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From the editor Dear Members, The month of April has been as usual, hectic, with number of activities organized not only in Chennai but also at all our Five Chapters and at Tirupati soon to be MMA’s Sixth Chapter. To accomplish excellence, we make a dream as aim, but don’t make aim as a dream. The Tamil New Year was celebrated in April and I have always been delighted at the prospect of a New Year Day, a fresh try, a new start to a new beginning and we at MMA are planning number of innovative events with renewed vigour to fill knowledge in our lives. The fall and the rise of gold prices, over the last few days is raging talk among the stakeholders including people watching the IPL. So in this issue of Business Mandate, we thought that we will bring some insight on this interesting and alluring subject for the benefit of our members. Please read on the article on “The impact of recent slump in gold prices….” and enrich yourself. Personally, I am confused at the movement of gold prices, for me its like Duckworth and Lewis formula! The talk on “Leadership-Impact on Governance” by Mrs Vijayaklakshmy K Gupta, Member, TRAI clearly highlighted that Leadership is about innovation and coping with changes. Part of the reason it has become so important in recent years is that the business world has become more competitive and more volatile. Faster technological change, greater international competition, the deregulation of markets, and the changing demographics of the workforce are among the many factors that have contributed to this shift. The net result is that doing what was done yesterday or doing it little better today is no longer a formula for success. I firmly believe that a wartime army, needs competent leadership at all levels. No one yet has figured out how to manage people effectively into battle: they must be led. I have had the privilege of closely watching the man who does not get pressurised by the tall asking rates. Soon the ball

disappears into the stands, to the joy of millions of cricket lovers. In the middle, the principal protagonist is truly very calm. What makes Mahendra Singh Dhoni such a formidable force in the game of cricket? His peace of mind even as anxiety mounts for lesser mortals is his biggest ally. As a leader he has his finger on the pulse of the game and a keeper who is seldom away from action. As management professionals we must emulate and follow him in not just the game of cricket but also other aspects of his leadership qualities in life. I was really happy to read the news that the Supreme Court has asked SEBI to deal sternly with companies indulging in manipulative and deceptive practices to send a clear message that market abuse will not be tolerated in the country. I believe that there are over six thousand listed stocks in the Indian markets. But how many of them are worth buying at any point in time? Another area of concern is chit fund companies functioning without abiding to rule of law. This is not the first time that thousands of investors have been cheated of their hard earned money. They will keep getting cheated unless they are educated on how to manage their finances. High returns are always associated with high risks is the basic law of economics. If their risk pays, people consider themselves lucky; if not, they blames the system! Only an alert judiciary can protect India from state tyranny. No sense in being pessimistic. It wouldn’t work anyway. Another hectic financial year has begun. We expect your support as always. I hope you enjoyed this issue of Business Mandate. If you like it, let us know. If not, let us know that too. How else will we learn! Cheers!

Gp Capt R Vijayakumar, VSM (Retd)



Author of Quest for Exceptional Leadership: Mirage to Reality & Chairman, CeNext Consulting and Investment Pvt Ltd


ost of the discourse tends to be focused on ‘getting it right’; I believe it is equally important to understand why we “got it wrong,” in the first place. Though we shook off British Empire 65 years ago, the quality of governance changed only marginally. The freedom struggle brought to power another elite - as disinterested in securing prosperity for the Indian masses, as the British. We continue to be a poor country because those who have power make choices that create poverty. They got it wrong not by mistake or ignorance, but on purpose. We are perceived as a morally bankrupt nation - not because the citizens of India are so - but because we are led by people who have deliberately made it so. We are beginning to realize that it may be as tough to gain freedom from our own misrule as it was from British rule. I have divided this treatise in four parts: Part 1: An Overview of Current Scenario Part 2: A possible path from “What is” to “What can be” Part 3: Leadership Traits required for future success & Part 4: A ten-point Actionable Agenda Part 1: An Overview of Current Scenario In this context, I cite 5 key aspects to portray the times we live in. 1. FIRST: Despite a pervasive sense of injustice and widespread frustration against the Government, each agitation or revelation is followed by a discontinuity in populist upsurge. Neither the elite of India nor TV nor print media relentlessly take forward the people’s struggle. They focus on what happened last evening or this morning, thereby limiting the debate to issues of the day – rather than portraying the palpable agony of the vast majority of India, on a host of fundamental issues. Unlike in Mahatma Gandhi’s movement, the Elite of India today is blissfully oblivious in its sheltered world, because the status-quo is tilted in its favour. They are safely insulated from the bleak realities tormenting the less fortunate. Such injustice is not sustainable; it cannot be a part of the country we want. Barring a few exceptions, the Elite of India has let India down. 2. SECOND: Our constitution created inclusive political institutions so that they lead to inclusive economic institutions, which are a pre-requisite for a nation’s growth. 5


• But business-politics nexus succeeded in out-manoeuvring inclusive political process to create extractive political institutions, which enabled them to ruthlessly create extractive economic institutions – to extract incomes and wealth from large sections of society to benefit a select few. Net result: those in power don’t represent the people of India. • In that framework, long-term engines of growth such as technology and education lag behind, because they threaten status-quo. • As Acenmoglu & Robinson have explained in their book: Why Nations Fail: Inequality in a country cannot be explained by climate or disease, or any version of geography hypothesis. It is explained by political institutions. They alone determine whether politicians are agents of the citizens, or whether they brazenly abuse the power entrusted to them. The most significant fault-line in our democratic system is that none of the political parties have an internal democracy. A party that does not have transparent internal democracy can NEVER promote strong democratic institutions in the country. The silver lining is that in today’s environment, extractive economic institutions cannot survive for long. More so because our Constitution is explicitly against those. 3. THIRD: India is an ideal place for Confluence of Civilizations, not clash of civilizations. In the West, one can understand the ignorance or arrogance, in mistakenly believing that there is more that separates than what unites civilizations. But in India – there is no such problem. India is the only country where believers of all twelve living faiths have lived together for centuries. It is politicians alone who have caused and sustained this clash and continue to do so. 4.

FOURTH: Ideology is dying. Young people are not interested in debating capitalist or socialist ideas or the nuances of geopolitical equations. Their politics is not about left versus right; it is about: (a) authoritative versus collaborative (b) centralized versus shared, (c) top-down versus lateral, and (d) closed thinking versus transparent thinking. This is a world-wide phenomenon – including India. Sadly, our entire political class is stuck in a stationary time–capsule.



FIFTH: Collectively, the business communities’ actions and governments’ proven complicity have given firm credence to a widely held perception that business objectives and society’s needs tend to be like the two tracks of a railway line. They appear to converge in the distance; in reality, they never do. It is a mirage. In every period in history, there is one dominant institution that needs to take responsibility for the whole of society. In the early days, the religious institutions fulfilled that role. In the Middle Ages, the Kings and Rulers of Kingdoms and States discharged that responsibility. Since the second half of 20th century, business has become the most powerful institution on the planet. So business has to adopt a tradition it has never had throughout the history of capitalism: to share the responsibility for the whole. This is a new role, not yet understood or accepted.This possibly explains the deafening silence of business leaders in India – whether it be an issue of endemic corruption or systemic collapse of civility in public life. Such factors tend to create the impression that we are moving towards “Dystopia – the opposite of utopia”. The good news is that An age is called Dark, not because the light fails to shine, but because people refuse to see it. We can see it, if we realize that we will not go back to the world we



knew. The era of statistical economic growth, at the cost of civil liberties and civic rights is over. The seven hundred million people of India, who are not a part of the growth story, will no longer accept poverty and exclusion as destiny. Business and political leaders cannot brush it away as mere philanthropic talk. The only choice is: accept the new reality grudgingly or willingly. Part 2: A possible path from “What is” to “What can be” I believe we are living in truly exceptional times. I say so because never before have we had such a confluence of favourable factors and so much potential to transform “What is” to “What can be”. Five Phases of Human Enterprise I discern the emergence of a new dawn, the evolution of a new phase of human enterprise that is redefining the criteria of success. Even the skills required to succeed will undergo reconfiguration. There have been four phases till now:  Phase One was Strong Fish eating Weak Fish. This was the law of preservation for most of recorded history till the early days of industrialization. Alexander the Great, the Romans, the Turks, the French, the British, and the Spanish continued to tread the path of ruthless domination. The majority of the human race helplessly accepted the rule of the mighty, as the privilege of living.  Phase Two: Big Fish eating Small Fish - started with the concept of “joint stock company”. The British East India


