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Pratibimb | February 2012 | 1 Pratibimb | January | 1 VIII Volume II, 2011 Issue

AA Students’ Initiative Student’s Initiative

February 2012

A Monthly e-Magazine

T. A. Pai Management Institute Manipal, Karnataka

About TAPMI T.A. Pai Management Institute (TAPMI) is a premier management institute situated in Manipal and is well known for its academic rigor & faculty-student interaction. The Institute has been recently ranked amongst top 1 per cent of B-schools in India & 4th in the South Zone by The Week Magazine. Founded by the visionary, Late Shri. T. A. Pai, TAPMI’s mission is to provide much needed impetus to the task of building professional management capability in the country. In the process, it has also played a role in strengthening the existing educational and health infrastructure of Manipal.

Mission We are committed to excellence in post graduate management education, research and practice by nurturing and developing global wealth creators and leaders. We shall continually benchmark ourselves against the best-in-class institutions. We shall foster continuous learning and reflection, achievement-orientation, creative interdependence, and respect for diversity with a holistic concern for ethics, environment and society.

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About Pratibimb Pratibimb – The TAPMI’s e-Magazine - is the conglomeration of the various specializations in MBA (Marketing, Finance, HR, Systems and Operations). It is primarily intended to provide insights into the plethora of knowledge that relate to the various departments of Management and to give an opportunity to the students of TAPMI and the best brains across country to exhibit their creative cells. The magazine also strives to bring expert inputs from industries, thereby bringing the academia and industry together. Pratibimb the e-Magazine of TAPMI had its first issue in December 2010. The issue comprised of an interview of denoted writer Ms. Rashmi Bansal along with a series of articles by students and industry experts like MadhuSudan Rao (AVPDelivery, Mahindra Satyam) & Ed Cohen who is a global leader and chief learning officer who led Booz Allen Hamilton & Satyam Computer Services to the first rank globally for learning & development . It also included a hugely successful and engrossing game for finance geeks called ―Beat the Market‖ to bring out the application based knowledge of students by providing them the platform where they were expected to predict the stock prices of two selected stocks on a future date. The magazine is primarily intended for the development of all around management knowledge by providing unbiased critical insights into the modern developments. TAPMI believes that learning is a continuous process and is not limited to the four walls of the classroom. This viewpoint is further enhanced through Pratibimb wherein students manage and contribute to create a refreshing learning environment outside the classrooms which eventually leads to a holistic development process. The magazine provides a competitive platform and opportunity to the students where they can compete with the best brains of the country. The magazine also provides a platform for prominent industry stalwarts to communicate their views and learning about and from the recent developments from their respective fields of business which in turn helps to create a collaborative learning base for its readers. Pratibimb is committed in continuing this initiative by bringing in continuous improvement in the magazine by including quality articles related to various management issues and eventually creating a more engaging relationship with its readers by providing them a platform to showcase their talent. We invite all the best brains across country to be part of this initiative and help us take this to the next level.

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It is always a pleasure to witness that certain efforts of the students are sustained and carried forward; Pratibimb is one such. The oft-beaten track, “We are here to learn,” ends up as a mere platitude when there are no visible actions and documentation. Whereas there is no dearth of actions at TAPMI, documentation is not something that many—other than scholars—choose to engage in; it is normally viewed as uninteresting, drab and a drudgery. TAPMIans have proved that they are equally capable of actions and of documentation without losing the intellectual flavour of it. Scholarship is too important a phenomenon to be left to scholars alone, especially in the field of management. As future practicing managers who will be engaged in rigorous action in different fields of business, TAPMIans have manifested both the penchant to produce research works and also get their counterparts in other leading business schools to contribute their thoughts to this endeavor. In this regard, TAPMIans have truly demonstrated the evidence for creative interdependence, an important aspect of TAPMI’s mission. I sincerely appreciate the students and the faculty of TAPMI who have made the edition of February 2012 a possibility through their scholarly works, coordination efforts and support. I wish the Pratibimb team the very best. Dr. R. C. Natrajan Director, TAPMI.

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editor’s corner Dear Readers, We thank all the participants and readers for their valuable contributions. By making it monthly, we present you a platform that will provide more opportunities to share knowledge and showcase your talent by competing with best minds in the country. Our latest issue has more to offer in the variety of content. We have received contributions from eminent B-schools of the country where the articles range from the Wedding Planning Industry in India to the effect of Financial Derivatives. Two articles have covered the state of the Indian Infra Market and the Housing Finance Market. A very relevant and interesting contribution has covered IndiGo Airlines and their ad spaces which is a must read. The articles have been selected by the Editorial Team. We also thank all those who helped us in improving Pratibimb through their feedbacks. We would like to take this opportunity to extend our gratitude to all faculties and students at TAPMI for their continued support, guidance, motivation and inspiration to take Pratibimb to the next level. Please continue to send in your valuable suggestions/feedbacks at so that we can make improvements in the coming issues. Happy Reading! Pratibimb | February 2012 | 5

Rohit Kumar, Chief-Editor Ramanuj Vidyanta, Editor-Branding Sarvesh Joshi, Editor-Creative Designer SUB-EDITORS

Abhishek Anupam Abhishek Dubey Divyanshu Manish Mishra Namrata Mahapatra Sushmit Sinha Vandana Soni

Faculty Advisors

Prof. Chowdari Prasad, Dean (Planning & Development), TAPMI Dr. Jaba M. Gupta, Professor and Chairperson—eGPX, TAPMI

contents Aligning HR with Business Strategy


Debojoyti Saha, IMI Delhi

Analysis of Indian Wedding Planning Industry


Rajesh Kumar, IIM Lucknow

Analytics and Beyond


Sayak Gupta, SIMSR Mumbai

Financial Derivatives – Blessing in Disguise or a Curse Camouflaged


Rohit Taneja, IIT Delhi

Housing Finance Market in India


Ankit Goel, IIM Bangalore

India Infrastructure: A boon or a bane?


Niraj Satnalika, IMT Ghaziabad

What keeps IndiGo Going Rubayet Chakraborty | Ahana Chakraborty, NITIE Mumbai

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Aligning HR with Business Strategy by Debojoythi Saha, IMI Delhi Introduction: The rapid changes in the business environment are prompting organizations to look at human resources as a unique asset that can provide sustained competitive advantage. Management of human resources should be in perfect fit with the management of the organization as a whole and its strategic plans. Once the business strategy has been formulated the HR strategy can be formulated which should be in alignment with the business strategy. The personal competencies of the employees become one of the key strategic factors for the organization to maintain its competitive advantage. The HR-Business Strategy Alignment Model: Now we look into the HR-Business Strategy model which looks into the various processes for aligning the HR Strategy with the Business Strategy for maximum productivity and performance. The various business objectives organization are illustrated below     



Financial Growth Market Expansion Research and Development New Technology Integration Operational Excellence

Once the corporate strategy has been defined the organization must then obtain a perfect fit between Pratibimb | February 2012 | 7

the competitive strategy and the internal HR strategy and a fit between the various elements of the HR Strategy. The next stage is to identify various job specific roles and competencies to translate the business objectives. The various Organization Structuring steps identified in this process are as shown below     

Job Design and Analysis Role Creation Role Definition Competency Description Team Structure Design

In this phase the various roles and positions are identified and for those specific positions the job responsibilities are defined in accordance with the business strategy of the organization. The competencies required for those positions are clearly identified which will help the organization attain its business objectives. Proper teams will be designed and structured to meet the organizational goals and strategies. The next step is the talent identification process where the knowledge, skill and abilities required for the specific job roles are identified and the amount of relevant experience a person may need to complete the job responsibilities associated with that role are also clearly laid out. The various essential steps in the Talent Identification process are as shown below:

   

Knowledge Identification Skill Requirement Core Abilities Relevant Experience

This is one of the critical processes in the system because once the skill and the knowledge levels are identified then only the organization can go ahead arranging the resources with necessary skills, knowledge and attitude. The next step is the Human Resources Planning and Process Designing. The organization looks into the competencies of its internal workforce and determines the availability of the workforce. If the internal resources are not sufficient to meet the business needs then the organization goes into hiring of employees from outside. It also involves designing necessary performance metrics to evaluate the performance of the employee. Designing an effective compensation strategy is also very much essential to keep the employees motivated in their work. Another important HR responsibility at this stage is to develop a proper succession plan and maintain a talent pipeline so that the organization is never devoid of key resources to take up the various responsibilities.

