2 Hermès T-shirts Equal a Nano

Hermès recently opened its store in Delhi, their first in India. It carries the hallmark of the famed high fashion French brand. The use of high quality material and appraised hand-craftsmanship drives the price points for Hermès merchandise well into the top end. Not surprising then that Hermès has a t-shirt priced just under Rs50,000.
Interestingly, you could buy a Nano for the price of two such t-shirts. Two highly admired brands worldwide. Hermès has built a global brand with a very high value perception while Nano is applauded for its unparalleled engineering and innovation in the automobile industry.
Hermès is the finest example of brand building on the back of pristine product quality such as the Hermès scarf woven from the silk of 250 mulberry moth cocoons, hand printed and hand stitched. The brand boasts a clientele that includes aristocracy, divas, Hollywood superstars and business czars across the globe. Its famous Kelly bag named after Grace Kelly and the Birkin bag named after the Hollywood actress Jane Birkin promise a stairway to style heaven. The company has never licensed any of its products.
Nano is the poster child of Indian innovativeness. As developed economies looked towards emerging markets for growth, they began to realise that for these highly price conscious and value driven markets, products needed to be designed from scratch and innovative solutions were to be found in the markets themselves. China took it a step further - they used scale and innovative ways to produce goods at rock bottom prices for the rest of the world. Tata Motors set itself the challenge of producing a car at the unheard price of Rs1lakh that would make the Indian dream a reality. In a country of 1bn people, car ownership is a mere 1%. Nano gave the world a blueprint for low priced cars.
More recently, global brands have been rushing to set up R&D labs and innovation centres in emerging markets where there are invaluable lessons to be learnt about price and value. Today, everything about emerging markets makes headlines. Every economic and marketing forum is focused on them.
However, let us not forget that when it comes to building brands, we have a lot to learn from developed economies. There are lessons aplenty; Coca Cola, McDonald's, Microsoft, Nike, Starbucks, Apple, Google, and so on. It is perhaps not too early for us to learn lessons on global brand building.
However, Hermès is perhaps one of the most valuable lessons - how do you create a value perception for your brand where even a somewhat less glamorous and casual piece of clothing like a T-shirt will get consumers to pay half the price of a car even if that car is the cheapest in the world!

Great CEOs, Stupid Men

Why is it that men who can pull off corporate miracles fail at something as simple as keeping their fly zipped? I, for one, can think of at least five reasons. So, Mike Hurd is the latest CEO to bow out ignominiously of a dream job. Let me assure you, he won’t be the last. There’s something about powerful, rich men that makes them trip up over something as commonplace as beautiful women. And that’s been happening from time immemorial. A man called Ravan lost his kingdom and life for messing with Ram’s wife; Paris (the Trojan prince) got it from the Greeks for abducting Helen; and in more recent history, Phaneesh Murthy and David Davidar paid the price for their extra-marital pursuits. The question, then, is, why do otherwise bright, successful and wealthy men end up trashing their careers over—well, there’s no delicate way to put this—sexy sirens? Since I am neither powerful nor wealthy, but a man just the same, it’s relatively easy for me to look at this issue rather dispassionately. And having tossed this issue in my mind for a while now, I have been able to pinpoint five reasons. Of course, there’s not a shred of scientific research backing any of these points. Let me walk you through them in reverse order of their importance:- Spoiled by Sycophants: When you are in a position of power, you automatically attract people whose primary job is to keep reminding you just how great you are. Even if they are capable people, their own insecurities are compounded by the fear that perhaps you expect them to shine a little less brightly than yourself. Now, imagine getting brainwashed like this every minute of the day; when no idea of yours is too absurd to be rejected, no joke too silly to evoke laughter, no credit too small to be laid at your feet. Is it any surprise then that CEOs actually think they are extraordinary people? No.- Availability: When you are powerful and rich, there will be those who are drawn to you because they see you as a means to riches and powers. And if you are ‘straight’, most likely the ones throwing themselves at you will be beautiful women. They’ll make you feel special and themselves, available. Now, you need to be either a saint or a man with no testosterone to ward off such advances. More often than not, CEOs capitulate.- Enough is never enough: The CEO is also a family man, right? He’s got a wife and kids, so why should he stray? That’s where the super-achiever in him comes in. Don’t forget that he didn’t get to the top job by accepting convention or saying enough is enough. Enough for him is never enough. That applies to his interest in women as well. He’s got to have more.- Arrogance: Let’s face it, men with self-doubts don’t make great leaders. Typically, the leader needs to make decisions with incomplete information and in times of uncertainty. Often, they are so cock-sure of themselves that they tend to get arrogant. Why else would HP’s Mike Hurd think he could fudge $20,000 in personal expenses and get away with it? Obviously, he thought, “Well, I am the CEO, who the hell is going to rat on me?” And he was right. If his marketing consultant pal Jodie Fisher hadn’t accused him of sexual harassment, his transgression would have never come to light. - It’s in the genes: This is not to justify irresponsible behaviour by men, but the fact remains nature never designed them for fidelity. Like other creatures, humans are meant to perpetuate their kind, and men, whose principal utility is that of an impregnator and not a carrier, are naturally driven to put sex over caution. And that doesn’t change just because you sit in a corner office or you wear an Armani suit