Company was set up in 1600, and Virginia Company in 1606, creating ingenious financing model while lowering risk. The State acquired revenues through these ‘big fish’; in return gave them protection, giving birth to business-politics nexus and ‘crony capitalism’. It got so bad that US President Rutherford Hayes said in 1876 that “This is a government of the people, by the people and for the people no longer. It is a government of corporations, by corporations, and for corporations.” Since then – things are much worse all over the world and corporations continue to be the source of corruption for politicians.  Death of Distance and Birth of Internet led to Phase Three: Fast Fish eating Slow Fish. Apple was incorporated in 1977, Microsoft in 1981, Amazon in 1995, and Google in 1998. They created more wealth for shareholders every year, than the old enterprises created in decades.  Early 21st century, we witnessed the dominance of a new kind of corporation. Phase Four: Intelligent Fish eating Dumb Fish - Indian trio of TCS, Infosys and Wipro, Embraer in Brazil, Haier in China, Samsung in S.Korea and many others discovered a new era. For institutions that failed, the change of a phase was often the trigger. But those that prevail have an eclectic mix of all these traits. They are strong, they are big (in substance), they are fast (in responses), and invariably intelligent. The defining moment in the commencement of each new phase is the inevitable need to imbibe the new trait. Quite in line with what Charles Darwin said: It is not the strongest of the species that survive, nor the most intelligent, but those most adaptable to change. As we analyze this process, we discern the early signs of the emergence of a new Phase Five: Realistic Fish eating Unrealistic Fish, driven by: • Increased demand for Social Consciousness & • Need to function in sync with society & environment Leaders that are “realistic” enough to acknowledge the new ‘realism’ will emerge as winners in the 21st century. Five Allies to Catalyse Change I must hasten to add that while we continuously encounter firmly entrenched interests that are resisting the emergence of Phase Five, fortunately, there are five potent forces that are simultaneously speeding up the onset of Phase Five, based on the premise that another world is possible. These are: 1. Knowledge-based Civil Society driven by enlightened citizens (not calling them activists), former bureaucrats and independent Legislators. 2. Predominance of Youth in demographics, supported by internet and social networking tools. This has created an asymmetry that enables small players and seemingly insignificant events to produce disproportionate impact or hold disproportionate power. 3. Enlightened stakeholders: customers, investors, employees, supported by alternative media - are forcing Institutions to change. 7



Educators: I sense sporadic, but discernible stirrings of what could be a revolution in the making, as educators gear up to face two key tasks (a) How to de-corrupt the minds of today’s leaders and (b) How to make the minds of coming generations in-corruptible 5. Women - taking on a larger pro-active role in this transformation Gender prejudice is a fault line beneath the foundation of our aspirations for a humane society. In most countries where status and condition of women is abysmally low, rates of violent crime are high and levels of poverty are deplorable. Abdul Bahai says it so crisply: “The world of humanity is possessed of two wings: the male and the female. As long as these two wings are not equivalent in strength, the bird will not fly. When the two wings enjoy the same prerogatives, the flight of humanity will be exceedingly lofty and extraordinary.” For reasons I have explained, I believe the forces of transformation will prevail over forces of status-quo. Part 3: Leadership Traits required for future success Leaders are called upon to make scores of significant choices every day. They typically display five postures in their behaviour. I call these “Five Circles of Leadership Attitudes”.  Circle One - Passive Attitude  Conscious decision not to make any choice.  Result of complete callousness or sheer inability to take a decision Samuel Beckett’s play, “Waiting for Godot”. In the last scene, the two actors look at each other. One says, “Well. Shall we go?” The other says, “Yes. Let us go.” But neither moves and the curtain falls.  Circle Two - Inactive Attitude  Consciously ignoring the need to take decisions  Result of utter lethargy and dismissive approach Satyajit Ray’s film: Shatranj Ke Khiladi: two noblemen in Awadh in 1856, busy playing chess, while British army is about to annex their kingdom. After nightfall, one of them says, “Let us go home now because we need to hide our faces in darkness.”  Circle Three - Reactive Attitude  Responding only when forced  Result of no vision about the future or inability to distinguish between the routine and the important We have all witnessed how the Indian State has responded to genuine citizen concerns with a blatantly lackadaisical, knee-jerk approach. I know of no other country where the Government applies the same modus-operandi to treat every problem – appoint a Commission of Enquiry. Is it because people have no trust in government to conduct a fair enquiry? Or is it that the Government does not have the requisite knowledge and talent within. Or is it both?


 Circle Four - Proactive Attitude  Foreseeing emerging issues and responding meaningfully before problems arise  Result of ability to sense emerging trends with genuine concern This calls for a navigational change in the way leaders function. Sadly in India, the leadership neither looks at the compass to establish the direction of development, nor the clock to realize that time is running out.  Circle Five - Interactive Attitude  Anticipating tomorrow’s issues and showing sensitivity to expectations  Result of ability to trust and be trusted and eagerness to work in partnerships Our leaders talk of India as the world’s largest democracy, but treat it as the largest opportunity to create personal wealth. We need to make Indian democracy as the world’s largest co-operative movement, with 1.25 bn members, led by principles, and owned by all citizens. Those in power are merely temporary custodians. Outside the realm of government, a new type of valuesdriven leadership is already emerging in society. They are ahead of the pack because they are visionary in how they look at society and have relied on their values and principles to define their leadership agenda. In their transformation from passive, inactive or reactive attitude to pro-active or interactive style, they take a holistic view, show compassion and work with transparency. More than anything else, they listen to their conscience. Part 4: An Actionable Agenda There are three drivers of change in today’s context that could transform India. (A) Judicial Intervention either through PILs or pro-bono (B) Positive Response to people’s Demands & (C) New Initiatives by those in power My ten-point agenda lists three actions within each category and one that encompasses all. (A) Judicial Intervention is the most open path; we need to sharpen our focus on this. 1) Electoral Reform through Judicial Intervention It is patently clear that the present Government will neither initiate nor pass any laws that would make legislators accountable or reduce their propensity to commit fraud. Attempt to debar those convicted of heinous crimes from contesting elections comes under this category. The only practical way to Electoral Reform is through Judicial Intervention. It cannot be the intent of our Constitution to permit convicted criminals to seek political office. I request persons of eminence such as former Chief Justices and Justices of Supreme Court and former Chief Election Commissioners to file a petition in Supreme Court - for a Review of all Past Judgements that have limited CEC’s role and unwittingly helped Government to subvert or compromise the constitutional provisions. 8


A PIL by civil society is already before the Supreme Court: seeking (a) Direction to debar those charged with serious offences from contesting any elections (b) for those elected with such crimes, ensure their cases are fast-tracked and judgement pronounced within 6 months and (c) Declare provisions of section 8(4) of the Representation of People Act as ultra-vires. I also urge Chief Election Commissioner to take cognizance of their constitutional independence and raise the bar of excellence, well beyond that achieved by their predecessors. e.g. CEC should specifically issue the following instructions, which is well within their powers: (a) All candidates for Lok Sabha and State Legislatures shall hereafter electronically file on CEC website the affidavit of their assets – those held in India and those held overseas (b) CAG should be requested to audit and verify the affidavits submitted by winning candidates within one year and if it is established that the declaration submitted was incorrect, with malafide intent, the election of that person will immediately be declared null and void. The candidate will have the right to appeal, in which case the court will pronounce judgment within 6 months. 2) I also request the Persons of Eminence to also bring another PIL to highlight Supreme Court orders that have been either surreptitiously ignored or deliberately not enforced. The list is endless (Police Reforms, Food distribution, rampant CBI delays in Formulation of charge sheets against political leaders, etc). I believe Supreme Court needs peoples’ nudge to exercise its constitutional role. The right time to do that is NOW. 3) Fast tracking of Justice, initially with three key initiatives (a) Filling of judges vacancies Of approved strength of 895 judges in 21 high courts and the Supreme Court, 262 remain unfilled. In lower courts, 3000 of the 18,000 posts lie vacant. (b) Continuous day-to-day trial of every case – no adjournment once the case commences. 66,700 cases are pending in Supreme Court, 43 Lakhs in High courts and 2.8 crore cases in lower courts. Of these, 72 L relate to murder, rape and riots. As of now, it could take 350 years just to clear the backlog. (c) Central and State Governments to be a little more discerning about appealing to the higher court every time they lose a case. (B) Positive Response to people’s Demands 4) Anna Hazare’s movement for Lokpal brought out people’s disgust with rampant corruption. Herein lies an opportunity for the Government to surprise the electorate and see the resounding response it creates. They should actually do more, such as: Initiate scrutiny and award of all Government tenders on live TV so that citizens can see the transparency of the entire process.




Women’s Rights If legislators are serious about women’s rights, they should pass Women’s Reservation Bill. With 180 women MPs in the Lok Sabha, the accompanying political mobilization of women will slowly catalyze a greater respect for women. We devote endless energy to debating and encouraging FDI – foreign direct investment in India. Without getting in to merits or demerits of FDI in specific sectors, I suggest we change the focus and start encouraging IDI – Indian Direct Investment in India. When citizens of a large country like India start investing in their own country and make money, FDI will come running, on our terms. This means: Respect Small and Medium entrepreneurial start-ups - A key ingredient of sustained growth in any economy. 80% of the new jobs in the European Union in recent years and 65% in USA have been generated in small and medium-sized firms. Sadly, an entrepreneur in India faces entry barriers that are patently unfair. The difference between success and failure is not how good you are or how brilliant your idea is – it is simply whom you know and whom you can bribe. Let us treat entrepreneurs as harbingers of growth – and give them proactive support.