The various essential steps involved in the Human Resources Planning and Process Designing phase are enumerated below:      

Recruitment and Staffing Employee Skill Enhancement Training and Development Performance Management Compensation and Benefits Succession Planning

This is the key operational phase in the business strategy implementation process. The HR Department has to play a very significant role in this phase and has to take the main responsibility of capacity building for implementation of the business strategy. Effective and successful implementation of a business strategy depends on the successful execution of the various phases involved in the entire process. The various phases are clearly interdependent on one another and the relative success of a particular phase is clearly determined by the successes of the various phases preceding it.

Framework for Corporate Strategy Implementation Process Pratibimb | February 2012 | 8

Challenges in the HR alignment process: The HR Department faces various challenges in the entire strategy design and implementation process and has to take critical decisions in the entire process to design an optimal strategy for execution. The various challenges which involved critical decision making from the point of view of the HR are illustrated below. Sourcing and Hiring 

 

To what extent will the company go about hiring resources from outside to meet business demands? To what extent will the investment be made in the recruitment process? How to integrate the outside talent into the organization’s culture?

Rewarding and Retaining 

To determine the extent to which the efforts of the employees are contributing to the success of the organization? How to design a variable compensation structure to distinguish between the high and low performing employees?

Training and Development 

What is the level of training that needs to be provided to make the employees competent enough to face the challenges of the business environment?

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What will be the acceptance level from the employees regarding the training proposals?

Succession Planning  

How to retain the tacit knowledge of the employees within the organization? How to design an effective knowledge transition process for the organization?

Conclusion: The alignment of the HR Strategy with the business strategy is very much essential for the successful implementation of organizational goals. The HR Department has to maintain proper coordination with the strategy makers from other departments to develop an effective HR strategy which will be able to translate the business objectives into action. In this age where we are facing talent crunch the responsibilities of the HR Department is assuming paramount importance. The HR Department has to keep the employees engaged to the organization for the HR Strategy to be effective. Therefore he has to face various challenges and take key decisions while deciding the strategy

Analysis of Indian Wedding Planning Industry by Rajesh Kumar, IIM Lucknow

Introduction: Overview of Wedding Industry India is considered to be one of the most soughtafter wedding destinations around the world. Weddings in India are fast gaining popularity among global citizens who flock to the country to solemnize their wedding vows. It is growing at a CAGR of 25% owing to lavish spending. Currently, cost of a wedding may range from INR 0.5 mn to INR 50 mn. With India becoming a wedding destination, foreigners are aggressively contributing to a growing market. Increasing disposable income is expected to double the strength of the market in the next 15 years. Theme based weddings and destination weddings are some of the major trends that the market has observed. Characterized by social features, wedding industry manages to be resilient even to vagaries of inflation and recession.

Fig. Wedding market size in INR Source: “The Wedding Planner� Sep 2011

Market Overview: Overview of Wedding Planning Industry As wedding industry shoots with burgeoning demand for lavish events, wedding planning industry gets a boost for demand of organized and structured planning services. Wedding planning industry in India is estimated to be growing at 20% per annum.

Fig. Wedding planning market size in INR Fig. Wedding cost break-up

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This industry is also driven by increasing affluence and rising aspirations among consumers to make their wedding unique and memorable. Time constraints among consumers towards planning and organizing weddings have been largely re-

sponsible for the growth in planners. Wedding planners are more often seen to indulge in special theme based marriages to give it an edge so that it may stand out from the other marriages.

Wedding Planning Process Management

Primary Cost Components A wedding planner has to look at several primary expenses to be incurred during a wedding. However, expenses would vary across different

weddings depending on the arrangements with the venue being a major cost factor. Some of these expenses have been given below:

Source: “Planning someone’s big day� Jan 2008

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Growth Drivers: Increase in Disposable Income The primary enabler for this sector remains rising disposable income of the growing upper middle class group. Lifestyles fuelled by better salaries have led to increased spending on weddings. Indian weddings are ostentatious affairs with people showcasing their wealth and economic affluence. It also marks tendency towards upsurge of newer methods like destination weddings, theme based weddings. Earlier such ways remained within the domain of the elite, but with increasing disposable income even the middle class can now afford such luxurious spending. Even for those who do not have enough resource to fund their extravagant wedding, many financial institutions like GE Money India have come up with ―auspicious‖ personal loan exclusively for weddings. Destination Wedding Driven by an appetite for ‗something unique‘, destination wedding is fast becoming a fad. Increasing numbers of Indians are planning on getting married at exotic locations abroad, such as Istanbul, Florence, Bangkok and Monte Carlo. Resorts and hotels also offer wedding packages as weddings also offer a holiday flavor to the people who move out to attend weddings at distant locations. Destination weddings require organized planning thereby resulting in an increased demand for wedding planners and planning market. Destination wedding can have both people going out as well as flying into India.  India  Most popular destinations chosen in India are Rajasthan, Jodhpur, and Goa  Royal wedding party in a fort or palace or even out-of-town wedding is a common trend these days

   

Abroad Most popular destinations abroad range from Bali, Malaysia, Mauritius to Thailand Chief reasons for their popularity stems from the advantage of ‗cost effectiveness‘ Air tickets to these places are affordable, added to this is the availability of Indian cuisine

Time constraint and convenience Weddings have become a grand affair which calls for detailing to intricate aspects to make it a successful event. Present day lifestyle does not permit people with busy work schedules to devote as much time as required. Wedding preparations require attention to minute details which requires professional assistance. The various facets of a wedding are as follows:       

Wedding venue and caterer Invitation card printing and distribution Decor and ambience Bridal make-up and care Shopping for wedding jewellery and clothing Entertainment requirements (singer, actors, orchestra, bands etc.) Honeymoon related travel ticket procurement and hotel reservation

Impediments/Challenges: Government regulations Government regulations imposed on this sector have acted as an impediment to the growth of this sector. Various impositions have acted as deterrents for this sector to grow with latest being Government planning to restrict lavish food spreads in weddings in face of food inflation. Unfavourable wedding seasons and dates Association of marriage with astrology heralds unfavourable non-wedding season affecting

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Source: “Indian weddings too big, says government” Feb 2011

wedding planning sector. For Hindus, marriage is held in high value and a lot of emphasis is given to astrology. Dates are considered that meet ‗nakshatra‘ ‗tithi‘ and other astrological considerations. This demarcates the year into wedding season and non-wedding season, especially for Hindus. Further, ‗raashis‘ (moon sign) of bride and groom are also considered to find suitable and compatible dates.

either the wedding get postponed or simply called off. Thus, unfavourable dates for wedding acts as a barrier to growth of wedding planning sector. Industry Trends: Theme Wedding Theme weddings are weddings arranged and

Limitation of wedding in terms of astrological perspective: 

Planets: Unfavourable planetary positions heralds ill effects in a married couple‘s life which causes fear among most Indians Horoscopes: Horoscopes of brides and grooms are compared before deciding on dates for wedding

