Indian domestic market- Numbers for Obama to look at

While Obama is putting up policies for preventing any outsourcing to non-US company, a look at Indian IT domestic market would show that most of the work is being done by IBM with govt. being the major customer for IBM.

Reference - Indian Express

'Extreme Offshoring': Guess whats this?

I don't know why some brands have a penchant for creating new words ! One such new word added to dictionary is "Extreme offshoring" used by Infy in its latest press release Infosys plans 'extreme offshore' model to tide over visa crisis.

Well, after going through the news article and subsequent googling, I figured out its nothing more than simple off-shoring, that is, moving jobs to offshore locations.

Well, probably I should put this word in my sales presentations :-)

Digital fasting - required?

'Digital  fasting' is a recent term which refers to withdrawal from all online identities, like the ones on facebook, orkut, blogs and twitter. Contemplating digital fasting: How much Internet is too much? talks about this recent trend in detail.

Knowingly or unknowingly, all of us are addicted to internet and our online presence. Personally, I don't see a problem in this. All web 2.0 tools are a good way to keep connected not only more frequently but also cheap (compare the price of a SMS to an international friend vs the cost of dropping him an elaborate e-mail). Blogs like this one are an important part of a virtual identity and a way to connect with unknown.

I guess the whole problem is one of 'excess'. People start their day with Facebook and twitter with updates as unimportant as "I hv got up" to "hate going to loo" with a friend list that responds to such tweets or updates ! Obviously, the time saved from such 'excesses' can be better utilized in making a face to face connection and face to face discussions.

True cost of hedging

An interesting article from McKinsey on hedging (The right way to hedge) tells that apart from general buy and ask spread cost that's associated to hedging, there are more indirect cost to it as well which needs to be considered. The following exhibit shows the other variables. 

The details of what these indirect costs mean and what should the overall strategy for hedging should be has been discussed in the article. 

An Intro to Social CRM

In nutshell, Social CRM adds the 'social' angle to traditional CRM. 'Social' means use of web 2.0 concepts such as blogs, wikis, social networking, twitters etc. Social CRM does not replace existing CRM efforts – instead it adds more value. In fact, Social CRM augments social networking to serve as a new channel within existing end-to-end CRM processes and investments.

For a company, it means -
1. How it intends to participate in the ongoing conversations taking place in the industry.
2. How it embrace non-traditional influential people like popular industry bloggers, and social sites on the web frequented by audience.
3. How it engages in discussions on social networks to help build the kind of reputation needed to become a valued member of the online communities important to the business.
4. How it adds information from the social network to find out how successful a campaign is running and/or the chances of an account success.
4. How a company uses customer feedback to improve existing products and find innovative ideas on new ones.
5. How to respond to customer tweets in real time and also incorporate them into the knowledge base as well as share them with partners

A more formal and high level representation of social CRM is explained in this diagram from Deloitte.

In the long run, I believe, social CRM will likely just become part of CRM and no distinction will be necessary.

Arvind Eye Hospital- another innovation

Arvind Eye Hospital is an example of how low cost, self-sustainable CSR (corporate social responsibility) models can be built. I remember Arvind was my first case study that I deliberated upon in my MBA program at XLRI. Today's concept of CSR is not about doing a charity which is funded by big corporate houses but one where a corporate provides a kick start and then the whole model works on its own to generate money for itself and serve the cause of society. There are number of examples of such CSRs. Coming back to Arvind, for people unfamiliar with this name, it provides free and paid eye care facilities where the paid eye care subsidizes the free. The health-care facilities at the hospital is world class and there is no difference between whats available to paid patient and to free. The hospital also runs manufacturing facilities where they manufacture glasses which is one-fourth the market-price.

The latest innovation from Arvind has been low cost maintenance of high-end equipments. These equipments were traditionally managed by costly technicians most of which took up contracts of similar equipments in an area introducing delays in servicing in case a complaint arose. Arvind started training some low-end support staff of their hospital leading to most of the maintenance work being done in-house than outsourcing it. As the word spread, more such hospitals from India started sending their folks to Arvind for training and soon Arvind had a dedicated center for training. This center today trains people from other third world countries too including Vietnam, Nigeria etc.