(C) New Initiatives by those in power


Our economic policy framework is based on ‘trickle down capitalism’ i.e. wealth may travel down in a trickle, but the flood stays at the top. I suggest we create a trickleup economy to make the masses relatively prosperous and let their prosperity percolate up. We can do that in three ways:

(a) Re-structure tax system. Under existing laws, the rich pay far less percentage of tax on their gross income than the middle class. Let us reverse that. I propose that income up to Rs.10 L be taxed at 10%, and those above 50 L at 25% - with no exemptions for longterm capital gains or dividends. Likewise, Corporate Tax Rates for profits up to Rs.1 Crore should be half of normal corporate tax. Present system is to give incentives to rich to become richer. My proposal is to enable the less well-off to be better off. (b) Re-structure interest regime Micro-finance rates are 30 to 36%, while industry gets loans at less than half those rates. In the name of market forces, we throttle small entrepreneurship – the force that can tangibly reduce unemployment and increase rural prosperity. We need a banking system that ensures interest rates for small loans do not exceed the interest rate for large loans by more than one and half times. (c) Our Investment Policy encourages Capital intensive investment through accelerated depreciation benefits. Let us also promote Employment intensive investments. For each new permanent job created, allow additional 100% tax exemption, up to an amount equivalent to double the minimum wage. 9



Bring back Scientists and technologists Relevant science can play a significant role in alleviating poverty. We can access and implement scores of low-cost, ecological technologies that can help over 500 million citizens, e.g  Each village can become a self-sufficient island of adequate off-grid green power and pure drinking water – providing sustainable livelihoods.  The democratization of energy, clean water and communication will have profound implications on our development, leading to what Jeremy Rifkin calls distributed capitalism. 9) Trim the size of Government and interventionist role of Govt. In three path-breaking initiatives: (a) Central Government to have maximum 20 cabinet ministers and State Governments a maximum of 15 for large States and 10 for small States. (b) Independent Regulators in every domain in which Government is a player or where strong relevant expertise is required. (c) PSUs to be independent autonomous bodies, each managed by a strong independent Board, outside the ambit of cabinet ministers. 10)And finally, to achieve equitable, sustainable growth, we need a holism that must include two common threads in each Government policy framework and action.  Use IT to make the entire governance process efficient and transparent.  Restore respect for public service and a sense of community What I have outlined is not an absolute agenda; it is more a directional agenda. We all know: all wrongs cannot be undone overnight. But if the direction is right and there is sincerity and transparency, we will realize our aspirations. Typically, transformations tend to bubble up from the bottom of society. When that happens – the erstwhile elite suffers the most, like the Glorious Revolution in U.K. and later the French Revolution. The thrust of my submission is that today, there is a small window of opportunity for our political and business elite to align themselves with societal aspirations and become partners in pushing radical change. If they do that – they would lose the least. In nutshell, the decisive issue is: if you want only wealth and that also only for you, then what I have said may appear to be impertinent. But if you are seeking wealth and sustained happiness, not only for you but for all around you - then you need to adapt and accept the change, and start listening to your conscience. Remembering that “The voice of conscience is so delicate that it is easy to stifle it; but it is also so clear that it is impossible to mistake it.” The Author can be contacted at


BEYOND EQUALITY Mr Mahesh Bhatt Film Director

A summary of the Inaugural Address delivered by the Chief Guest, Mr Mahesh Bhatt during the MMA Women Managers’ Convention 2013 on the theme “Beyond Equality’” on 9th March 2013 at Chennai


come from a home which was headed by a mother. The first CEO whom I rubbed shoulders with was my own mumma. She was a Shia Muslim woman who came into the world of movies when sound came into the movies. If my father who was a Sound Engineer had not taken a detour from the job that he was looking for in the Navy and come to Mumbai, they would not have met and I would not be here talking to you today. What was unusual about this woman, my mother, was that she had the courage to live life on her own terms. Being a Muslim, she was forbidden in those days to have what is called the ‘legal contract’ with my father, but she was so much in love with him; she said “ Fine,I will live outside the frontiers of this social construct because it is my choice”. And so, without making a big thing about what she was doing, she lived in those days, according to some, in sin with my father who would come and see her because he had another home. But with great dignity she brought us up, me and my sisters, with one clear thought that “I choose to live my life on my own terms; I want to be on the driving seat; I want to be the one who chooses where to turn and when to turn”. She paid the price for standing up and daring to live life on her own terms. But what she taught me was that “unless you do that, you really don’t become a person”. When she died, this woman who chose to masquerade herself as a Hindu woman because she did not want her fate to interfere with the prosperity of her children, simply came to me and said, “I am a Muslim woman and I choose to go the Muslim way. So, please bury me”. Those were the simple choices 1 0 BUSINESS MANDATE | MAY-JUNE 2013

she made. She lived her life with the man she chose, (I was born in 1948 in the Free India) unheard of! She did not impose her ideas on anyone. She said, “If I am an aberration, so be it! This is my life”. The wisdom of that woman was extraordinary. She said, “I came from a home where my mother used to say ‘women are grass under your feet, to be trampled upon’ and I dared to fight against that construct.’ This woman, Shirin Mohammad Ali was an extraordinary woman. She was the first CEO I rubbed shoulders with and it was she who taught me ‘unless you have the courage to stand alone, you do not become a person”. Here was this extraordinary woman who was the architect of her own life; she was the captain of her own fate. Ladies and gentlemen, unfortunately it takes long time to realize that this world is run by simple ordinary people who lived their lives with dignity. In this celebrity age, heroes and heroines do a lot of harm to our society. It is the courage and the audacity of ordinary simple people that makes the wheels of the society turn. As I speak of my mother, I am reminded of an extraordinary man, I would call him an eunuch, a person belonging to the third gender. In the holy months of Ramzan few years back in Mumbai, this eunuch who was a hair dresser in the Mumbai Film Industry was going to offer prayers when he heard the cry of a child and to his horror it was a girl child left in the garbage bin to die; she was being nibbled at by rats. This eunuch picked up that girl child, did not go to offer prayers that day, but struggled to keep that child who was almost dead alive. The child lived and this eunuch became the guardian of this girl

child. He brought up this girl child by dancing, by doing bit roles in movies, but gave the girl child a life of great dignity, educated her by sending her to school. When the going got tough, he came to me and asked for money (I had known him already) for higher education. We made a film out of this extraordinary eunuch called Tamanna, the first film made by my daughter Pooja Bhatt. The film won the National Award and with great difficulty we tried to get tax exemption because the grim movies which hold a mirror to the Indian society of female infanticide do not find many takers. I remember in those days when we asked the Ministers to give tax exemption, there would be ministers who would say that female infanticide does not exist in India! It is a problem of China! It was 1997. India was living in denial and perhaps still is and its hands are drenched with the blood of female infanticide. We pretend to worship female forms in temples, but privately in our homes, we kill them. So where is the woman safe? In the womb? In the streets? Where?! It is the question that still awaits an answer. The movie released and it was not a box office success. We got the National Award and we got the medal, and I was little despondent that movies like these do not find takers. But years later, I was travelling to Rajasthan and I met a woman Activist who works on the girl child issues. She came to see me on a hot summer day and she thanked me profusely for making a film like this. She said, “Do you know that the movie that you guys made has become a tool? I take this movie and I travel from village to village and I use this as a tool to inspire women and shame men. Your film


has contributed to lives being saved” and that really made me mighty pleased. So, movie makers! movies are society’s dreams. I made a film called Arth in 198283 which was sourced from my own life, my extra-marital relationship, the whole marriage scenario and the thirst in a women for self-actualisation through the perspective of my wife. I remember the great role of Shabana Azmi in that film. I remember when I was struggling to craft out the climax. When the philandering husband comes back and tells the wife that his relationship with his girl friend was over and whether he could come back, the heroine asks him a fundamental question “Will you accept me if I were in your position?” He says no and she says good bye to him and having done that she does not even jump into the bed of her boy friend. She simply turns her back to him and says “I want to be on my own. I want to walk on my two shaky feet; however shaky they are, they have to be my feet”. I still remember the days when the film was lying in the box for almost a year because that was the India which could not even dream of thinking how such a film could work where the woman doesn’t forgive her husband who had come back having erred. What nonsense is this? And having done this, the woman does not even go on and use another man as a crutch to make ends meet! This film will not work! But the truth is that in the year 1983, when the movie released, the first day first show applause for the movie when the woman takes this decision came from the front benchers in the cinema hall. India had embraced that film! There was a dream that the Indian women were dreaming which perhaps somehow I had sensed. But today as we have this epidemic of rape in our country, the questions that haunt us are: Have we even provided toilets to our women? I was recently in the KumbhMela in Allahabad. There was a pontiff who I could not very respectfully look toward, but he finally shocked me by what he was doing. He was having this crusade wherein he said, “In every village there is a temple, but there are no toilets for our women. This is what perhaps we can do; provide toilets in every village because our women psychologically live with the 1 1 BUSINESS MANDATE | MAY-JUNE 2013

