HDFC Bank Limited

Posted by Indraneel

HDFC Bank is a commercial bank of India, incorporated in August 1994, after the Reserve Bank of India allowed establishing private sector banks. The Bank was promoted by the Housing Development Finance Corporation, a premier housing finance company (set up in 1977) of India.

Tata Consultancy Services

Posted by Indraneel

Tata Consultancy Services Limited s a software services and consulting company. It is Asia's largest provider of information technology and business process outsourcing services. The company is listed on the National Stock Exchange and Bombay Stock Exchange of India

Colgate Palmolive

Posted by Siddharth

Colgate Palmolive is an American diversified corporation focused on the production, distribution and provision of household, health care and perso19nal products, such as soaps detergents and oral hygine products.

Reckitt Benckiser

Posted by siddharth

Reckitt Benckiser (RB) is a global consumer goods company, making and marketing home,health and personal health care products. The comapny's strategy is to have a highly focused portfolio concentrating on its 17 most profitable brands, which were responsible for 62% of net revenues in 2008. The brands which RB refer to as powerbrands are: Vanish, Finish, Calgonite, Air Wick, Dettol, Veet, Clearasil, Gaviscon and Nurofen.

Industrial Development Bank of India Ltd (IDBI)

Posted by Siddharth Roy

The Industrial Development Bank of India Limited commonly known by its acronym IDBI is one of India's leading public sector banks and 4th largest Bank in overall ratings. RBI categorised IDBI as "other public sector bank".

Council of Ministers:Govt of India

Posted by Indraneel On Monday, October 12, 2009 0 comments
Serial Number Portfolio Name of Minister
1. Prime Minister and also In-Charge of the Ministries/Departments viz:
Ministry of Personnel, Public Grievances & Pensions;
Ministry of Planning;
Ministry of Water Resources;
Department of Atomic Energy; and
Department of Space
Dr. Manmohan Singh
2. Minister of Finance Shri Pranab Mukherjee
3. Minister of Agriculture and Minister of Consumer Affairs, Food & Public Distribution Shri Sharad Pawar
4. Minister of Defence Shri A.K. Antony
5. Minister of Home Affairs Shri P. Chidambaram
6. Minister of Railways Km. Mamata Banerjee
7. Minister of External Affairs Shri S.M. Krishna
8. Minister of Steel Shri Virbhadra Singh
9. Minister of Heavy Industries and Public Enterprises Shri Vilasrao Deshmukh
10. Minister of Health and Family Welfare Shri Ghulam Nabi Azad
11. Minister of Power Shri Sushil Kumar Shinde
12. Minister of Law and Justice Shri M. Veerappa Moily
13. Minister of New and Renewable Energy Dr. Farooq Abdullah
14. Minister of Urban Development Shri S. Jaipal Reddy
15. Minister of Road Transport and Highways Shri Kamal Nath
16. Minister of Overseas Indian Affairs Shri Vayalar Ravi
17. Minister of Textiles Shri Dayanidhi Maran
18. Minister of Communications and Information Technology Shri A. Raja
19. Minister of Petroleum and Natural Gas Shri Murli Deora
20. Minister of Information and Broadcasting Smt. Ambika Soni
21. Minister of Labour and Employment Shri Mallikarjun Kharge
22. Minister of Human Resource Development Shri Kapil Sibal
23. Minister of Mines and Minister of Development of North Eastern Region Shri B.K. Handique
24. Minister of Commerce and Industry Shri Anand Sharma
25. Minister of Rural Development and Minister of Panchayati Raj Shri C.P. Joshi
26. Minister of Housing and Urban Poverty Alleviation and Minister of Tourism Kum. Selja
27. Minister of Food Processing Industries Shri Subodh Kant Sahay
28. Minister of Youth Affairs and Sports Dr. M.S. Gill
29. Minister of Shipping Shri G.K. Vasan
30. Minister of Parliamentary Affairs Shri Pawan K. Bansal
31. Minister of Social Justice and Empowerment Shri Mukul Wasnik
32. Minister of Tribal Affairs Shri Kantilal Bhuria
33. Minister of Chemicals and
Fertilizers
Shri M.K. Alagiri


