Telecom Competitiveness, Merger and Acquisitions, the new Idea for Vodafone to help their customers.

The following article is based on my own interpretation of the said events and/ or publicly available information. Any material borrowed from published and unpublished sources has been appropriately referenced.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.

Abhishek Shringi, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur


The market redesign of telecom market by the launch reliance jio has re-triggered the trend of mergers and acquisitions among tel-cos. The sector of telecommunication has seen several mergers in the past 4 years’ like MTS and Aircel merging in Reliance communications. But this merger talks between is Idea and Vodafone is about the fight to become no. 1 tel-cos in the country. It is about adding new customers and grow revenue market share(RMS), adding value to customer service by the high end experience of Vodafone and Idea’s distinct corporate ecosystem to drive the targeted synergies towards a healthier bottom-line. This merger will result in the country’s largest tel-co replacing Bharti Airtel.

Reliance Jio started its work by officially acquiring 95% of the shares of Himachal Futuristic Communications Ltd (HFCL) in 2012. But this plan started much before in 2010 when reliance industries on back hand with help of HFCL took PAN India license for 4G spectrum such that the other companies does not come to know and the spectrum could be purchased at much lower cost in 2010 spectrum auctions by TRAI. This blasting entry by Reliance industries in telecom sector in 2012 via Project Vijay, later changed to Reliance Infotel and then Reliance Jio created a bruising impact on the existing telecom companies in the market like Airtel, Vodafone, Idea, Tata Docomo, and BSNL. Specially the free voice and data service by Reliance Jio that was to be given till December 2016 and later extended till March 2017 has resulted in worse quarter for telecom companies disturbing their revenue model and decreasing their profits by as much as 60%.

To fight the current scenario Vodafone Group doesn’t have much of the choice but to accelerate its expansion moves in India- likely with the help of Idea Cellular. Although this acquisition will have several road blocks like Indus tower stake holding, regulatory hurdles associated with spectrum caps and significant market power in terms of combined customer base and RMS, but it can be dealt in a year time and by surrendering excess spectrum. Another major problem the existing tel-cos face against Jio is that they own license of only limited states across India like Idea have of only 11 circles, Vodafone in 14 circles, airtel in 16 circles only whereas Reliance Jio owns PAN India license across the country.

In a country like India whose telecommunication network is the second largest in the world by number of telephone users (both fixed and mobile phone) with 1.053 billion subscribers as on 31 August 2016 this process of competitiveness and mergers will not only create a big telecom giant in India but also will increase the competitiveness in the Indian telecom market in terms of providing quality service, technology and providing a competitive pricing to customer base in terms of adding value for them.  And this competition will further facilitate a faster growth of country in a new direction towards the new era of digital transformation. The path on which the journey of success has started and will go beyond the infinity.

Honest Criminals

The following article is based on my own interpretation of the said events and/ or publicly available information. 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.

Avantika Bhargava, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur


Digitisation has crept within government and businesses in India after the night of 8th November 2016. The reluctance which prevailed amongst us due to inefficient online banking systems was forced upon and now what stands in front is the hard earned money unprotected. This is not an exaggeration. Let me explain why.

Considering the spiked growth in online transactions, cybercriminals can now comfortably run their organised business operations. Ransomware is a league that haunts many businesses and individuals.

If critical files in our personal laptop become inaccessible someday by a ransomware operator by encrypting and scrambling the data, only to find out that we need to pay a sum to the cyber attacker to gain access to those CRITICAL files. It sounds disastrous. On successful payment, they shall deliver the decryption key as a perfect business partner as the mafia is cautious about its reputation and do not soil it.

In order to avoid this malware mafia and its bigger plans, India is trying to push biometric authentication for Aadhaar based transactions but fingerprints also stand under the radar because of wear out. Problem with an iris or finger print scan is that one can cut off your thumb and still use it to gain access. A very recent technology which uses infrared to read blood veins in the palm has come out as an answer to this problem.

While India needs to gear up, a new regulation will come into force from 2018 in the EU mandating tough penalties to check the growth of this malware mafia of honest criminals.

Will IIT Kharagpur become an”Institute of Eminence”?

The following article is based on my own interpretation of the said events and/ or publicly available information. 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.

Shubhangini Rastogi, MBA 2016-18, Vinod Gupta School of Management, IIT Kharagpur


Finance minister Arun Jaitley had announced in the 2016 budget to enable regulatory architecture to 10 public and 10 private institutions to emerge as world-class teaching and research institutions.