dread of how they would answer nature’s call when there are no safe places. Every time they go out, they subject themselves to unimaginable hazards.” So a country which is screaming from the roof top about the gender equality, must first do something on the ground; at least provide toilets to her women. This is something that the pontiff was doing. Things are happening on the ground in India about which we have no idea. The other thing is something that struck me when I was about to come for this Convention. I was told by a friend of mine who had read this piece which was written years ago which I think is important to lead you with. While we celebrate womanhood and scream from the top of the roof and demand that they should be more than equals, there is something which I want to leave you with, a thought. A few years ago during the Iraq war, I saw some photographs of American soldiers sadistically humiliating and abusing the detainees in Iraq. These photos made me sick. I bet they did the same to you. But they also broke my heart. I had no illusions about the United States mission in Iraq but I certainly did have some illusions about women. Women were, to me, symbols of compassion and tolerance on this planet. There was the photo of a woman soldier smiling an impish smile and giving a thumbs up sign behind the naked Iraqi prisoners! Then there was another photo, of women in uniform dragging the Iraqi prisoners as if to say, “Hello America! We are in Abu Gharib!”. I bet you have seen these photographs. I wonder whether these women were encouraged to participate in these brutal games that

the conquering army often plays on the defeated one. Or whether these deeds of brutality are the deeds of women? All I know is that even if they were encouraged by the male soldiers to join them in these savage games, these gentle creatures of mother nature did not say “No”. Ladies! Of the seven soldiers charged with abuse of prisoners in Abu Gharib, three were women; may be, I should not have been so shocked. We know that people can do terrible things under the right circumstances; may be these ladies just wanted to fit into the man’s world! There was a time when I honestly believed that women were genetically programmed to be more respectful to other people and to people of alien cultures. I sincerely believed that women were more capable of general peace keeping. I believed that if this world was handed over to women, it would turn into a paradise. Well! That’s what I thought. I don’t think that any more. I did once see men as perpetual perpetrators and women as perpetual victims. I do feel that the male sexual violence against women is the root of all injustice. May be this sort of feminism makes more sense in our country in these days where we seem to be in the midst of a rape epidemic. There is no denying that women who hold up half the sky have been trampled upon for centuries! There is a heart breaking line in the biography of Lady Mao. She said that her mother used to say that she must come to terms with the fact that this is a world run by men”, but Lady Mao did not agree with that. She said, “I thought I was a peacock amongst these hens” and she did what she did.


In college, we used to have lots of debates over whether it was biology or conditioning that made women superior to men. One thing was clear that this assumption of superiority was beyond debate. After all, we saw women do most of the caring work in our culture and we noticed that women, at least in our homes, were consistently less inclined towards the idea of war than men. Most of us believed, then that all human beings needed to do was to make the world kinder and less violent to women and make them become a part of the system, a system which was run by men and to have them assimilate into that system. We wanted the women to compete so that they could become CEOs, Ministers, judges and opinion makers in this male dominated world. There was this strong belief that once women gained that power and authority, once they achieved the critical mass within the institution of society, women would change this world for the better. But I have to say, in the 70’s when I came

into the film career, India’s first lady Prime Minister, Indira Gandhi clamped the emergency and clamped down free speech, me and my friends who were then in our early 20s found out, to our horror, that we were perhaps wrong. Those ideas that we had were just not true. But what I had certainly learnt from the photographs of Abhu Gharib is that the uterus is not a substitute for a conscience and menstrual periods are not the foundation of morality. This does not mean gender equality isn’t worth fighting for. I will keep fighting for it along with you as long as I live. But gender equality cannot all alone bring about a just and peaceful world. What I have finally come to understand sadly and irreversibly is that, the kind of feminism that is based on an assumption of moral superiority on the part of a woman is a lazy and self indulgent form of feminism. Self indulgent because it assumes that the victory for a woman whether diploma, or a promotion or right to serve with men in the military is a victory for humanity and

lazy because it assumes that there is only one struggle – the struggle for gender equality, when in fact we have many more - Struggle for peace, for social justice. Women do not change institutions simply just by assimilating into them. We need a woman who can say “NO” not just to a bullying husband or to a persistent boy friend but to the military or corporate hierarchy within which she finds herself in. We need the kind of woman who does not want to be one of the boys when the boys are acting like sadists and fools; we need the kind of woman who is not trying to assimilate but to infiltrate and subvert the institution she goes into. You can do these. You can be those women. A Feminist once said, “If you think equality is the goal, your standards are too low. It is not enough to be equal to men when the men are acting like beasts. It is not just enough to assimilate. We need to create a world worth assimilating into”. I am counting on you; don’t let me down. Go out there! Raise hell, Good Luck!

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Co-Founder, Janagraha and Chairman, Janalakshmi Social Services A summary of the Address delivered by Mr Ramesh Ramanathan during the MMA Annual Convention 2013 on the theme ‘Future Tense or Future Perfect? Is India Future - Ready?’ on 2nd February 2013 at Chennai


am going to start by giving you a sense of my own life journey over the last several years, the choices that I have made and some learnings and takeaways for the theme that I am going to speak about today. I am a product of a middle class family and my father used to work for the Railways. Just before I was born he decided that he wanted to be an entrepreneur. But his father who was in Chennai then and working for the Imperial Bank warned him that no Tamil Brahmin caring for self respect would start any business and that if he still wanted to start a business, he might as well leave the house and then do so. We moved to Bangalore where I met my wife who is from a Gujarathi family and our story of marriage was typically as that of a Hindi movie. I had to fight a great war to marry her as she comes from a very conservative family. To this day, I maintain convincing my wife’s parents to let her marry me the single greatest achievement of my life! Through all this, I want to say that we had no sense of the larger India. We were typical products of middle class upbringing. I remember when I was growing up, there would be discussions about the Emergency and fierce debates on whether it was right or wrong and so on. All that happened around our coffee table. My parents and grand parents were resolving every problem of India in our breakfast room! We did not think that there was anything wrong with that. That was the culture in which most of us have actually grown up, the culture to see democracy from the spectators’ dais. It was like something was happening out 1 3 BUSINESS MANDATE | MAY-JUNE 2013

there and we had no role to play. That remained like that for us until we went overseas. My wife and I spent about ten years overseas; most of it was in the U.S. and the last year and a half in London. We went abroad driven by the most common sentiments - a better life, to see the world, to earn more money, to understand whether what we believed in ourselves can indeed be shaped etc., and all that came true. It was like most Indians who go abroad and work hard. But something else happened which was very unexpected for us. As we lived in the US in an around the tri-city namely New York, New Jersey and Connecticut, we would very often get mailers in our mail box which would invite us to volunteer and join some group or other in some activities. We used to just dump them aside as we thought there was no time, we worked for five days a week and we wanted to relax on the week ends. Until we moved to Connecticut, which was slightly north of New York, where too we had the same kind of mails for volunteering ourselves for some cleaning of the park.They said they’ll give us beer. We felt that cleaning of the park was the responsibility of the Government and that why should we at all involve ourselves in such activities. So for very selfish reasons because we had just moved in there and we did not know our neighbours we decided to go on a Sunday morning to join the team and clean the park. So, we went on Sunday morning where someone gave us the cleaning equipments to clean the park.We helped out by removing the leaves and other rubbish in the park for a couple of hours. They give us the beer but there was nothing great about that day; it was just another uninteresting Sunday morning until Monday!

On Monday when I was standing in the Railway Station to catch a train to Manhattan, I saw a gentleman standing little far with a suit reading the Wall Street Journal looking. I asked him whether he was the chap who did the park clean up operation on Sunday. He said that he was. I was surprised and told him that I took him for an NGO or Tree hugging activist or an environmental activist! We talked during our train travel for an hour and that one hour of conversation was an eye opener to me. This was something that he took very seriously; his volunteerism, caring for issues that mattered to him was a very important part of who he was.That opened up our eyes and one thing led to another and we saw whole sub-culture of people who were giving time to the issues that mattered to them. Within few months, he invited us for a local community meeting in which they were going to decide the budget of the town! The meeting took place in a school auditorium on a Friday evening and the Mayor of the Town was chairing the meeting. There were around two hundred people assembled there. We were sitting in the hall and watching the Mayor welcoming the audience. We saw him handing over some issue to the Co-Chairperson of the Finance Committee who got up and discussed about some budget deficiencies. Over the next 20 minutes, in an amazing display of participation average people, like you an me, sitting there debating and discussing on several points and put them to vote. Like this the next set of people got up and started their discussion and debates and thus in an hour or two, people were involving themselves in determining the issues that mattered to them in their


neighbourhood. My wife and I sitting in the hall were amazed at what was going on in there; it was completely different to the cardboard caricature of democracy that we were carrying around! We had politicians and bureaucrats who were talking about various issues. But here were the people who actually involved themselves into something and doing something about it; they were not just talking. And once this genie is let out of the bottle, there is no putting it back. For us, it just began to consume our lives. We could actually go back and do this because everything that we had seen made us believe that it was possible back in India. It was not that we did not want to do it but we did not know any better. All this made us go back and say there is another way! All the people who are doing this, whom we admired were not doing this by any accident. It is just that some generation of people before had put this in place. So we need to go back and do this. We had met our financial goals; we had met our professional goals. My wife was an architect and I was a banker. The one thing we can credit ourselves, I think is that at the age of 33 and 34, we decided to bite the bullet. We didn’t move the goal post and we did not say let one more year go by, the children are studying and so on.We just decided ‘let us just go’! So, it was 1998 and it has been 14 years since then. We returned to India with only three boundary conditions. Being successful professionals, we decided, we should do something with the meaningful time that we had. The three conditions were: one - whatever we did, we would have an impact on scale! India has seen too many pilot programs. It had to affect the lives of millions of people. The second condition was that we would work on transforming urban India, not that villages didn’t have problems but that because we were children of cities, born and lived in great cities of the world, the idea of fixing our cities resonates for us. The third is that we would use our professional skills – my wife’s is in planning and architecture and mine in banking and finance and that was it! The last 14 years has been an incredibly enriching fulfilling journey about trying to make a difference and we’ve learnt as much about ourselves as we learnt about 1 4 BUSINESS MANDATE | MAY-JUNE 2013

