Its tax-saving season and the purveyors of tax-saving investments are out in full force. For the most part, this means insurance companies and unit-linked insurance plans (ULIPs). There was a time when tax time was driven by accountants asking salary-earners to invest in NSCs. That option is still open, but the sales pitch has been taken over by tele-marketers extolling the virtues of ULIPs from at least January onwards. In fact, the calls actually started in December this time. The reason was that from January 1st, new expense rules meant that only newer, lower-cost ULIPs could be sold. Therefore, the insurance industry made a special effort in December to ensnare as many people as possible in the older, higher-cost ULIPs.
Anyhow, the real problem is that many of us are still not planning our tax-saving savings systematically, which is what leaves us scrambling for options at this time of the year. As a result, I find that for tax-saving investments, we tend to think about tax first and investments later. As long as something saves tax, its characteristics as an investment are paid less attention to. Much of the time, waking up late to these investments means that they are chosen more for their convenience than for their suitability as investments. The time to plan tax-saving investments is much earlier in the financial year. In February, or March, it's much more likely that you will make hasty decisions.
When you evaluate tax-saving investments as investments, the most important parameters are returns, safety and liquidity. On safety, the government-guaranteed systems like PPF and the NSC score, but they have the longest lock-in. Given the mandatory lock-in of tax-saving investments, it makes sense for most investors to concentrate their investments in ELSS mutual funds. These funds have the lowest lock-in - three years - among all tax-saving possibilities. Given the term of the investments, the chances are that you would earn far better returns than in any other option.
There are other options that give equity-linked returns - ULIPs and the New Pension System. Of these, ULIPs have a long lock-in - at least ten years - coupled with high costs and poor transparency. Moreover, investors have to commit to continuous payments for a certain period-if they can't keep up then the effective cost shoots up to a ruinous level. However, the money that you put into equity tax-saver funds is best spread out over the year in an SIP. At the end of the year you could end up catching a high point of the market and thus lose out on the advantage that cost averaging through the year will give you.
Anyhow, whether that happens this year or not, it's still not too late. Given the volatility in the markets, you could still do some cost-averaging to be on the safe side, perhaps by breaking up your investing into three equal parts till 31st March.
On a different note, there's a piece of bad news for honest and regular tax-payers who were looking forward to the Direct Tax Code. The draft DTC was released by the government last year. Although the document had some rough edges, its thrust at simplicity was refreshing. However, things are not looking so bright for the new code now. Within the government, there seems to be a lot of rethinking on the DTC. My belief is that within the government and the bureaucracy, as well as in the accounting profession, there are a lot of vested interests who don't welcome simplicity. These people's livelihood and influence depends on the taxation system being complex and open to abuse, and they will fight hard against its simplification. I hopetheir efforts fail but at the moment, things don't look very good.
Thanks,
Nimesh.
Source: valueresearchonline.
Friday, February 19, 2010
Wednesday, February 17, 2010
ISPAT INDs - CMP 19.4 TGT 21 SL 19
Ispat inds has again entered its trading range from 19.4 to 21 and we would recommend a buy at 19.4 with a target of 21 i.e. over 7% of gain.
We have recommended this to our mailing list clients as well. To subscribe to the same Free of Cost just drop an email at dewang@denip.in or nimesh@denip.in
Tuesday, February 16, 2010
IIP for Dec’09 at 16.8% YOY.
IIP reaches the mind boggling growth at 16.8%, highest since Nov’94, much above consensus estimate of 12.3%. Month over month IIP increased by an impressive 11%. IIP increased 8.6% during Apr-Dec vs 3.6% previous year. This stellar growth was driven by Manufacturing and base effect (-0.2% in Dec’08).
Manufacturing strong on both yoy and monthly basis:
• Manufacturing output, with higher weightage in IIP, rose by a strong 18.5% yoy. Within manufacturing, as many as 14 out of 17 industry groups showed positive growth. But weakness in food products continued due to bad monsoon. Transport equipment and parts (+82% yoy), machinery and equipment (+45%), metal products and parts (+12%) showed major growth (see table in next page) indicating that construction, infrastructure and auto sectors are driving growth currently.
• Mining grew at 9.5% in Dec compared to 10.4% in Nov. Electricity increased at 5.4% in Dec vs. 1.8% in Nov. On m/m, both Electricity and mining posted positive growth.