President of India: Smt. Pratibha Devisingh Patil
Vice President of India:Shri Mohammad Hamid Ansari
Lok Sabha Speaker: Smt. Meira Kumar
Rajya Sabha Chairman: Shri Mohammad Hamid Ansari
Chief Justice of India:K.G.Balakrishnan

For more information go through the following:
http://india.gov.in/govt/whoswho.php

BLUE OCEAN STRATEGY

Posted by Siddharth Roy On Monday, September 21, 2009 1 comments



Welcome to the depths of the ocean...an ocean which have been created by strategies. The book Blue Ocean Strategy is the brain child of W. Chan Kim and Renee Mauborgne. The authors tries to segregate the markets into two parts the first being the Blue Ocean and the latter being the Red Ocean. Blue Ocean Strategy is a way to make the competition irrelevant by creating a leap in value for both the company and its customers. The terms red and blue oceans to describe the market universe. Red oceans are all the industries in existence today—the known market space. In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody. Hence, the term “red” oceans.


Blue oceans, in contrast, denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored. Like the “blue” ocean, it is vast, deep, powerful, in terms of profitable growth, and infinite.
But the question here lies that how does blue ocean strategy fundamentally differ from red ocean strategy?
To sustain themselves in the marketplace, red ocean strategists focus on building advantages over the competition, usually by assessing what competitors do and striving to do it better. Here, grabbing a bigger share of a finite market is seen as a zero-sum game in which one company’s gain is achieved at another company’s loss. They focus on dividing up the red ocean, where growth is increasingly limited. Such strategic thinking leads firms to divide industries into attractive and unattractive ones and to decide accordingly whether or not to enter. Blue ocean strategists recognize that market boundaries exist only in managers’ minds, and they do not let existing market structures limit their thinking. To them, extra demand is out there, largely untapped. The crux of the problem is how to create it. This, in turn, requires a shift of attention from supply to demand, from a focus on competing to a focus on creating innovative value to unlock new demand. This is achieved via the simultaneous pursuit of differentiation and low-cost. Under blue ocean strategy, there is scarcely an attractive or unattractive industry per
se because the level of industry attractiveness can be altered through companies’ conscientious efforts. As market structure is changed by breaking the value/cost tradeoff, so are the rules of the game. Competition in the old game is therefore rendered irrelevant. By expanding the demand side of the economy new wealth is created. Such a strategy therefore allows firms to largely play a non–zero-sum game, with high payoff possibilities.

Blue and red oceans have always coexisted and always will. Practical reality, therefore, demands that companies understand the strategic logic of both types of oceans. At present, however, competing in red oceans dominates the field of strategy in theory and in practice. Part of the reason traces back to the historical foundation of business strategy—war—where territory is defined and limited and opponents compete to protect and enlarge their share of limited and existing terrain. This focus on beating the competition in existing market space was exasperated by the meteoric rise of the Japanese in the 1970s and 1980s. Faced with mounting competition in the global marketplace as, for virtually the first time incorporate history, customers were deserting Western companies in droves, the center of strategic thinking gravitated further towards the competition. A slew of competition-based strategies emerged which argued that competition is at the core of the success and failure of firms, and that competition determines the appropriateness of a firm’s activities that can contribute to its performance.

What BLUE OCEAN STRATEGY seeks to do is to make the creation and capturing of blue oceans as systematic and actionable as competing in the red waters of known market space. For although blue ocean strategists have always existed, for the most part their strategies have been largely unconscious. Blue ocean strategy seeks to remedy this by not only decoding the pattern and principles behind the successful creation of blue oceans, but also providing the ana lytical frameworks and tools to act on this insight.

Now let us understand the fact that whether this strategy is actually helpful or not in the present context.