India, its past, its future, about its possibilities, its mysteries and so on. So that’s the background. Over these 14 years, we built four institutions all of which were focused on urban reforms but were taking different institutional forms to address the different challenges of urban India. I’ll just take a few minutes to give you some examples of these institutions. We have one institution called Janagraha which is focused on transforming of quality of life in cities and towns and we think that in order to fix the quality of life in our cities, it’s an incredibly complicated problem. The garbage problem isn’t as simple as it seems, the traffic jams are not as simple. Cities around the world are complex systems and the good cities, the great ones build those complex response systems really well. So, what we are embarked upon in Janagraha is to try and work both with the government and with citizens to try and fix this. We have run a lot of programs around these seven programs for the last ten years specifically addressing several aspects. Let me give you a couple of examples. I don’t know how many of you know, when we talk about Voter turnout in our cities; we keep saying urban apathy nothing could be farther from the truth. The quality of the Voters’ List in our cities is completely broken. Error rates in our Voters’ Lists are over 60% and the reason for this error rate is not because of some apathetic bureaucrat; the system by which the Voter List is managed is meant for a static rural India. Once in a year, the Tahsildar would read out the list in a Panchayat assisted by the school teachers and the change in the list would be barely one or two names as one person would have passed away or one person would have got married and left the place and so on. If we take that 19th century system and transplant it into urban India, any place like Bangalore or Chennai where there are hundreds of thousands of people coming into the city and moving away from the city and the system is overwhelmed. So what you are seeing is a system in which tens of thousands of names every year have to be deleted and tens of thousands

of names have to be added.You need a new system to handle this kind of flux. So we are working in an unprecedented MOU with the Election Commission of India to fix this problem. Over the last four years, we have taken one constituency in Bangalore and we moved the Voter List accuracy from 45% to 75%. Our very simple metric is that in the next election and hopefully the Assembly elections in Karnataka could happen next week or in May, we want to show the turnout in that constituency is 20% higher than the rest of Bangalore because it puts to rest this myth that the citizen is apathetic. The citizen isn’t apathetic; I have not met a single apathetic citizen in India. We are all like Pressure Cookers, boiling to say something but nowhere to say it! So, we hope that we can solve that and with that then build a scalable model which can go across India and clean the Voter list over the next ten years in all our cities so that the first step of democracy can truly be exercised. That is just one program and similarly we run seven such programs. We are the knowledge partners for IAS Academy in Moussorie. We also do a very interesting thing with the school kids. We run a program called Bala Janagraha; we have taken over the class VIII and we don’t do anything on Civics about LokSabha or RajyaSabha. We have written a text book called “Me and My City” which tells children where the water supply comes from; what happens to the sewage; to take a look at waste treatment plants and so on. We started with one school eight years ago and today we have 146 schools and around 11000 children who go through that program, and last year we built a franchise model for this so that it can scale beyond us. This year we are running it in Patna, Ludhiana, Pune and Hyderabad. Our goal over the next five years is about


5000 schools, 100 of which we will run ourselves and the remaining 4900 will be run by partners who are like us and who care about the country. My wife has started something called India Urban Space which is focused on how cities are planned in our country. She has done the master plan for Jaipur and has won the Highest Civilian Award of Rajasthan for that. She is currently doing master plans for five towns and most importantly she is now building the Blue Print with the Planning Commission and Ministry of Urban Development for how cities should be planned in India, the policy environment for planning and the protocols of how planning should be done so that can then have a scale impact on the ground. Besides these two, I am involved in two social businesses which are addressing the quality of life for the poor because they cannot wait for a generation for these reforms to take place, one of which is a Micro Finance Institution in which Nachiket has been a great friend and advisor. Infact the FINO institution which he reffered to has been a big help to us.

Another one is on affordable housing. We are building houses for the poor at a price point they can afford. Our first project has been completed with 480 units of 400 sq.ft at Rs.5 lacs in Bangalore and we are now embarking on three more projects. That’s the background! This work in the last 14 years consumes me! I’ve worked 18 hours a day non-stop for the past 14 years.I was extremely successful in the private sector but nothing I ever did comes even close to what this asks of you. The first thing is, and I loved what Swami Bodhananda said, that the challenges of the society should inspire us to do more. They demand more of us and I can tell you that this is intensely demanding! This is not something that you do on a Friday afternoon. And Nachiket said this as well; passion is a necessary but not sufficient ingredient for change. The second part is that there are remarkable people in Government. There are extraordinarily talented honest dedicated people in Government who are no different from us. Infact they are even more isolated than we are because we are everyday dumping the debris of our criticism on them. If we can find a way to reach out to them and

• • • • •

There is lot of stories of frustration, of difficulty, of challenges but my wife and I have chosen to think about the positives, because, that’s what carries you. We have been blessed by the goodwill of so many people over the last 14 years that you can’t count it. One of them infact , is Ireena who was a panelist just in the earlier session. We have a jury for a program we were running and out of the blue I call her on a Monday morning and asked if she could be on the jury. She immediately says ‘Yes I would and by the way thank you for making my Monday.’ Like this there are so many people. You just need to be able to reach out to them with a childish and naive sense of belief that we can change our society. I close by saying, does India have challenges? Of course, it does. Does India have promises? Yes, it does. Ultimately each of us have to say, let us look at the positives and let’s give everything that we have to this great country that gave us the opportunity to sit here!


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FUTURE TENSE OR FUTURE PERFECT? IS INDIA FUTURE - READY? Mr Alok Kshirsagar Director (Senior Partner) McKinsey & Company

A summary of the Keynote Address delivered by the Guest of Honour Mr Alok Kshirsagar during the MMA Annual Convention 2013 on the theme ‘Future Tense or Future Perfect? Is India Future - Ready?’ on 2nd February 2013 at Chennai


hen we contemplate on the topic on “Is India Future Ready” and the uncertainties that confront us, yes, there are a lot of uncertainties and there are many challenges; but I would like to take you through the optimistic views of the world who say that there are certain underlying trends and drivers, that if we act upon them, should create great value for us. Let us see what are those underlying longer term drivers of change both in the Indian economy and the global economy and as Indian companies what can we do about it; how could we act, what kinds of actions that we could take, what would distinguish those of us who continue to lead over the next five to ten years and what capabilities and execution capabilities will be necessary to do that. I am always inspired by Einstein who says that “I never think of the future as it comes soon enough!” Many people talk about trends. Why do people talk about trends? We all feel that it is only good to read them in the text books. First of all, trends matter. When you look at the underlying growth of the company markets in which they choose to play contributes at least 60% to their growth. Selecting to where to play, which segments and which markets really make a big difference. Secondly the ability to reallocate resources based on where those are going is a huge creator of value. In this study that we did for 20 years of 1 8 BUSINESS MANDATE | MAY-JUNE 2013

companies, we find that the companies those who are able to reallocate the resources based on the underlying trends have earned more than a 30% greater shareholder return and more than a 20% higher survival rate. Finally often people say that they already know the trends which sound very familiar to them; but the fact is that most of us don’t act on them. There are 10 major trends shaping the global business landscape, each with major implications on India. The first trend is global rebalancing, the growth of emerging markets. When you look at the growth of emerging markets, nearly more than one third of the global consumption representing nearly about US$ 22 trillion is going to come from Asia. This is a dramatic change relative to the last 20 years and that change is underway even today. Despite all the uncertainties of India and that we are going through a difficult cycle at the moment, the underlying consumption driven trend will continue to drive our economy and many other economies like Indonesia, South East Asia and China. The second theme associated with the global rebalancing is associated with the growth of cities. We now see that all of the value happening in cities as opposed to countries. Almost 1.3 million people shift to the cities each week across the globe. 600 cities across the world would

contribute to more than 60% of global growth. Even in the Indian context, talking about the city as a unit is much more important in a state. We have already seen Asian companies being at the forefront of shaping innovation and driving transformation. When you look at just a company like Samsung and its progress in the last ten years, it has grown more than 600% since 2000. It has become world No.1 across the different brands in terms of flat panel TVs, memory models and smart phones. In 2011, China became the largest patent office in the world and China has made 72.1% contribution to growth in patent applications worldwide from 2009 to 2011. We come across China in the context of intellectual property issues, piracy issue and so on; but it is also important to recognize the real intellectual property being developed in China as well. We have seen that the growth of many Indian companies actually had 10 and 15 x growth in market capital in the last 10 years. So we expect this underlying trend to continue over the next few years. The second theme on the rebalancing of the emerging markets is the importance of consumers as I talked about is from the mass and the upper mass. About 900 million new consumers from the mass and the upper mass were added to the emerging markets over the last 10 years. About 500 millions of these would be from India. The next is agriculture.