HRD Ministry led by Mr Prakash Javadekar has finalized on the regulations to set up these `world class institutes’ deciding to name them as `Institutes of Eminence’.

There have been changes made to the requirements to be fulfilled to compete for the spot. The corpus amount requirement has been significantly brought down for private institutes from the originally proposed Rs 500 crore to just about Rs 60 crore. They have also pulled down enrollment requirements to 15,000 students from 20,000 and keep Faculty Student ratio at 1:20 from initial 1:10.The regulations also clearly say that UGC regulations will not be applicable in most part to these 20 institutes.

The changes to the Regulations have been made following the feedback the ministry received on them after they were put in the public domain.

It is expected that the HRD ministry will be able to take the proposal to Cabinet in April-May and notify them in June this year. Once Cabinet approval comes through, an Empowered Experts Committee will be appointed to conduct the screening process for the aspiring institutes which will be able to apply within 90 days of notification.

Now the question is : Will IIT Kharagpur make it to the much coveted list of Institutes of Eminence?

An Ocean full of Opportunities

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.

Chetna Kohli, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur


“The maritime agenda will complement the ambitious infrastructure plan for the hinterland which is going on in parallel”, said the Indian Prime Minister, Mr. Narendra Modi at the Maritime India Summit in Mumbai on 14th April 2016.

India has always been slow and ad hoc in developing infrastructure for the various seaboards it naturally has and thereby losing out on related economic opportunity they provide. Having been Chief Minister of Gujarat – a State that stands out in port development, Mr. Modi has an unmatched sense of this untapped potential. He pointed out that India’s maritime potential lies in its strategic location as it is a part of all major shipping highways.

The emphasis on maritime infrastructure has increased in the recent years and the Modi government has provided impetus to it. The ambitious Sagarmala programme intends to promote port development, improve coastal economy, modernize the ports, integrate ports with existing SEZs, and create port-based smart cities, industrial parks, and transport corridors. India has also started to collaborate with neighbouring countries like Bangladesh and Myanmar in establishing waterways and port infrastructure. This is inevitable as infrastructure provides the necessary push to take forward strategic ventures.

India should strengthen its maritime and costal strategy. At the International Fleet Review in Visakhapatnam in February, Mr. Modi had observed that the ability to reap economic benefits from the water bodies and the country’s capacity to respond to the opportnities and challenges in the maritime sector. The Indian Navy plays a pivotal role in containing piracy on the seas and is positioning itself as the security provider in the broader context of economic exchanges. The emphasis on oceanic trade is two-sided — first, securing energy and trade routes to sustain economic growth, and second, keeping a check on increasing foray by other countries into Indian waters. Indian strategic interests in the larger Indian Ocean are converging with the U.S. India, who has traditionally been defensive, is also indicative of a change in its posturing.

All in all, the future of maritime domain is infused with endless possibilities whose benefits can be repaed if expolited properly.

Banning Inebriation

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.

Sonal, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

 


Following suit of Gujarat, Nagaland, parts of Manipur and Kerala (banning alcohol in phases since 2014), Bihar banned alcohol sale on 5 April 2016. Country-made alcohol will be totally prohibited in the first phase while the Indian Made Foreign Liquor (IMFL) will be banned six months after in the second phase. Currently there are nearly 6,000 liquor retail shops in the state. The Bihar government now plans to sell foreign liquor through government outlets. For this, the Excise department has initiated the process to acquire land for setting up outlets and the storage for sale of liquor. Earlier, the Bihar State Beverage Corporation Limited (BSBCL) was responsible for the wholesale trade of IMFL earning a maximum of 2% profit on sale price but now with retail shops it will earn 15% more on the Maximum Retail Price (MRP). According to Mr.Mastan , the state Excise and Prohibition minister, Country, spice and locally brewed liquor will be banned in the first phase while IMFL(foreign made liquor)  will be banned after six months in second phase. He added that the new prohibition policy will not place a complete ban on sale of liquor. The state excise department says that there will now be only 656 government owned IMFL retail shops of liquor in the state with maximum 10 in large towns like Patna, Muzaffarpur, Gaya while 4 in smaller towns like Madhubani, Bhagalpur and Darbhanga. Currently there are nearly 6,000 liquor retail shops in the state. These decions have drawn anger from people who are involved in the liquor sale industry amounting to around 4000 crores. As if this was not enough, the sale of toddy has been dragged  into ban as well. Turning this into a political spectacle, the opposition has claimed that many people belonging to the Pasi community have been arrested for selling toddy hence targeting these people belonging to the Scheduled Caste (SC) category for political reasons. Only time will show if this policy bodes well for Bihar or stays behind as a still another political propaganda.