Capital Goods improved significantly and Consumer Goods still strong:
o The consumer goods grew at 12% in Dec as consumer durables grew at 46%, the highest ever after more than 20% growth for past 5 months. The non-durables improved and grew at 3.7% yoy (14% over the last month). Consumer durables growth was supported by booming car and white goods sales helped by low financing cost and improving outlook. Also expectation of increased cost after budget is driving car sales in Jan-Feb.
o Intermediate goods remained robust at 21.7% yoy indicating that overall industrial activity will likely remain elevated.
o Capital goods zoomed at 38.8% in Dec. On month over month basis, it increased 41% in Dec. It indicates that growth is becoming more broad-based moving from consumer sectors to capital goods sector. The ECB data for Dec also shows increased borrowing for capital goods imports.
Bottom Line:
o There is no denying the fact that IIP growth was partially helped by low base and policy stimulus. But obviously the positive momentum has gained traction with growth becoming more broad based.
o A higher than expected growth in Industry will offset any decline in Agriculture resulting in a GDP growth in FY10 that has the potential to surprise on the upside.
o RBI has already announced that the policy action is not event driven like budget. So we expect a rate action only in April as WPI inflation peaks, Govt borrowing for FY11 are out and Global scenario becomes clearer.
o Expectation of higher growth and inflation in FY11 will increase nominal GDP expectation next year. So fiscal deficit as % of GDP will be lower in FY11. Tax revenues also go up on better growth prospects. So, net borrowing for FY11 can be expected to be lower than this fiscal.
Thanks,
Nimesh.
Manufacturing strong on both yoy and monthly basis:
• Manufacturing output, with higher weightage in IIP, rose by a strong 18.5% yoy. Within manufacturing, as many as 14 out of 17 industry groups showed positive growth. But weakness in food products continued due to bad monsoon. Transport equipment and parts (+82% yoy), machinery and equipment (+45%), metal products and parts (+12%) showed major growth (see table in next page) indicating that construction, infrastructure and auto sectors are driving growth currently.
• Mining grew at 9.5% in Dec compared to 10.4% in Nov. Electricity increased at 5.4% in Dec vs. 1.8% in Nov. On m/m, both Electricity and mining posted positive growth.
Capital Goods improved significantly and Consumer Goods still strong:
o The consumer goods grew at 12% in Dec as consumer durables grew at 46%, the highest ever after more than 20% growth for past 5 months. The non-durables improved and grew at 3.7% yoy (14% over the last month). Consumer durables growth was supported by booming car and white goods sales helped by low financing cost and improving outlook. Also expectation of increased cost after budget is driving car sales in Jan-Feb.
o Intermediate goods remained robust at 21.7% yoy indicating that overall industrial activity will likely remain elevated.
o Capital goods zoomed at 38.8% in Dec. On month over month basis, it increased 41% in Dec. It indicates that growth is becoming more broad-based moving from consumer sectors to capital goods sector. The ECB data for Dec also shows increased borrowing for capital goods imports.
Bottom Line:
o There is no denying the fact that IIP growth was partially helped by low base and policy stimulus. But obviously the positive momentum has gained traction with growth becoming more broad based.
o A higher than expected growth in Industry will offset any decline in Agriculture resulting in a GDP growth in FY10 that has the potential to surprise on the upside.
o RBI has already announced that the policy action is not event driven like budget. So we expect a rate action only in April as WPI inflation peaks, Govt borrowing for FY11 are out and Global scenario becomes clearer.
o Expectation of higher growth and inflation in FY11 will increase nominal GDP expectation next year. So fiscal deficit as % of GDP will be lower in FY11. Tax revenues also go up on better growth prospects. So, net borrowing for FY11 can be expected to be lower than this fiscal.
Thanks,
Nimesh.
Saturday, February 13, 2010
Coffee with CEO.
Today I met 3 CEO's Mr. Sanjay Jha (CEO-Cricnext.com), Mrs. Pallavi Jha (Exec. Director Dale Carnegie), Mr. Alvyn (CEO - Pagalguy.com) at Barista, Atlanta Bldg, Nariman Point, Mumbai. Thanks to Europe Asia Business School for giving me this opportunity. They were all first gen. CEO's.
They shared their experiences about their qualification and professional lives and how they reached this level. Mr. Sanjay is graduate and post graduate in Economics. He started his career in Banks and then worked for FMCG and ended becoming an entrepreneur when he started http://www.cricnext.com/.