I would suggest readers to read more about Arvind. Obviously, there is more to read and learn from such CSR models.

Banks going forward + Links to previous article

An article on how mobile banking is playing an important role in getting more financial inclusion for the people has appeared in HBR. See - Do We Really Need Banks? This article talks about the m-Pesa concept which I had blogged a while ago. See this - m-banking for the BOP.

Reliance in Shale Gas - Acquires US Co. for 1.3 bn USD

I had blogged a while ago on the Shale gas technology and how is it gonna be the future of oil industry. (see Shale Gas Technology ). The announcement from Reliance Industries Ltd. (RIL) for buying of 45% share in Pioneer Natural Resources, a company involved in shale extraction, for $ 1.3 billion gives some credence to that. This comes close on heels of similar acquisition by RIL for $ 1.7 billion in the another US company's shale-gas assets in Pennsylvania.

The reason for sudden interest for RIL in such technology is probably because India supposedly has lot of shale assets and as this technology matures (the cost of extraction gets cheaper), a petrochemical company like RIL would be best suited to exploit the situation.

IT companies and calculating environmental impact

Typically for an IT companies, the impact to environment from their operations or products is relatively very low. Whatever it is, comes from following -
1. IT Servers and user computers
2. Facilities/ Offices
3. Use of products (like some hardware) at customer' end

Look at these links from leading IT companies on how their operations cause environmental impact and what steps have they taken to mitigate the same - 

1. Apple's environmental impact 

2. SAP and Greening of Service Business 

Wazup with UID - Updates

I found an interesting article which gives an update on UID, one of the most ambitious IT project of Govt. of India. Details can be found here --> UID Round-Up: All The News on AADHAAR : For IT, Against It? 

Some keywords from the article- Ernst & Young, MindTree, 3000 crores, 600 million Aadhaar numbers, finger printing, iris scans, government kiosks, Citizens against UID

StanChart IDR - Money raising as well as branding

London based StanChart' IDR (Indian Depository Receipt) today came out with an issue for raising money from Indian market. The bank is offering a price band of Rs 100-115 per IDR and 10 IDRs would map to a single share of the bank. At Rs 50 per USD simple conversion, this maps to Rs 975-1125 as premium for a single share of the bank.

The issue from the bank which operates as a branch in India and not as subsidiary is first of its kind issue of raising money by a foreign company in India. Once this is complete, this should become a trend setter and open up similar issues by other companies wishing to raise money. This hopefully would improve the overall image of Indian market in global landscape.


Besides raising money for the bank, it serves as a good branding exercise for the bank too. With Government inching ahead with plans to liberate the financial services industry, this issue would help bank establish a more market-visible commitment to Indian market. This should also help Indian people see the bank as a more trusted option for savings and investments.

Few more details about StanChart Indian operations- The bank’s profit in India rose 19 per cent to $1.06 billion (over Rs 4,600 crore) last year, contributing 21 per cent of group earnings. The Indian operations rank fractionally behind Hong Kong as the biggest profit contributor. Most of the Indian earnings came from wholesale banking, where profits grew by half to $1 billion while consumer banking, which had been hit by bad debt, declined around 25 per cent to $54 million (around Rs 250 crore).

Blog has a new URL

I bought a new URL for my blog yesterday. So from now on, you can access my blog as either of the following-
1. http://amrit-singh.blogspot.com/ (Existing)
2. http://www.amritpalsingh.com (New)

Kites is such a disappointment

Ah, Kites.. first I dont know why is this name ... except that I got to see some kites flying as the movie began, there was no co-relation with the movie story line..

two, this movie is such a bore .. unless u just recently got in love and have 'filmy' notions about romance, u wud find for most part, this movie a complete dumb ! Characters played by Barbara (Linda in movie) and Hrithik (J in movie) fall in love for no obvious reason .. and no, its not love at first sight or something of DDLJ types, the guys just fall in so called 'love' .. and then they keep fighting the world to keep together their love..  some of the action scenes look so childish.. remember all those 10 cars chasing your car and u making them fall over each other types.. or the ones where gun shots are fired and u wud escape unhurt .. oh, let me mention comedy too.. theres just one scene which tries to make u laugh.. where Linda playing a Spanish girl trying to speak Hindi with 'mein ullu ki pathi hun'...  again one of the ideas picked up from some old movie..

three, things that u wud probably like.. dance is good.. songs are too.. US and Mexico or wherever its shot, the scenic beauty is awesome... Barbara's smile looks good and so does Hrithik's toned body ....

