outside the realm of Patents citing sub clauses of the patent act.

Such is the force of market economy, which allows well intended provisions for market making, capital formation and encouraging of competition, to lend itself to abuses by a few for creating monopoly and indulge in over exploitation.

Starting from Open source software to Scientific leaders engaged in Bio Technology research and Stem Cell Research are increasingly sharing their discoveries and making it available in public domain to benefit and add value. This sort of openness, they are realising, is bringing in substantial benefits to themselves, by cutting down on drug discovery time.

All this is leading to the question of GOOD and BAD capitalism , which is agitating the minds of policy makers world over. Under these circumstances, by deciding not to choose the learned Judge have acknowledged the inherent weakness of the law and its larger implications on the sovereign & constitutional rights of the public. Kudos to my home land Judiciary MADRAS High Court.

Presidential Prescrition - An over reach of Press

2007-07-22T20:25:00.001+05:30

In a leader in "The Hindu" today, a heavy dose of prescription is handed over to the Presidential nominee.

This presidential election from the start has been a controversial one. To a very large extent it reflects the mindset of the politicians on the purported fluid political situation. The ground reality is different. It is therefore unbecoming of leading news papers to further disillusion the ruling class by prescribing restraint when there is no cause of a provocation. The opposition is fragmented and no one, even the worst enemy of the congress will like to rock the boat now.

Coming to the prescription itself and the instances quoted in the history based on which such prescriptions are handed over, it is to be said that times are changing and the same Victorian approach may not be what the doctor will order. The media is only partly free and excessive restraints at the wrong time on the part of the President may not be advised.

One needs to allow the incumbent to act and have faith in her advisers and the other administrators of the constitution of India. In our 57 years of Republic, except for a brief period in 1975, our independence was never at risk. We managed to come out of that crisis as well.

I would strongly argue for an active President of India, whose actions will of course have to be within the powers granted by the constitution. While restraint and private reprimand in some cases may produce extraordinary results, it must be left to the judgment of the first person to choose the option.

One stop solution as indicated in the Leader is not what the doctor will order

The Leader is Looking Ahead .

SEZ Policy

2007-07-15T18:53:00.001+05:30

SEZ policy which was supposed to be a single stop solution for all the ills of the exporters has hit a road block much to the chagrin of some in the government. The issue is the land which in most of cases is snatched from small farmers and handed over to the industrialists & corporates. Our rural folk have skill sets which support agriculture and it is naive to expect that reclassification of Land use which effectively rules out the repossession of the land by the current owners for generations will be smooth. Further the literacy level and the language barriers prohibit these farmers to move on to another location in our own country with out major setback. Policy makers and corporates should be humane enough to understand these issues and take appropriate action.

For instance in the case of Reliance, one of the suggestions is to take these farmers on contract basis and provide them with leased land and need based funds to engage in farming. Such farm output could be sold through their own proposed retail network. Such forward thinking and inclusive development models should be deployed by the corporate leaders like Reliance.

The Need for Talent to multiply Talent

2007-07-15T18:51:00.001+05:30

The Need for the Talented to Multiply Talent

In the Indian context not a day passes with out a mention of the looming talent crisis to be faced by the IT and ITES sector. A shortage of similar magnitude is increasingly being felt by the brick and mortar industry, in infrastructure projects, Neither the Services segment is spared, as is seen in the shortage of qualified accountants. We are recruiting at third year level (two years prior to graduation) and the trend may continue.

What is needed is a multi pronged approach to tackle the problem on an immediate basis.

Education being a concurrent subject, has now become every government’s (state and central) problem. As is always the case under such circumstances every decision maker has come with up quick fix short term stand alone solutions with out a clear cut approach to prepare talent which are recognized at the state and national level as well as the international level. One wonders whether the decision makers at the education departments are aware of the need to nurture talent and provide enough opportunities for them to develop. While it is impossible to alter the basic structure of decision-making and governance, we need to start to address the issue.

The best way to start is by appointing a Central Education Regulator supplemented by state Education regulators. The Education Regulator functions and powers shall be structured in a similar manner as is done for the other industry like the Telecom. Today most of the institutions in the private sector are being run as an enterprise with clear responsibility to the promoters rather than to the student. Such undertakings need to be regulated and a quasi-judicial body needs to be constituted to streamline their operations on an immediate basis.

The regulator shall at the policy level lay down the following guidelines:

· Uniform Syllabus across states from the Higher secondary School onwards(8th Standard onwards),

· Lay down the principle of selection of teachers and their appointment, including fixing their service conditions.

· Fix Student – teacher ratios for each level

· Define minimum infrastructure requirements for each type of curriculum

· Define evaluation procedure

· Evaluate new specialization avenues and through the support of expert bodies and consultants formulate structured courses for new avenues.

· Specify minimum funding requirements

· Bring in a system of transparent accounting and acceptable maximum norms of return on the investment, Debt - equity norms and other investment guidelines to encourage Public Private partnership.

At the implementation level regulators role will be supported by multiple organisations and it is therefore necessary to appoint State Regulators. The state regulators in addition to laying all policy framework for the primary education, will be responsible for the implementation of the Central Regualtor's policies with in the defined state geographical boundaries.

The central regulator as an overseer of the implementation shall

· Introduce Licenses and certification mechanisms to ensure orderly implementation of its policies

· Shall establish transparently educational fees to be paid by the public at large

· Shall regulate the pricing of the educational materials which are consumed by public at large

· Establish cross subsidy norms and generate funds for rural education utilising the premiums now being paid at the Metro level through a transparent mechanism.

· Regulate coaching centers and monitor them.

· Regulate Mid day meal scheme

· Regulate student concessions

· Intervene in any area of concern (such as Vehicular Transportation for Children) which affect the student or the teaching community at large

· Adjudicate on issues related to examination are recruitment

As is clearly seen above there are various agencies either attempting to regulate these issues and in some of the cases the issues are not addressed at all. Providing such an encompassing role for the regulator could be contested by many, it is necessary to understand that unless all these issues are addressed it will be impossible to move quickly forward.

The main fall out of such a transparent regulatory policy frame work will be to encourage private investment. If our software companies are hesitant to invest in large scale in education, it is because of the need for themselves to collate data on the institutions. Further they need to supervise the implementation themselves and that requires a lot of responsibility which is outside their core competencies. No wonder there are so many crying over issues in the educational system with out doing anything about it.

Taxation Policy of the government and the credit policy shall be structured to encourage investment by corporates in to the certified institutions. At the personnel level outright allowance of say Rs. 1 lac per individual as set of in the taxable income from the salaried class will see the investments rushing in to the system. There are many a professional who will be willing to invest directly given this additional incentive.

e Learing which is a nascent phenomena needs to be encouraged. Innovative mechanisms shall be thought of to use such as utilising the off peak bandwidth available with leading service providers to deliver content to remotest areas of the country.

Across sectors Indians have proven their mettle and will definitely look at an opportunity to spend more time in India and invest their talent and resources. Persons in the educational field especially, given their typically strong religious leaning, will not waste an opportunity to return. But they will return only if the climate is right and the overall environment is conducive to investment and nurturing of talent, their own, their peers and the new stock.

India is currently uniquely poised to leverage its position in the Knowledge based industry. There are many diverse issues starting from the robust all round performance of our own economy, a renewed interest in the Indian market by our own Diaspora, the crashing of the distances and increased globalisation, etc which have created an opportunity for the government to seize the moment and provide the frame work to the talented to multiply talent.