Prospects in most established market spaces—red oceans—are shrinking steadily. Technological advances have substantially improved industrial productivity, permitting suppliers to produce an unprecedented array of products and services. And as trade barriers between nations and regions fall and information on products and prices becomes instantly and globally available, niche markets and monopoly havens are continuing to disappear. At the same time, there is little
evidence of any increase in demand, at least in the developed markets, where recent United Nations statistics even point to declining populations. The result is that in more and more industries, supply is overtaking demand. This situation has inevitably hastened the commoditization of products and services, stoked price wars, and shrunk profit margins. According to recent studies, major American brands in a variety of product and service categories have become more and more alike. And as brands become more similar, people increasingly base purchase choices on price. People no longer insist, as in the past, that their laundry detergent be Tide. Nor do they necessarily stick to Colgate when there is a special promotion for Crest, and vice versa. In overcrowded industries, differentiating brands becomes harder both in economic upturns and in downturns.

Is blue ocean strategy applicable to all types industries including businesses that are several steps upstream from consumers?

Yes, blue ocean strategy applies across all types of industries from the typical suspects of consumer product goods to b2b, industrial, pharmaceutical, financial services, entertainment, IT, and even defense. BLUE OCEAN STRATEGY drives this point home by highlighting a rich array of companies creating blue oceans across diverse, and unexpected, industry domains from NetJets in jet travel, to NABI in the municipal bus industry, to Cemex in cement, to Joint Striker Fighter in defense, to Cirque du Soleil in entertainment. Our experience further suggests two interesting findings with respect to businesses several steps removed from the final consumer. First, companies in these industries tend to view their businesses as commodity businesses with little room to offer innovative value. This has effectively created a self- fulfilling prophecy in that the more these companies view their businesses as commodities, the more they treat their businesses as such. Secondly, we observed that the more removed companies are from the final
customer, the more levers there are to unlock innovative value as every company in that chain can be viewed as a customer. If a company can’t see an opportunity to unlock innovative value for the next direct customer in that chain, there are still opportunities to unlock innovative value for that customer’s customers, and so forth.

Last but not the least lest us ask that whether Blue Ocean Strategy new one or not?

Although the term blue oceans is new, their existence is not. They are a feature of business life, past and present. Look back one hundred years and ask yourself, how many of today’s industries were then unknown? The answer: many industries as basic as automobiles, music recording, aviation, petrochemicals, health care, and management consulting were unheard of or had just begun to emerge at the time. Now turn the clock back only thirty years. Again, a plethora of multibilliondollar industries jumps out—mutual funds, cell phones, gas- fired electricity plants, biotechnology, discount retail, express delivery, minivans, snowboards, coffee bars, and home videos to name a few. Just three decades ago, none of these industries existed in a meaningful way. Now put the clock forward twenty years—or perhaps fifty years—and ask yourself how many now unknown industries will likely exist then. If history is any predictor of the future, the answer is many of them.

"Very often, the two expressions "merger" and "amalgamation" are taken as synonymous. But there is, in fact, a difference.

Merger is restricted to a case where the assets and liabilities of the companies get vested in another company, the company which is merged losing its identity and its shareholders becoming shareholders of the other company.

Co. A <--Co.B ==Co. A . ie., Co. B is swallowed by Co. A

On the other hand, amalgamation is an arrangement, whereby the assets and liabilities of two or more companies become vested in another company (which may or may not be one of the original companies) and which would have as its shareholders substantially, all the shareholders of the amalgamating companies."

Just like:

Co.A + Co.B == Co.C

10 questions to ask in an interview

Posted by Indraneel On Sunday, September 20, 2009 1 comments

When you are called for an interview, remember not to appear too focused on yourself, money or the TA/DA that you would need to be reimbursed. Honesty and frankness is appreciated, in the right dosage. Be prepared to ask your own set of questions during the interview to help decide whether you want to join or not.