There is significant productivity revolution is underway in the agricultural sector. There is a huge amount of innovation from countries like Israel and that are yet to be fully deployed across the world. Just given the nature of our population and expectations that we talked about earlier, 10,000 years of the last world food production will be required in the next 40 years because of the growth of our population and the emergence of this middle class. . This is going to require pretty fundamental productivity and innovation in agriculture which will also create plenty of opportunities for us in India. Next comes the infrastructure. We continue to see huge spend, almost USD 7 trillion in the world and in India amidst all our challenges, we will continue to need to have infrastructure such as roads, power, clean energy and many other aspects for the years to come. I would like to talk about productivity and people. There are 80 million jobs that are required and there is a shortage of over 80 million of high and medium skill workers across world. In fact in India, which is an important issue for us, there is a shortage of 13 million people whom we call midskilled workers; these are those who work as contractors, welders and workers in the construction sites. We need these people. This is actually a business opportunity to create vocational training programs and equally points to how we can create the employment, high wage employment for young people. The other trend is the ageing population. It is the fact that there is aging population across the west. I would like to state the ageing population is not just an issue for the west, it is a business opportunity for Indian companies as well. I will give you an example. As you have such a large and wealthy ageing population in the west, there is a fundamental change going on in the way as to how they demand product and services. They are in retail, consumer goods, and electronics, for example medical monitoring equipments and even in financial services in terms of targeting people. In fact look at the demographics of our country, the ageing problem particularly in southern India is increasing an important part of our demographic and 1 9 BUSINESS MANDATE | MAY-JUNE 2013

it is increasingly important part of our purchasing power. There is a number of products and services relevant for them which we have not yet put in place. Let me give you an example of Japan. In Japan, you can see how people are using these products. In bottle caps, there are bumps which help older people to open the bottles much easier. The point I want to drive home is that when you look at the trend of the ageing population, you can sit back and think that there is a need for whole set of products and services for these people over 65 years and this will give an opportunity in this country and elsewhere. Commodity prices will continue to be important issue going forward. We have already seen that in the last 100 years, commodity prices declined and have more than doubled in the last ten years. We continue to expect to see that volatility continue in the years to come and therefore the way in which we need to build up business capabilities is assuming a much higher volatility in the commodity pricing we had in the past. There is of course, the underlying change in technology and the boom that we see across devices and across the deployment of 3G and 4G in the country and the importance of that. To give you the sense of its importance, the Facebook will be the world’s largest country. We expect more than 35 billion objects that are to be connected to the internet. This is already happening; Imagine what the future would be in such a vastly networked world. In China alone, 150 million people were connected to the internet last year. In India we have 120 million internet users today and we expect it to reach 350 million within three years. So if you are in business and not deploying a mobile driven internet platform whether you are in a b2b business with your supply chain and SME customers or whether you are in a consumer business, you are going to miss a huge opportunity in the years ahead. You see these very fundamental changes in the business model. Here is a company called Mint in the US where they had taken all of the information across banks and financial companies and put them all in a simple

website which is free to use and thereby taking the banks and making them much more utilities as opposed to owning the customer relationship. These things are quite disruptive if you actually think about the deployment technology and the implications that has for how you will drive businesses in future. Let me make one more point about Internet. It is not one of those things which is just for the younger people; it is not one of those things that one says is only for the future In fact when you look at the underlying trends, the fastest growing segment who are using the internet are people who are above 35. In the US, the fastest growing segment in e-commerce is people over 50. So we have to question some of our assumptions when we think about what are the actual opportunities here. You see this in terms of how disruptive this has been for technology companies everywhere. Look at the impact of Amazon on retail or look at the Netflix on a company like Blockbuster. These technology disruptions are not long term to be thought of only in 5-year strategy term; these are fundamental to how they are changing business models today. Amazon, for example, now captures more than 60% of major categories in retail. Wall Mart does not care for any other comparatives except for Amazon. Therefore in the context of all of these trends, I would simply say that competition will be intense and you cannot take the life span of companies for granted. I am showing an example of an Indian company across two cycles – cycle 1 covers the period between 1996 and 2003 and cycle 2 covers 2003 to 2010. We looked at two aspects viz. Revenue Growth and Return to Shareholders. We also basically looked at what were the people who were successful in the first cycle and what happened to the people in the second cycle. The big take away was that 40% of the people who were successful in the first cycle dropped out in the second cycle. Therefore, assuming that we can carry on as ever and the trends will continue to be our friend is not a good assumption.You see this across the world. Life span of the companies is dramatically reducing. People are getting


to scale quickly and burning out even faster. Therefore, when we think about it from our point of view we can’t just simply be saying that we assume that the trends will carry on, we assume that we take advantage of them when they do. There are pretty fundamental shifts in how our performance will get driven. Therefore what are the implications on the Indian companies? I will just talk about six things very briefly. Firstly, we have to use much more granular approach of where to play; being in the right business is much more important than doing the business right. It is very important to be sharp about the specific product and segment in which we want to be. Secondly, M&A will become very important but we need to think much about revenue synergies and view through the cycle. Let us not confuse ambition and ability to acquire with readiness to capture value. Particularly when we go overseas, we see many Indian companies have the ability to acquire, but not the capability to capture value from that acquisition. The third is about the whole notion of managing unfamiliar risk. In India, we are very good managing familiar risk through trusted people, careful management and conservative thought. But in a much more uncertain world, the risks are much broader and more uncertain. Risk of uncertainty lies in currency, international supply chain, regulatory issues, commodity prices etc and most of our Indian companies today are not yet resilient to manage and anticipate these sorts of risks. The fourth one is creating high value brands. Brands are not advertising or PR. You see this in the case of people like Huawei which have built very specific high value brand spending ten years doing it as opposed to just thinking this as a PR exercise. The fifth one is about organization structure and decision making. Traditionally in Indian companies, depending on the type of company, we had a few trusted people that made a lot of decisions and lot of empowerment that was supposedly was not in place. As we get to much larger scale, there needs to be a much greater degree of clarity and empowerment in decision making. Lastly it is about the leadership bench. Particularly when we think about the global opportunities for 2 0 BUSINESS MANDATE | MAY-JUNE 2013

Indian companies, each company will need to think about who are the 5200 managers who are going to form the international cadre, who are going to carry this company internationally. Today, we still find it is too few people who are doing everything. When you look at the success of the Unilever, HSBC, Citi etc., all of them had 30 to 40 years ago, around 50 to 100 people who were actually driving their success. Even in the best managed Indian companies today, we cannot find that cadre. I talked about these six things and this is where the opportunities I talked about in the first section will come alive in terms of execution. Let me give you an example of why granularity matters. This is an example from China. This is just to demonstrate for you that with the same consumer behavior, what is the change by province in the degree to which people are willing to pay a premium for food safety, for example, a company like Nestle, because it understands that in different provinces food safety vs. taste changes the specific nature of the marketing campaign is aligned against this. For example, Nestle promotes food safety in Hangzhou and taste in Guangzhou whereas Kraft focuses on “Better food, improved safety” in Hangzhou. We see similar issues in India, but we still continue to have a much more national approach as against a granular approach. In India, according to the work done by McKinsey, most of the growth is concentrated in clusters and these 16 clusters are quite homogeneous within themselves in terms of their demographics and their income and spending patterns. Hence again, we don’t need think about them either states or the country. It is not about the western region versus the southern region versus northern region.

That’s how it typically organizes itself. What do we organize ourselves by these 16 clusters? That’s where the underlying growth is and that’s where the behaviour and all of the values is. The second theme is about the importance of using M&A and the revenue synergy that comes out of the M&A. I must tell you that on this dimension, we have studied a number of Indian companies and find that the actual merger identification and integration capability unfortunately is relatively weak. We are very good at the process side of mergers. We know how to get mergers done, we know how to do a day one close and we have no issue on all of the process elements. But when you look at what is the ability required to drive revenue synergy, because when you make acquisition it is not like a traditional western company where you go slash and burn the company. We want to get the revenue. That requires a different set of capabilities and in most cases we have not been able to do that. What we typically follow is two extremes; either we say we are passive acquirers and so, let it go and two years later we find that there is no value that has been created and in fact it has been destroyed. All we say is that we are going to have an intensive review of the company. And we resume that by continuously reviewing the company thinking that we are helping it. Truth is that we are not! In many cases, there also we have destroyed the value. Taking a view that says what the hundred day plans that will actually derive significant value are and what would be the new distribution network that you are going to put in place are from our point of view will bring huge success. You see this in the case of Doosan, the Korean Company. When you think the