Apple launches iPhone 4 in China

BEIJING: Apple on Saturday launched the latest version of its iPhone in China and boosted its presence in the world's biggest Internet and mobile market by opening another two stores in Beijing and Shanghai. Dozens of people queued up at the new store in the capital for the first official iPhone 4, some waiting for more than 24 hours, state media reported, even though the smartphone has been available on the grey market for months. The iPhone 4 is available in Apple stores in the two cities, as well as at China Unicom retail outlets for buyers who sign a two-year contract with the operator, Apple said in a previous statement. The 16-gigabyte version of the smartphone, which will have wireless Internet capability, will cost 4,999 yuan (744 dollars) at Apple stores with the 32-gigabyte selling for 5,999 yuan, the California manufacturer said. China Unicom, the country's second-largest mobile phone operator, reportedly took nearly 50,000 pre-orders for the iPhone 4 on September 17, the opening day for such reservations. With the two-year contract, the 16-gigabyte will sell for 5,880 yuan while the 32-gigabyte version will cost 6,999 yuan, the China Daily said. The iPhone 4 made its debut in China just a week after Apple officially launched the iPad tablet computer in the country, with some customers queuing up for several days to ensure they got their hands on the sleek device. The new stores in Beijing and Shanghai will bring the company's total to four in China -- two in each city. It plans to have 25 stores in the country by the end of next year. China has at least 420 million web users and is also the world's largest mobile market with more than 800 million subscribers as of the end of June, according to official data.

Foreign banks lower lending, workforce in India in '09-10

NEW DELHI: Foreign lenders operating in the country reduced their overall lending by over one per cent and staff strength by over six per cent in 2009-10 fiscal. This happened even as the overall economy bounced back and foreign banks increased their number of branches in India during 2009-10. According to the Reserve Bank, foreign banks gave out total advances of Rs 1,63,260 crore during 2009-10. This was 1.28 per cent less than Rs 1,65,385 crore of loans given by the banks in 2008-09. In addition, overseas banks had 27,742 employees in India as on March 31, 2010, a fall of 6.22 per cent compared to the previous fiscal, RBI said in its latest 'Profile of Banks'. However, the total number of offices operated by foreign lenders in the country went up to 310 in the last fiscal, from 295 in 2008-09, it added. There are 32 overseas banks operating in the country. Among major foreign lenders, Citibank gave out advances of Rs 36,655 crore in 2009-10, down from Rs 39,920 crore in the previous fiscal, while Barclays Bank's lending fell to Rs 7,565 crore in the last fiscal from Rs 10,551 crore in FY'09. Hong Kong & Shanghai Banking Corp gave out Rs 23,475 crore in India last fiscal, down from Rs 27,589 crore in the year before that. Royal Bank of Scotland NV's lending in the country fell to Rs 13,406 crore in 2009-10, against Rs 16,660 crore. However, Deutsche Bank's advances to Indian customers went up to Rs 12,923 crore in the fiscal ending March 2010, from Rs 8,798 in the previous year. Standard Chartered Bank had the largest payroll among foreign banks in India as on March 31, 2010. It employed 7,903 staff in the country, which was a small rise from 7,825 in the previous fiscal. But many of the other overseas banks reduced their staff strength substantially last fiscal. Hong Kong & Shanghai Banking Corp cut staff numbers to 6,685 last fiscal. It had 7,746 employees in India in 2008-09. Royal Bank of Scotland NV's workforce in India came down to 2,716 in 2009-10 from 3,241 in the previous fiscal, while Citibank's went down to 4,613 from 4,795. Barclays reduced India payroll by a third and ended 2009-10 with 1,083 employees against 1,534 in 2008-09. Even as they shed staff in India, overseas banks added more branches in the country last fiscal. Standard Chartered Bank increased the number of its offices to 95 from 91, while Hong Kong & Shanghai Banking Corp touched the 50 mark from 47 a year-ago. Citibank's total branches in the country went up to 43 in 2009-10 from 41 in the previous fiscal.