What will my scope of work, roles and responsibilities be?
It's important to have an idea of the requirements as an employee. Nivedita Ghosh, consultant and client manager, ABC Consultants advises, "Seek clarity on the duties and responsibilities for that position so that it does not come as a surprise package to you."

What are the skill sets required for effective performance in the given role?
Understand what is required of you, if analytic ability or thinking out of the box are needed, you need to be able to deliver on the same count. According to Nishant Mohan, director, VentureBaron Technology, a Mumbai-based company, "This helps in understanding if the company is aligned similarly or if you will find it difficult aligning yourself to the organisation's goals and objectives."

What is the guidance offered in the initial stages in the organisation?
This will decide how smooth your transition will be into the company. If efforts are made to help you fit in, chances are the
effort will reflect in other aspects as well. The more willing the organisation is to train you during the initial period, the better your reults and the more the intention of the company to make the relationship work. It is like the company is investing in you.

Is there an acclimatising camp to get used to the systems, work culture of the organisation?
Many companies place high importance
on this, reflecting the organisation's ability to deliver on its promises and investment
in human resources. Srinivasan, HR director, HCL Technologies, says, "It's important to know this so that you have a clearer idea about whether you will find the right fit, whether the atmosphere is formal or informal."

What are the KRAs on which I would be assessed?
All employees are evaluated based on key result areas. Know how your contributions will be rated, be prepared and be willing to deliver.

Is there an annual appraisal system where my deficiencies would be discussed for self improvement?
Be open to appraisal and always strive towards self improvement. Remember that this is not personal and a process,
be willing to change and mould yourself into your job.

What is the salary structure and other benefits?
Most employers will make an offer, so you rarely have to broach the topic. Be careful in your negotiation process, don't appear to be too money-minded. Mohan warns, "Try and understand the salary break-up because an unfavourable break-up may result in lower income and more taxes."

How much does the company invest in their employees through learning and development programmes?
Srinivasan feels that your career landscape is also determined by the kind of career development programmes that are offered. Know what you can expect, be aware of whether you will get it or not if you join.

What is the reporting structure?
It's important to understand this process early so that you avoid making any blunders as part of the company. Many companies state there is no hierarchy, but it is better to understand that it does exist in some manner. Openness should not be taken as a given, be sure to maintain a certain decorum and ethical approach at work.

What does the organisation think about work-life balance?
At a personal level this is important to be kept in mind. Srinivasan shared, "It will not be a question that puts to rest your doubt in terms of deliverables but it will give you a sense of how flexible the company is in terms of other needs."

An interview is a two-way process, be prepared to be able to respond to an opportunity to ask questions. Remember, each work space is a learning experience, be open to change and handling challenges as part of your work. Give it your best shot and don't be scared to accept your limitations, work hard to learn at work and achieve success.

Source

How is Sensex Calculated??

Posted by Indraneel On Saturday, September 19, 2009 0 comments

Introduction

SENSEX, first compiled in 1986, was calculated on a "Market Capitalization-Weighted" methodology of 30 component stocks representing large, well-established and financially sound companies across key sectors. The base year of SENSEX was taken as 1978-79. SENSEX today is widely reported in both domestic and international markets through print as well as electronic media. It is scientifically designed and is based on globally accepted construction and review methodology. Since September 1, 2003, SENSEX is being calculated on a free-float market capitalization methodology. The "free-float market capitalization-weighted"methodology is a widely followed index construction methodology on which majority of global equity indices are based; all major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the free-float methodology.

The growth of the equity market in India has been phenomenal in the present decade. Right from early nineties, the stock market witnessed heightened activity in terms of various bull and bear runs. In the late nineties, the Indian market witnessed a huge frenzy in the 'TMT' sectors. More recently, real estate caught the fancy of the investors. SENSEX has captured all these happenings in the most judicious manner. One can identify the booms and busts of the Indian equity market through SENSEX. As the oldest index in the country, it provides the time series data over a fairly long period of time (from 1979 onwards). Small wonder, the SENSEX has become one of the most prominent brands in the country.