Last but not the least, the talented Indian Diaspora is aware of the increased inequalities that are getting created in the western world, which are solely attributable to their talent. If it were to boil over it is any body's guess, who will be the first affected and no body can pretend to be not aware of the such a situation developing.

Disinvestment a different Perspective

2007-07-15T18:50:00.002+05:30

All the assets which are currently considered as Navaratnas have reached that status due to the protection they enjoyed during the start up stage through various tariff protection measures and in some cases by denial of permission to create additional competing capacities by governments diktat. It is therefore not wrong to say that these assets are created through Regulation efforts and not necessarily through the enterprise efforts of the government. Such being the case, it is but obvious that the ownership will have to be transferred to the public who has basically suffered to create this asset. One cannot wait generations to reap the benefit.

It will be therefore appropriate to offload the Navartna equity to individual citizens who have suffered to build these capacities and have the first moral lien on these assets. So the return of the equity to the public cannot be considered as "Dis Investment". By this process funds are garnered for creating similar assets, which over a period of time can again be returned to citizens thereby creating a value creation. In appropriate naming has vitiated the entire process of returning the assets to the true holders.

Automatic Meter Reading Solutions

2007-07-15T18:47:00.001+05:30

The caption is misleading as the author is actually in favour of locating Mega Power Projects along coastal basis. His main concern is water and hence he prefers coastal based power plants.

Given the current Power deficit in India we need to have many more of these Mega Power Projects to provide even a single lamp connection to many of our citizens' households. While the Distributed generation modules will survive in a grid backed up by good base load generating capacity, the model will fail miserably in our country where we have severe shortages.

Mega projects bring with it scale of operation and high level of automation and latest technology. If we have to achieve 4000 MW of generating capacity even by 3 to 4 plants as suggested by the author we will add up a minimum of 3 times the labour force required to operate a 4000 MW power plant. And that is sheer waste and even in a populous country like ours we are running short of qualified staff today.

It is therefore in the interest of the nation that power professionals appreciate the need to bridge the gap quickly and work for it.

Ultra Mega Power Projects - A great Idea for the Indian Power Sector

2007-07-15T18:45:00.001+05:30

Irrelevance of Inflation Targetting

2007-07-15T18:43:00.000+05:30

In spite of phenomenal increases in the basic prices of Metals and Oil, which we import to run our economy, our economy is ticking and moving forward reporting marginal increase in inflation rate. This shows that we have found a way to scale up volumes and efficiency. We are also increasingly shedding cost plus factors, as is evident in air travel and communication costs which are no longer operating on social basis but are driven by market forces and hence competitive. I still remember the news stories, (similar to the ones which we are seeing in Oil sector today), that Indian Airlines request for revisions are not decided by the government and hence the Airlines is likely to report losses!

Therefore monetary policies should factor in structural changes and encourage on a sustained basis the attempt to bring an impetus to growth. We are at this stage a unique economy where our knowledge workers are gaining recognition and bringing in large profits which are retained in the nation. Consumption is increasing and goods are being delivered to meet the demand. Sustained corporate earnings growth across sectors is aided in no small measure by volume growth.

So we need to have our own policies, which in this case may even call for increased deficit financing or using the forex reserves. We need to therefore find the way to sustain this growth through monetary policy and be very cautious in our moves lest, this momentum gained over ten years of 5 year planning is challenged.

Economic Renaissance in the Developed World

2007-07-15T18:41:00.000+05:30

Economic Renaissance is sustainable and the Developed world is looking up to India to bolster their economy through the improved performance of our economy and increased consumption. Just to illustrate - Today our earnings in foreign exchange is across a much wider spectrum as compared to a decade ago. While there used to be only remittances from sweat labour from across the middle east and supporting funds from non resident residents to the near and dear ones, today Indian born and international entrepreneurs are returning to their mother land with ideas, systems and seed capital. This is setting in a new chain of growth which will take our economy to new levels, leave alone sustain. Their presence and their interactions with the world clearly demonstrate the sustainability of the growth story, for these are definitely not "Fair weather Friends".

True any mismanagement of the macro economy can undo part of the growth story. But the current government has not given any indication of such actions. On the contrary, the government owned Goliath the Indian Railways has returned surplus and is set to surpass its own stellar performance last year. The investment in the aviation sector is returning surplus as well.

The capacity addition being seen in the Capital goods industry, the booming service sector and the additional investment being planned for in the Retail, Infrastructure through Public Private participation, indicate that the Indian corporate and international private fund managers have a diametrically opposite perception from that of IMF. They believe in the Indian growth story and are eager to participate at the first opportunity, rather than wait and be left behind.

Retailing in India - New Revolution

2007-07-15T18:40:00.001+05:30

With the who is who of Indian corporate announcing ambitious schemes for the retail space, it is indeed a question how the neighbourhood small retailer will manage to retain his own. Grandma's wisdom suggests that the small retailer will continue to staty. Is that the case?

Let us look at similarities in few other major retail spaces - the eateries, the road side mechanics for 2 wheelers.

I remember the early 80s when we had very little choice in class restaurants in Chennai. As a matter of fact if you move out of one part of town, you are literally on your own or you will have to be dependant on the small road side restaurant, with its basic facilities. But today, we have choices and this has not reduced the number of small eateries; on the contrary the small eateries have also increased in numbers.

Similarly we were wholly dependant on the road side mechanics but now we have a choice for the place of service; but that has not eliminated the road side mechanics, but has only added in numbers.

The main reason for easy accommodation of the variety of service providers is the latent demand which has not been met, be it in terms of quality or quantity or infrastructure the service provider offers. Similarly in the retail space there are people who are looking for shopping in large Retail chain stores, which they can not do so now. When such an opportunity arises they will definitely shift. But that would not mean that the entire lot who are shopping with the neighbourhood retailer will shift. There will be pressure on the local small timer to improve and attract new customers, retain existing ones. So will be the case for the Super Bazzars;

The key differentiator between the big and small will be Technology. This will play an edge as it can be leveraged to assure consistent quality in all aspects. Indian consumer is very demanding as many marketing surveys has established and the big ones are aware of it. So if they provide quality products and service they will have their own space and will manage to wean away a larger segment. But they can never dream of eliminating the small retailer.

Indians are masters in retailing and will put the large international logistics firms and whole sellers to shame by their rudimentary solutions, as in the case of the panwallahs. These road side delivery centers are are so excellently linked through out India by a supply chain mechanism, which even the giants such as HLL have not been able to replicate after years of attempts. The pan (beatle leaf)is fresh and so is the gulkand! And please note this chain works with out proper refrigerated storage and refrigerated handling vehicles.

As on today the small retailer who is threatened by the big bazars like Food world are slowly transforming themselves. One group whom I am observing, has improved his personalised service and has started accepting cheque payments! Assisted by the local telecom service provider, he accepts orders through intercoms from nearby flats who are all connected to the same service provider and have availed of the group dialling facility! The small retailers are fearsomely innovative and the wal marts should remember their German fiasco when they enter India

NTPC as an Investor in TELK

2007-07-15T18:39:00.000+05:30

It is heartening to note that NTPC is considering picking up 49% of the equity in TELK. For all professionals in the Power Sector this is good news, for we are at least sure that TELK will definitely not go the NGEF way.