To sum it up, I guess the story line has taken its toll on the movie and taken its sheen away...The entire movie looks like a collection of few short stories picked up from old movies with predictable love, action, comedy scenes .. Its like selling a product in market with nice packaging, good advt. for promotion, discount to traders and all but the product doesn't do what its supposed to. My rating for this movie would be 1.5 out of 5 of which 0.5 is just for Barbara ! :-)

I am with Adobe on Flash vs Apple case

Ever since Apple didn't come out with Flash support on 'i' products namely iPhone, iPad etc., Adobe has been fighting its case vigorously for its presence on these gadgets. Recently, Adobe has launched 'I love Apple' campaign as well highlighting its arguments. The reason for all this comes from losing market share in the mobile space for Adobe. Apple too has posted its arguments here -> Thoughts on Flash.

Broadly, the arguments are on these lines-
1. Closed vs open standards
2. Support for touch screens
3. Security vulnerabilities
4. Flash vs H.264
5. Performance

Well, I am not a techie (as in one who has worked on Flash or iPhone development) to understand lots of these stuff but from an end-user, my point is that I don't care if Flash is 'bad', I want it to be running when I buy an Apple product ! Flash has been in internet for a while and a world without Flash is hard to imagine. I wouldn't want myself to be constrained from viewing certain website content just because my device doesn't play it.

Even if we assume that Flash has poor performance and is vulnerable, we still need to give the Web world enough time to move to a new standard or technology. Stopping support for a technology just because one has the power to do so is not ethical.

Shale gas technology

My friend from XL pointed me to this article on Shale gas (WSJ: Shale Gas Will Rock the World) and how it is going to be the future of gas extraction technology. Readers interested in learning more about this should read this article as it provides an interesting view point of how this balances out the world (li'l exaggerated though). More details are available on wikipedia: Shale oil extraction also.

The biggest problem per me with this is the high cost of oil extraction which is sustainable only when the prices of oil are in the range of $90 plus per barrel and the environmental impact of polluting water when the gas is taken out.

International travel and people culture

Somethings never seem to change. I traveled to US last month and noticed the same odd things that give a bad impression to the country and its people culture. See a sample of what we are good at -

1. Rushing to get into line the moment boarding announcement is made irrespective of the fact whether our seat number is called for or not.
2. Using the maximum capacity of our hand bag to our advantage and get in whatever we can in that bag.
3. Occupying not only our luggage compartment but also making sure that our neighbor's is occupied too.
4. Once on board, ordering for whiskey, scotch or beer whatever the airline has to offer for free and then drinking it to the maximum.
5. Belief in the fact that announcement for cell-phones turn off when the plane takes off or lands is something that is to be ignored.
6. Cribbing about anything and everything - so, no matter if we had to stand for half hour at New York for security checkup, we would crib about standing for the same time for immigration here.
7. Getting in some reference of higher up to allow for expedited immigration, quick baggage clearance, bringing in items with value higher than allowed by customs, so-on and so forth.

Guess, there are many more items to the list which can be added. The idea for me is not to criticize something but to open up a channel for introspection !

UPSC civil services results- Source of inspiration

This year UPSC Civil Services results are a source of inspiration on at least two counts - 

One, a candidate from Kashmir who had lost out his father and brother to militancy made to the list as topper. 

Two, the percentage number of candidates who attempted more than once to clear the exam. Among first 25,

• six have made to the merit list in their first attempt - 24%
• four in second attempt- 16% 
• eleven in third attempt - 44%
• three in fourth attempt- 12%
• one in seventh attempt - 4%

God, and how soon did I give up !