Mrs. Pallavi Jha shared her experiences about her qualification and work. She started her professional career working for FMCG firrm and then entered the Wallchand Industries as Director. She explained the importance of MBA and what are the important points to be considered by people to start a business.
Mr. Alvyn is a MBA from Wharton. He started his firm http://www.pagalguy.com/ before he started his MBA. He shared his views on starting an enterprise and how to sustain it. He also shared his story on how he dealt with his parents on doing his post graduation.
I learnt a lo from these people. When I asked Mrs. Jha on giving me some imporatant points for running an enterprise, she said the most important part is to select a diversified team and also having prople with higher knowledge at times. She said its very important not to have Arrogance and Ego in business as it leads nowhere.
I was obliged to have their views and suggestions and I am sure this session will help me in taking future decision in business. My personal thanks to Mr. Nikhil Agarwal (Director-EABS) for inviting me for this event and to the CEO's for sharing their experiences. I am sure all the students present at the event had a great time.
Cheers,
Nimesh.
Mr. Alvyn is a MBA from Wharton. He started his firm http://www.pagalguy.com/ before he started his MBA. He shared his views on starting an enterprise and how to sustain it. He also shared his story on how he dealt with his parents on doing his post graduation.
I learnt a lo from these people. When I asked Mrs. Jha on giving me some imporatant points for running an enterprise, she said the most important part is to select a diversified team and also having prople with higher knowledge at times. She said its very important not to have Arrogance and Ego in business as it leads nowhere.
I was obliged to have their views and suggestions and I am sure this session will help me in taking future decision in business. My personal thanks to Mr. Nikhil Agarwal (Director-EABS) for inviting me for this event and to the CEO's for sharing their experiences. I am sure all the students present at the event had a great time.
Cheers,
Nimesh.
Thursday, February 11, 2010
Section 80 C of Income Tax Act.
1. Salary.
2. Income from House Property.
3. Profits & gains from business of profession.
4. Capital Gains.
5. Income from other sources.
What is Section 80C:
In order to encourage savings, the government gives tax breaks on certain financial products under Section 80C of the Income Tax Act.
Investments made under such schemes are referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakh and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment.
Max limit = Rs.1 lakh.
Options for Investment in Section 80C:
1. Premium paid to Life Insurance.
2. PPF = Max rs. 70000.
3. NSC = 6 years (Interest Taxable).
4. Principal repayment of housing loan.
5. Tution fee for school children (Max 2 children).
6. ELSS.
7. Investment in Infrastructure Fund.
8. Contribution towards EPF.
9. Bank Term deposit for 5 years.
10. Senior citizen savings scheme.
11. Post office deposit for 5 years.
12. Premium paid towards deferred annuity.
Tax free return from 80 C:
1. Life Insurance.
2. Provident Fund.
3. ELSS.
Taxable return from 80C:
1. NSC
2. Post Office.
3. Pension Plan.
4. Bank FD with section 80C benefit.
Expenditure:
1. Children tution fees.
2. Principal repayment on housing loan.
Thanks,
Nimesh.
Wednesday, February 10, 2010
Omkar Patil joins DENIP Consultants Pvt. Ltd. Advisory Board as IT Consultant.
Omkar Patil is a Mumbai based IT professional, currently working as a Analyst with one of the leading organizations in India. Omkar received his Bachelor’s degree in Computer Engineering from Mumbai University and has completed his Masters of Business Administration in IT from Symbiosis International University.
Omkar has also authored a book, "Object Oriented Programming Using C++", for the students of Pune University. Describing DENIPOmkar says, "The most family-friendly and flexible company I've worked for!"
We are thankfull to Mr. Omkar for helping us in setting up the IT dept and also wish him good luck for his professional career.
Sunday, February 7, 2010
Expectations from India Budget 2010.
The Indian Finance Minister is going to announce Union Budget 2010-11 on 26th February, 2010. Everyone is as eager to know the India Budget 2010 expectations as the final budget itself. The budget results 2010 are keenly awaited for several reasons. Some of these are:
1. What measures will be taken up to tame high inflation rate, which has given rise to high prices of primary food articles and has caused fiscal deficit?
2. How a balanced budget will be managed to cope up with rapid economic growth and the stagnancy seen in the below poverty level?