If in case of unfavourable planetary position or even unfavourable matching of horoscopes occurs, Pratibimb | February 2012 | 13

executed based on certain themes chosen both by the bride and groom. Themes are used to make

special moments unique. Earlier themes revolved around options of colours, motifs and any particular style, but with increasing disposable income and aspiration to stand out from the rest, extravagant lavish set-ups have evolved. These weddings are popular in the West but fast becoming a rage among the affluent class in India. Currently, following themes are most popular in the Indian wedding industry:    

Arabian theme Royal theme Romantic theme Fairytale/fantasy theme

Online classified wedding planning




There has been an upsurge of online matrimonial sites that have begun providing additional services other than match-making on the lines of wedding planning services. Another trend speaks of online matrimony sites having tie-ups with wedding planners wherein such names get listed in their directories. Tie-ups of wedding planners with online marriage classified players usher a symbiotic relationship wherein both parties gain towards providing a complete package of match-making and wedding to customers. Therefore, players are increasingly looking towards maximizing their coverage in this sector:   

  It lists wedding planning services as a wing under its service umbrella Through ‗‘, an online wedding directory, it provides listing of different caterers, florists, make-up artists, decorators, musicians, DJ‘s and many more Through Shaaditimes, a wedding portal, it delves into ways to plan one‘s wedding Bharat Matrimony It goes beyond matchmaking services to provide other related services like wedding

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planning and honeymoon planning ‗Matrimony Directory‘ includes all such services wherein it gives the listing of wedding planners, contractors and decorators

Wedding planning online software Planning a wedding is a cumbersome affair which wedding planners undertake. Software tools are being developed that bridges the gap between Wedding and the IT industry. An organized and effective tool to manage the process is now in the offering which merges wedding planning with software tools. An effective method of making wedding planning smooth, these tools are spreading both in metropolitan and smaller towns. This software allows customers to enjoy the wedding by managing the entire event through its customized solutions.  

Shaadi-e-khas Web-based wedding management software that provides unique solutions towards making the tedious planning process easier It is available on every Smartphone and offers 3 packages - Package includes a 30day free trial, silver (costing INR 2,500) and gold (INR 5,000) Application provides assistance to manage guest lists, send invites, create checklists, manage vendors and expenses, manage RSVPs, develop images and video libraries, print reports and many more management features Also, it has varied options including classic and royal wedding themes at affordable prices for customers

3-D Presentations Wedding planners are now permeating innovative ideas through technological advancements. 3-D is now being used to deliver presentations in order to give a more life-like feel of the event. Earlier what

used to be communicated through pen and paper drafts has now transpired into 3-D formatted delivery structure. This format primarily renders a more lifelike picture of designs and décor of the venue thereby giving more clarity to the idea presented to the clients.

Key Players:

The competitive landscape of the Indian wedding planning industry has following major players:  Exotic Indian Weddings  India Wedding Planner  Marry Me  Mystical Moments  Shaadi Online  Wedent Group

These players provide complete end to end event management solution to their customers. This allows the customers to focus on their core business at the same time planners manage their event. They not only cater to the rich but also provide services for low budget wedding affordable by middle class customers.

silver to focus on various customers Maintain transparency by passing lists of vendors and suppliers of resources to clients so that they can view their work portfolio Try to get testimonials and brochures printed as word-of-mouth forms an effective means of advertising Look towards getting featured in ‗wedding fairs‘ to increase visibility Players should provide some discounts on their services to early birds during wedding season as a means of promotion

References: Articles: The Economic Times – ―New‐age wedding celebrations catching the fancy of gen next‖ Mar 2011 – ―The Flourishing Indian Wedding Industry‖, Jun 2010 – ―Destination dos replace the Big Fat Indian Wedding‖ Feb 2011 Books:

Recommendations: Based on the in-depth analysis of the industry, one can come up with the following recommendations for the players of this industry:

McKinsey Global Institute – ―Rise of India‘s consumer market‖, May 2007 Websites:

They can look towards categorizing business into different levels like premium, gold and

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Analytics and Beyond by Sayak Gupta, SIMSR Mumbai Executive Summary: Business Analytics is the process of exploration of an organization‘s data with the help of statistical analysis. Analytics convert a huge amount of data into highly valuable asset of an organization. Today analytics is not just a support function within a company; it has become a key framework to understand significant pattern which help them in complex decision making and taking insightful action for future growth. The volumes of data generated by the companies are increasing exponentially. The volume itself has become a major problem. Executives worldwide are facing the same problem of not getting the proper data when needed. The data that can make a difference are buried somewhere. Moreover business struggle to gather real time information even though it‘s a must as the companies have shorter time to react to changes. The availability of quality analytics help the organizations to react in real time. Hence we see that with the increase in complexity of the business, data analysis should be done on a regular basis to improve business performance. With the increasing need of incorporating analytics into the business, the analytics techniques have become more sophisticated. To manage the huge volume of data, usage of advanced statistical model is necessary to detect relationships and trends. Today, companies also use predictive analytics extensively. The term refers to the process of successfully predicting future events using statistics and data mining. It enables corporations to identify opportunities and risk of a business based on historical data. Pratibimb | February 2012 | 16

Analytics is not too technical to master. It is a group of approaches targeted at the business users rather than IT people. These approaches are used in combination of several tools to gather information, analyze them and finally present the findings. The field of business analytics has shown a great improvement over the past few years. Business users are now able to get better insights from data stored in transactional system. An example could be e-Commerce application which has made data mining a very effective analytical process. Analytics application and business intelligence are now better integrated with transactional system than before. A close loop between operation and analysis has been created. Mined information is now available to be used by a large set of audience which helps to take the advantage of analytics in everyday activity. Analytics can be used in the following activities: 

Credit and Market risk in banks

Fraud detection and Financial crimes in banks

Text fraud in public sector

Demand forecasting in manufacturing

Data Warehousing

Optimization of various activities in Retail sector

Core Performance Areas: Core performance areas of Analytics are: Economic: Use of analytics can optimize revenue by predicting future trends. Non value added services or products can be removed. This is especially applicable in challenging economic conditions. Strategic: In future there may be changes in business model, customer requirements, regulation requirements, external environment etc. With the application of analytics companies can analyze their position with respect to these changes and can take corrective actions if needed. Operational: Companies can understand whether they are using proper operational business model for customers, vendors, regulators and vendors. This will help to optimize the operational efficiency.

what customer did. They exist in database. BI is useful for analyzing structured data. Unstructured refers to the data that doesn‘t exist in database. Unstructured data have significant business value as it can tell us the reason behind a specific customer action. Today most of the business is carried out on unstructured data. But businesses are unable to derive the right answer because of inadequate technologies. BA can analyze the unstructured data and transform it into actionable intelligence. Methodology: Data are becoming more and more complex. There are various types of data – Behavioural, Textual, Geospatial, Graphical, Social etc. The analytics model is base on 4 steps:  Structured and unstructured data management throughout the lifecycle of the business

Organizational: Analytics can also help to achieve best management practices. Companies can analyze employee satisfaction level, usefulness of their compensation and reward system, the corporate social responsibility the company is undertaking. This will bring more sustainability to the organization.