McKinsey and consulting

I have high regard for consulting companies because they employ the best of talent. Not only in India, but world over best b-school grads' first choice is a consulting company and McKinsey tops the chart. Yet, looking at articles on McKinsey Quarterly often makes me wonder is this what they do. For example, look at this article "Three trends in business-to-business sales" - it talks about the following trends in B2B sales (abridged for copyright issues) - 

First, customers have become more demanding. Second, B2B companies are exploring lower-cost ways to make clients happier and to generate sales growth. Third, B2B companies are making smarter use of customer data to predict behavior, drive sales, and deepen relationships.

Now, except for second point what's new in this? Customers have always been demanding, every basic sales and marketing book would tell you that. And which company doesn't analyse customer data? Again basic marketing book  would tell you about this. Well,  McK has figured this out by talking to senior executives with 150bn USD combined B2B sales. Come on McK, tell me something new !!

Greece Debt Problem- One of Solvency

Well, this was gonna happen. During recession most government across the world followed Keynesian economics of boosting growth by spending more. To finance such spending, governments borrowed heavily from the market. And when the government cannot repay back, it becomes a problem. That’s what has happened to Greece. 

To summarize in financial terms, the Greece debt problem is one of solvency and not of liquidity. Picking up dictionary meanings for these- 

1. Solvency comes from Solvent which means a liquid substance capable of dissolving other substances, in a way, which in finance would be like something that can help or dissolve obligations. 
2. Liquidity comes from Liquid which means something fluid that has a property of flowing easily, which in finance would be something that can easily be liquid like. 

Elaborating more and relating to Greece situation this would mean that the Government’s balance sheet had more of liabilities than assets and it was in a situation where the interest to be paid on loans was higher than receivables for the government. That made it insolvent. Government could have still converted most of its liquid assets into cash (which is liquidity) but that would not have solved the problem either. 

Thoughts after The Great Indian Butterfly

I just completed watching movie The Great Indian Butterfly. Well, if you leave all the name calling in this movie aside, this movie has wonderful message of finding the happiness within oneself. One of the characters in this movie says we have a habit of turning away the peace when it knocks our door saying we are looking for peace. So true and relevant ! The protagonists in this movie are characters just like you and me probably, ones who are so busy and engrossed in their professional lives and successes that they hardly have any time for each other or for themselves.  


Well, as I saw the movie, thoughts ran in my mind of how I have been living so far, whether I truly enjoy what I do now, have I truly enjoyed what I have done so far, whether am I more proud of personal stuff or my professional stuff, where does it take me from here to and many others. 


And, I remember watching a not very similar but a related movie, 'Dasvidaniya', while I was at XL which talked of defining 10 things that you would want to do before you die. The main character played by Vinay Pathak had a moron life until he discovered that he was to die and after which he set out to accomplish each one of his ambitions. Well, I cannot say that I have accomplished all 10 of my ambitions in life but yes, I did achieve one of doing a Masters in Business ! :-).. So at least, I am not gonna die disheartened ! 

Changing the flavor of the blog

To my regular readers,


I am gonna change the flavor of the blog a little. I realized that  probably I  had more to share with my friends about what I am doing and what I feel rather than having just a kind of 'academic' blog.  So while all my financial and social media blogs would continue, I would tend to write on more topics, somewhat more general in nature. If you don't like that, do let me know.


- Amrit 

m-banking for the BOP

The McKinsey article on financial services using mobile for the people devoid of banking, referred as unbanked, (Capturing the promise of mobile banking in emerging markets) provides an interesting insight to how mobile phones can be used to integrate a wider population into banking net. Not only social inclusiveness, it also brings in a large portion of informal money into the formal system thus helping the overall macro-economic indexes of the country. There are no two opinions on how banking inclusiveness reduces the risk to the saver and the borrower.