The finance minister has plenty of issues to take into notice in order to come up with an ideal budget plan that meets everyone's expectations. The results will be unfolded in the month of February. But, the expectations from budget 2010 that have come to the notice are vital and play significant role in the pre-budget scenario.
Taxes:
The common men and the corporates are looking for decrease in taxes. The Finance Minister is likely to augment exemption limit of individual taxes to Rs 3 lakh from Rs1.60 lakh for salaried people. Exemption limit for women is expected to be increased from 1.80 lakh to 4 lakh and for senior citizen from Rs 2 lakh to 5 lakh.
However, taxes levied on the perks availed by income earners are expected to be restructured on higher level. This arrangement may satisfy junior employees and senior citizens. But, it may not go well with the people belonging to higher position.
Corporate Tax:
A reduction of 30% is expected in the corporate tax. The expectation is found in line with the introduction of Direct Tax Code (DTC) suggesting a 25% rate. The individual rate was lowered by 30% previous year also.
Capital Gains Tax:
As far as the 2010 India Budget expectation in the area of capital gain tax is concerned, finance minister is unlikely to bring any reform in this category of tax. It is predicted to be included under the Direct Tax Code, to be implemented from April 2011.
Re-fixing of Tax Slabs:
As mentioned earlier, the tax slab for women is expected to be revised to 4 lakh and senior citizens to Rs 5 lakh. However, second and third slabs of tax would see significant change.
The second tax slab is expected to be augmented from the existing Rs 3 lakh to Rs 1 million to be taxed at 20%. The third slab is likely to be increased from Rs 5 lakh to Rs 25 lakh to be taxed at the rate of 30%.
These revisions would act in favor of the reputed advocates as well as the doctors.
Gratuity Limit:
The India Budget 2010 expectations show that significant revision in gratuity limit is also considered. The gratuity limit of the income class is expected to be raised to Rs10 lakh in the budget 2010 from Rs 3.5 lakh. Both the upper as well as middle level executives will benefit a lot, if this revision is brought into effect.
Employees are paid gratuities in the government as well as corporate organizations during the time of their retirement. The amount that is dished out as gratuity falls outside the tax regime. If the gratuity limit is enhanced, the employees will surely benefit from it.
Self Assessment Slab:
The self assessment slab for businessmen and professionals is Rs 40 lakh at present. According to expectations, the slab may be revised to Rs 1 crore to lower the burden felt by the business people and professionals.
Stimulus:
India Budget 2010 speculations suggest that it is not the right time for the government to roll back stimulus packages, despite the fact that GDP growth of the nation in the Q2 (July – September) of the current fiscal stood at 7.9%.
However, experts believe that government would withdraw few of the subsidies from the market. The oil companies were aided with the stimulus package to check loss. Government did not allow the Oil companies to raise product costs of kerosene and diesel, which would have forced the common men to pay more.
As high prices of diesel and petrol would bear adverse effect on the transport rates of food products, the stimulus packages are expected to continue in the oil industry. However, partial withdrawal of the stimulus aid can be expected in this sector to tackle the situation of increasing fiscal deficit.
Nevertheless, stimulus packages from engineering as well as export sectors are expected to be rolled back.
Agriculture Sector:
According to India Budget 2010 expectations, the agriculture sector would be the highlight of the session. This sector is likely to receive enormous boost from the government. Finance minister's invitation to the farmers for the pre-budget meet is held to be the main reason behind such speculation.
Infrastructure and Social Sector:
Infrastructure industry is also expected to be the focus of the budget results of 2010. Many believe that development in this sector would account for massive growth in GDP. However, it is unlikely to ease monetary policy to better infrastructure. Interest rate cannot be reduced as well.
Railways:
According to 2010 budget speculations, the transportation charges for bulk commodities in railway industry are likely to be increased. The turnaround in the economic conditions of India is expected to boost the transport costs of cement, coal, iron ore and steel. Previous year, the Ministry of Railway refrained from raising transportation costs to help sector tackle the scenario of global meltdown. The ministry has not come up with its plan for hikes yet. But, the range can be fixed somewhere between 5 and 10%. If this becomes effective, one would need to pay Rs. 100 to 200 per tonne.
Other Sectors:
While taking into account the India Budget 2010 expectations of various sectors, it was found that the garment industry of India is looking for considerable cut in interest rates in its exports segment. The garment exporters also want the ministry to remove all the confusion faced in the case of excise as well as custom duties. The sector wants major commercial as well as fiscal relief. Similarly, the Indian tea industry is expecting to get an allocation of more than Rs 130 crore, which was granted in the fiscal year 2009-10.