way in which it went from essentially being a small Korean company in mid 90’s and really transforming their portfolio in 2005, and the acquisitions they have made since 2006 onwards, they have deployed a very careful merger management capability. They have developed what they call the “Doosan way”, which has been applied to every single acquisition. Even though those are culturally very difficult to do when they had bought Treasure Bank in the US, we find that this ability, we think, is much harder in merger management and merger capabilities which are going to be the distinguishing factors for Indian companies going forward. In fact when you look at the success of companies, as per the global study we did, that looked at what is that those companies do well at M&A , the interesting thing is that those who do many medium size deal have tended to do much better than those who just relied on a single large deal. So this theme of several deals that you do to build capabilities, build skills and expand business is a huge part of how you create value much more than relying on a single large deal. The next point I want to touch upon is about the unfamiliar risks. We look at Indian companies and say that this needs to be a much bigger priority, than it is currently the case. Today you have Board Level Meetings, you look at Risks Register, your compliance guidelines etc., but these are not risk management. You are facing much greater variety of risks and much greater blind sighted risks. Today we genuinely feel that people are assuming that since we have trusted people, good compliance and risk averse, we are going to be actually managing the risks! Unfortunately that is not the case. The degree of risk that we face is huge and we now see many high profile Indian companies who had to be blind sighted because of commodity price change, because of the Chinese comparative that has come in, because of pricing changes in the local market that had not been fully anticipated. We talked of creating high value brands. We all know about Hyundai which is a great part of Chennai as well. The interesting example to look at is that what 2 1 BUSINESS MANDATE | MAY-JUNE 2013

did they really do 1999-2000 that led to that fundamental shift in sales. They realized that in the US, they did not have a good brand at that time. So, they said, “We will give you a 10-year warranty”. The 10-year warranty at the time was unheard of. This has fundamentally changed the perception and you can see the sales occurred between 1999 and 2001-02. To what extent we as Indian companies are willing to put that sort of debt on our brand? You see this in the case of Huawei. Huawei first started in late 90s’ and early 2000’s. Again people were very skeptical about the Chinese telecom equipments manufacturers; what they did is that they went to the SME customers all over the world whom the Ericson and Cisco were not willing to target and who were not giving good service to them. They said that they would give them great service and because of their great service they started to grow particularly in the emerging markets as those SMEs became large telecom service providers. Today Cisco will say that their number one competitor is Huawei! So, that is at the back of building a very careful brand targeted the SME, not on cheap but on good service, that they went after a segment whom the bigger players were ignoring. One other point I made was about organization. When we looked at companies started to spread overseas versus domestic, we find almost 20% difference in their organizational effectiveness. This is because, as you continue to expand and you find that those who are operating in more than one market (this is based on the actual survey from 300000 data points of companies across the world) have much lower scores on direction, on coordination and controls, on their capabilities and on their innovations. Why is this the case? As you move from a home market to a market which is much outside, for that matter, whether you are moving from a state in India to a much broader distribution across the country or moving across countries, you would expect that some of the cohesiveness that you had in the home country or home market would be different, but this penalty is huge. Think about the time in this room that we have

talked about many multinationals that have come to India and not been successful because they only tried to skimmer the top; they had very high turnover of the expatriate managers someone there for two or three years and never really settles. We see the same thing happening with the Indian companies when they expand both within the country and overseas. So this theme of few trusted people that can do everything is not going to be sufficient; you need to think much harder about dealing with groups of leaders, thinking harder the way GE would about building 500 leaders and not 10 trusted people and everyone else to execute. He will think of 500 trusted people and 500 leaders who can build the business. In fact, when you look at a Korean company like LG, it fundamentally changes its model over time. In its pilot stage, it had a very centralized sales model, in its next stage, it changes its brand to much more business unit-driven model and now with much more global competition, it is much more region- driven sales model. So this adaptation over time as you scale up is something we again would encourage the Indian companies to do. We find that most Indian companies have not yet fully adapted their structure, their processes and their culture to be much more adaptive and flexible as they continue to grow. Let us see how we develop leaders. Developing 200-500 leaders are not going to be done through class room training alone. This is the example of the work that we did with an Indian company to develop the 250 people.This is highly an integrated program. First and foremost, people were given real projects to do. The second was much more actionable feedback, not just year end reviews; it was the 360 degree actionable feedback on what could you do on the job. Third was basically giving them functional training as to how to give tough feedback, how to coach a star performer etc. Fourth was individual development; what would you do individually. There is a case where an individual says that he has a concern of dealing with bad news and that’s why he hears about the customer problem too late. Thus people are made to be self-aware. We do a mentorship program with senior leaders and create a


much more targeted ongoing rhythm of training over a one and two year period of time. This is the sort of effort that we see has been critical to the success of Indian companies because at the end of the day, none of us is going to learn only in the class room or none of us is going to learn only on-the-job. So, creating a program that would develop 500 people who would be the future leaders of the company is to us, a very important element of future success. When you look at many of the global companies of the world, they have in fact put in place, the global management program, job orientation programs and much stronger people systems. Therefore some of the challenges we often see with Asian companies, they have been able to overcome with some of these actions. At the end of the day, when we talk about “Are you future ready”, there are number of capabilities that we talked about; Here is a check of them which you have to consider, be it in terms of using a granular approach to priorities opportunities,


capturing values from joint ventures and M&As, managing unfamiliar risks, creating high value brands, managing increased global presence and building talent and leadership strength by developing those 500 people. I would only say that in the work we have done both in India and other countries and in China the variation of performance on this check list within a group is very large. Even in our large respected business groups, the actual degree of execution variances is very large. It is not again whether you know that these are important; it is the degree to which they are executed. It needs a much more disciplined and systematic approach in executing these capabilities and reducing the variances within companies of same group, within companies across different parts of the company itself. Therefore, if I step back of our conversation here, what I am really saying is that I am very optimistic about the 10 trends that I talked about. They create huge values. Think about the 900 million

consumers. Think about the ageing population creating billions of dollars of value. Think about the fact that you have got 35 billion objects connected to the Internet and all the opportunities coming out there.Think about the fact that in India alone we are going to have so many cities that are growing rapidly and think about the fact that you have the big consumption engine at the heart of it. But the question is: Are we ready and are we capable to execute against that? I hope through the discussion on these six levers, it gives you some sense of what we think is going to be required for us to be ‘future ready’. These six execution capabilities, grabbing on to them, driving them with discipline, building the capabilities within the organization, to us is going to be the huge part of those companies that are able to have significant value relative to those who left or left behind.




old prices may have just plummeted by double-digits — the biggest percent sell-off in four decades — but some of the world’s central banks are still buying up large amounts of the precious metal. Specifically, the central banks of six countries are adding gold to their official foreign reserves, according to The World Gold Council’s most recent report on global central bank holdings. These six nations have purchased large amounts of gold so far in 2013 or throughout 2012. And if their buying continues, their gold demand could offset some of selling pressure (which has driven gold price to below $1,400) in the future. Some nations may indeed continue buying because of central bank or currency issues. Of course, a major market concern is that Cyprus is now likely a gold reserve seller. The World Gold Council shows that Cyprus’s 2013 gold reserve is only 13.9 tonnes, which is 61.9% of the small nation’s total foreign reserves. Concerns about selling from Cyprus are compounded by worries that larger troubled nations, including Italy, Portugal and Spain, may start selling gold to either raise capital or because of the existing Central Bank Gold Agreement sale programs. However, it does not appear that there is panic selling among most of these nations, so that effect can be discounted for the time being. The six nations that could offset or at least mitigate gold sales by other central banks, institutions and individuals are Russia, Turkey, South Korea, Brazil, Kazakhstan and Iraq. The reasons may differ from country to country as to why these nations may be acquiring gold. It is worth noting is that the World Gold Council report evaluates central bank holdings and does not include investor and industrial demand in any of the countries. As recently as February, the World Gold Council showed that global central banks had bought the most gold since 1964. But India and China were no longer the demand mechanisms they had been in the past. Many of the official central banks’ gold holdings of large nations, based on gross domestic product (GDP), are given in the Table 1 . But if that changes and some of the troubled nations actually sell gold as a source of funds, then it be beyond the scope of retail investors and speculators to help keep gold price at even the current depressed levels. If history is a measure, it seems highly unlikely that retail buyers and speculators will start another wave of gold purchases. Central banks buy gold in support of their currencies, and the recent massive drop may give the central banks that can a chance to increase their gold holdings. Gold prices have suffered their sharpest fall since the 1980s, heightening fears among investors that the precious metal’s decade-long bull run has ended. 2 3 BUSINESS MANDATE | MAY-JUNE 2013

Table 1 : Nations with largest gold reserves as measured by tonnes. (Including IMF & ECB ) Name of the country 1.The United States of America 2. Germany 3. IMF 4. Italy 5. France 6. China 7. Switzerland 8. Russia 9. Japan 10.Netherlands 11.India 12.European Central Bank 13.Taiwan 14.Portugal

Quantum of Gold Holding (in tones) 8133.5 3391.3 2814 2451.8 2435.4 1054.1 1040.1 851.5 765.2 615.5 557.7 502.1 423.6 382.5

Spot gold prices tumbled by more than $100 an ounce, or 8.7 per cent, in a few hours on 15th April 2013. Gold has enjoyed a stellar run over the past decade. Prices surged more than sevenfold since 2001 to an all-time high of $1,920 a troy ounce in 2011, as investors turned to the metal as a haven from turmoil in the rest of the financial world. The gold suffering such a biggest single day fall of Rs 1,250 is never seen before and may lose more ground in coming days mostly influenced by speculative selling in futures markets,’ according to analysts. The market was mostly driven by global markets and futures trade, while there was hardly any physical buying.