The report also hints at TELK facility being used for repairing the failed Transformers and other equipment of NTPC . This adds a jarring note. As an investor one can not fault NTPC for negotiating a deal most suited for their needs. But one would expect a more proactive role from NTPC, in the interest of their own share holders.

TELK, as a manufacturer of Generator Transformers has a unique position in the country. On last count their Transformers were supporting more than 25000 MW of generating capacity in the country be it Nuclear or Thermal or Hydro Electric Projects. The performance of their units have also been by and large satisfactory. Given this back ground and the current boom in the market with so much of accelerated investment flowing in the Generation and Transmission segment, NTPC as an investor should immediately ensure maximisation of the capacity utilisation by providing working capital funds. Price realisations in the Transformer industry has gone up with existing capacities being utilised fully. Even Chinese vendors are picking up orders in the Indian market.

Today when multinational Power companies such as Siemens, ABB & AREVA are investing in the India for establishment of green field capacity or expansion of their existing capacity, it will be indeed sad, if the existing capacity of a leading indigenous manufacturer is turned in to repair facility.

NTPC's Merchant Power Plants

2007-07-15T18:37:00.001+05:30

It is heartening to note that NTPC plans to quickly strengthen their balance sheet using the Merchant Plant route. These plants when they come on to the Grid, a National Power Exchange will be functional as envisaged by CERC. In the Draft paper on Power exchange published by CERC, the Prices are to be discovered using the Double side Bidding process where, the aggregated demand at different prices is matched with Supply Prices quoted by Power Producers, for different quantum. Such a system as the paper very correctly points out, will minimise market manipulations, by providing equal say to both the Buyers and Sellers. It is therefore expected that the tariff of the Merchant Plants of NTPC will be discovered through such transparent Double Side bidding process and not determined by the penal rates of Unscheduled Interchange which it seems is their current expectation.

Another factor which one needs to keep in mind is that these Merchant Plants are planned on the balance sheet of NTPC and NTPC assets are built by all the Distribution companies and the erstwhile electricity Boards. It is but natural that the Distribution licensee (or Electricity Boards) while willing to accommodate certain level of competition(read higher prices), expect that the prices are either discovered through the Power Exchange in a transparent manner or guided by the well founded tariff setting principles, including the competitive route. This is especially applicable for the large Hydro stations which are being named as Merchant Plants, where the benefit of lower tariff should not be blocked to all the stake holders, in the interest of one company.

Disgorgement Order of SEBI

2007-07-15T18:36:00.001+05:30

Whether it is the "Disgorgement Order" or the move to accept and recognise the offer of "Super Self Regulatory Organisations" of a section of the market participants, SEBI's initiative have to be complemented and encouraged. The man at the helm Sri M.Damodaran deserves all the praise he is rightfully receiving..

His recent remarks that "Absence of Precedence would not be a deterrent for the Regulator" as quoted in your column deserves to be singled out and appreciated. India is unique and is today a thriving financial market where the psychology and the behavioural aspects of the market participants are strikingly different than those of the other developed economies. The lax in non compliance to the laws of the land (read - feeling we can manage it all) be it a simple a traffic rule or the tax compliance, emboldens the individual to use his capabilities to influence.

He comes with this mind set to the market, which the Regulator has to take note of. Regulators actions will therefore need to be punitive and swift to change this mind set. The over reach of the regulator in commenting on the media is another case where he is moving on to ensure investors protection. Regulators actions are crucial as his dithering can shake up investors confidence and scare away the fair weather friends.

Increasing appetitie for Investments in Indian Power Sector

2007-07-15T18:35:00.001+05:30

With the "Electrifying Start" achieved in the implementation of Ultra Mega Power Projects, it is clear that the present policy initiatives has met with more than anticipated response. This is a land mark event in the country and will clearly be remembered for times to come.

Two significant changes have been heralded in this start. One; it is now clear that there is an enormous appetite for investments in the Power Generation Segment. Given the mind set of some in the government who still complain of lack of response of the Private sector in participating in the addition of more than 120,000 MW of Power Generation, the current response of Indian Companies with the support of the international equipment manufacturers and investment agencies, should be satisfying.

Power sector is unique with its own typical issues. It cannot be compared to Automobile Industry (as done by a senior government official in a conference recently) for the Dealers in the Power Sector decide what the consumers get and not the Consumers or the Producers.. The freedom the consumer enjoys in choosing the Automobile he wants, whether it is the class or brand, it comes to Power, the same consumers do not have the luxury of choosing between a Maruti or Tata or Honda, even for a given segment. He has to live with the dealer with whom he is connected or generate on his own. In the other industry Dealers have a limited role and the market is governed by consumer demands and the Suppliers capabilities. To add to the trouble, in India the "Power Dealer" (Distribution Licensee / Board) can simply report that he has lost 60% of the goods delivered to him! Can a dealer in Cement or Automobile report a similar loss and still continue to be in Business?

Given this scenario where the Producers cannot choose consumers, it is necessary for the government intervention to guarantee returns on investment or provide policy initiatives where the investor will be able to recover his investments and see guaranteed returns. When such micro management takes place, then the prices are artificial and are not typically governed by Free market dynamics. And the prices tend to be higher when the Public sector takes the major role as being in house, the Prices are not put through hard negotiation. It is therefore to the Credit of the persons at the helm of Ministry of Power (MoP) for introducing a high degree of competition and bringing in an era of Ultra Low Prices.

The Second important change that this Start will bring in is a significant improvement in Public Sector Operations in this sector. With this policy initiative the Generator is given the option of integrating two distinct elements in the value chain namely mining and Power Generation. The price now received is stripped of the high cost on both these counts. NTPC which had teamed up with BHEL for equipments has quoted a price in excess of Rs.2.00 per unit while three Private sector Companies have submitted offer less than Rs.1.40. To understand the magnitude of the impact one needs to work out the additional cash flow which NTPC tariff would have generated in the 25 year life cycle of the plant. Taking an average PLF(Plant Load Factor) of 80% with 8000 hrs of annual operation, the amount is Rs 45000 Crores for 4000MW. Some would argue that "that is the kind of inefficiency which the country is bearing today".

The equipment maker BHEL has to review the cost of his operations as he is no longer operating in a protected environment. NTPC, should sharpen its skills on mining and also negotiate finer rates of finance. I am sure there will be lots of introspection in these companies and there future actions will factor in these market dynamics.

All of this euphoria will quickly disappear if the planned evacuation arrangement (over which the Generating companies do not have any control) do not come up in time. With the MoP planning to do a similar act in the Transmission segment, part of this issue will be addressed. Focused initiatives are needed to strengthen the sub transmission segment as well.

The MoP literally talked down the Prices in this bidding round, when they indicated that their expectation of the Price for Sasan power should be in the region of Rs.1.50 to Rs. 1.60 per unit; a reserve price of sort. Any serious player would not have quoted more than that and the results bear this out. It is of course another thing that the government corporations which derive the maximum support from the MoP do not seem to concur with this view!

With such significant changes the Indian consumer can clearly look forward to an illuminated future.