Source: http://business.mapsofindia.com/india-budget/2010-expectation/.
Thanks,
Nimesh.
1. What measures will be taken up to tame high inflation rate, which has given rise to high prices of primary food articles and has caused fiscal deficit?
2. How a balanced budget will be managed to cope up with rapid economic growth and the stagnancy seen in the below poverty level?
The finance minister has plenty of issues to take into notice in order to come up with an ideal budget plan that meets everyone's expectations. The results will be unfolded in the month of February. But, the expectations from budget 2010 that have come to the notice are vital and play significant role in the pre-budget scenario.
Taxes:
The common men and the corporates are looking for decrease in taxes. The Finance Minister is likely to augment exemption limit of individual taxes to Rs 3 lakh from Rs1.60 lakh for salaried people. Exemption limit for women is expected to be increased from 1.80 lakh to 4 lakh and for senior citizen from Rs 2 lakh to 5 lakh.
However, taxes levied on the perks availed by income earners are expected to be restructured on higher level. This arrangement may satisfy junior employees and senior citizens. But, it may not go well with the people belonging to higher position.
Corporate Tax:
A reduction of 30% is expected in the corporate tax. The expectation is found in line with the introduction of Direct Tax Code (DTC) suggesting a 25% rate. The individual rate was lowered by 30% previous year also.
Capital Gains Tax:
As far as the 2010 India Budget expectation in the area of capital gain tax is concerned, finance minister is unlikely to bring any reform in this category of tax. It is predicted to be included under the Direct Tax Code, to be implemented from April 2011.
Re-fixing of Tax Slabs:
As mentioned earlier, the tax slab for women is expected to be revised to 4 lakh and senior citizens to Rs 5 lakh. However, second and third slabs of tax would see significant change.
The second tax slab is expected to be augmented from the existing Rs 3 lakh to Rs 1 million to be taxed at 20%. The third slab is likely to be increased from Rs 5 lakh to Rs 25 lakh to be taxed at the rate of 30%.
These revisions would act in favor of the reputed advocates as well as the doctors.
Gratuity Limit:
The India Budget 2010 expectations show that significant revision in gratuity limit is also considered. The gratuity limit of the income class is expected to be raised to Rs10 lakh in the budget 2010 from Rs 3.5 lakh. Both the upper as well as middle level executives will benefit a lot, if this revision is brought into effect.
Employees are paid gratuities in the government as well as corporate organizations during the time of their retirement. The amount that is dished out as gratuity falls outside the tax regime. If the gratuity limit is enhanced, the employees will surely benefit from it.
Self Assessment Slab:
The self assessment slab for businessmen and professionals is Rs 40 lakh at present. According to expectations, the slab may be revised to Rs 1 crore to lower the burden felt by the business people and professionals.
Stimulus:
India Budget 2010 speculations suggest that it is not the right time for the government to roll back stimulus packages, despite the fact that GDP growth of the nation in the Q2 (July – September) of the current fiscal stood at 7.9%.
However, experts believe that government would withdraw few of the subsidies from the market. The oil companies were aided with the stimulus package to check loss. Government did not allow the Oil companies to raise product costs of kerosene and diesel, which would have forced the common men to pay more.
As high prices of diesel and petrol would bear adverse effect on the transport rates of food products, the stimulus packages are expected to continue in the oil industry. However, partial withdrawal of the stimulus aid can be expected in this sector to tackle the situation of increasing fiscal deficit.
Nevertheless, stimulus packages from engineering as well as export sectors are expected to be rolled back.
Agriculture Sector:
According to India Budget 2010 expectations, the agriculture sector would be the highlight of the session. This sector is likely to receive enormous boost from the government. Finance minister's invitation to the farmers for the pre-budget meet is held to be the main reason behind such speculation.
Infrastructure and Social Sector:
Infrastructure industry is also expected to be the focus of the budget results of 2010. Many believe that development in this sector would account for massive growth in GDP. However, it is unlikely to ease monetary policy to better infrastructure. Interest rate cannot be reduced as well.