The gold in New York, which normally sets price trend on the domestic front, tumbled to the lowest since July 2011 on signs that investors are favouring the dollar and equities as the global economy recovers. India’s two largest imports - crude oil and gold - saw their prices fall sharply on 19th April 2013, raising hopes for the country’s stressed balance of payments and fiscal deficit. Brent crude oil sank to an eight-month low of nearly $102 a barrel as the outlook for global oil demand growth dimmed. Weakening crude oil prices tend to have a positive impact on India Inc.

The exodus from gold is expected to continue until next year probably if the global economy recovers and the equity markets do well, he said. Physical demand in India has already been low because in a falling market people tend to postpone their purchases. India is planning to offer inflation-protected bonds for the first time in 15 years next month to damp demand for gold and offer a hedge against inflation. That may not curb demand.

India currently imports three-fourths of its crude oil requirement. In fact, petroleum oil and lubricants account for a little more than a third of India’s import bill. The easing of gold and oil prices might bring some cheer to policymakers, grappling with fiscal and current account deficits. RBI is set to announce its next policy decision on May 3 at its annual policy review. U.S. futures for June delivery extended losses to fall more than 5 percent as Tokyo gold futures tumbled around 8 percent, marking Japanese futures biggest daily fall since September 2011. I think jewellers are the happiest lot, but wholesalers will stay on the sidelines at the moment. It’s human nature. When the price crashes like this, they will tend to wait for it to go even lower. On the face of it, the business of lending against gold should be considered a low-risk one. But Manappuram Gold Finance claims that the five per cent fall in gold price over the last two months and its high loan-to-value (LTV) ratio of 85 per cent will hurt profitability. It appears the regulator RBI saw this coming a year ago, when it stipulated that gold finance companies could not have an LTV of more than 60 per cent. In March 2012, Manappuram had stated its LTV ratio was higher at 70. Muthoot Finance Ltd. falls 16.5 percent, while Manappuram Finance Ltd. is down 9.1 percent. In India, buying has also been hit by a falling rupee, which makes domestic gold more expensive than its global counterpart, which is priced in dollars. India has tripled the tax on imports since the start of 2012 to moderate demand as gold accounted for almost 80 percent of the current-account deficit, the broadest measure of trade. Gold rallied for 12 straight years, driven in part by demand from investors looking for a store of wealth amid concern about inflation. Goldman Sachs Group Inc. predicts the rally will end as a U.S. economic recovery gathers momentum. Buying gold is considered auspicious in India during religious festivals and weddings. The festivals start in August and end in November, and are followed by the wedding season. Around 50 percent of the country’s population is under 25, with 15 million weddings estimated every year till 2020, equivalent to about 500 tons of fresh gold demand, according to experts. Gold forms 30 percent to 50 percent of total marriage expenses. Indian gold demand is supported by cultural and religious traditions which are not directly linked to global economic trends. 2 4 BUSINESS MANDATE | MAY-JUNE 2013

Societe Generale Bank, Reuters opinion Pool , Goldman Sachs have done various research on this sudden fall in Gold price. The market is highly fluid, it is best suggested to HOLD on, rather than buying or selling. The Author can be contacted at


ON BEING CREATIVE Mr B Shiva Subramaniam Founder, the paper clip


he dictionary defines creativity as the use of imagination or original ideas to create something; also as inventiveness. This definition looks very wrong. Creativity has to be looked at in the context of life. Somehow definitions, and dictionaries take away the true meaning of a word. Creativity cannot be explained by a mere sentence. It is much more than the use of imagination. Sometimes much less. There is really nothing called an original idea. If there was, the world would be limited to a few ideas. There are ideas and there are a million ideas around these ideas. Creativity could be an attitude. It could be a behaviour, it could be a belief. Sometimes simply believing in my creativity could bring me startling results. I don’t have to necessarily demonstrate my “inventiveness”. Creativity has to be looked at in the context of mortality. We can be creative only as long as we are alive. Look at the dialogue between the Yaksha and Yudhishtra in ‘The Mahabharatha’. When theYaksha asks “What is the greatest wonder?”. Yudhishtra replies “Day after day countless people die. Yet the living wish to live forever. O Lord, what can be a greater wonder?”. This dialogue tells us that people don’t believe they will die. Perhaps that is why they keep postponing creativity. They keep postponing taking 2 5 BUSINESS MANDATE | MAY-JUNE 2013

responsibility for creativity. Creativity has to be looked at as a deliberate activity. In law deliberate murder is distinguished from other types of murder. Deliberate means planned. The murderer plans the murder - thinking about the intended victim, getting information about the intended victim and planning meticulously, because the murderer is obsessed about committing the murder. Though the analogy may seem a little blunt, the truth is creativity

has to be planned. It has to be backed by information. It has to be executed with an obsessive passion. Creativity cannot be learnt. Because you cannot learn something you already have. Creativity exists in all of us. A new born baby is creative enough to recognise its mother and knows to cry when it is hungry. It creates the noise that lets its

mother know that it is hungry. We all have lots of creativity, but we don’t use it. That is all. We don’t use it because we don’t believe that we have it. We are surprised when we are told we have it and quickly deny it when someone acknowledges our creativity. The first step for deliberate creativity, therefore, is to believe in it. The way to believe is to look around you and tell yourself that nothing that you see could have happened if creativity did not exist. If someone around you was creative, you were too. Creativity cannot be an attribute of only certain people. If someone created a university and therefore was very creative, you were too because you may have created a happy contented family. Creating a happy family is as difficult as creating a university. Someone deliberated on building a university and you deliberated on a happy family. The needs were different, the context was different and the resources were different. With belief in creativity comes confidence and with confidence comes action. In the next article we will think about what is required to practice creativity and to make it a part of our lives. The Author can be contacted at


Registering Memo ries

Mr Gyan Nagpal, CEO & Principal, PeopleLENS Global Associates, Singapore during the talk on “Talent Economics – The Fine Line Between Winning and Losing the GlobalWar forTalent’.Mr Sridhar Ganesh,Director– HR, Diversified Business Group, Murugappa Group chairing the Session

Mr Ranganath N K, Managing Director, Grundfos Pumps India P Ltd addressing the audience during 2nd MMA Endowment Lecture on “Impact of Societies on Organizations in Future” held at University of Madras

Prof Rishikesha T Krishnan of IIM Bangalore, Dr Vinay Dabholkar, Dr N Ravichandran, Dr G Venkatesh and Mr Kumar Sachidanandam during the Presentation and Panel Discussion on ‘8 steps to Innovation: Going from Jugaad to Excellence’

Mr S Kannan, IRS, addressing the members of MMA Puducherry Chapter on ‘Managerial Excellence’. Gp Capt R Vijayakumar, VSM, Mr C Siva Kumar, Dr S Sureender and Mr P Rangaraj, Chairman, MMA Puducherry Chapter are also seen

Ms Rashmi Bansal, Entrepreneur, Writer and a Youth Expert during the talk on “Follow Every Rainbow”. Ms Sarada Jagan, Deputy Managing Director – HR , The Sanmar Group, Corporate Division chairing the Session

Ms Vijayalakshmy K Gupta, Member, Telecom Regulatory Authority of India (TRAI) addressing the members on “Leadership – Impact on Governance”. Mr Srinivasan K Swamy, Chairman & Managing Director, R K SWAMY BBDO Pvt Ltd & Past President, AIMA & MMA chairing the Session

(L to R) Dr Elangovan, Director - Safety, Regional Labour Institute, Chennai, addressing the management students of Emerald’s Advanced Institute of Management Studies at Tirupati

Gp Capt R Vijayakumar, VSM (Retd) addressing Management Professionals, Entrepreneurs and SMEs on “The Influence of Global Forces on Business’ at Tirupati



MMA Women Managers’ Convention 2013 Theme: “Beyond Equality” 9 March 2013

Ms Mary Rose Brooks, Executive Director & CEO, MAP Knowledge Ltd, UK delivering the Keynote Address during the Inaugural Session of MMA Women Managers’ Convention 2013

(Third from left) The Chief Guest Mr Mahesh Bhatt, Film Director releasing the Women Managers’ Convention special issue of MMA Business Mandate

(L to R) Ms Mowshimkka Renganathan, Bhojan Atews Foundation, Mr R Raghuttama Rao, ICRA Management Consulting Services Ltd and Ms Geetu Verma, Hindustan Unilever Ltd during the Business Session on ‘Reflections”

(L to R) Ms Anita Ramachandran, Cerebrus Consultants, Ms Sangeeta Prasad, Mahindra World City Developers Ltd and Ms Bindu Ananth, IFMR Trust during the Business Session on ‘Strategies for Work’

Mr Ajay Antony, Vice President, T.I.M.E. Pvt Ltd during the Special Session on ‘Athena - The Great Mind’

(L to R) Mr V Balaraman, Dr Mini Rao, Ms Anusha Shetty, Dr Prithika Chary, Ms Aparna Nagesh and Ms Devasena E S during the Panel Discussion on ‘Re-Inventing Equality’

The Chief Guest Ms Renuka Ramnath, Founder, MD & CEO, Multiples Alternate Asset Management delivering the Valedictory Address. Ms Anita Ramachandran and Dr Ms Amita Bishnoi are also seen

A cross section of the women delegates at the MMA Women Managers’ Convention 2013


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