Free the Pipe and avoid Monopoly

2007-07-15T16:16:00.004+05:30

We have a lot to learn from the Electricity Distribution model when we are on the anvil of launching a pan India network of Pipes for gas with the last mile connectivity to deliver to individual homes. Four major points emerge from the success as well as the failure of the National Power network. These are:

National Grid is best owned by a single operator who can not have distribution rights at the local level. This is to ensure that the pipes are not monopolised, which link gas wells and LNG terminals at port to City Bulk storage points, and bulk consumers. GAIL has to be given the mandate and the Gas Transmission tariff should be regulated. As in the case of the Power sector where Private participants invest in the formation of major national links, the Joint venture route with GAIL ownership up to 49 % shall be insisted up on.
City Distribution shall be sub divided to two segments - the main trunks which run across the city and the sub transmission which connect the trunks to individual consumers. We must avoid the model which we have in electricity, where when we are in the fourth year of reforms and are unable to free the wires for open access. It is therefore necessary to allocate city distribution to a minimum of three players for each city through a competitive bidding route as done in the telecom sector. The selected operator shall be mandated to build the minimum quantum of the Main trunk routes and the sub transmission network as required for servicing his consumers. The main trunks should be free to be used by the other Gas Providers by paying the transmission charge which can be regulated. While individual consumers cannot have the choice at this stage, this kind of structure will finally enable the pipe assets to be spun of to a separate company which may not have interest in distribution.
Metering has to be state of the art, along with the connected remote control mechanisms. This would facilitate dynamic pricing to reflect the global price trends and the foreign exchange rates. We need to encourage Pre Paid metering which would facilitate the consumers to move from the Cylinder era to the Piped era, with out complaining of high energy bills.
Finally Energy in India is subsidised and moving over to market related pricing quickly can enlarge the social disparities. It is therefore prudent to plan the network reckoning some element of subsidy which can be clearly traced to the beneficiary instead of "un metered Freebies" now being practised in the electricity sector.

Monetary Policy

2007-07-15T16:14:00.000+05:30

Central Bankers prime responsibility is to utilise the Monetary Policy to achieve Monetary stability over long periods under varying conditions. This as the author has indicated, predominantly relate to maintaining the Purchasing Power of a currency. But there are two other significant elements which need to be balanced;

- One the competitiveness of the export basket should not deteriorate and the other
- the main stay of the people be it industrial wages or the value of agriculture produce should be stable.

While some may tend to ignore the comparison of Gold to purchase power, as to be too elitist, the situation of the Indian farmer or the wages of our semi skilled worker will throw a definitive view. It will be too simplistic to assume that all these can be achieved only by the Monetary policy. But monetary policy can substantially support these, as in the case of USA where the Asian economies surpluses are funding the subsidy of the USA farmers(Budgetary deficit). Not many states will be able to practise this. The decision of the US central bankers to believe in their systems and make their currency fully convertible in an era of where everything was closed has brought them this reward. It is always the first mover who will have the advantage as it is evident here.

Given this background, it is necessary for the central banker to come up with innovative mechanisms and steps, structured to capitalise on the individual country's strength. We have today put in place sound controls which can be relied up on. So it is time to take bold steps which are unique to our country's strengths. Two starking uniqueness are evident

One - Our huge retail stock of gold(should say hoard) No other country has so many of their citizens hoarding gold. This immense asset is not put to use. This has to be done.

Second - Our Youth. We are one of the two countries who will have the largest number of youth in the next decade, whose services will be in dire need amongst the so called developed nations as well. We need to formulate policies, to retain this youth in our country to levergae thier earnings.

India is poised to move in to another era and path breaking efforts are needed to take to Her to the rightful place She deserves.

Merchant Power

2007-07-15T16:13:00.000+05:30

As envisaged by the Power Ministry 15000 MW of Generation capacity is expected to be added to the grid through the Merchant Power Plant route. This is a bold new concept to channelise private investment in to the sector.

The Indian Power sector needs lots of reforms and each step has its own detractors. 40 to 50 % of the Power injected in to the system is not billed in some states and hence substantial costs are not recovered In a such a scenario, the utilities obviously manage load peaks by severe load shedding, which is accepted as a norm. The industries are therefore forced to have their own stand by generators which are in some cases operated as base stations. This brings a very high cost to the industries. So over the years major power consumers have been forced to invest in Captive Power plants that is base stations planned on coal instead of relying on grid power.

Under these circumstances, one can definitely expect good response to the scheme for setting up of Merchant Power Plants. A lot remains to be done to make this a success. As the author has correctly pointed out Transmission network needs to be strengthened and more private or public investment made in this segment. Existing large Private Power utilities like Tata Power and Reliance Energy will definitely utilise this opportunity as the tariff of the power generated through the Merchant Plant route is not regulated. Both the pit head plant with the Coal Block allocated to it and the plant with the coal linkages will be keenly contested as the industry today is generating cash surpluses to have its power requirements met through its own investment.

Control Notes Supply

2007-07-15T16:12:00.000+05:30

The constant increase in Printed Notes Supply and the excess requirement of working capital due to processes and legacy issues are two significant elements which need to be tackled head on to rein in inflation. The slack money which is in the system as working capital in form of credit at various stages is increasingly pushing up the cost to the consumer and sucking in more credit for achieving the same output. An alternative will be to incentivise use of money for shorter periods. This has to be through a policy initiative and will signal better management of working capital limits.

Given the fact that most of the receivables are linked to central & state governments the finance ministry will do well to seek a review of the Outstanding payments; the Government's "Sundry Creditors List" and devising methods to settle the same with in reasonable limits. Even for approved plan outlays, payments are with held or not released, as either the funds are diverted for meeting out salary payments (as in the case of state implemented projects with central funds) or stuck due to terms of contract an euphemism for dithering. This needs to be addressed immediately with the accelerated growth seen in the recent years.

Cash transactions have again not been controlled as the key contributor is Real Estate whose administration is the responsibility of the Center and state. A pragmatic to capture the true Real Estate values and make it attractive to comply with completing transactions closer to realistic values needs to be put in place.

Currency rate Instability

2007-07-15T16:11:00.000+05:30

One of the reasons the interest rates do not impact the Real estate asset class is because of the simple fact that it is running on money which is PARALLEL. No individual or HNI can borrow through the official channel to buy a land in any city. It may not even cover 5 % of the cost. That being the case to signal control of this asset class through monetary instruments, as you have very simply and eloquently argued is shooting your self in the legs and yes both of them.

Lack of agricultural growth and its impact on the growing economy has been ignored by the government even though the central banker has been highlighting its failure on this account. In the election year this becomes a much more bigger problem.

Importing essentials, while being a short term measure, to cover the ground to arrest inflation, long term bilateral international agreements (like the ones being done for energy Security) can be negotiated for essentials to cover a planned period before our internal agricultural production escalates.

We need to think out of box to come up with solutions which are specific to us and the way in which we allow our parallel economy to grow and accept inefficiency.

Process Reengineering

2007-07-15T16:09:00.000+05:30

One of the main concern which is agitating the corporate minds across sectors as emerging from the articles in "Budget Line" is the government's attitude and attempt to micromanage issues instead of staying aloof. There is open cry to go for a thorough Process Re engineering.

If Mr. Ravi uppal, is agitated about "C" form, Deemed Export and VAT issues, and raises it as a point for discussion in a public forum, one must realise the impact that is having on the performance of major organisations. All the major players in the industry know that physical part of any business transactions gets completed quickly; but the corresponding statutory complaisance's take years to close. Obviously any prudent organisation, would like to look at the possible liabilities on these counts and address or provide for. It is time that Government addresses these issues and does a thorough review of the process and overhauls it.