MGM studio creditors reject $2 billion bid

Indian conglomerate Sahara India Pariwar says that its offer to buy out the creditors of struggling Hollywood studio Metro-Goldwyn-Mayer Inc for more than $2 billion has been rejected. Subrata Roy Sahara, the company's chairman, had a conference call with creditors on Tuesday. The company said late yesterday that the offer was rejected within hours. A spokesman for Houlihan Lokey, an investment bank that is advising MGM's creditors, declined to comment. MGM's creditors are owed around $4 billion. They are negotiating a restructuring plan for the studio that could include a prepackaged bankruptcy. MGM has rights to the James Bond franchise and owns half of the upcoming movies based on J R R Tolkien's "The Hobbit."

Next year critical for decision on India venture

Telenor ASA, Scandinavia's biggest phone company, said next year will be decisive for its Indian operations. The Norwegian company, which spent about $1.3 billion to buy control of its India venture and invested 4.8 billion kroner ($808 million) more on capital expenditure, has accumulated more than 3.4 billion kroner in losses in the South Asian country. The India operations added just 159 million kroner, or $27 million, to revenue in the first half. "Our goal is to get back on the business plan next year in terms of revenues and cash flow," Sigve Brekke, the chief executive of Uninor, the Indian venture, said at Telenor's investor meeting this week. "I'm not going to say that we are confident. A year from now we'll know what we're able to do." Telenor entered India last December seeking to leverage expertise gained in Pakistan and Bangladesh to capture growth and profits in the world's second-biggest wireless market. With more than a dozen operators competing for users in India, call rates have been pushed to as low as a penny a minute, making the risk in the market too great, Telenor investors have said. Uninor could still meet its target of profitability in three years although the company has been "humbled" by its setbacks, Brekke said. The executive took over the operation in July from Stein- Erik Vellan after the first six months didn't meet projections. The company estimates it doubled revenues and boosted subscriptions 79 percent in the third quarter. LOW LEVEL "Obviously it's picking up, Sigve Brekke is doing a really good job of re-energising the sales," said Frank Maao, an Oslo- based analyst at DnB NOR. "But it's picking up from a really low level when it comes to revenue and the whole challenge is related very much to the structure of the industry and the number of players." India's current regulations discourage consolidation that would help remaining players increase profits. Another hurdle is the possible requirement for universal coverage, meaning wireless companies could be compelled to provide service in villages of 5,000 people rather than concentrating on more lucrative markets. Brekke says Uninor aims to become one of the top six companies in each of its "circles" or regions , and is close to that goal in several circles. He's changed managers in four circles where performance lagged and introduced a pricing plan that requires users to keep the Uninor SIM card in their phone to take advantage of fast-changing discounts. Indian users typically juggle prepaid SIM cards from several phone companies. Average calling prices collapsed last year as companies offered free calling minutes to sign up customers. India added 13.5 million mobile subscribers amounting to 2.9 percent of its base in August according to the Cellular Operators Association of India. Uninor added 32 percent, the association said. "The market growth you see is not going to last forever," Brekke said. "The experience we have from other markets is that if you don't take your fair share when the market is growing like that it's very difficult to do that later." Prices have stopped falling and he expects the free- minutes plans to taper off because they cut into profits. Uninor's monthly Average Revenue Per User, or ARPU, was 90 rupees ($1.97) in the second quarter, rising to 100 rupees in August, the company said. "If a year from now we are still competing with free minutes and the regulations go against us," then the business may be reviewed, Brekke said, saying the company will continue with plans to improve operations. "Even if we sell it, we have to have something to sell," he said. Telenor entered India when it acquired a majority stake in a new wireless business set up by Unitech Ltd., the real estate company controlled by Indian billionaire Ramesh Chandra. It's kept infrastructure costs down with tower sharing agreements, including new contracts that Brekke says have smaller fees and shorter lock-in periods than the initial agreement made with Tata Teleservices and Quippo Telecom Infrastructure.