SENSEX Calculation Methodology

SENSEX is calculated using the "Free-float Market Capitalization" methodology, wherein, the level of index at any point of time reflects the free-float market value of 30 component stocks relative to a base period. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization.

The base period of SENSEX is 1978-79 and the base value is 100 index points. This is often indicated by the notation 1978-79=100. The calculation of SENSEX involves dividing the free-float market capitalization of 30 companies in the Index by a number called the Index Divisor. The Divisor is the only link to the original base period value of the SENSEX. It keeps the Index comparable over time and is the adjustment point for all Index adjustments arising out of corporate actions, replacement of scrips etc. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate SENSEX every 15 seconds. The value of SENSEX is disseminated in real time.

Dollex-30

BSE also calculates a dollar-linked version of SENSEX and historical values of this index are available since its inception. (For more details click 'Dollex series of BSE indices')

SENSEX - Scrip Selection Criteria

The general guidelines for selection of constituents in SENSEX are as follows:

1. Listed History:The scrip should have a listing history of at least 3 months at BSE. Exception may be considered if full market capitalization of a newly listed company ranks among top 10 in the list of BSE universe. In case, a company is listed on account of merger/ demerger/ amalgamation, minimum listing history would not be required.
2. Trading Frequency:The scrip should have been traded on each and every trading day in the last three months at BSE. Exceptions can be made for extreme reasons like scrip suspension etc.
3. Final Rank:The scrip should figure in the top 100 companies listed by final rank. The final rank is arrived at by assigning 75% weightage to the rank on the basis of three-month average full market capitalization and 25% weightage to the liquidity rank based on three-month average daily turnover & three-month average impact cost.
4. Market Capitalization Weightage:The weightage of each scrip in SENSEX based on three-month average free-float market capitalization should be at least 0.5% of the Index.
5. Industry/Sector Representation:Scrip selection would generally take into account a balanced representation of the listed companies in the universe of BSE.
6. Track Record:In the opinion of the BSE Index Committee, the company should have an acceptable track record.

Understanding Free-float Methodology

Concept

Free-float methodology refers to an index construction methodology that takes into consideration only the free-float market capitalization of a company for the purpose of index calculation and assigning weight to stocks in the index. Free-float market capitalization takes into consideration only those shares issued by the company that are readily available for trading in the market. It generally excludes promoters' holding, government holding, strategic holding and other locked-in shares that will not come to the market for trading in the normal course. In other words, the market capitalization of each company in a free-float index is reduced to the extent of its readily available shares in the market.

Subsequently all BSE indices with the exception of BSE-PSU index have adopted the free-float methodology.

Major advantages of Free-float Methodology

* A Free-float index reflects the market trends more rationally as it takes into consideration only those shares that are available for trading in the market.
* Free-float Methodology makes the index more broad-based by reducing the concentration of top few companies in Index.
* A Free-float index aids both active and passive investing styles. It aids active managers by enabling them to benchmark their fund returns vis-Ã -vis an investible index. This enables an apple-to-apple comparison thereby facilitating better evaluation of performance of active managers. Being a perfectly replicable portfolio of stocks, a Free-float adjusted index is best suited for the passive managers as it enables them to track the index with the least tracking error.
* Free-float Methodology improves index flexibility in terms of including any stock from the universe of listed stocks. This improves market coverage and sector coverage of the index. For example, under a Full-market capitalization methodology, companies with large market capitalization and low free-float cannot generally be included in the Index because they tend to distort the index by having an undue influence on the index movement. However, under the Free-float Methodology, since only the free-float market capitalization of each company is considered for index calculation, it becomes possible to include such closely-held companies in the index while at the same time preventing their undue influence on the index movement.
* Globally, the Free-float Methodology of index construction is considered to be an industry best practice and all major index providers like MSCI, FTSE, S&P and STOXX have adopted the same. MSCI, a leading global index provider, shifted all its indices to the Free-float Methodology in 2002. The MSCI India Standard Index, which is followed by Foreign Institutional Investors (FIIs) to track Indian equities, is also based on the Free-float Methodology. NASDAQ-100, the underlying index to the famous Exchange Traded Fund (ETF) - QQQ is based on the Free-float Methodology.