 Transformation of the data into a consistent source of information

BI vs BA:

The business analytics revolves around statistical methods and for this reason it starts with information logic designed for statistical data processing. The complexity lies in the representation of the objects to be considered for data modelling. This is mainly because of the huge volume of data available today. For this reason there is a gap between desired information and the outcome we‘re trying to see. The following issues need to be taken care of in order to reduce this gap:

The focus of Business Intelligence (BI) is improvement of data capture and information delivery. It mainly concentrates on the distribution of known facts. For example BI can say how many transactions took place through credit card on a given day. But it cannot say how many of those transactions are likely to be fraudulent. BA, on the other hand can provide answer to such questions. It provides insight into almost all aspects of a corporation‘s value chain by driving innovation. Thus with the help of BA an organization will be able to respond to the market more quickly and hence it can insulate itself from environmental changes. There are basically two types of data: Structured data and unstructured data. Structured data tells us Pratibimb | February 2012 | 17

 Use of simple and advanced technique to gain extra insight into the behaviour of the data  Making the result of the analysis available to the process

 The overall cycle time of collection of data, analysis of data and the presentation of the finding must be reduced.  Within this cycle, the time required to analyze data should be reduced.

 Business goals should be clearly defined. Unclear goals and metrics can misguide the effort.

 Reduce the operational cost to give a better ROI

Quantitative findings should properly be translated into language so that it can be distributed to a broader range of business users.

Analytic Platform Older technologies find it difficult to keep pace with analytic advancements. Data warehousing technologies are very slow. Sometime it takes days to getting data. Cost of deployment and maintenance is also very high. Data appliances resolve these problems to some extent but it still is unable to support advanced analytics. Data appliance is useful as long as data is flat and the workload is small. Analytic DB also can‘t run complex workloads and advanced analytic functions well. Hence a platform environment is the need of the hour. A proper Analytic platform should be able to integrate multiple data types, run complex workloads and advanced analytic functions. The platform should also be able to empower users to perform various functionalities. In short, the role of Analytic platform should be as follows: 

It should take less time to display the result

Increase the accuracy of the result

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Offer new levels of innovation

Future of Analytics In the upcoming years it is expected to have more business investments in the field of analytics. There are so many things to be done about Analytics. By now it‘s clear how an ideal analytic platform should be. But all the objectives are not completed yet. We can expect more open source platforms for advanced analytics and implementation of predictive analytics into core products. At the same time it might become cheaper and as the vendor offerings will mature. Most importantly analytics will diversify the career options as it will become a distinctive field in its own right. Hence, Analytics is surely going to be a hot cake of this decade. References: Websites:

Financial Derivatives – Blessing in Disguise or a Curse Camouflaged by Vikash Kumar, IMI New Delhi Financial Derivatives, as the name itself suggests are the nodes of the tree of financial tools. These derivatives are some of the most mystique concepts around in the financial world today as not only are they quite misunderstood aspects, they also have the ability to take a person into unchartered waters if undertaken without any prior knowledge. Their impact on society is a mingled one as well, considering that in the past, they have led to both unperceivable gains as well as disastrous results. However that does not mean that we should not use these interesting tools. After all, human beings have always learnt to bend around the rules of the riskiest games and play with innovative strategies. The same goes for these tools, albeit the realization that the level of intelligence and foreboding required might be on a higher note in this case. If the planning and risk management team takes into account the maximum perceivable potential risks involved, then definitely financial derivatives can go a long way to make the organization or the individual pretty much on the higher side. Here, I discuss some of my thought out as well as improvised techniques to counterbalance the involved impediments. The Market in the world today is complicated enough to give goosebumps to any freshman when he enters the financial structure. Be it as a part of an organization or an individual, nevertheless, we realise the significance of innovative strategies to improve upon the financial front yet somehow some implicit policies lead us into dilemmas. Discussing financial derivatives is no different. Let us discuss the blessing these have bestowed Pratibimb | February 2012 | 19

upon our society and also the impediments they pose in front of us. The most significant notion that comes up first of all is the underlying assumptions behind these tools. It is quite critical to understand them explicitly as many of them might not seem so direct at first when observed. One of them is that the Market at present is frictionless taken for one of the very obvious reasons that is - simplicity of working. Hence, the derivatives don't take into account various upheavals that might occur on daily routines on account of the rivalries and enmities in the corporate world. They do however take into consideration some of the consequences, like the variation of exchange rates and the arrival of liquidity. There are further two assumptions that keep us on the edge. They are - the interest rates are fixed and that trading is possible at all times. One of the most basic mistakes of the beginners is that they don't register the criticality of these assumptions. For example, hoping for a last minute change in interest rates while simultaneously operating under the forwards contracts or any other such derivative is a major pitfall of the undertaker. Let us consider an economic model in which an enterprise wishes to undertake a forwards contract or a future contract. The primary pertinent realisation that should come without fail is the relation between risk, exposure and the financial position in the deals involved. Regardless of the type of stakeholder in question, this hidden aspect that is sometimes treated as 'miniature and insignificant' can actually lead to unexpected turnovers. After this, comes a step of compromise

in certain cases; one example can be swapping the interest rates with banks for mortgage while losing out on the possibility of windfalls due to lowering of interest rates. In fact, compromises can be avoided if we keep close watch on particular figures arising from international trade and capital flows leading to the extreme volatility in exchange rates. Hence this inadvertently calls upon a need for surveying the financial position in a coordinated manner i.e. having a dedicated group of people involved in this department for the regularisation and accountability of the organisation. To avoid too much delegation of work into insignificant amounts and perceiving that derivatives are quite easily replicable, I feel that this department should protect against the duplications of derivatives as well. At the same time comes the point of Market efficiency, which is elevated to a completely new level by these financial tools besides simplifying the information flow from the source to the end user. Hence, one of the major concerns is to keep the underlying terms as simplistic as possible so as to avoid all the implicit losses that occur due to the complexity of execution. Not only do we need to reduce the interest rate exposure but also diminish the foreign exposure and stock return volatility at the same time, considering that around 20% - 30% of portion of the annual turnover of some major enterprises comes from stock returns. The work of the common regularisation department can also be extended to ease out the valuation of derivatives in illiquid markets. This point becomes pretty much significant as in this highly competitive world; coping with long-term maturities is decently difficult and this is one of the consequences of incomprehensible derivatives or inability to evaluate them. However, that does not mean spending our time on those aspects that don't generate measurable returns like the concept of 'Disclosure Requirements'. Let us discuss some more guidelines that I feel should aid a lot in battling the financial blues. Primarily, terminologies should not bug anyone Pratibimb | February 2012 | 20

down; one of the critical examples of this can be that derivative trading is not the same as 'cash investment'. The latter is much more simplified in terms of the expected outcomes and returns, hence calls upon for a pretty cautious approach while dealing with the former. Another help towards the cautious approach would be estimating the potential risks from the previous years' derivative portfolios as well as the liquidity risk approximation. This comes as a late realisation sometimes to the organisations when they are on the verge of liquidation or closure from another perspective. This has been the outcome of various case studies as well. On the same lines, our stand with respect to the banks should be lucid as well as the Market does not always have enough flexibility to accommodate the sales from all banks or in other words, enough liquidity. In fact, efficiency would result from utilising the various types of stays provided by banks to avoid problems on defaults and liquidity. For those types of stakeholders who are thinking of maintaining long positions on bonds, be aware that hedging these against short interest risks creates long-term difficulties even though the results might not be visible in the immediate moments. Hence what is required is a constant evaluation of the company portfolio. This would also be a backup in terms of managing the assets in such a way so as to prevent losses due to sudden liquidity. Some might ask that even though they have such a sub-body in place within their organisation and the risk - management has been outlined as their major function, yet they suffer some hidden losses. What I feel is that the subbody that they are talking about should be as independent and should possess as much authority and corporate stature as possible for it to give the most effective suggestions and to remove all its impedances while reporting possible risks and defaults. In fact, the practice of structuring a risk measurement function is a crucial step forward for long terms stability. Not only this, quite many corporations outline their returns in a risk adjusted fashion so that the time and money for

backtracking and such other measures is kept at a minimum. We can take a lesson from some organisations like HUL that maintaing portfolios of instruments or goods in collections is better in many ways than maintaining the same for individual goods. Hence, we observe that we can easily reduce quite many unsystematic risks by taking note of some these active suggestions in an efficient manner. What is needed is a collaborative approach within the organisation so as to counteract all types of impediments and possible losses from these financial tools termed 'derivatives'. These tools can be effective means to serve the society in a better way. References: Articles: Parliamentary Research Service -―Derivatives: Baring the Financial Risk‖ – (March 1995) Linda Davies - ―Gambling on Derivatives‖ - Into