Is Indian realty sector hurtling towards another bubble?

Avalid question - and one being asked by almost everyone looking for property in Mumbai , Delhi or any of the other city where real estate prices have spun out of control - still, speculating about real estate bubbles on the Indian property market without looking at the facts is the work of a doomsayer, not an analyst.First, a much-required definition: What is a real estate bubble? How does it happen?A real estate bubble happens when the cost of homes climbs unrealistically fast. In a normal market scenario , prices do rise, but only in tandem with the rate of inflation or a rise in middle-class incomes. When a real estate bubble goes critical and finally bursts, the prices of the same homes come crashing down and the real estate market takes a nosedive.In nature, a bubble is the most energy-efficient configuration for something as fragile as a stretched sheet of soap water. As long as it is not acted on by an external force, it can stay that way for a long time. In a way, that is true for a real estate bubble as well - unless something happens to disrupt the status quo, it will prevail. Fortunately , it is not the nature of the property market to leave a real estate bubble alone for too long. The artificial pressures that create it are always defeated by the pressure of demand for rationality. Once demand for irrationally priced properties drops sufficiently, the bubble bursts.

Citigroup gives pay hikes to top execs in stock

NEW YORK: Citigroup, still partly owned by the government after a rescue during the financial meltdown, is giving raises to top executives that could amount to millions of dollars. CEO Vikram Pandit, who is drawing a salary of $1 for the second year in a row, did not get a raise, but the chairman of the bank hinted it plans a big payout for him next year. The announcement Friday by Citi, which remains weaker than most of the large American banks two years after the meltdown, raised questions among experts on corporate governance. By paying the raises in company stock, not cash, Citi has decided to follow previously issued guidelines that limited salaries to $500,000 for the top 25 executives at financial institutions still receiving large amounts of federal help. "The question is do they deserve higher salaries, and are they evading rules to avoid losing talent?" asked Charles Elson, director of the Weinberg Center for corporate governance at the University of Delaware. Citi is fighting to keep talented bankers from jumping ship to any of its rivals on Wall Street, all of whom have repaid their federal bailout money and are not under the same kind of compensation restrictions. Edward Skyler, a spokesman for the bank, said the compensation levels "correspond with similarly situated executives in the industry." Citi was the hardest-hit US bank during the credit crisis of 2008, and received $45 billion in government bailout money under the Troubled Asset Relief Program, part of which was converted to stock last year. The government is gradually selling its stake and still owns about 17 per cent of the bank. Though Citi has posted profits recently, Citi continues to be weighed down by large amounts of bad loans and investments it made in the run-up to the crisis. Pandit, who pledged last year to take a $1 salary until the bank returned to profitability, elected to keep that figure for this year, but he seems set for a big payday in 2011. Citi's chairman, Richard Parsons, said in a statement that beginning next year the bank's board "intends to compensate Vikram commensurate with the job of CEO of Citi." Rolfe Kopelan, a managing partner at search firm Capstone Partnership and an expert on corporate compensation, said $1 still seems appropriate for Pandit. "It's not ridiculous when you're living on public funds, and when you're one of the major causes of the recession," Kopelan said. The biggest raise disclosed in Citi's regulatory filing will go to John Havens, head of the bank's institutional clients group. He will get a cash salary of $500,000 this year, the maximum under the cap, and $9 million of salary paid in stock. That compares with a salary of $975,000 last year for Havens, also in a blend of cash and stock. Including other awards of stock and options last year, Havens' total compensation last year came to $11.2 million. Citibank did not disclose how much Havens might be awarded in other stock grants, but he could be eligible for a bonus this year of up to 50 per cent of his salary, or $4.75 million. Manuel Medina-Mora, head of consumer banking for the Americas, will also get a cash salary of $500,000 and $7.45 million of salary in stock, making him eligible for a bonus of up to $4 million. Last year, Medina-Mora's base salary was $972,000, and his total compensation including other awards of stock and options was $9.8 million. Chief Financial Officer John Gerspach's salary will be $500,000 in cash and $4.17 million in stock, making him eligible for a bonus of up to $2.3 million. Last year, his cash and stock salary was $3.3 million, and his total compensation including other stock awards was $5 million. Under an amendment to the bank bailout law of 2008, Citi is still subject to the compensation restrictions as long as the government remains a shareholder. That means the top 25 executives cannot receive bonuses exceeding 50 per cent of their salaries. In deciding to give their salary raises in stock, Citi chose to abide by a previous rule that governed the bailout, under which top executives could not receive more than $500,000 of their salary in cash. The Associated Press' calculation for executive pay aims to isolate the value the company's board placed on the CEO's total compensation package. The figure includes salary, bonus, incentives, perks and the estimated value of stock options and awards. The calculations don't include changes in the present value of pension benefits, and they sometimes differ from the totals companies list with federal regulators.