Definition of Free-float

Shareholding of investors that would not, in the normal course come into the open market for trading are treated as 'Controlling/ Strategic Holdings' and hence not included in free-float. Specifically, the following categories of holding are generally excluded from the definition of Free-float:

* Shares held by founders/directors/ acquirers which has control element
* Shares held by persons/ bodies with "Controlling Interest"
* Shares held by Government as promoter/acquirer
* Holdings through the FDI Route
* Strategic stakes by private corporate bodies/ individuals
* Equity held by associate/group companies (cross-holdings)
* Equity held by Employee Welfare Trusts
* Locked-in shares and shares which would not be sold in the open market in normal course.

Determining Free-float Factors of Companies

BSE has designed a Free-float format, which is filled and submitted by all index companies on a quarterly basis. (Format available on www.bseindia.com). BSE determines the Free-float factor for each company based on the detailed information submitted by the companies in the prescribed format. Free-float factor is a multiple with which the total market capitalization of a company is adjusted to arrive at the Free-float market capitalization. Once the Free-float of a company is determined, it is rounded-off to the higher multiple of 5 and each company is categorized into one of the 20 bands. A Free-float factor of say 0.55 means that only 55% of the market capitalization of the company will be considered for index calculation.

Index Closure Algorithm

The closing SENSEX on any trading day is computed taking the weighted average of all the trades on SENSEX constituents in the last 30 minutes of trading session. If a SENSEX constituent has not traded in the last 30 minutes, the last traded price is taken for computation of the Index closure. If a SENSEX constituent has not traded at all in a day, then its last day's closing price is taken for computation of Index closure. The use of Index Closure Algorithm prevents any intentional manipulation of the closing index value.


Maintenance of SENSEX

One of the important aspects of maintaining continuity with the past is to update the base year average. The base year value adjustment ensures that replacement of stocks in Index, additional issue of capital and other corporate announcements like 'rights issue' etc. do not destroy the historical value of the index. The beauty of maintenance lies in the fact that adjustments for corporate actions in the Index should not per se affect the index values.

The BSE Index Cell does the day-to-day maintenance of the index within the broad index policy framework set by the BSE Index Committee. The BSE Index Cell ensures that SENSEX and all the other BSE indices maintain their benchmark properties by striking a delicate balance between frequent replacements in index and maintaining its historical continuity. The BSE Index Committee comprises of capital market expert, fund managers, market participants and members of the BSE Governing Board.

On-Line Computation of the Index

During trading hours, value of the Index is calculated and disseminated every 15 seconds. This is done automatically on the basis of prices at which trades in Index constituents are executed.


Adjustment for Bonus, Rights and Newly Issued Capital

SENSEX calculation needs to be adjusted for issue of Bonus or Rights shares If no adjustments were made, a discontinuity would arise between the current value of the index and its previous value despite the non-occurrence of any economic activity of substance. At the BSE Index Cell , the base value is adjusted, which is used to alter market capitalization of the component stocks to arrive at the SENSEX value.

The BSE Index Cell keeps a close watch on the events that might affect the index on a regular basis and carries out daily maintenance of all the 19 Indices.

* Adjustments for Rights Issues
When a company, included in the compilation of the index, issues right shares, the free-float market capitalization of that company is increased by the number of additional shares issued based on the theoretical (ex-right) price. An offsetting or proportionate adjustment is then made to the Base Market capitalization (see 'Base Market capitalization Adjustment' below).

* Adjustments for Bonus Issue
When a company, included in the compilation of the index, issues bonus shares, the market capitalization of that company does not undergo any change. Therefore, there is no change in the Base Market capitalization, only the 'number of shares' in the formula is updated.