 

 

All Aboard Inida’s Fastest Train

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.

Vinay Yadav, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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It wouldn’t beat a Japanese Shinkansen train in a race, but India on Tuesday completed the maiden voyage of its fastest train, taking the country’s rail network one stop closer to realizing Prime Minister Narendra Modi’s dream of modernizing the country’s aging rail network.

On 5th April, the Gatiman Express (“Gati” is a Hindi word for “speed”) took its first 100-minute journey between Delhi and Agra, home to the famous Taj Mahal. It will shuttle between the two cities at a speed of up to 160 kilometers, or 99 miles, per hour. India is calling it a “semi high-speed train.” Japan’s Shinkansen bullet trains go twice as fast–up to 320 kilometers, or 199 miles, per hour.

“The launch of this train heralds a new era of high speed rail travel in India,” the federal ministry of railways said in a statement a day ahead of the train’s flagging off.

The Indian Railway Catering and Tourism Corp., a government body that handles catering, tourism and ticketing operations of the railways, is ensuring that the food and other services on the train are “comparable to an in-flight experience.”

Passengers will be able to choose between Indian, continental and a special health meal from chicken sausages, date walnut cakes, Swiss rolls to fruit platters for calorie-conscious passengers.”

Until now, the Indian Railways food hasn’t had the best reputation. Meals typically consist of standard Indian fare–rotis, rice, lentil curry and vegetables.
The train’s 10 Wi-Fi enabled coaches manufactured in the northern Indian state of Punjab, also come equipped with “bio-toilets,” designed to convert human waste into a liquid, which is disinfected before it is discharged onto railway tracks.

Most Indian trains have open-discharge toilets, infamous for their unbearable stench and the litter they drop on railway tracks. A government-panel report in 2012 said that human waste on tracks was corroding them. In the recent past, railway ministers have vowed year-after-year to alleviate the risks of direct discharge by providing eco-friendly toilets in all trains, existing and new.

The so-called semi-high-speed train will run twice daily, except on Fridays, between Delhi and Agra–leaving in the morning from the Indian capital and returning the same evening. A ticket for a regular coach will cost 750 rupees ($11.35) and for double that price, one can travel in one of the two “executive” coaches. A standard ticket covering the same distance can cost between 300 and 500 rupees ($4.54 and $7.57).

Building a high-speed railway corridor is a pet project of Mr. Modi. In December, his cabinet approved a bid from Japan to build India’s first high-speed rail network. Construction is expected to begin in 2017 and be completed by 2023. It would cost about 980 billion rupees ($14.8 billion) and be financed by a low-interest loan from Japan.

The Gatiman Express will run on an existing railway line, modified slightly to meet its speed requirements.

POSCO: Victim of Red tapism

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.

Anuj Goenka, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur


Pohang Iron and Steel Company POSCO, largest steel maker of South Korea, a major and dominant player in global steel industry withdraws from India citing the regulatory hurdles.

The company had signed a memorandum of understanding MoU with Orissa Govt. in 2005 to start a 12 MTPA (million tonne per annum) integrated steel plant at an estimated cost of 12 billion USD. The project since its inception had faced several political, environmental and regulatory hurdles. Even after more than 10 years, the requisite amount of land hasn’t been transferred to company.

POSCO Pratirodh Sangram Samiti (PPSS), an outfit of the local people and various civil groups had opposed the land acquisition. Along with dharna, agitation and protests, PPSS adopted the legal route and had filed several cases against the proposed plant.

In a recent hearing at National Green Tribunal NGT, the company had mentioned that it don’t want to pursue its Orissa project any further and whatever the environmental clearances were received by the company can be revoked by tribunal. POSCO was keen to invest in India considering the growth potential offered by country.

The demand for steel was expected to be doubled in India when the rest of the world is facing slump in demand. It tried to set a 6 MTPA steel plant in Karnataka by signing a MoU in 2010 but that plant was also scrapped due to similar issues most notably land acquisition.

This proceeding is a major setback for our country as India continues to lag in the list of business friendly countries. Considering the mammoth size of the project both in terms of size and value, it would had been a major boost for indian economy providing large scale employment (both skilled and semi-skilled), increase tax revenues, alignment with MAKE IN INDIA campaign by the incumbent government.

 

 

 

 

 

One Belt One Road

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.