Pratibimb | February 2012 | 21

the fire―Financial Derivatives: Risk management and Trading Efficiency‖ ―The social functions of financial derivatives‖ – RMCS Inc Books: Willem Thorbecke, George Mason University, Department of Economics―Financial Derivatives: Harnessing the Benefits and Containing the Dangers‖

Housing Finance Market in India by Ankit Goel, IIM Bangalore Housing problems, particularly in developing, and mostly, in developing and overpopulated countries are very severe. Most urban households cannot afford a decent living space in a relatively well-connected location. Consequently the results are: 1. Squeezing of households in highly dense areas leading to security and hygiene issues 2. Living far from main cities into peripheral areas / connected towns and wasting a lot of economic resource in travel for employment or other services 3. Renting space in slums or squatter settlements This is where the economic role of housing finance comes in. Provision of well-structured finance schemes for the masses to enable affordability and deep penetration is thus the major objective of Housing finance. Allied Objectives 1. Backward linked products: Housing finance market is a very important contributor to the production activity in any country because its demand directly influences the demand for its backward-linked products i.e. raw materials (derived demand) like land building materials, tools and labor. 2. Forward-linked products: These are the financial markets. Often through securitization, mortgage debts are offloaded in the secondary market in the form of securities, thereby increasing the efficiency of domestic and international financial markets. As proved in the recession of 2008, housing markets are also a great leading macroeconomic indicator of the financial Pratibimb | February 2012 | 22


markets. Developmental Impact: The developmental impact includes provision of social stabilityand promotion of economic development which is directly affected by level of maturity in housing finance markets.

Housing Finance Market Assessment developing countries – especially India:


From the micro economical point of view, fluctuations in the housing finance market affects the entire household since housing, in most cases, is by value, the largest investment most people make in their lifetime. From the macro economical viewpoint too, housing has a major impact on the economy as was proved in the recent world economic crisis. Also, it is a significant contributor to GDP in the form of employment generation (direct and indirect) and industrialization. Strengths: Growing Economy A lot has been written about India‘s growing strength as an emerging nation. I would however, still like to highlight the following points which have been particularly conducive to the growth of housing finance in India: 1.

GDP growth rate averaging over 8% from 2003-2010


Rapid Urbanization, Rising middle Class


Increasing political stability with re-election of last government


Forex Reserves over $250bn


2nd Largest employment generated in housing sector (after agriculture)


Fosters development of ancillary industries via strong vertical linkages (forward & backward)


US $110 bn market size

Although Housing finance in India, particularly, is in a very nascent stage to be able to comment on specific strengths driving its growth, I have enumerated above some of the broad factors responsible for the upcoming interest. Opportunity: Demand & Supply of Housing: With the growing GDP of most nations and particularly India, the demand-supply gap of housing has reached all-time highs.

rocketing. Apart from this, the poor are also in need of allied professional services like budgeting, building and monitoring since they inevitably end up either overspending or with much lower quality houses. Some housing finance products have currently hit the market in India, However, since the market is in its nascent stage many are missing achievement of the right balance between providing an adequate long term for repayment and installments to be paid. Volumes, which we believe is a key to success in the housing finance market (since the default risk is fairly spread), will not be attainable till the products incorporate the suggestions in this paper, mainly the long term maturity needs.

In most markets, the only available financing resources to the poor and middle-income groups are: a)

Minor Savings


Sale of assets


Borrowing from relatives or employers




Loans and savings from money lenders


Microfinance Loans

Analyst Research has shown that around 10 to 20 percent of all microfinance loans taken for business, education, agriculture and emergencies are actually being diverted for housing purposes. In some cases the figure is as high as 80 percent. This is infact major evidence in support of the growing demand for housing finance. Currently, the only options available to the poor for financing are micro credits which unfortunately are inappropriate for housing purposes since they are very short term in nature and interest rates for this purpose are skyPratibimb | February 2012 | 23

Now, let us enumerate as to what can be the requirements of a good housing finance market. Table 3: Requisites for an attractive housing finance market

Thus, in my opinion, the South-East Asian, and particularly the Indian and Chinese market, there is a set base for the development and flourishment of housing finance business. The market though is still in its nascent stage, is still quite large, and is only expected to ahead in upwards direction in the future. Indian Market: The major problem plaguing the Indian housing industry is the consistent demandsupply mismatch in housing as pointed out earlier. The shortage was 23.3 million units in 1981, 22.90million in 1991, ~20mn in 2001 and so on. Although a clear downward trend has been visible the fact is that the rate of closure of this gap has

been decreasing over time. The recent figures in this respect are worse. Moreover, the growth rate in urban areas is clearly above that in rural areas, signifying that urbanization phase India is currently undergoing

The major risks involved in case of housing businesses is a)

Infrastructure Issues: Insufficient basic infrastructure like lack of uninterrupted and cheap supply of raw materials, labor and space or lack of sanitation can spell doom for the housing sector.


Government Attitudes: If the government is favoring an indirect promotion of housing among people, in this case it will extend support to housing finance companies through credit relaxation, reserve relaxation and so on. On the other hand, if government directly participates in the housing finance market through the issue of housing finance products, there can be no greater bad news for an already established housing finance player.

B. a)

INTERNAL FACTORS Lack of capability: Lack of capability as identified by me is multidimensional but stems from a common cause of the housing finance company not being able to judge the required parameters properly. These are as follows:

Estimated Housing Shortage in India (2007) Rural

14.1 mn units


10.6 mn units

Table 4. Estimated Housing Storage in India

with more and more people migrating from the rural to urban areas. Thus, there is a huge demand-supply disconnect here. We see that whereas a huge demand for housing finance exists in India, the mortgage/GDP ratio, which is a key indicator of Housing finance penetration, is one of the lowest in the world. This naturally is a great opportunity waiting to be tapped Weaknesses My analysis and the information I collected through my talk with the managers of HDFC and

Figure 4: Risks and Challenges in Housing Finance

Axis Bank has revealed 4 levels of challenges faced by these companies: A.


Pratibimb | February 2012 | 24


Difficulties in matching terms of assets and liabilities : Since the sources of deposits are mostly short term in nature for commercial and other banks whereas housing finance products are mostly long-term in nature


Tools to provide for product development and evolution: Various tools like internal MIS data of customers and their credit-worthiness, product experts, leadership etc are a prerequisite for product development in housing finance. Housing finance companies have a major problem in the sense that they might not have the required access or the capability (as we move to more and more complex housing products)

to maintain such a database. b)

Policy Constraints: i) ForexRisk : Most HFC‘s turn to foreign loans in order to refinance the loan burden extended by them. This exposes them to foreign currency risk. ii) Default Risk: In most cases, farmers and other lower income group people fail to provide any sort of adequate security. Also, in case of farmers we notice that agricultural land can hardly be mortgaged since in most rural areas clear demarcation of land does not exist. Even if land was distinctly demarcated, land transfer charges are a big hindrance in acceptance of land as security.

any significant competition in housing finance. 3.