* Other Issues
Base Market capitalization adjustment is required when new shares are issued by way of conversion of debentures, mergers, spin-offs etc. or when equity is reduced by way of buy-back of shares, corporate restructuring etc.

* Base Market capitalization Adjustment:

New Market Based Capitalisation Method: Old Based Market Capitalisation*(new based market capitalisation/old market capitalisation)

To illustrate, suppose a company issues right shares which increases the market capitalization of the shares of that company by say, Rs.100 crores. The existing Base Market capitalization (Old Base Market capitalization), say, is Rs.2450 crores and the aggregate market capitalization of all the shares included in the index before the right issue is made is, say Rs.4781 crore. The "New Base Market capitalization " will then be:

2450*(4781+100)/4781=Rs.2501.24 crores

This figure of Rs. 2501.24 crore will be used as the Base Market capitalization for calculating the index number from then onwards till the next base change becomes necessary.

Index Review Frequency

The BSE Index Committee meets every quarter to discuss index related issues. In case of a revision in the Index constituents, the announcement of the incoming and outgoing scrips is made six weeks in advance of the actual implementation of the revision of the Index.

CUSTOMER RELATIONSHIP MANAGEMENT

Posted by Siddharth Roy On Friday, September 18, 2009 0 comments


Customer Relationship Management (CRM) gained recognition in the mid-1990s, primarily driven by its perception as information technology (IT). However, not enough attention has been given to the fundamental drivers of CRM success: strategy, metrics and its organization.

Successful CRM is about competing in the relationship dimension- not as an alternative to having a competitive product or reasonable price- but as a differentiator. CRM can succeed by being SMART: defined a customer-centric Strategy, use appropriate Metrics; ensurining the organization is Aligned with the objectives of the company itself; Redesign work process as needed; and use appropriate Technology tools as enablers.

At a conference in London in May 2004, business strategy guru Michael Porter delivered a simple but a powerful message. Effective business strategy means being distinctive. How? Business strategy experts say that you can differentiate based on:

1. The core product service offering

2. The price or total cost of ownership; or

3. The total relationship and customer experience.

Staying ahead of competition solely through product leadership is becoming more and more difficult. In an interview with Fast Company, Porter stated, “It’s arrogant for a company to believe it can deliver the same sort of product that its rivals do and actually do better for very long. That’s especially true today, when the flow of information and capital is incredibly fast”.

CRM is a business strategy to acquire, grow and retain profitability customer relationship, with the goal of creating a sustainable competitive advantage. Product/price – based differentiation is waning because of four broad trends: maturing markets, global trade, effective manufacturing and the internet.

Now CRM is emerging as a critical strategy simply because relationships are coming to the forefront of the competitive battleground. CRM should mean creating mutual wins for customers and all the company stakeholders, including employees and business partners.

Frederick Reichheld, author of This Loyalty Effect and Loyalty Rules, found that loyalty leaders grow, on an average, more than twice as fast as the industry average across a wide variety of industries. And they do it more cost- effectively. The reason for this so-called “loyalty effect” is that loyal customers tends to spend more, cost less to serve and refer others. The net result is that loyalty leaders are head and shoulders above their competitors in growth and profitability. Leading examples according to Reichheld range from Harley Davidson to Enterprise Rent-A- Car.

The key question is: How does a company create loyalty relationship? Reichheld and other loyalty experts have studied this issue for years and concluded that loyalty attitude and behavior are driven by the customer’s perception of value, which is an amalgamation of what the customers receives; how it’s sold, delivered and supported; and how much it costs- the price or total cost of ownership. Experts in customer psychology say that customers’ emotional sates influence about 50 percent of the value them percent of the value they perceive.

Loyalty guru Reichheld had found one simple metric to be highly related to growth in most industries: the willingness of a customer to recommend the company (supplier or brand) to a friend or colleague. Using a 0 to 10 scale, a ‘net promoter’ score is calculated by taking the percentage of customer giving the company a score of 9 or 10 (promoters) and subtracting the percentage giving the company a score of 6 or below (detractors).