Railways:
According to 2010 budget speculations, the transportation charges for bulk commodities in railway industry are likely to be increased. The turnaround in the economic conditions of India is expected to boost the transport costs of cement, coal, iron ore and steel. Previous year, the Ministry of Railway refrained from raising transportation costs to help sector tackle the scenario of global meltdown. The ministry has not come up with its plan for hikes yet. But, the range can be fixed somewhere between 5 and 10%. If this becomes effective, one would need to pay Rs. 100 to 200 per tonne.
Other Sectors:
While taking into account the India Budget 2010 expectations of various sectors, it was found that the garment industry of India is looking for considerable cut in interest rates in its exports segment. The garment exporters also want the ministry to remove all the confusion faced in the case of excise as well as custom duties. The sector wants major commercial as well as fiscal relief. Similarly, the Indian tea industry is expecting to get an allocation of more than Rs 130 crore, which was granted in the fiscal year 2009-10.
Source: http://business.mapsofindia.com/india-budget/2010-expectation/.
Thanks,
Nimesh.
Saturday, February 6, 2010
Running a thela, MBA style! 15 street vendors are getting management tips on running their business from B-school students ARUNDHATI RANADE.
Nimesh Marfatia in Pune Mirror on 4th Feb 2010.
http://epaper.timesofindia.com/Repository/ml.asp?Ref=UE1JUi8yMDEwLzAyLzA0I0FyMDAzMDA=
Imagine your regular paani puri vendor playing soothing background music as you gulp down his fare. Seems like a dream, right? It's not a dream any more. At least 15 street food vendors in Kalyani Nagar have been getting tips in business management from B-school students as a part of an ongoing project.
Management students of Europe Asia Business School (EABS) are working for the project ‘Microscope’ along with young Indians and World Entrepreneurship Forum. The students have adopted 15 vendors and have already studied their business processes by spending a day with them last week. Now, these students will work along with these vendors for a couple of months to develop their businesses by suggesting ways to cut costs and introduce profitable strategies.
These benefits are a two-way street. Even the students are getting practical knowledge from vendors by understanding the whole process of development. Two of these students — Gargi Kumari and Nimesh Marfatia — share their experiences with Pune Mirror.
Nimesh Marfatia:
For my project, I selected a vada pav vendor near the More store in Viman Nagar. Sunil Vitkar runs this small street-side business named Aditya Snacks.Along with vada pav, he serves idli, poha, upma, tea, dosas, medu wada, dal wada, uttappas etc. Customers start pouring in from 8.30 am. I noticed that the batches of food prepared during peak hours were more. I was surprised to note the way things were taken care of smoothly. It was professionally managed and the service was quick. Goods of over Rs 50 were sold every minute, on an average, during the peak hours. Sunil wants to expand his business and dreams of owning a hotel one day.
I liked his passion and vision. Even we are taught in B-school about this. Sunil has studied only till Class X. But despite his limited education, he manages his business well. Business opportunities for him include canteen services in companies, tiffin services to working professionals and so on. He has plenty of competition from other vendors on road and fast food hotels in the area. I asked him to focus on cleanliness, prepare and display a menu card, make dosasin butter and charge the cost to the customer, increase the variety of dosasand play soft music (not songs). From my observations, I have found that there is a huge potential for the micro-entrepreneurs like Sunil to grow in this country.
Gargi Kumari:
I chose a florist named Sameer Mahapatro, who operates a small stall selling bouquets. Sameer is a class X pass. He came from Kolkata to Pune two years back in search of livelihood. Sameer starts his day by taking stock of flowers and ferns left over from the previous day.After that, he calls up his supplier for an inventory of Rs 2,000, which usually lasts for around a week or so. His average sale for a normal day comes to around Rs 600, which shoots up to Rs 4,000 on occasions such as Valentine's Day. His average profit per week is Rs 1,230, ie, a margin of 40 per cent.
However, this means that his monthly profit comes to about Rs 5,000 approx. His stall's USP is its location in front of a famous bakery in Viman Nagar.To motivate him and help his business, I asked him to focus on cleanliness. Most Viman Nagar residents fall in the upper middle class bracket, so they value a cleaner shop. I have also asked him to change the backdrop of the stall. Sameer starts making his bouquets from 11 am and is done by around 1 pm. However, he keeps the bouquets on display only in the evening because of the perception that customers buy flowers only in the evening and at night. But flowers need to be on display once they are ready. I found that Sameer makes no efforts to retain his customers. Cutting down on expensive flowers can bring his costs down.Though he sells old flowers at a lesser price, he can bring this to the notice of customers by putting the sale tag on old bouquets. I will track his business for a few months and observe the benefits of my suggestions during this course.