PepsiCo CEO Indra Nooyi sees great growth, hurdles for India

NEW YORK: PepsiCo Inc Chairman and Chief Executive Indra Nooyi has a clear message for her homeland of India -- improve your infrastructure, work force and sanitation, attract more foreign investment, and develop faster. At a panel discussion on Tuesday evening hosted by the Yale-India Initiative, Nooyi said it was tough for her to talk about India, since she has "one foot there and one foot here." She called India a "must-invest" market, citing its demographics, ample work force and pace of innovation. "We see a growth market for the next 50 years at least, which is not the case in many of the other markets we participate in," said Nooyi, the highest-ranking Indian-born woman in corporate America. "We are in India for the long haul." Still, Nooyi said she wanted to talk about India constructively in terms of what can be done better, "so you can attract more investment and India itself can develop faster." The biggest obstacle is infrastructure, she said. "If I use the word 'appalling,' that would be a bit of an understatement," said Nooyi, who hails from the southern city of Chennai. "When we talk about reaching every nook and corner of India we need an infrastructure. ... We need power 24 hours a day in every part of the country. We need water." "I'm not saying developments haven't been made, but it's not as fast as it needs to be," added Nooyi, who has a reputation for being a demanding manager. The next two obstacles are a work force that largely lacks the proper skills and a poor level of health and hygiene, she said. "We think that if you improve education you can improve the hygiene standards in India and you can reduce the incidence of disease," said Nooyi. "And the economy itself will become much more healthy going forward." In 1989 PepsiCo established its business in India, where it now has more than 36 bottling plants including 13 owned by the company and 23 that are franchise-owned. In the latest quarter, its beverage sales volume rose at a double-digit rate. US ECONOMY STILL DELICATE Nooyi, who played in an all-girl rock band in her youth and now enjoys ballroom dancing, came to the United States to attend Yale School of Management. She graduated in 1980. Now a U.S. citizen, she has worked for PepsiCo since 1994. She was named to the top job in October 2006. Nooyi, who turns 55 in October, told Reuters that she is completely focused on making PepsiCo "the defining corporation of the 21st century." But further out, she sees a possibility of public service.