Regional Rural Banks: Again, they have not been very active in housing finance sector because of the large amounts and low creditworthiness involved in leading to illiquidity and losses.


Agricultural and Rural Development Banks: The major function of these banks again is not the provision of housing finance. Consequently, there is low threat from these too.


Housing Finance Companies: These are companies with principal objective of lending for housing finance. However, the noticeable aspect my research has revealed is that there are only about 20 companies accounting for greater than 90% of total housing loans provided. Hence the industry is very fragmented and given the high demand for housing credit, there is very little fight for market share with these.

Threats: Competition in Housing Finance Sector: The following are providers of housing finance in India, in one form or another: 1.


Commercial Banks: is the largest mobiliser of savings and also in respect of coverage. Their role has traditionally been limited to providing the working capital needs of business, industry and commerce and hence, they have not been very active participants in the housing finance market. Another reason for the same is that they are funded by short-term resources which cannot be profitably employed in long term lending. Hence competition from Commercial banks is very low especially because of their inability and lack of specialization in providing tailor-made financing needs for various households. Cooperative Banks: A lot of reluctance has been noticed by these cooperative banks to provide loans for housing finance. Our analysis states the major reason for this is the high risk and illiquidity in giving housing loans from common corpus. Hence, even cooperative banks do not offer

Pratibimb | February 2012 | 25


Cooperative housing finance societies: These are specialized institutions established and subsidized by NHB to cater to the housing needs of the masses. They are established at the State (Apex) Level and retail level. These institutions do not have adequate technical expertise to be able to design the right product for the right target. However, the state subsidy is a major factor in their favour. Thus, the housing finance market competition in India can be summarized as follows: Organizations providing Commercial Banks Cooperative Banks Regional Rural Banks Agricultural and Rural Development Banks Housing Finance Companies Cooperative housing finance societies

Threat Medium Low Low Low High High

Summary: From the above, we can now draw an Industry Analysis Map as follows:

Clearly, from the above analysis we can understand that Indian housing finance market is in its nascent stage of development. Since this is a new formed market for a hitherto unaddressed product, there will be huge first mover advantages. The drawbacks stem only from the event of unfavorable policy changes or uneven

Pratibimb | February 2012 | 26

competition from state. Both the drawbacks are relatively unlikely on the basis of government‘s current policy trends. Hence, we conclude that the Housing Finance market in India is very attractive and forms a good case for investment.

India Infrastructure: A boon or a bane? by Niraj Satnalika, IMT Ghaziabad INFRASTRUCTURE: THE ROOTS OF GROWTH FOR EMERGING MARKETS:

slowdown provides an opportunity for countries

“When you don't invest in infrastructure, you are going to pay sooner or later" Mike Parker

infrastructure requirements. This is reinforced by

“Infrastructure, in general, defined as the set of

has large multiplier effects.

interconnected structural elements that provide


framework supporting an entire structure of

Post Independence Era (1947-1975):


Indian Economy was known to be an agrarian

A well-knit and coordinated system of transport

economy wherein the major part of the revenue, to

plays an important role in the sustained economic

an extent of 70%, was generated from the

growth of a country. It also helps a nation develop

agriculture sector. The main objective of planning

a stature in today‘s world where globalization is

in India at this stage was to initiate a process of

the buzzword. Evidence also suggests that creation

development which will raise living for a richer,

of infrastructure, through its direct and indirect


effects, has a significant impact on poverty

development of an under developed economy is


one of utilizing the potential resources available to

Now when the need of infrastructure is defined, its

the community effectively. An underdeveloped

working is a mandate to be discussed. To

economy is characterized by the co-existence of

accelerate the pace of infrastructure development

unutilized or underutilized manpower on the one

Government has taken the initiative and has

hand and of unexploited natural resources on the

started a host of projects and schemes with the


sole motive to upgrade physical infrastructure in


all crucial sectors.

somewhat more focused towards increasing the

In the Indian context, though there has been some

investment the reason being accounted to the fact

improvement in infrastructure development in

that being a fresh, new economy freed from the

transport, communication and energy sectors in

British Raj it was necessary for the government to

recent years, there are still significant gaps that

stabilize itself so as to control its economy in

need to be bridged. The current economic

future. A somewhat low rate of capital formation

Pratibimb | February 2012 | 27

like India that have a substantial degree of unmet the understanding that spending on infrastructure











might have been adequate for countries like the U.K. and the U.S.A., wherein the modern industrialization took root early. On the other side the under developed countries which make a late start have to aim at comparable development within a briefer period. The First Five Year Plan involves an outlay on development by public authorities of around ` 2069 Crores over the period of 1951—56. The main considerations that have been taken into

Sector Agriculture Irrigation Transport and Communications Industry Social Services Rehabilitation Miscellaneous Total

Amou nt 360 561 497 173 339 85 51 2066

Table 1: Sector wise Plan for 1st Five Year Plan

account are: 1.

Need for initiating a process of development that will form the basis of the much larger effort needed in the future


Total resources likely to be available to the country for the purpose of development


The close relationship between the rates of development





resources in the public and in the private sectors 4.

The necessity of completing the schemes of

Chart 1: Sector wise Plan for 1st Five year Plan (% wise)

development initiated by the Central and State 5.





commencement of the Plan ; and

Thus we can see that Indian economy was not

The need to correct the maladjustments in

focused into infrastructure development rather the

the economy caused by the war and the

development of the economy so as to ensure


utmost utilization of the resources. During the period of 1947-1965, the rate of growth

Following the budgetary plan formulated by the

of the Indian economy in the first three decades

Planning Commission, since its inception in the

after independence was derisively referred to as

year 1950, for the year 1951-1956 which is the

the Hindu rate of growth by economists, because

First Five Year Plan of and for the Indian

of the unfavorable growth rate. Since 1965, after

Economy. It is seen from the chart that a major

the number of revolution in the agricultural sector

portion of the plan was focused on areas like

like the Green Revolution, Yellow Revolution or

agriculture and irrigation.

the White Revolution which enhanced the use

Pratibimb | February 2012 | 28


















breakthrough reforms. The new neo-liberal policies included 






patterns and strengthening forward and backward

Initiation of privatization,

linkages between agriculture and industry.

Tax reforms, and

Liberalization of Economy (1991):

Inflation-controlling measures








agriculture by increasing crop productivity, crop



The main objective of the government was to


transform the economic system from socialism to

The major breakthrough in the economy came

capitalism so that a high economic growth is

during the year 1991, when Dr. Manmohan Singh

achieved and industrialization can be seen in the

served as the Finance Minister and incorporated

nation which was, at the end of the day, intended

the Policy of Liberalization, Privatization and

for the well-being of Indian citizens. Today India

Globalization. In 1991, after India faced a balance

is mainly characterized as a market economy.

Figure 1 Timeline of Development of Indian Economy

of payments crisis, it had to pledge 67 tons of gold

Following is the chart of trend of gross domestic

to Union Bank of Switzerland and Bank of


England as part of a bailout deal with the International Monetary Fund (IMF). In addition to the bailout, IMF required Indian government to undertake a series of structural economic reforms. As a result of which, the government of P. V. Narasimha Rao and finance minister Manmohan Singh started

Comparison Year 1975

GDP 8,42,210

w.r.t year 1975 1

w.r.t year 1990 0.151949





















Table 2: India’s GDP

Pratibimb | February 2012 | 29

The figures itself shows how the GDP of the

care of in the second generation reforms. The In-

economy in 2000 grew by more than 24 times

dian economy which generated around 70% of its

than that of the GDP in the year 1975. Thus the

revenue from the agriculture sector has now

trio policy of LPG came out to be a boon for the

turned the scenario with the services sector taking

nation where in the infrastructure was also taken

the lead with 57%.