Another anguish which is emerging again across sectors is the lack of commitment for the implementation schedule from government. In a scenario where the government identifies a project and provides funds, the implementation wing should achieve scheduled completion. But instances where this happen as in the case of Delhi Metro are less. The lack of commitment on the part of a few of the implementation in the wings of the government could derail the whole project. May be the government should outsource implementation!

5 Points Overlooked by FM

2007-07-15T16:05:00.001+05:30

The article Five points someone overlooked made for an interesting reading. I believe that the FM gave each of these five proposals a due thought and rejected it. And here is why?

Excise Duty on cars: Passenger car segment has seen an overall growth of 23 % on the previous year and that too on a year when they have seen their input costs escalate. Across the sector they have reported healthy earnings and the sector is exiting enough to attract major players with the existing duty structure. So why reduce and loose revenue?
Focus on Tourism Infrastructure: The hotel industry was not waiting for a 5 year tax holiday to launch new projects. They are waiting because of the more than 80 clearances which they have to take from governmental organisations starting from Central to state government departments, to corporations to local police. If it is a high rise building you need a clearance from the Aviation department and if you are on an important road the Highways! Clear these hurdles and increase taxes. You will still not be able to discourage investors rushing in. The average room tariff of our hotels is after all comparable with the some of the costliest in the world!
Duty Structure on Petroleum Products: The case here is driven by the need to generate enough revenue for a rainy day. Imagine a situation when the Oil price stays stable at US $ 75 per barrel or above. The impact on our economy will be severe; may be the FM thought it prudent to pass on further cuts at that time! The real cut in this sector should come from states who never are convinced about it. May be we have to wait for the GST for an overall taxes reform in this sector.
Promoting savings: I do not agree that this has been missed out in the budget though the author may have his reservations as to the extent. tax deductions on Premium paid on Medical Insurance has been increased and the interest costs paid on educational loan taken for one's spouse and Children are tax deductible. Satisfying enough for a middle class person.
Abolishing DDT for Holding companies: This wish, I tend to compare with the wish for reduction in taxes on tobacco. Holding companies are vehicles which serve to enrich the investors and work around the regulatory, taxes network. To reduce taxes for such Holding companies will translate to encouraging their breed. Let us encourage more transparency and may be increase the taxes for these companies.

Funding Higher Education

2007-07-15T10:49:00.001+05:30

IIT Chennai, with a funding of Rs. 100 crores for 5000 students and 400 teachers is one of the key factors that make this institution a great success. The other factor as the Open Page article "IIT Models have to be replicated" in The Hindu today correctly argues is the total autonomy.

As one of the strategists at a recent exchange of ideas in Yale University sessions (I was lucky to hear through a podcast) mentioned it is the Autonomous status of the universities of USA which gives it the cutting edge in innovation. The panelist went to the extent of arguing that this is one of the key factors which make the USA super power; you destroy this autonomy and USA may loose its special status as the lone Super Power.

We have two great advantages. We are a living democracy and we have the demography in our favour. India Inc or the governments or the Alumini of these institutions must wake up to this fundamental reality and initiate urgent steps to release the second tier institutions from excessive controls.

India Inc on Job Training & Stipend

2007-07-15T10:28:00.001+05:30

I read an interesting article in Business Line today on the topic "India Inc Offers Job Training, Stipend".

Two significant facts hit me. One the minuscule number of students who will be eligible for this offer and the other the absence of scholarships for the Science and accounts faculties. The total population who will be eligible for this offer is in the range of more than 3 crores and to see that only 5000 will become eligible, even though it is a starter is real dampener.

One would expect the CEO's of India Inc to exhibit a better sense of the numbers involved and scale up the offers to make a significant and quick impact.

Finding and nurturing innovative talent in the Science and humanities faculties are also essential. India Inc must wake up to the fact that with the increased level of automation being achieved through information technology, trained and groomed science graduates and humanities graduates will also significantly supplement the efforts.

After all it is the current scenario when we are experiencing severe shortages of trained manpower and the likely scenario of this not improving in the near future, drive India Inc for this effort. It must be wholesome and complete effort to make this programme really successful.
I wish the programme is revisited and improved.where you will of the immediate future

Contempt of Court - Need for a Second Look

2007-07-14T11:51:00.000+05:30

Truth as a defence in Contempt of Court Proceedings is indeed a welcome step. More importantly as the Honourable Senior Judge argues this is the first step. He has taken the extraordinary step of announcing his pride in not holding anybody in contempt of court during his service. While this should be adopted by one and all of the judges, it is necessary to provide to the public(Master!), a comfort that a legal functionary if found erring when examined under this context, under such examination by the appropriate authority shall be liable.

I strongly recommend that such a provision is debated and introduced in the statute.

Who is doing the saving

2007-07-14T10:11:00.001+05:30

A series of articles in your paper ( India's young savers will prove McKinsey wrong - Sunday the 13th May, Macro scan - Who is doingg the Saving and Investing and How countries Compete - a nice crisp extract from books under E- Dimension - Both in today's editon) all have focused on one critical issue of the change in savings and investments patterns in the last few years.

That there is a shift in who is doing the Saving has been acknowledged and is accepted. The challenges for the policy makers are to capture this change, understand the factors behind this change and generate model which can project their impact at the Macro Level together with the key parameters which cause these changes.

Any growth will bring in change inevitably. That the shift is from agro based industries, to ITes and BPOs, industrial establishments is abundantly clear. Hence the savings are not from from agriculturists but from workers, executives and generally the white and blue collared community. This has been encouraged by the governments policy initiatives to make our country "Competitive". This is a welcome change and is accepted by one and all as the way to move forward.

But what should worry the policy makers is the impact this change makes on capital formation at the grass root level of the economy.

Indians are generally known for their thrifty habits and hence saving is prevalent across households. Their savings especially in the rural and semi urban areas are the seed capital of many an enterprise, retail outlets and small shops. These savings have been supporting the active functioning of the small enterprises and any deceleration in the savings growth at this micro level, will seriously erode the capital formation ability.

Given the near absence of institutional support at this level (our major bank's focus is on big ticket investments) unless a dedicated effort is taken immediately to address this issue brought forth in your articles, we may be seriously disrupting our basic economic structure. It is therefore necessary for the policy makers to understand this change and focus on providing substitutional avenues where seed capital can be easily accessed at the micro level.

We are challenging the retailers by bringing in Global players as their competitors and simultaneously also challenging their abilities to access seed capital through our policy initiatives of bringing in modern industries and IT services. We are acquiring their land for our grandiose SEZ's and the parks. While these initiatives bring in a change for the better for some, the policy makers need to appreciate the disruption these changes cause and provide a substitute, alternate mechanism.

As otherwise we may mortally harm the retailers, which in the long run could hurt everyone.

Carnatic Music

2007-07-14T10:09:00.000+05:30

Indian Music, in particular Carnatic Music, is full of unique characteristics. Your paper with its coverage have over the years, brought out its nuances to generations. Your coverage in today's paper under "This day that Age" and Music Scan is one such instance where you have put in word what we the Music audience feel and participate in and at the end of the concert (or listening in) carry with us.

Carnatic music is driven by a highly passive, but knowledgeable, critical individual audience who have their own preferences. Similarly the artistes are individualistic, with their own style. But both know the broad rigorous limits which makes the participative effort sublime.