There are successful models on m-banking which have been used across the world, especially, by M-Pesa in Kenya and Smart Money and GCash in Philippines. Please see that m-banking here refers to micro-money on mobile, something of the range of Rs 50-500 in Indian context which is uneconomic for banks of today to work with. And that is where a mobile comes in to reduce the overall cost of banking. Given, the bank penetration rate in India at less than 25% compared to mobile penetration rate at 46%, Indian market can be an ideal ground for such mobile banking for the people at bottom of pyramid.  

The model as followed by m-Pesa is illustrated below –

As pointed out by mcKinsey too, for the m-banking model to succeed, the provider needs to have skills in both telephony and banking. In India, people trust and recognize the mobile brands more than bank brands. So the initiative has to be from mobile operator. Given their reach, I personally feel, BSNL, Vodafone and Airtel could be possible players in this arena. And yes, first mover advantage should definitely accrue !

And before I end, a note on some progress in this area- Nokia Money has tied up with Yes Bank to provide such services. Read here -> (http://telecomtalk.info/nokia-to-launch-mobile-payment-facility-nokia-money/19875/). More details on what is on offer is yet to be seen. 

Bond STRIPS allowed in India

An interesting development has taken place in bond market in India. The RBI has allowed ‘stripping’ of bonds from April 1, 2010. For the uninitiated, STRIPS, or Separate Trading of Registered Interest and Principal of Securities (STRIPS) refers to a process of separating principal and coupon payments on bonds and turning them into zero-coupon securities.

The advantages that accrue from STRIPS is multiple – One, it allows corporate to plan their payments and receivables for required amount per the STRIP that they buy/ sell. Two, it allows for a more accurate price determination in the market as the strips provide liquidity. Three, there is no reinvestment risk arising from coupons.

To start with, here is what RBI has allowed-

1. 1.  Stripping for bonds with coupon or maturity dates of Jan. 2 and July 2, irrespective of the year of maturity.
2.  Minimum amount to be submitted for stripping will be INR10 million and subsequently multiples thereof
3.  Reconstitution, which is the reverse of stripping, allowed. That means the coupon and the principal are reassembled into the original government security.
4.  The stripped financial instruments will be reckoned as eligible government securities for statutory liquidity ratio (SLR) purposes.
5.  RBI will not charge any fees for stripping/reconstitution of Government Securities.

Among the existing bonds, the 6.35 percent 2020 bond and the 9.39 percent 2011 bond are eligible as per their coupon dates.

Impact to bank's bottomlines due to fluctuating bond yields

Bond yields have an impact on prices of bonds- they share an inverse relationship. If yield rises, prices fall and vice-versa. Bond yields have an impact on Indian banks bottomlines because the banks have a substantial investment in govt. bonds necessitated by statutory liquidity that banks have to maintain per RBI guidelines.


Lets take an example of SBI in this case. The following calculation takes the standard g-sec (10 yr, 6.35% coupon). At 7.85% yield, this was available at Rs 89.895. 

Now if there was to be 10 bp increase in yield, it would mean yield to rise to 7.95% and resulting price as Rs. 89.2698. 

Given SBI domestic investments and proportion of that in SLR and AFS (Available for Sale), it comes to Rs. 60,732 crore. A Rs. 0.62 loss on Rs. 100 of bond value means Rs. 380 crore for SBI. 
Because every loss in AFS investments (made by mark to market provisions) have to be compensated, this would mean more money parked by SBI and less available money for credit. 


P.S: All figures above have been picked from Economic Times, April 1 edition. 

Interesting apps in social space

Two interesting apps that I have come across in social space- 


1. BubbleTalk- Lets you send voice messages to anyone in the world – without calling! It is equivalent of twitter where one broadcasts (called Send Bubble) his status as a voice rather than text. Your followers can then hear you by dialing a fixed code. 








2. Socially- This app resides on your mobile phone and embeds dynamic Social Network data and context into the Address Book, Incoming Calls, Idle Desktop Screen etc. 

Asia and Marketing template mentality

Prof. Dae Ryun Chang has been writing interesting things about marketing in Asian markets. In his blogs on HBR (Does Your Strategy Rely on a "Pan-Asian Identity"? , In Asia, Marketing 101 Doesn't Work), he talks about the fact that a common marketing template cannot be applied to entire Asian markets and marketers who are used to such a style of working should better adapt themselves. 