Sachin Mehta, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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After making nearly 6000 miles trip taking just two weeks, the first Silk Road train arrived in Iran carrying 32 containers of commercial goods from China. This route is the start of the new Silk Road modelled after the ancient trade route which allowed east to connect with the west in BC era. The new pathway is expected to revolutionize the china as well as the other countries along the way.

The new trade routes will be helpful in connecting the China with the European countries and the other regions in the west. The plan to build more roads, railways, ports and transport infrastructure is being called “One belt one road” plan. This comprises of two routes: a land route running from East Asia to Europe and a Marine route stretching to South-East Asia and Africa by Sea. Along the way these routes will pass through as many as sixty countries and regions covering half of the world’s entire GDP.

China being the biggest trading partner of Iran, this initiative will certainly help in strengthening ties between China and Iran thereby leading to economic prosperity. China and Iran have agreed to build economic ties worth $US600 billion within next decade. The strategic location advantage of Iran in the Middle East provides access to the number of land and sea routes which might play a crucial role in development of China’s new Silk Road initiative.

“China’s president Xi Jinping said he hoped its annual trade with the countries involved in Beijing’s plan to create a modern silk road would surpass $2.5 trillion in a decade.”

The revival of ancient trade route is touted to be one of the signature foreign policy initiatives by the Chinese president Xi Jinping, probably the largest undertaking since Marshall Plan post World War II. According to the experts around the world, this strategy will be the answer of china to the US’s Transpacific Partnership (TPP). The new silk road is expected to be the China’s best bet against the new trade agreements like TPP that threaten the China’s presence in the global economy. In any case China owns a huge number of infrastructure projects in a diversity of number of regional countries. That alone puts them in a risky yet, incredibly strong bargaining position with the rest of the world. The project aims at bringing revolutionary changes in the economic map of the world.

While the ancient Silk Road was a political and economic explosion, the new Silk Road promises to change the face of Asia.

Tata Steel to sell off entire British business

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.

Monica Patra, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur


 

Tata Steel is set to pull out of all its UK operations, including Port Talbot, in a move that could put thousands of jobs at risk.The company announced late on Tuesday night that its board had rejected an “unaffordable” turnaround plan for Port Talbot and instead given the green light to a sale of its UK business.

The move will affect about 15,000 workers and comprises the sites that used to make up British Steel and then Corus, which was bought by Tata Steel in 2007.

Port Talbot is Britain’s biggest steelworks and employs 4,000 people. However, it is losing £1m a day, making the prospect of finding a buyer difficult.

Tata Steel acquired the Anglo-Dutch steel giant Corus paying nearly $11B in 2007. At that time, Tata Steel although a regional player, was one of the most profitable steel company globally. The rationale behind this acquisition was to get access to developed markets in Europe and other places, draw synergy across the capabilities and drive operational efficiency and economies of scale through massive size and resources of the combined entity.

However over the last ten years they have faced several challenges both externally and internally. First the global slow down reduced the overall demand for steel and hence they could not operate in full capacity. Second, slowdown in the Chinese economy led cheap steel from Chinese manufacturers to the global market further affecting the UK operations of Tata Steel. Internally, the combined entity had multiple cultures embedded in pockets thus making the operational synergy a challenge. In addition, the UK unit had union employees making it difficult to rapidly adjust production to the market demand changes. As a consequence, over the last few years it seems they had to maintain their production levels in UK despite loosing money, hence the decision to sell or shutdown. Last year, the company had written off 2 billion pounds in impairment costs and that was almost the entire impairment cost. Tata blames cheap imports of Chinese steel, high energy costs and weak demand for threatening the future of its UK steelmaking.

References:

http://www.theguardian.com/business/2016/mar/29/tata-set-to-announce-sale-of-uk-steel-business-port-talbot

http://timesofindia.indiatimes.com/business/international-business/Why-Tatas-shut-down-its-British-operation/articleshow/51652375.cms

http://articles.economictimes.indiatimes.com/2016-03-30/news/71926533_1_tata-steel-europe-british-operations-port-talbot

 

 

 

Indian Raliways: Improving Infrastructure

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.

Glen Savio Palmer, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur

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The Indian Railways is one of the largest transport and logistics networks of the world. It runs about 12,000 trains, carries over 23 million passengers daily and connects about 8,000 stations spread across the country. Moreover, Indian Railways runs more than 7,000 freight trains per day carrying about 3 million tonnes of freight every day.

The Indian economy has emerged to become the fastest growing economy of the world today. However, Indian Railways has not been able to capture this growth due to unavailability of wagons and lack of infrastructure, thereby losing share steadily to roads.