Thanks,
Nimesh.
http://epaper.timesofindia.com/Repository/ml.asp?Ref=UE1JUi8yMDEwLzAyLzA0I0FyMDAzMDA=
Imagine your regular paani puri vendor playing soothing background music as you gulp down his fare. Seems like a dream, right? It's not a dream any more. At least 15 street food vendors in Kalyani Nagar have been getting tips in business management from B-school students as a part of an ongoing project.
Management students of Europe Asia Business School (EABS) are working for the project ‘Microscope’ along with young Indians and World Entrepreneurship Forum. The students have adopted 15 vendors and have already studied their business processes by spending a day with them last week. Now, these students will work along with these vendors for a couple of months to develop their businesses by suggesting ways to cut costs and introduce profitable strategies.
These benefits are a two-way street. Even the students are getting practical knowledge from vendors by understanding the whole process of development. Two of these students — Gargi Kumari and Nimesh Marfatia — share their experiences with Pune Mirror.
For my project, I selected a vada pav vendor near the More store in Viman Nagar. Sunil Vitkar runs this small street-side business named Aditya Snacks.Along with vada pav, he serves idli, poha, upma, tea, dosas, medu wada, dal wada, uttappas etc. Customers start pouring in from 8.30 am. I noticed that the batches of food prepared during peak hours were more. I was surprised to note the way things were taken care of smoothly. It was professionally managed and the service was quick. Goods of over Rs 50 were sold every minute, on an average, during the peak hours. Sunil wants to expand his business and dreams of owning a hotel one day.
I chose a florist named Sameer Mahapatro, who operates a small stall selling bouquets. Sameer is a class X pass. He came from Kolkata to Pune two years back in search of livelihood. Sameer starts his day by taking stock of flowers and ferns left over from the previous day.After that, he calls up his supplier for an inventory of Rs 2,000, which usually lasts for around a week or so. His average sale for a normal day comes to around Rs 600, which shoots up to Rs 4,000 on occasions such as Valentine's Day. His average profit per week is Rs 1,230, ie, a margin of 40 per cent.
Thanks,
Nimesh.
Friday, February 5, 2010
Nimesh Marfatia in Indian Express (National). 31st Jan 2010.
http://epaper.indianexpress.com/IE/IEH/2010/01/31/ArticleHtmls/31_01_2010_010_002.shtml?Mode=1.
Thanks,
Nimesh.
Tuesday, February 2, 2010
"Have Breakfast… or…Be Breakfast!" By Y. L. R. MOORTHI
[Management Views from IIMB is an exclusive column written every two weeks for india.wsj.com by faculty members of the Indian Institute of Management Bangalore.]
Your guess is likely to be Sony, Canon or Nikon. Answer is none of the above. The winner is Nokia whose main line of business in India is not cameras but cell phones.
Reason being cameras bundled with cellphones are outselling stand alone cameras. Now, what prevents the cellphone from replacing the camera outright? Nothing at all. One can only hope the Sonys and Canons are taking note.
Try this. Who is the biggest in music business in India? You think it is HMV Sa-Re-Ga-Ma? Sorry. The answer is Airtel. By selling caller tunes (that play for 30 seconds) Airtel makes more than what music companies make by selling music albums (that run for hours).
Incidentally Airtel is not in music business. It is the mobile service provider with the largest subscriber base in India. That sort of competitor is difficult to detect, even more difficult to beat (by the time you have identified him he has already gone past you). But if you imagine that Nokia and Bharti (Airtel's parent) are breathing easy you can't be farther from truth.
Nokia confessed that they all but missed the smartphone bus. They admit that Apple's Iphone and Google's Android can make life difficult in future. But you never thought Google was a mobile company, did you? If these illustrations mean anything, there is a bigger game unfolding. It is not so much about mobile or music or camera or emails?
The "Mahabharat" (the great Indian epic battle) is about "what is tomorrow's personal digital device"? Will it be a souped up mobile or a palmtop with a telephone? All these are little wars that add up to that big battle. Hiding behind all these wars is a gem of a question – "who is my competitor?"