The author points out how the Asian markets are complex markets where not only each country has a distinct culture but even within the country (like India, China) there are multiple ethnical groups whose taste and preference don't match. Any company that plans to dominate the Asian markets would have to understand the nuances of these markets and then create multi-brand strategy targeted at individual regions, give a local flavor to the products and involve the local community. 

Marketing on Social Networks

Social networks such as Facebook, LinkedIn, MySpace have become an inseparable part of our lives. Empirical studies have shown that click through rate for ads on these sites are very low. This is disappointing both for social network companies which expect to monetize from the network as well as for the companies which display ads. The reason is simple; people are on social networks because they are trying to find solution to their offline problem of networking in real world. For looking at ads they would probably be looking out to general content sites that offer specific entertainment content.

The solution is (as Prof. Piskorski of Harvard) puts it a shift from social media to social strategy. Instead of looking social networks as another media, a comprehensive strategy needs to be put in that exploits the network effects of the social sites. The marketing efforts have to be around ‘Viral Marketing’. Since social networks offers friends, and friends of friends and friends of friends of friends, the best way is to use word of mouth publicity. Here are few suggestions-

a. Offer something for free to a randomly selected set of people commenting on your Facebook (or any other social network) page.

b. Form a community and invite people to be part of that. Obviously, there has to be some incentive for people to be in. The strategy can be customized depending on product brand by forming a restricted community or open-for-all community. 

c. Float a creative application or a creative picture (with small brand logo on that) that people post onto their pages. For example, a car company coming with a new model could float a small car game application or create pictures.

d. Incentivize people to update their purchases on networks. For example, a sunglasses company could offer a $10 rebate to users offering to upload their purchase and shop from which it was bought status on Facebook.

e. Engage people who are active on Facebook and other social networks into promoting your brand. 

Using behavioral finance for marketing

Since the time I was introduced to the concept of Behavioral Finance by Prof Uday Damodaran at XLRI, I have been greatly influenced by this topic. For the uninitiated, Behavioral Economics and Finance is a branch of economic and financial analysis that tries to understand economic decision of consumers including investors through social, cognitive and emotional factors. The premise is that human beings show repeated patterns of irrationality when making decisions.

A search for behavioral finance on Google would throw up multiple theories explaining this but I am trying to present below a very simplified interpretation and how it has been used by marketers around the world to their advantage.

1. Overconfidence- As human beings, we are generally overconfident of the results. This explains why even knowing the probability of success with a lottery, people would still buy it. This also explains why an investor would get into a high debt leverage knowing fully well that it may turn against him in bad times.

2. Herd like behavior- We tend to believe what the majority is doing. This 'behavior' is exploited by companies rolling out an IPO. Marketing glitz talking about company's prosperity, positive critic’s reports tempts investors into investing into that stock. As another example, stock analyst at a trading company, for example, would tend to buy what his colleagues are buying ignoring his analysis and judgment just to be sure that he won’t be fired in case his preferred stock turns out to be bad.

3. Loss Aversion- People feel pain of loss twice as much as they derive pleasure from an equal gain. A good example for this would be that people tend to retain a stock than to sell it at minimal loss knowing fully well that it would not give them a profit in near future. Mentally they would be most happy if they could even sell such a stock at 1 cent profit.

4. Consistency in thoughts- As human being, we have a tendency to have a thought process and then to stick to it. As a result, we tend to overlook any inconsistent information. Again an example could be about the way people would hold onto stocks and their investment irrespective of the updated market information available.

5. Emotional Attachment- Taking decisions based on emotions, such as love for a country, love for a brand, love for a region etc. There are many examples to this and has been used frequently by marketers across the world.  

6. Poor computation- People put undue weight on recent events and too little on far-off ones; they cannot calculate probabilities well and worry too much about unlikely events; and they are strongly influenced by how the problem/information is presented to them.