Carnatic Music is of meditative quality and adaptive to help it carry this tradition through ages.

Budget 2007-08

2007-07-11T21:46:00.002+05:30

As the fine print is being read and the implications sink in, the clarity of the man in control on the way forward is becoming more clearer to us all the common men. Here is a man who is no hurry. He knows that in these middle overs, he has to keep the run board ticking and not go overboard with flashy strokes. The slog overs are just around the corner with election to come in early 2009.

While, a little bit of tinkering has been done for now, one can expect a land mark 2008 -09 budget which could be a please all. Bold measures including allowing increased freedom for investments for Indians in various foreign assets can be expected. With the institutions to channelise foreign exchange reserves in to Infrastructure projects in place, I am sure he will initiate bold measures to shift a significant portion of reserves to Infrastructure.

Infrastructure Upgradation

2007-07-11T21:46:00.001+05:30

The author's comment that the enabling environment is essential for a successful implementation of infrastructure up gradation is appropriate and is the accepted norm. However to imply that nothing has been done in the ground will belittle the achievements we are seeing in terms of competitive offers coming in by way of "Negative Grants" in highway projects and investors appetite for large Public Private partnerships in Airports and Mega Power Projects.

Even to achieve the targeted completion of the projects already commenced, increased mechanisation is needed. This would call for mobilising large, sophisticated construction equipment machinery. In some capital equipment segments our existing capacities are fully booked and we need to look at imports. Developers, as in the case of Power Projects, make commitments to offer competitive prices based on imported equipments with better efficiency and earlier deliveries.

Government has therefore done the next correct thing to announce the roll out of support for these initiatives, by committing to use the forex.

As regards, the reserves, from the way in which we are growing in many sectors, it is just a question of time before we have many more Dollar streams starting from the additional Refining capacities being added to manufacturing capabilities in the auto ancillaries sector to Telecom components equipment.

RBI's new approach

2007-07-11T21:23:00.000+05:30

The title as befitting a Central banker is just a hint for the well heeled and one needs to drill down and mull over the contents to understand the implications.

The suggestions by the former governor is very timely and needs to be implemented. We need to "segregate a part of the reserves that can be traced to more sustained flows" and allow a government agency to manage these funds to achieve more than " 6 % plus returns" will really help the economy. I see the "Invisible receipts" which our economy boasts of as one amount which is sustainable and growing. These receipts majority of which emerge from middle east can be invested in infrastructure projects to accelerate the growth.

The "comrades" will also like the idea.

Power Sector

2007-07-11T21:21:00.000+05:30

At the core of the beleaguered Power sector is the ownership issue. Are state governments responsible to the public or is it the central government's role? Governments at centre and states have conveniently not addressed this issue as it affects their vote banks. No sector invites Private capital with assured returns with most of the cost variables being pass through. In spite of it we have not seen capital coming in to this sector.

It is therefore clear that what is needed is enabling provisions, which allow for a sensible business plan to implemented by competent organisations and achieve their returns. Enabling provisions will include interference free "disconnection" of Power Supply in the event of default, recovery of dues with Penalties and above all a free environment where an organisation can perform with out the elected representatives having their say on day to day matters.

While we have made such major strides in new technology areas, it is disheartening to see that we are not able to get our act together on providing this basic infrastructure. We have already tackled the communication issue and are on our way in the transportation segment with the giant railways achieving world class performance.

Policy makers should quickly address this and come up with working models which will invite talent and capital. In the absence of bold initiatives, dark nights and idle hot days are ahead!

Inclusive Education

2007-07-11T21:18:00.000+05:30

One needs to revisit the concept of Educating the future generation and think out of the box to bring in innovative methods of truly educating the future Indians. While the current educational system suits a segment, we need to devise new patterns to implement our desired objective of "Inclusive Education".

Training in skills which are appropriate for a segment of the population combined with the basic knowledge of Language, Arithmetic, Civic Sense etc is one of the sure ways of achieving success in this endeavour. One needs to make a propaganda of the advantages of such a curriculum so that the children are voluntarily sent to the schools.

Sports has been neglected for too long. While we are fighting over reservations in Post graduate education, people in power have not made any effort to tap the enormous potential that is available in Sports. Rural sports can transform to a major entertainment business in the Semi Urban and rural areas. Today, the urbanites has hijacked this area as well and along with it the funds. Why is it necessary to have the best of the training facilities in Metros? will it not be a better idea to have them in multiple District level locations where the basic skills are available in abundance and waiting to be tapped?

Spotting Excellence is the primary task. To identify and implement systems for spotting excellence is the first step. To nurture such talents, it is essential to build Public Private model so that the truly talented benefit and the benefit reaches all.

No Point in Blaming RBI ?

2007-07-11T21:17:00.002+05:30

The authors have correctly argued that RBI has limited scope for deploying other instruments.

But what the RBI can do and which has failed to do is to prevail up on the Finance Ministry to deepen the debt market. Corporate paper is nearly absent in the debt market and there is crying need for it to be quickly implemented so that the Non agricultural credit growth is met at rates which the industry can service and credit growth in this segment is not mixed up with the rest of the market.

Similarly expansion of currency notes in circulation, which is taking place year on year to support the Real Estate expansion and phenomenal rate increases is being ignored. It is surprising that RBI as an institution which does not come under any direct influence of the Government should turn a blind eye to this phenomenon.

It is necessary for RBI to take a bold step in this regard and announce through its reports the damage currency based transactions bring to its policies. As long as RBI continues to hide and thus encourage such transactions, they will be blamed and quite correctly too.

Issues at Sugar Industry

2007-07-11T21:14:00.000+05:30

Your leader on the need to address the issues that plague the country's Sugar Industry is timely.

Given the fact that we are reaching new highs in terms of total sugar produced in the country with surpluses being seen at the same time globally, we need innovative policies and location specific support so that the stake holders are protected when the down side becomes steep. Today the sugar industries have multiple revenue streams through export of Power and Ethanol. In some locations some of the factories are even buying Bagasse for burning and producing power.

Under such a scenario, one has to address the Sugar co-operatives, mills and companies to make reasonable profit out of their by products, be it Ethanol or Power produced from their co generation plants. They should be encouraged to sell their power at the highest cost toady ( Rs.7.45 per KWH). This is feasible only if the restrictive provisions on the Power Trader are removed and the trader is incentivised with appropriate margins to pool these stand alone resources, collate and sell.

Similarly the blending of ethanol is being talked about for a while. It is the appropriate time to encourage and provide additional incentives to the industry through special prices for ethanol at this time.

A holistic approach from a macro perspective needs to be taken to support this sector at this stage.

Flip Flop in Export and Import

2007-07-11T21:10:00.001+05:30

The blame for the debacle in the sugar Industry is being placed at the governments steps for its flip flop attitude in first banning Exports and then rushing to provide subsidy for exports all in a manner of 12 to 16 months. Similarly on the Cement front where the government invited with open mind (and quite correctly too) foreign multinationals to invest in Indian cement plants and create additional capacity, is now crying wolf saying that they are profiteering. Of course they have to profit and not for a social cause. It brought in a additional levy and now it is thinking of lifting it.

Iron ore, Wheat are other stories and so is the pulses story as your correspondent Mr. Chandrashekar eloquently highlights the failings of the government machinery. We are thinking of banning forward trade while RBI encourages hedging in international exchanges!