Once in a while, to intrigue my students I toss a question at them. It says "What Apple did to Sony, Sony did to Kodak, explain?" The smart ones get the answer almost immediately. Sony defined its market as audio (music from the walkman). They never expected an IT company like Apple to encroach into their audio domain. Come to think of it, is it really surprising? Apple as a computer maker has both audio and video capabilities. So what made Sony think he won't compete on pure audio? "Elementary Watson". So also Kodak defined its business as film cameras, Sony defines its businesses as "digital."
In digital camera the two markets perfectly meshed. Kodak was torn between going digital and sacrificing money on camera film or staying with films and getting left behind in digital technology. Left undecided it lost in both. It had to. It did not ask the question "who is my competitor for tomorrow?" The same was true for IBM whose mainframe revenue prevented it from seeing the PC. The same was true of Bill Gates who declared "internet is a fad!" and then turned around to bundle the browser with windows to bury Netscape. The point is not who is today's competitor. Today's competitor is obvious. Tomorrow's is not.
In 2008, who was the toughest competitor to British Airways in India? Singapore airlines? Better still, Indian airlines? Maybe, but there are better answers. There are competitors that can hurt all these airlines and others not mentioned. The answer is videoconferencing and telepresence services of HP and Cisco. Travel dropped due to recession. Senior IT executives in India and abroad were compelled by their head quarters to use videoconferencing to shrink travel budget. So much so, that the mad scramble for American visas from Indian techies was nowhere in sight in 2008. (India has a quota of something like 65,000 visas to the U.S. They were going a-begging. Blame it on recession!). So far so good. But to think that the airlines will be back in business post recession is something I would not bet on. In short term yes. In long term a resounding no. Remember, if there is one place where Newton's law of gravity is applicable besides physics it is in electronic hardware. Between 1977 and 1991 the prices of the now dead VCR (parent of Blue-Ray disc player) crashed to one-third of its original level in India. PC's price dropped from hundreds of thousands of rupees to tens of thousands. If this trend repeats then telepresence prices will also crash. Imagine the fate of airlines then. As it is not many are making money. Then it will surely be RIP!
India has two passions. Films and cricket. The two markets were distinctly different. So were the icons. The cricket gods were Sachin and Sehwag. The filmi gods were the Khans (Aamir Khan, Shah Rukh Khan and the other Khans who followed suit). That was, when cricket was fundamentally test cricket or at best 50 over cricket. Then came IPL and the two markets collapsed into one. IPL brought cricket down to 20 overs. Suddenly an IPL match was reduced to the length of a 3 hour movie. Cricket became film's competitor. On the eve of IPL matches movie halls ran empty. Desperate multiplex owners requisitioned the rights for screening IPL matches at movie halls to hang on to the audience. If IPL were to become the mainstay of cricket, as it is likely to be, films have to sequence their releases so as not clash with IPL matches. As far as the audience is concerned both are what in India are called 3 hour "tamasha" (entertainment). Cricket season might push films out of the market.
Look at the products that vanished from India in the last 20 years. When did you last see a black and white movie? When did you last use a fountain pen? When did you last type on a typewriter? The answer for all the above is "I don't remember!" For some time there was a mild substitute for the typewriter called electronic typewriter that had limited memory. Then came the computer and mowed them all. Today most technologically challenged guys like me use the computer as an upgraded typewriter. Typewriters per se are nowhere to be seen.
One last illustration. 20 years back what were Indians using to wake them up in the morning? The answer is "alarm clock." The alarm clock was a monster made of mechanical springs. It had to be physically keyed every day to keep it running. It made so much noise by way of alarm, that it woke you up and the rest of the colony. Then came quartz clocks which were sleeker. They were much more gentle though still quaintly called "alarms." What do we use today for waking up in the morning? Cellphone! An entire industry of clocks disappeared without warning thanks to cell phones. Big watch companies like Titan were the losers. You never know in which bush your competitor is hiding!
On a lighter vein, who are the competitors for authors? Joke spewing machines? (Steve Wozniak, the co-founder of Apple, himself a Pole, tagged a Polish joke telling machine to a telephone much to the mirth of Silicon Valley). Or will the competition be story telling robots? Future is scary! The boss of an IT company once said something interesting about the animal called competition. He said "Have breakfast …or…. be breakfast"! That sums it up rather neatly.
—Dr. Y. L. R. Moorthi is a professor at the Indian Institute of Management Bangalore. He is an M.Tech from Indian Institute of Technology, Madras and a post graduate in management from IIM, Bangalore
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