Crude Oil Predictions

Following is crude oil predictions from the biggies (source: Ernst and Young, picked from Business World)

Given, the current state of economy in developed and developing world, I dont think oil prices should shoot up in 2010 but they should climb up in next couple of years.

Here is the last quarter oil prices.

As seen the oil prices have hovered around 75 in this quarter. I think the estimates from BMO and UBS would be closer to the reality but the exact price would be seen when the times come !!

Poverty Reduction and Creation- A new approach

Shariff and Krishna have pointed a new approach to look at poverty reduction measures through a matrix. http://economictimes.indiatimes.com/opinion/comments-analysis/Poverty-reduction-and-creation/articleshow/5496832.cms

The authors argue that poverty is a measure of escape rate (people moving out of poverty) and descent rate (people getting into poverty). At any time both factors play a role and a higher value of descent or escape determines the net rate. The authors then define a 3 by 3 matrix to display how various states rank per the study they conducted. 


The authors also argue that instead of a national level, uniformly applicable policy of poverty eradication, a more state specific policies with respect to escape and descent rate would be useful.  

Example of using web 2.0 for Marketing

Good example of how you can use web 2.0 to your advantage! ClearContext (http://www.clearcontext.com/jan2010/) has launched a new product and is using viral marketing to get the word around. See the screenshot below- 

Analyzing Bharti's acquisition of Warid' Telecom

Bharti Telecom recently acquired a 70% stake in Bangladesh' Warid Telecom. This post of mine tries to dissect the acquisition and see how the financials make up. The post also throws other strategic factors which make up for this acquisition. 

Please note that I had limited time finding out the answers and I do not have access to any paid subscription or reports  which could have thrown a more accurate results and analysis. 

Without much ado, let us start. 

1. Market Players- 
Bangladesh market is comprised of 6 big players with top 3 accounting for 88% of the market. Almost all these companies have some foreign tie up to help them out with technology and funds. The following table shows the players and their subscriber base. (Data from Bangladesh Regulatory Authority) 

From the above table, the percentage market share of Warid' Telecom appears pretty less. Now, lets add another data.

2. Average Growth
If we track when each of these mobile operators commenced their operations and combine that with number of subscribers, we should get following- 

As can be seen, the top players had a first-mover advantage but if we track the average additions per month, Warid comes second to Grameen. This shows the potential that Warid has in terms of growth rate.  

3. Betting on Bangladesh
This is interesting, as following table would show -  Bangladesh market is under-penetrated and is bound to increase going forward. If it reaches the current level of mobile penetration for India (46%) in next 4 years, it would open up 23 mn more subscribers and at 20% market share for Warid, this should be 4.6 mn subscribers.


4. Calculating whether it makes sense for Bharti
Putting down assumptions as stated below, we arrive at NPV for this aquisition-

As can be seen, since this is positive NPV, so it is right decission for Bharti. 

Most of the M&A analysis is about getting the assumptions right. Would love to hear from readers on the assumptions made.

Besides this there are multiple synergy factors which have not been taken into account in the analysis above-
1. Bangladesh' mobile market is similar to Indian market in terms of customer preference, demography etc. It would be relatively easier for an Indian company like Bharti to make a growth plan similar to the one they charted for India in Bangladesh.
2. Singtel has stake in both Bharti and Bangladesh Telecom. So there should be some synergy there as well.
3. Bharti would be able to leverage its existing set of suppliers viz Nokia, Siemens for better deals compared to existing players in Bangladesh.

Inspiring Ideas and Creativity

Wonderful video of how imagination can be put to use to create cheap working systems. Couple of ideas which would change the world going forward.
--> Pranav Mistry and Sixth Sense Technology

Using Social Marketing- Ford Example

The following blog article shows how Ford used an innovative mechanism to market its new car Fiesta in US market. -- HBR: How Ford Got Social Marketing Right

Good Example of how web 2.0 and social media can be used to bring about product awareness. Involving customers in product marketing and using their feedback is all part of what web 2.0 has been put to use. Though I am not very sure if the sales numbers as quoted in the article are directly attributable to this marketing campaign, but I believe such innovative methods are the way to selling going forward.