Sector Agriculture

Contribution (%) 14.9






100 Table 3: Sector wise contribution to GDP

Chart 3: Sector wise contribution to GDP (Percentage)

Sector Agriculture

Workforce 52







Table 4: Sector wise workforce distribution

Chart 4: Sector wise workforce distribution

In the past, development of infrastructure was

development. This has prompted the government

completely in the hands of the public sector which

to partially open up infrastructure to the private

was characterized by:

sector allowing foreign investment, and most

Slow Progress,

public infrastructure, barring railways, is today

Poor Quality, and

constructed and maintained by private contractors,


in exchange for tax and other concessions from the

Infrastructure deals with the availability of power,


construction, transportation, telecommunication or

Electricity: As of 2006-07 the electricity

real estate etc.; it was seen that India's low

generation capacity was at 652.2 kWh,

spending on these categories at $31 billion or 6%

against an installed capacity of 128400 MW.

of GDP in 2002 had prevented India from

In 2007, electricity demand exceeded supply

sustaining higher growth rates. With changing


policy and reforms, certain minimal infrastructure

infrastructure in electricity dimension can be

was required in order to sustain the pace of

Pratibimb | February 2012 | 30






Some 600 million Indians have no

electricity at all

national highways account for less than 2%

80% of Indian villages have at least an

of the total road network but carry 40% of

electricity line, wherein just 44% of

the movement of goods and passengers.

rural 










national teledensity rate of 67.67% with

The stolen electricity amounts to 1.5%

806.1 million telephone subscribers, two-

of GDP

thirds of them in urban areas, but Internet

The reforms brought about by the Electricity Act

use is rare—there were only 10.29 million

of 2003 caused the separation of generation,

broadband lines in India in September 2010.

transmission and distribution aspects of electricity,

Thus we can see that India after getting liberalised

abolishing licensing requirements in generation

has developed to a great extent in terms of

and opening up the sector to private players,

infrastructure wherein the country which didn‘t

thereby paving the way for creating a competitive

had metalled roads is now having one of the

market-based electricity sector.

largest and dense transport system including all

Water Supply: Notable improvements in

the roadways, railways, airways and yes not to

water supply infrastructure, both in urban

forget the waterways.

and rural areas, have taken place over the past






Approach to 12th Year Plan:

population having access to safe drinking

The Indian economy which is now on the verge of

water has risen

releasing the Twelfth Five Year Plan for the

considerably as

period of 2012-2017, which can be characterized

shown below:

by strong macro i.e., the overall fundamentals and










is also characterized by a successful and good performance over the ongoing Eleventh Plan

Table 5: Change in Water Supply

period. At the same time looking at the other side However, quality and availability of water supply

of the coin the economy can be seen clouded by

remains a major problem even in urban India, with

some slowdown in growth in the current year

most cities getting water for only a few hours

which can be accounted to the fact of continuously

during the day.

growing concern about inflation and a sudden

Transport: India has the world's third

increase in uncertainty about the global economy.


Plan of Action:





3.3 million kilometres and carrying 65% of

The twelfth year plan commencing April 1, 2012

freight and 80% of passenger traffic. In

projects a total investment of Rs 41 trillion (at

terms of road length, India has one of the

2006-07 prices) in infrastructure. This would

largest road networks in the world. The

account to approximately 10% of India‘s GDP

Pratibimb | February 2012 | 31

during the period and is twice the targeted levels

Infrastructure projects during the plan. The

during the eleventh five year plan. Following is

Sources of Financing is categorically divided into


the Equity and Debt Financing.







Sources of Equity Finance Corporates' internal accruals




Private Equities







135 578 713

Total available sources Total requirement Table 6: Source of Equity finance

Chart 6: Source of Equity finance Percentage)

All figures in ` ‘000 Crore

The equity financing includes IPO‘s, private

fear of the double dip recession have added fuel to

equities, Foreign Direct Investment or the QIP

the fire. Apart from this, the downgrading of US

(Qualified Institutional Placement). The equity

economy from it‘s ever since AAA to AA+ by the



Standard & Poor‘s have done the remaining icing.

projection, is expected to raise around 29% of the

These global challenges call for renewed efforts


on multiple fronts.






chart projected for financing

inclusive of both debt and equity. Sources of Debt Finance Commercial banks








Private Placements



230 1552 1782

Total available resources Total requirements

Table 7: Source of Debt finance Chart 7: Source of Debt finance (Percentage)

Key Challenges: There are several other external challenges arising from the fact that the current stature of the global economic environment is less favorable than it was at the start of the Eleventh Plan. The global slowdown and the European Crisis along with the Pratibimb | February 2012 | 32

Performance and Key areas: As far as the Indian economy performance is considered it has performed well on the growth front which is 8.2 percent as seen in the first four years where as the growth in the final year of the Eleventh Plan saw a growth of 8.5 percent in

contrast to the projected 9 percent.

According to the 2011 Census an increase was

This slight underperformance can be owed to the

seen in the urban population from 27.8 percent in

strong rebound from the crisis thus the actual

2001 to 31.2 percent in 2011, and is likely to

growth in 2011‐12 is likely to be around 8.0

exceed 40 percent by 2030. This would generate a

percent which would lead to achieve an average

heavy demand for better quality infrastructure in

GDP growth of around 8.2 percent over the

urban areas, especially water, sewerage, public

Eleventh Plan period, lower than the targeted 9.0

transport and low cost housing. Since it takes time

percent, but better than the 7.8 percent growth as

to create urban infrastructure, we must introduce a

seen in the Tenth Plan.

sufficiently long term focus on urban planning in

This increase accounted for an increase of nearly

the Twelfth Plan.

35 percent in per‐capita GDP. The slowdown in


2011‐12 is a matter of concern, but can be


reversed if the investment climate is turned around

With the government spending or investment

and if fiscal policy is strengthen alongside.


One of the major shortcomings of 11th Plan was

Partnerships (PPPs) are increasingly becoming the

inadequate infrastructure which resulted as a

preferred mode for construction of infrastructure

major constraint on rapid growth of the economy.

projects, both in developed and developing

The Plan had, therefore, emphasized the need for a


massive expansion in investment in infrastructure

documents such as model concession agreements

based on a combination of public and private

and bidding documents for award of PPP projects

investment, the latter through various forms of

have streamlined and accelerated decision‐









transparent and competitive.


How PPP has affected?







total making by agencies in a manner that is fair,

investment in infrastructure which includes roads, ports,




telecommunications, oil gas pipelines and


irrigation is estimated to have increased from 5.7

accounting for an investment of Rs. 486,603

percent of GDP in the base year of the Eleventh

Crore. According to the Private Participation in

Plan to around 8.0 percent in the last year of the

Infrastructure (PPI) database of the World Bank,

Plan. A large number of PPP projects have taken

India is second only to China in terms of number

off, and many of them are currently operational in

of PPP projects and in terms of investments, it is

both the Centre and the States.

second to Brazil.

