Another blow to Sahara !!

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anup Agrawal,  MBA 2014-16,  Vinod Gupta School of Management, IIT Kharagpur

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On 15^th  March 2015 , The Times of India  published the news that “Sahara has been asked to pay Rs 10,000 crore to secure Subrata Roy’s bail.” This is again a serious blow to the company which is currently facing a huge financial problem and also has lost its ground since the company was found to be cheating with the people of India by offering them manipulative schemes. Currently Sahara has been asked to pay Rs forty thousand crore as a part of compensation to the people who have been cheated by the company and also ten thousand as a security deposit to secure the release of the Sahara chief Subrata Roy and two of its executive director who have been in Tihar jail for a year now.

Subrata Roy was jailed one year back after he repeatedly defied Supreme Court’s order to attend the courts hearing against Sahara group and since then he has found it difficult to secure his release from the jail. The supreme court has asked the Sahara group to deposit Rs ten thousand crore as a security to allow release of Subrata Roy but then the Sahara group of companies has not able to deposit the same.

The company is facing a huge challenge in terms of financial liability and has also tried to sell off two of its luxury hotel for an undisclosed amount to raise funds for the release of Subrata Roy which it has failed to do as of now.

The main question that comes to my mind is If Sahara is not able to deposit ten thousand crore ruppes in a one year span , how is it supposed to pay forty thousand crore to the people who have been duped by Sahara?

Reference-

http://timesofindia.indiatimes.com/business/india-business/Sahara-asked-to-pay-Rs-10000-crore-to-secure-Subrata-Roys-bail/articleshow/46569784.cms

Ola gets into TaxiForSure for $200-mn

“The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.”

Anup Agrawal,  MBA 2014-16,  Vinod Gupta School of Management, IIT Kharagpur.

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On 3^rd March 2015 , The Indian Express published the news that “Ola cabs buys TaxiForSure for $200-mn deal. This is nothing but a big step towards strengthening their market position in the country and expand rapidly to take on the US based rival Uber cab and others. This step, in my opinion will provide a big boost to both the companies, which are a first generation startup in India.

Ola cabs which was founded by Bhavish Agarwal,  has revolutionize the cab service market in India, seeing the success of it a lot of entrepreneur forayed in to this lucrative cab market like TaxiForSure, Meru cab, Uber cab and so on. Indian Cab industry is a big industry in it self , and we have a huge prospects in this segment. Looking at the bigger picture there are still a lot of competitors trying to enter in to this market , a majority of which is still unorganized. So to take a major chunk of this market a company has to evolve it self continuously and keep bringing values to the customers. Now if we look at the operating model of Olacab , they have been able to create a huge demand for their product and it is expanding rapidly. Given the current scenario in which Olacab  bought TaxiForSure , it would deepen their  reach in the market and strengthen their position as compare to Uber, A globally recognized company.

Again if we look back to the untoward incident that happened to a passenger of Uber cab , Uber cab has already lost its sheen in the market and has drawn criticism from many government based organization for failing to meet the protocols, that are supposed to be followed. When synergy takes place 2+2 becomes 5, that is what has happened here in this case and I believe the merger will provide a fillip to both the companies to expand their footprint not only in India but globally.

Reference-

1. The Indian Express- 3rd March 2015

2. http://www.financialexpress.com/article/companies/ola-gets-into-taxiforsure-for-200-mn/49640/

 

Profit: The need for long term sustainability of E-commerce companies

“The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.”

Anup Agrawal,  MBA 2014-16,  Vinod Gupta School of Management, IIT Kharagpur.

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On 12^th February 2015 Business Standard published the news that “Deep discounts are not long term strategy for e-tailors:PwC” . According to a recent survey done by PricewaterhouseCoopers India it has found that most of the ecommerce companies in India are on a growing trajectory in terms of revenue but not in terms of profit. Its also been found that there is a tremendous amount of opportunity lies in this sector in future which is going to be the most lucrative market in the future, and for the companies to sustain they need huge profit in this sector which is not happening currently due to major discounts offered by  these (e-tailors) company to woo customers .  Now if you analyse the current situation the competition is at its peak now with the advent of US major e-tailor company Amazon which is going to take on its rivals in India Flipkart and Snapdeal. With the major global ecommerce companies foray in to India, there is going to be serious tough completion ahead in this particular market without any doubt, so to sustain in these industries the companies have to have a proper strategy for long term sustainability and not just offer discounts on its products.

Now if you look at the current scenario, offering discounts have become a ritual in these market. All the top ecommerce companies are offering huge discounts, for example Flipkart topped the chart in the list of companies offering discounts by launching its Big Billion day scheme, which was no wonder a big fiasco in itself.  So what PwC has found through its research is that offering discounts are not a viable option for long term sustainability and there has to be some other strategies needs to be in place in the long run.

Customer data analytics and customised consumer enhancement tools could work well for the e-tailors company. They must provide customers an experience that will change their lives to sustain in the long run and become a profitable company.

Reference-

1. http://www.investmentguruindia.com/IndustryNews/discounts-may-not-be-viable-for-e-commerce-cos-in-long-runpwc

2. Business Standard 12th February

 

Tata Motors’ next launch to take on Maruti Alto

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anup Agrawal,  MBA 2014-16,  Vinod Gupta School of Management, IIT Kharagpur.