Entrepreneurship and Management Science

While reading "Is Entrepreneurship a Management Science?" on HBR, I came across this line --

It requires the coordination of many different people, working in concert to answer them. In other words, it requires management.

The author is right in a way that entrepreneurship is not different from other streams in requiring management of different people and intensive coordination. But to me, clearing that unknown fog of what customers ultimately will want and accept is more of an art than science.
 
Had this been a science, we could have very well invented a formula for success and there would have been no failures. End of day it is about how convinced an entrepreneur is of his idea irrespective of what market surveys or quantitative analysis might suggest.

Carbon Credit- Part 1 (Basics)

With this series on 'Carbon Credit', I am going to explore the interesting world of monetizing the carbon business. In 3 part series, I should be able to cover-
1. Basic of carbon credit- terms and terminologies
2. The Indian scene and MCX carbon trading
3. Future of carbon business and trends

Today, I would blog about part 1-
Basic of carbon credit- terms and terminologies
1. What is Carbon Credit?
In simple words, one carbon credit gives the owner the right to emit one tonne of carbon dioxide.

2. The background: Kyoto Protocol
The Kyoto Protocol set quotas on the amount of greenhouse gases countries can produce. Countries, in turn, set quotas on the emissions of businesses. Businesses that are over their quotas must buy carbon credits for their excess emissions, while businesses that are below their quotas can sell their remaining credits. Under the Kyoto Protocol, between 2008 and 2012, developed countries have to reduce emissions of greenhouse gases to an average of 5.2 per cent below the 1990 level.

3. Mechanisms for reduction
The Kyoto Protocol provides for three mechanisms that enable developed countries with quantified emission limitation and reduction commitments to acquire greenhouse gas reduction credits. These mechanisms are Joint Implementation (JI), Clean Development Mechanism (CDM) and International Emission Trading (IET).
•    Under JI, a developed country with relatively high costs of domestic greenhouse reduction would set up a project in another developed country that has a relatively low cost.
•    Under Clean Development Mechanism (CDM), a developed country can take up a greenhouse gas reduction project activity in a developing country where the cost of greenhouse gas reduction project activities is usually much lower. The developed country would be given credits for meeting its emission reduction targets, while the developing country would receive the capital and clean technology to implement the project. 
•    Under IET, countries can trade in the international carbon credit market.

4. Units of Exchange
•    Certified Emission Reduction (CER)- are climate credits (or carbon credits) issued by the Clean Development Mechanism (CDM) Executive Board for emission reductions achieved by CDM projects and verified by a DOE under the rules of the Kyoto Protocol.
•    Emission Reduction Unit (ERU)- refers to the reduction of greenhouse gases, particularly under Joint Implementation (JI), where it represents one tonne of CO2 equivalent reduced.
•    Verified Emission Reduction (VER)- projects/activities are managed according to the quality standards set out for CDM/JI projects but the certificates provided are not registered by the governments of the host countries or the Executive Board of the UNO. As such, high quality VERs can be acquired at lower costs for the same project quality. However, at present VERs can not be used in the mandatory market.

5. Is it all about making developing countries air bad?
No, the polluters cannot buy 100 per cent of the carbon credits they are required to reduce. Say, out of 100 per cent they have to induce 75 per cent locally by various means in their own country. They can buy only 25 per cent of carbon credits from developing countries.

6. Exchanges
The company/entity can create CERs and sell them through exchanges, like Chicago Climate Exchange (CCX) and European Climate Exchange (ECX). As on October 23, 2007, the CERs were trading between USD 2.00-2.10 on the Chicago Climate Exchange. A few years back, the rates were hovering between USD 4.00-6.00 per CER.

What do I plan to write?

Let me welcome myself to this blog !
I am an enthusiast in following areas and my blog would cover the following-

• IT Strategy
• Business Analysis
• Corporate Strategy
• Business Development
• Business Models
• Finance - M&A, Derivatives
• Latest in IT
• Indian Politics
• Other random thoughts !