As far as Urbanization is concerned as compared

Few PPP Projects:

to other developing countries, India has been slow

Major PPP projects undertaken thus far are: Delhi,

to urbanize, but the pace of urbanization is

Mumbai, Hyderabad and Bangalore airports; 4

expected to accelerate over the next two decades.

ultra‐mega power projects at Sasan (Madhya

Pratibimb | February 2012 | 33






Pradesh), (Andhra

Mundra Pradesh)

(Gujarat), and





Thus we can see that there is a drastic change in

container terminals at Mumbai, Chennai and

the Indian Economy since Independence and a lot

Tuticorin ports; 15 concessions for operation of

has been done towards the development of the

container trains; Jhajjar power transmission

Nations‘ Infrastructure but still a lot more needs to

project in Haryana and 298 national and state

be done. According to the report published by the

highway projects.

standards and poor‘s, it is said that lack of

There have been 758 PPP projects in main sectors

infrastructure on the face of Transport and lack of

of focus where a contract has been awarded and

funding is a hindrance to the growth of Indian

projects are underway – in the sense that they are

Economy. The report says that the inadequate

either operational, have reached construction

infrastructure is a major roadblock for the

stage, or at least construction/implementation is

country‘s economic development and if the same



Between 100 to

Between 251 to

More than


ber of Pro-

100 Crore

250 Crore

500 Crore

500 Crore


Airports Education Energy Health Care Ports Railways Roads Tourism Urban De-

jects 5 17 56 8 61 4 405 50 152

424.2 337.6 315.0 86.0 4,364.6 1,132.6 2,812.0

365.5 934.0 343.0 1,745.3 102.2 11,696.5 1,503.5 3,136.9

303.0 460.0 3,083.0 275.0 4,304.8 873.0 38,520.5 800.0 6,688.2

18,808.0 600.0 62,890.0 900.0 74,902.1 594.3 122,143.3 1,050.0 16,838.0

19,111.0 1,849.7 67,244.6 1,833.0 81,038.2 1,569.6 176,724.9 4,486.1 29,475.0

velopment Total








Source: Planning Commission

imminent. The total project cost is estimated to be

condition prevails the forecasted economic growth

about Rs. 383,332.06 Crore.

for the coming twelfth five-year plan would be impossible to achieve.

Pratibimb | February 2012 | 34

What keeps IndiGo Going By Rubayet Chakraborty | Ahana Chakraborty, NITIE Mumbai shopping catalogue with interesting IndiGo branded curios. The picture on the left shows a USB drive with a disclaimer: ―This item can cause jealousy‖! IndiGo‘s on-your-face communication has effectively broken clutter and grabbed the attention of all. In today‘s turbulent airline industry this is perhaps what has kept IndiGo soaring high.

Simple. Crisp. It will put a smile on your face. IndiGo has consistently maintained its image as a friendly, hip airline. Everything starting from its logo to its banner advertisements tells us something that makes us smile. The vehicles it uses to carry luggage are labelled ―CarGo‖, in sync with the name ―IndiGo‖. The airsickness bag says ―Get Well Soon‖. Instead of an in-flight magazine, it has a Pratibimb | February 2012 | 35

The airlines industry of India has been in the limelight for quite some time now – though for the wrong reasons. Rising fuel prices and interests have caused most airlines to run into deep financial trouble. The industry has accumulated losses of nearly Rs 15,000 crore in 2010-11. Leading the pack is the national carrier Air India, followed by private sector Kingfisher Airlines. The only airline that has managed to make profits during these tough times is IndiGo. It has managed to increase its market share to almost 20%, securing the position of the largest low-cost airline in India. Owned by InterGlobe Aviation Pvt. Ltd, in fact, IndiGo has announced a buy order for 180 aircraft worth $15.6 billion from

Figure 1: Source DGCA Report

the European manufacturer Airbus.

The TV Commercial is like a runway musical, set

So what is it that IndiGo does to keep its books green? Rigorous cost control in the form of paidfor meals, high aircraft utilization and tightly framed maintenance contracts have been some methods. However, what has really caught the eye of customers is its branding. IndiGo is a brand that talks – to its crew members and passengers alike. In its communication about new flights and services, IndiGo has been very imaginative. Advertisements such as these grab eyeballs. The benefit of extra leg-room was effectively conveyed through the image of the comfort a leggy supermodel would enjoy. New flights to smaller destinations were promoted

through witty print-ads. IndiGo‘s advertising was the feather on the cap.


Late last year, IndiGo launched a fresh campaign to communicate its new international operations. Pratibimb | February 2012 | 36

in the Broadway Style. The lines ―Our service is so popular, we're flying international‖ and ―we will remind ourselves for one more time with each and every single flight, we're here to be the model of a modern global airline" truly captures the cool quotient of the airline.

At a time when the airline industry has been facing a severe shortage of pilots and crew, IndiGo has managed to attract applicants through sheer humor. One of its advertisements for hiring pilots looked like this: IndiGo has also very successfully positioned its cabin-crew profile by associating a glamour quotient with it. Advertisements seeking new crew members communicate the message that the crew

times and bad". The cheeky advertisement was captioned ―Let the bad times roll‖, which was a direct attack on Kingfisher airlines and its tagline ―Fly the Good Times‖. Charred by IndiGo‘s innovative communication, Kingfisher has answered back.

are not merely plain air-hostesses, but are as glamorous as supermodels. This creates an aspirational value in the minds of job applicants. The ―Miss IndiGo‖ badges sported by the airhostesses assure passengers time and again that the crew serving them is indeed special. IndiGo‘s has not spared its rivals. Capitalizing on Kingfisher‘s financial distress it announced that it continued to exceed consumer expectations in terms of service quality and pricing both in "good Needless to say, we just love to wait, watch and laugh. References: Images:

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Introduction `Does the stock market overreact?' De Bondt and Thaler in 1985 gave start to a new wave of thinking known as behavioural finance. Weak form inefficiency of the stock market was discovered by them after analysing how people are systematically overreacting to unexpected and dramatic news events which were surprising and profound. The Efficient Market Hypothesis as proposed by Fama (1970) asserts that the stock prices reflect the relevant information. The asset prices follow a random walk path i.e. they are merely random numbers. The study conducted by Caginalp G. and H. Laurent (1998) by the predictive power of price patterns finds patterns and confirms that they are statistically significant even in out-ofsample testing and report. The pattern of the stock index might help in predicting some of the effects of the various events. The calendar anomalies tends to exist which goes against the efficient market hypothesis. The researchers have used Gregorian calendar to investigate the calendar anomalies. There are various countries and societies which follow their own calendar on the basis of their religion. For example, the Hebrew calendar is followed by the Jewish society, which is strictly based on luni-solar, the Christian society follows the Gregorian, which is based on solar, and similarly Hindu and Chinese follow their own. The Hindu calendar is called ―Panchanga” and it is based on both movements of the sun and the moon. The festival of ―Diwali‖ is typically occurs at the end of October and beginning of November. The special ritual called ―Mahurat Trading‖ can be observed on major stock exchanges like NSE, BSE, NCDEX to name a few lasts for about an hour. It is performed as a symbolic ritual since many years. It marks a link with the rich past and brokers look at it on a positive note. It marks an auspicious beginning to the Hindu New Year. The investors place token orders and buy stocks for their children, which are sometimes never sold and intraday profits are booked, however small they may be. Thus, it is widely believed that trading on this day will bring wealth and prosperity throughout the year. It is interesting to observe the behaviour of trading activities during the period preceding and succeeding Mahurat Trading. The purpose of this study is to know the effect of the festival prior and post diwali on the the returns.

Econometric methodology

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I have measured stock return as the continuously compounded daily percentage change in the share price /

index (S&P CNX NIFTY) as shown below:

Visit: Rt = (lnPt – lnPt-1) x 100 …………………… (1) Team Where, Rt = return at time t



Pt, Pt-1 = closing value of the stock price index at time t, t-1.

Bag No. 9 in its portfolio. Further, the National I have used S&P CNX Nifty as it has gotPost the most liquid stocks Stock Pratibimb Exchange | February is largest 2012 |in38terms of Market capitalisation and Volume. I have used the data of the Manipal—576104

TAPMI Pratibimb February 2012  

TAPMI Pratibimb February 2012