To increase its market share in the transportation of bulk and non-bulk freight, the Central government has been steadily increasing investments in railway infrastructure. The budget allocation was increased to ₹ 643 billion in 2014-15 from ₹ 593.6 billion in 2013-14. Presently, the focus is on finishing the capacity-augmentation projects which have the highest rates of return. There are 154 New Lines, 42 Gauge Conversion, 166 Doubling and 54 Railway Electrification projects across the country at a cost of ₹ 285,652 crore (US$ 42.87 billion). For Railway Electrification projects, the cost as on April 1, 2014 is estimated to be ₹ 6,692 crore (US$ 1.0 billion).

In August 2014, The Department of Industrial Policy and Promotion (DIPP) introduced and permitted 100% FDI in certain sub-sectors of the Indian Railways. The revised FDI policy allows FDI in the construction, operation and maintenance of only the following:

• Suburban corridors through public private partnership (PPP)

• High speed train projects

• Dedicated freight lines

• Rolling stock including trains sets and locomotive/coaches manufacturing and maintenance facilities

• Railway electrification

• Signalling system

• Freight terminals

• Passenger terminals

• Testing facilities and laboratories

• Non-conventional sources of energy

• Railways technical training institute

• Concession of standalone passenger corridors (branch lines, hill railways etc.

• Mechanised laundry

• Rolling stock procurement

• Bio-toilets

• Technological solution for manned and unmanned level crossings

• Technological solutions to improve safety and reduce accidents

Some of the major developments and investments in the railway sector are:-

1.  Japan International Cooperation Agency (JICA) granted the Madhya Pradesh Government a loan of ₹ 12,000 crore for Indore and Bhopal metro rail projects

2.  Japan will finance India’s first bullet train between Mumbai and Ahmedabad at less than 1% interest rate, on the condition that India buys 30% of equipment from Japanese firms. The cost of the project is almost ₹ 98000 crores.

3.  Indian Railways issued a Letter of Award to US-based General Electric (GE) for a ₹ 14,656 crore (US$ 2.2 billion) diesel locomotive factory project at Marhowra, and to French transport major Alstom for ₹ 20,000 crore (US$ 3 billion) electric locomotive project in Madhepura, both in Bihar.

4.  An MoU was signed between the Ministry of Railways in India and the Czech Railways (Ceske Drahy) and Association of Czech Railway Industry (ACRI) of the Czech Republic on technical cooperation in the field of the railways sector.

Railway infrastructure requires large investments that cannot be undertaken out of public financing alone. Hence the Government has resorted to Public Private Partnerships (PPPs) to attract private capital and the techno-managerial efficiencies associated with it.

1.  Railways Infrastructure for Industry Initiative- This policy was announced in 2008-09 to attract private participation in rail connectivity projects so that additional rail transport capacity can be created.

2.  Private Freight Terminals (PFT) Scheme- It was launched in May 2010 in a bid to develop a network of freight terminals with efficient and cost effective logistic services and warehousing. The development of PFTs is to be funded through PPP. As of 2012-13, 43 proposals had been received for development of PFTs of which 38 had been finalised.

3.  Automobile Freight Train Operator Scheme (AFTO) and Special Freight Train Operator Scheme (SFTO)- These schemes were introduced in 2010 to increase the Railways’ share in the transportation of automobiles and commodities like fertilizers, molasses, edible oil, caustic soda, chemicals, petrochemicals, alumina, bulk cement and fly ash. These schemes have been further liberalised in 2013. For AFTO, the Railways received proposals from two firms out of which one had been given approval as of 2012-13. This AFTO will manufacture a new type of automobile wagon that has been developed by RDSO.

4.  Liberalised Wagon Investment Scheme and Wagon Leasing Scheme (WLS) – The Railways has allowed investments in Special Purpose Wagons (SPW) and High Capacity Wagons (HCW) by manufacturers and consumers of goods and their leasing by leasing companies from 2008. To make these schemes more popular, the Ministry of Railways revised the eligibility criteria in February 2011 by reducing the minimum net worth requirement for wagon leasing companies. The new norms also allowed for the leasing of wagons under the Automobile Freight Train Operators Scheme, Special Freight Train Operators Scheme and Container Train Operators Scheme. By 2012-13, two companies had registered as Wagon Leasing Companies.

Turning around the cash strapped Indian railways is a herculean task. A lot of investment, research and time are required to put it back on track. Though the present government in its election manifesto spoke a lot about improving the railways infrastructure and have placed a qualified and experienced minister at the helm of affairs. However, it can be safely concluded that their efforts will bear fruits when the changes promised are implemented meticulously.