All this points to very serious systemic maladies which need surgical intervention, followed by long term rehabilitation (read Long term sustained policies). The maladies are the near absence of trained professionals involved in the decision making when world over, people who take similar decisions are trained specifically for the job and have equipped themselves with a strong data base and modelling systems powered by technology. It is time we transparently appointed experts or hired through medium term contracts who can bring in far reaching impact on the decision making. There is need to establish a better system of collection of agricultural production and other consumption, data, and make it available on a technology platform for manipulation to prepare what if scenarios.

The government and the powers that be should be advised not to look for quick fix solution for issues concerning globalised commodities in this post WTO era. Local issues, such as an State election can bring in political pressure on decision making but the decision makers should desist from yielding to such pressures and refrain from tinkering with policy on the Export - Import front.

Otherwise they will be inflicting far more damage than good to the vote bank.

Macro Changes in Indian savings

2007-07-11T21:08:00.000+05:30

Rupee Appreciation

2007-07-11T21:07:00.001+05:30

he article "Making Sense of Rupee Appreciation" made an interesting reading. As the authors have pointed out there are diametrically opposite views on allowing the Rupee to appreciate.

The depreciating rupee while allowing for the perceived existence of the "Export competitiveness", also adds to the coffers of the Largest Indian Corporate "RIL", whose refining margins are better than the benchmarked Singapore rates and ONGC coffers are swelling in spite of partly providng for the petroleum bonds. Do our agriculturists who do not have any recourse but to use Diesel for even their water requirements for the field and are adjusting to international parity pricing for the Diesel, in the words of author have to further bear the brunt of a depreciated rupee to ensure that our Software, textile and other cash crop exports are competitive?

Socially and Politically such an approach would truly bring in surprises.

Another important view of the leading thinkers including Sri. Shnamugasundaram (whose article appeared in your paper recently) have correctly highlighted the danger of advocating the view of the appreciation of rupee while evaluating with respect to US dollar only. These thinkers have correctly argued that there has been no significant appreciation of the rupee when compared with the basket of currencies. A look at the behaviour of other Asian currencies in a comparable 4 year time frame support this view.

Added to this fact today, our export industries enjoy the pricing power. They are in the market because of their other inherent strengths and a favourable exchange rate will make it better no doubt, but they can survive. IT companies are not too much bothered about the impact this appreciating rupee make on their balance sheet. Textile, Diamond Industry, Cashew nut processing industry, (just to list a few) are crying hoarse about the impact the appreciating rupee is creating on their balance sheet. But they are quickly launching their equipment up gradation projects taking advantage of the appreciating rupee. Others are shrewed to enough to ensure that their value addition is retained at the same levels by driving down purchase costs(imports of Cashew Kernels and raw diamonds) again taking advantage of the appreciating rupee.

In the petroleum front we are in threshold of a major break through in Gas Exploration. Our refining capacity has significantly increased and is further increasing. This will definitely reduce the current level of our import dependence on Oil. Similarly with the current boom in the gulf market due to the high prices of crude our expatriate labour are also getting significant increases and I am sure will renegotiate their salaries to match with the appreciating rupees.

We need a stable forex climate but the boundaries and timing are influenced by our own typical situation and the increased globalisation which we are facing today. It cannot be closely pinned to some other models. Some of the benefits of this appreciating rupee is already being felt. It has brought in a negative outlook on "Inflation Expectation"and is helping controlling inflation.

Literally if the policy makers do not worry about the price of cabbage a new set will come soon enough to look at it!

Power Plans

2007-07-11T21:06:00.001+05:30

Country's Power Plans have gone hay wire and the entire administration at Central & State levels show to be agitated about it. But at ground level very little action is seen. Industries who are operating at close to their installed capcities have their own captive generation units and have self electric generation as a basic assumption when they draft their business plans, be it the domestic or export market.

On the other hand farmers and residential consumers are left to fend for themselves. Unfortunately our rulers believe that they can continue to get away with the euphemism of providing free power for ever and continuously increase the numbers who become eligible for it as well. It is time that responsible leaders take the trouble of impressing up on one and all the fallacy behind this whole effort.

An complete overhaul of the system of directing the subsidies to the targeted, to decentralisation of activities, breaking up the Goliath organisations to manageable and accountable entities is the need of the hour. As you have argued correctly in your leader, any efforts to derail this effort should be discouraged.

Policy makers can look at alternatives and they need to provide special incentives to performing organisations. But having decided on a direction and the pace at which they will move forward, any dithering in way will put the hapless millions in to further misery.

Education Vouchers

2007-07-11T21:04:00.000+05:30

Providing quality primary education can help to catapult our nation as whole entity to the top leagues given the favourable demography captured vividly through the survey and presented with clarity in the article "Is there a Solution(for our educational maladies)?"

The issues which need to be addressed vary from the existing multifarious presence of castes, their local social interactions to attract investment and talent for providing the educational service and finally to achieve that the funds reach the targeted. This will bring in the much needed private sector investment to expedite improvements.

One of the possible solutions is the use of "Education Vouchers".

Our educational systems are stretched and as Prof Indiresan has argued(here as well as in his columns in Vision 2020), brilliant students need to be identified and taught by brilliant teachers. In the crucible of Education institutions one needs to have a balance of brilliant students and teachers to sustain the reaction. Targeted funding will act as the catalyst which will accelarate the process.

It is incumbent on the powers that be to focus on the "solutions which are staring at us" and decide to implement.

Higher Education - A total need revamp required

2007-07-11T21:02:00.002+05:30

Approach to higher education, needs a total revamp. Policy makers are aware of the need but are doing very little as they are still grappling with the problem of education at the Primary level. They are also focused on side issues such as Reservations as they feel that this is politically correct. They could not be more worng.

Whenever, Government has distanced itself from any sector India Inc has risen up to the occasion. The Cement sector, Automobiles and Telecom sector stand out as shining examples. In the education segment when the need for harnessing Private sector investment was recognised and policy guidelines were being formulated, in the mid eighties, politicians who are also great entrepreneurs grabbed the opportunity. When they enter a field they instinctively block the others entry, as by nature they are very competitive and like the armed forces are trained to protect their turf by any means.

So it is necessary for the governments both at the center and the states to stay away, to encourage investment in this segment. They will do a lot of good including themselves, it they observe the Sector from arm's length. One need not look farther than the Tata Institute (now Indian Institute of Science), Birla Institute of Technology and Science Annamali University and more recently SSN college and many more like that to realise that India Inc is aware of the need to contribute their might and have proved their ability in doing it as well. The products of these institution are committed to the up liftment of India Inc as a whole. It is not mandatory for these students to work for the firms which had funded these institutions at the inception and they are free to work anywhere.

If Government decides on these lines and provide enabling provisions for India Inc to enter this segment with out any hidden agenda I am sure we will see a clear solution emerge in the next five years.

Higher Education - Abroad – Do we prepare our wards & ourselves?

2006-08-13T09:03:00.001+05:30

These days school students are encouraged to evaluate taking undergraduate courses abroad as the first option. Even though the government is aware that every year a minimum of 3 to 4 lacs aspirants who qualify for quality higher education year after year, they eliminate more than 99% of the eligible students under some fancy evaluation basis and pride itself on having completed its duty. They could not have been more wrong. What a practical and performing government will do is to exploit this strength of talent and built one of the most qualified young force in the world. But we are yet to realize this potential. However the other governments who do not have the youth as we have, are alive to the situation and are here to exploit it. They are fighting amongst themselves for our brilliant minds, with or with out funds. There are advertisements and promotions, school sponsored visits which all bring in a major influence to favor this option. Peer pressure through previous batch students who have taken up the course and who give a measured feed back also add to the influence.