Optimising growth to benefit the poor

The decision to withhold forest clearance to a mining project in the tribal area of Orissa is a turning point in the evolving national consensus around sustainable development, because it focuses attention on a neglected dimension of sustainability - the social dimension, or impact on the poor. It is timely, because we will be making increasing demands on natural resources as we consume vast quantities of steel, cement, aluminium, chemicals and fertilisers needed for infrastructure, urbanisation and food security essential for the eradication of poverty. Almost all the mining will take place in the tribal areas. As the finance minister pointed out to the Standing Committee leaping the 'double-digit growth barrier' and, ensuring that the growth is tempered with inclusiveness , equity and concern for the aam admi can be met only through sustained investment in infrastructure. We plan to invest. 4.1 trillion ($880 billion) in the period 2012-17, in the XII Plan, as compared with $541 billion in the current Plan. It has yet to be recognised that the stress on infrastructure, and related mining, because of the vast areas covered, requires a corresponding shift from focus on the exploitation of natural resources (the economic-environmental dimension) to the role, allocation and valuation of ecosystem services provided by these natural resources (the social dimension). Currently, the different 'environmental' clearances consider only a part of the problem, and the interests of the tribal's are invariably neglected. For example, environmental impact assessment essentially considers the technology used and environmental damage by the pollution caused directly on air, water and soil, ignoring the changes in ecosystem services that result and the consequential economic and welfare impacts on the local population. The Forest Rights Act provides detailed procedures, and safeguards, only in cases where the rights of tribals are affected in critical wildlife habitats of national parks and sanctuaries, and these provisions need to be extended to diversion of forest lands for development of infrastructure projects. A new poverty index, recently developed by the United Nations, stresses the role of services such as electricity, water and sanitation in the eradication of poverty. It shows that the numbers of poor is more than economic indicators indicate, and has important implications for defining the resettlement or alternatives package in terms of not only compensation for land, and establishment of schools and hospitals but also access to modern services. The Forest Rights Act's definition of 'community forest resource' recognises that reserve forests were created out of the traditional , or customary, boundary of villages, over which all the local inhabitants had 'unlimited' rights. Therefore, there is no need to determine the nature and extent of these historical rights based on the restrictive approach taken by colonial administrators in recording such rights. We also know that markets fail to capture most ecosystem service values. Existing price signals only reflect - at best - the share of total value that relates to provisioning services like food, fuel or water and their prices may be distorted. Even these services, where carried out as part of community management of shared resources, often bypass markets. The values of other ecosystem services are generally not reflected in markets apart from a few exceptions, such as tourism. This is mainly explained by the fact that many ecosystem services are considered 'public goods' or 'common goods' : they are often open access in character, but are really a community resource, and have now been recognised as such in the tribal areas, under the Forest Rights Act.

Inflation could be a spoiler for Indian markets: Vasu Menon, OCBC Bank

In an interview with ET Now, Vasu Menon, VP-Wealth Management, OCBC Bank, spoke on the Indian markets and equities. Excerpts: Do you think the gains for Indian markets have been too soon and too fast? Clearly the Indian market has done exceptionally well this year. The index is up almost 14% in local currency terms, and in US dollar terms it is almost up 16%. There has been a huge surge of foreign fund inflows in the Indian equities. You have had about close to $15 billion flowing into Indian equities, that is about 60% more than what you had last year. Clearly the story is good. The Indian growth story is good. The Indian economy is growing at 8.8%, corporate governance is strong in India, you have the monsoon, you have strong domestic demand. So the story is strong. Relative to China, India looks like it’s doing fairly well on the economic front. So yes at this juncture at 20000, it looks like it is going to hit a bit of resistance. If you look at the PE multiples for the Indian stock market, 2010 earnings are trading at probably about 19 times and 2011 earnings are probably trading at about 16 to 17 times. That is relatively high compared to the MSCI Asia ex-Japan index which is probably trading at about 13.5 for 2010 and about close to 11.5 for 2011. So India is trading at a premium. Probably you could see a little bit of pullback, but the long-term picture is still very positive for India. So from the short to medium term, what are the investment themes and sectors that you are betting on when it comes to Indian equities? I do not cover Indian equities. But I think if you look at India, clearly one area that is still lacking is infrastructure. Compared to China I think India still has a lot of room for infrastructure spending. The government will clearly have to commit quite a bit of resources in that area and I think that is going to augur well for infrastructure-related stocks in India. The other area which looks pretty good is the consumer related sector because India has got an affluent population, a young population. The economy is booming, and affluence is growing. The consumer sector is booming and anybody who invests in the Indian stock market, cannot ignore those key sectors.