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On 5^th February 2015 Business Standard published the news that “Tata Motors’s next from Nano factory to take on Maruti Alto.  Tata launched Nano to cater to the need of an affordable car for the people, but since its inception it has not been able to create that impact in the market. The Tata Nano failed to take off, despite a huge investment in development, marketing and a dedicated plant at Sanand in Gujarat. Tata also has tried to brand Nano as a smart car, but still there has a been a very sluggish demand for Tata Nano in the market and which has led the company to think of an alternative and launching a new version of Tata Nano code named as ‘The Pelican’.

Tata’s has again taken a prudent decision by not associating the new vehicles name with Nano and launching it under a new brand, to avoid reference to the failure of Tata Nano. Again this car will be launched with a bigger hatchback, to take on the Maruti Suzuki’s Alto. Tata Motors, in my opinion has taken a very smart decision by not associating this car with the Nano brand, and launching it with a different brand.

Tata Nano had seen a tremendous demand during its launch, but due to its poor performance in the market and due to being branded as a cheap car. Tata Nano also tried to revive its market by trying to rebrand it as a smart car , but that strategy also has failed to take off , so in this context if you see, you will find that it was necessary for Tata Motors to modify its Tata Nano and launch it in a new version by not only rebranding it but also by changing the design and manufacturing aspects of the car and also trying to target a market which is having a huge demand. Considering all these facts Tata Motors has finally decided to launch a bigger hatchback version of the car and targeting Maruti Suzuki’s Alto , which is having a high demand in the market. I believe Tata Motors new version of Nano “The Pelican” will be a big challenge to Maruti Suzuki’s Alto, and if it succeeds it will have a great outflow from its Sanand plant which is running at less then ten percent of its total capacity.

 

Reference-

1. http://www.shifting-gears.com/2015/01/19/tata-motors-x302-pelican-hatchback-to-rival-the-alto/

India- Trying to woo Foreign Investors :-

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anup Agrawal,  MBA 2014-16,  Vinod Gupta School of Management, IIT Kharagpur.

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On 29^th January 2015 The Indian Express published the news that “Government won’t appeal against Vodafone tax order”, this step has been taken by government to allay investors’ concerns on tax issues, and by this the government has absolved Vodafone of Rs 3200 crore tax demand in a transfer pricing case.

If we analyze the situation , it is found that India is at a loss of 3200 crore which it would have received from Vodafone India Services Private Limited (VISPL)  group as a part of its tax components for the transaction between VISPL and its parent group Vodafone Teleservices Holdings Limited , Mauritius. But In my opinion the government has taken a Prudent decision in this case by absolving Vodafone from paying these tax to the government keeping the concerns of foreign investors in mind.

Currently many business organization along with foreign investors have asked the government to simplify the process of doing business in India and to have a single window clearance for all the paper works and in addition to that the most important part is to simplify the tax rules and regulation. Many companies are leaving India and trying to set up their head office in countries like Vietnam and Mauritius where the rules and regulation are simplified for running a business.

Now, decisions like this at this point when India is a back on the track of growth will allay investors concern related to tax issues and also boost their sentiments to invest in India. The government is trying to put India in the global map as a business friendly nation, like that of Mauritius and Vietnam where those countries have simplified the rules and regulation to woo foreign investors.

India which is on a growth trajectory and have become the investment destination for many foreign companies , trying to simplify the tax rules and regulation and also by absolving Vodafone from the tax issues it has clearly sent a message that Indian is a business friendly nation and it will lift the sentiments of foreign companies to invest more in India , which will be a positive factor for Indian Economy.

 

Reference-

1. http://www.dnaindia.com/money/report-vodafone-off-the-hook-in-rs-3200-crore-transfer-pricing-case-2056417
2. The Indian Express (29^th January 2015)

The covenants of coal block E-auction

The following article is my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Anup Agrawal,  MBA 2014-16,  Vinod Gupta School of Management, IIT Kharagpur.

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On 24^th January, Indian Express published the news that  “In the upcoming process of coal mining auction lenders will be able to seek removal of defaulting winners of coal blocks.”  Coal blocks have always been a primary and integral part of India’s sources of revenue and it was imperative for the government to enact stringent laws to ensure the better usage of the coal resources.

Hitherto, we did not have any laws or acts to curb the illegal mining of the coal blocks and on top of that we also did not have any laws to bridge the gap between the lenders and the private companies to ensure a smooth transaction between them. The main factor that supports this action is the fact that only bidder with good financial capacity can take part in the bidding process of the coal auctions so that there will be very few chances of default in the payments to the lenders in future. Again the firms involved in the bidders will have to strictly follow the conditions and covenants of the coal mine development and production agreement (CMPDA) , which is the organizing body of the coal block e-auction.

If we look at some of the events related to the default in payments to the lenders such as in the case of Kingfisher, SpiceJet  where the lenders are currently facing a huge problem due to their inability to pay the debt. So in this case had this law been implemented earlier, it would have benefited the lenders and would not have let such situations to occur. With the advent of E-auction of coal blocks, the new ruling party has already put the impression of being a visionary government. In addition to that the government has also taken proactive measures to support the lenders who until now did not have any rights to take action against willful defaulters. According to an article published in the business standard it clearly states that coal blocks will not be given free for end use projects. The government has decided to take upfront payments from the bidders along with a performance guarantee equivalent to a year’s royalty , which would curb the chances of being a defaulter in future.

I strongly believe this sort of rules and acts will bring transparency in the system and also provide a fillip to the Indian economy.

­References-

1. http://www.business-standard.com/article/economy-policy/coal-block-auction-performance-guarantee-could-keep-small-players-out-115012301266_1.html
2. Indian express newspaper dated 24^th January (page no 13)