As a person who has had first hand experience in children currently on study assignments abroad I list some of the most common issues which crop up after one decided to take up the course (which for reasons best known never crop up earlier!).

Familiarize with the place through a personal visit: First and foremost is to get a first hand experience of the place where you intend to send your ward. It would be best to travel with your family and visit the university. You may drop by on your journey abroad or join the numerous promotional travels being arranged. Even if the entire family cannot travel one of you, best visits the place. It is necessary to meet the staff, past students and current students studying in the institution and discuss with them all your doubts; how is the teaching? What about ragging? How is the syllabus? What about mess facilities? What are job opportunities after completion of course so on and so forth. You may identify Indian students who are studying there and catch up with them here in India on their holiday. It is necessary to convince yourself about the course content, especially for higher studies, for most of the information available through the internet medium and the printed brochures are only indicative.

Hostel facility is another important consideration. It is necessary to ascertain whether hostel accommodation is available. Typically, no separate Girls hostel is available. In some cases, girls & boys share the same room and in others, girls & boys share the same hostel though in different floors. This may come as a major surprise for some as we are all used to separate hostels for girls and hence tend to be presumptuous on this account. There are universities which recommend off campus stay which in most of the cases is very painful as we do not train our wards to run a household at this young age. In case you consider it as an option, it is necessary to train your ward to be independent to the extent of running the house (for self of course).

Another is the food. For both vegetarians & non-vegetarians, there will be issues on the food front. It is indeed a disappointment that international institutions which promote Indian students to join them is not encouraging establishment of Indian Non Vegetarian & vegetarian cuisine as an option in the campus and their mess / canteen. In some locations the absence of food of your liking combined with severe climate does put a lot of pressure on the ward which one must carefully evaluate and prepare for.

On the curriculum the method of teaching and evaluation are totally in line with CBSE syllabus but students who have studied under different schemes where memorizing is given importance, over understanding basic concepts do find the going tough. In extra curricular activities, though plenty of facilities are available the ward needs to have a certain standard of play for participation. Typically, a beginner finds the going tough as other players who regularly use these facilities have had prior training and are proficient at these levels.

Cultural difference and its impact on your children need to be understood. Dress code as practiced by us and what is acceptable outside is entirely different and you must prepare yourself and your children for it.

Summing up, parents need to apply their mind more thoroughly and evaluate not only the main curriculum related issues such as method of teaching, but also off curriculum items such as Hostel facilities, Canteen facilities, cuisine, extra curricular activities and preparedness of your ward for running the household alone.

Neyveli Disinvestment

2006-08-13T08:59:00.001+05:30

NLC Disinvestment – Way Forward – A Model

A performing Prime Minister and person responsible for spearheading India’s resurgence in the new millennium, is ready to move away from active governance; a Dravidian party which has just come back to Power and has a very grand agenda for decimating its only opponent including smooth transfer of power to the next in command is ready to put at stake its entire plan on this issue – NLC disinvestment. Such is the power of this issue that it requires a thorough analysis of the issues involved, a possible solution and its impact on the entire reform process.

To start from the origin, the NLC web page takes you back to as early as 1828 when the first traces of “Low Calorific value of Coal” deposits was found. It took years of investigation and policy making for the birth of a commercial enterprise to exploit these “traces” which by now had been identified as “2000 Million Tonnes” of Lignite reserves. So in 1956 Neyveli Lignite Corporation was born with Mr.T.M.S.Mani as the chief executive of the project. It stands today with an installed generating capacity of 2490 MW supporting the southern grid with its steady and sustained performance of XX % PLF.

Lignite is a soft brown mined fuel found in distinct areas through out the globe. Its characteristics in terms of composition and calorific value is between “Coal” and “Peat”- a state of the rotten vegetable mass buried over many years. The calorific value of Lignite is 2450 Kcal/ Kg as against 6500 Kcal /Kg for high calorific Coal. But the moisture content in Lignite is very high -53% which is one of the major issues in burning it. It however ahs the advantage of being “Free Burning” with low ash content. Once the high moisture content is addressed (through Air Drying) lignite is suited for direct burning. With the identified reserves in our country of lignite and the growing appetite for energy in our country “Lignite” as one of the primary sources of Power Plant fuel is undisputed.

With the union government’s plan to proud power for every one by year 2012, every source of power which is owned by us and not dependant on imported fuels needs to be exploited. It is therefore necessary to leverage the fast technical expertise available with NLC in the areas of Open cast mining, handling of Lignite, dealing with sub terrain water tables, consistent Power generation over the years with this high moisture fuel and last but not the least managing & minimizing the environmental impact of the entire cycle of mining to Power generation. One must also not underestimate the cash surpluses that are generated (which can no doubt be maximized by further improved performance and financial reengineering), which can be utilized to build new capacities.

The government is therefore correct in wanting to do something about it; but has not quite approached the subject. As Sri. N.Ravi in his recent article “Half Done” pointed out, the political class is correct in implementing the reforms but are not convinced that it will bring the votes which they badly need. On the contrary they are mislead with the scare that these reforms are driving their voters away from them. The reforms therefore “need to be packaged”.

How does one go about “packaging” the disinvestment plan? The main issues the political class are confronted with today are

· Family silver is sold cheap
· Not sure about future as ownership change may alter the basic character of the institution and hence
· Employees stand to loose their jobs; if not jobs at least they may loose the benefits which other wise they enjoy.
To address both these issues, we can look at how another great professional orgainsation addressed the similar dilemma and has come out successful. – L&T. Because of its performance and lack of ownership clout L&T was always a target for corporate raiders till the present management decided to pool their own strengths and that of the the majority shareholder Financial Institutions to make an enterprise which all of us are proud of. The management reviewed the asset base of the organisation and created value by demerger of divisions, which was pooled in to the shareholder’s wealth. Employees benefits were ensured for posterity through the L&T employee welfare trust.

To replicate the same model for NLC(or any such PSU), the following steps can be an option:
· Create 4 subsidiary companies de merging the main assets as under
o Mines
o Power Stations under two distinct groups – TS II and IA and TS I
o Package the large land available under a different company and create a dedicated industrial estate
o Future projects.
· Sell of the majority stake in two of the existing entities and plough back the proceeds as equity capital for the future projects. In the process you have a lean organization with a low equity base but large cash to spearhead investments in the booming power sector. In addition to the already identified future expansion plans the much talked about Jayamkondam Project, Srimushnam Project and similar such projects can be started immediately.
· Allow the personnel to choose and incentivise their cntinunace by providing schemes through the welfare trust.

Based on the current PEs enjoyed by similar companies and the real estate values, NLC will be able to generate much more than the required equity component for all their future projects. This unlocks the hidden value and provides the benefits to the rightful owner the “Employee” and the Government. It is also acceptable to the political class as they will launching new projects in the Public sector which will generate much more employment and overall growth which is their main concerns. Reformist economist Sri. Manmohan Singh is also happy as he is able to provide funds for development with out burdening the Revenue budget.