THE CUSTOMER VIEW OF VALUE

To be successful with CRM, a company must start by understanding and listen to their customers. In most cases the customers do not complain they just abandon the brand, the product, the supplier or the company itself. When a customer is dissatisfied the on an average he tells around 8-10 people about his bad experience thereby effecting the profits of the company. In this situation the customer stops giving any further business to the company and in-turn diverts to the competitor. On the other hand if a customer feels that he is listened to, the same customer might not only go for repurchases but even provide 3-5 referrals to the company. Then there is the third type of customers the ones who are delighted these are ones who helps the company to grow. These are the customers who provides the company with around 17-20 referrals over their lifetime.

Allow Foreign Direct Investment in Retail

Posted by Siddharth Roy On Thursday, September 17, 2009 0 comments

Allow Foreign Direct Investment in Retail.


FDI has been opened up in other sector of industry and the number of government approvals has been on the increase steadily. During the 1st seven months of 2004, there has been a net inflow of Rs. 9503 crores which is approximately 80% of total FDI inflow 2003. 2005 has also seen a lot of reform in this sector. With reforms like the increase of FDI cap in aviation from 40% to 49% the overall growth rate in 2005 has also been on similar lines. Press note 18-the restrictive regulation which required a foreign partner in an Indian joint venture to get the Indian partner’s no objection to start a new venture in the same field, has been abolished. In the retail industry however, the picture is not very rosy. According to an A.T. Kearney report, the market in India is estimated at around $225 billion out of which only a dismal 2% or $4.5 billion amounts for organized retailing. With the demography of IndiaIndia indicating a young population and an overall booming economy the spending power of the populace has increased. The need for new shopping environs and increased spending is bound to fillip the growth in this sector by 15% to 20% in the coming two to three years. Retail in is amongst the largest industries accounting for 10% of GDP and around 8% of employment.

With India on the global map for foreign investors around the world, there is a large amount of foreign capital waiting to pour in. India is listed 5th in the UNCTAD survey of favorable investment locations. In the retail scene, global conglomerates like Wal-Mart from US, Shoprite from South Africa have been eyeing the Indian market keenly. METRO GmbH, the German retail bigwig has opened shop inBangalore. Although fraught with regulatory restrictions, the METRO group with their “Cash & Carry” format has started business selling for resale and corporate purchases. The Foreign Investment Promotion Board of FIPB allows foreign investors to enter the market under the banner of test marketing products for a period of two years. Under these norms the FDI is allowed in wholesale cash & carry but not under the retail trade. With the similarities in the test marketing route to actual retail trading the commerce ministry is hoping to scrap this test marketing route to plug FDI in retail trading.

The entry of METRO GmbH had sparked of protests from the left wing. The company has been accused of starting retail trading directly at their outlets in the name of wholesale. The propaganda machine has been blaming the government of looking the other way by allowing the company to continue operations even when there have been reports of METRO selling products not essentially meant for resale which is stipulated under norms. The Indian retail industries share a large market, which is mainly unorganized. The entry of these large foreign conglomerates is set to usher in an era of large scale organization in this market with modern strategies and newer technology. The left parties are willing to downplay these constructive features by mooting concerns over the so called predatory pricing regimes followed by such companies sounding a death knell to the smaller Indian retail companies.

Predatory pricing practices have been a common feature in arguments against large retail chains around the world like Wal-Mart. Although companies like Wal-Mart have in the past engaged in such practices, it is a case in point to note that such practices have failed and been the bane of these companies. To further allay such misconceptions it might be worthwhile to look into the rates of inflation which are a key index to the struggle in pricing. In fact trying to decrease rates of inflation by practices like monetary infusion, or increase in the stock of country’s money can prove counterproductive. There has been a debate over this issue in economic circles recently with Ben Bernake, the successor to Alan Greenspan as the chairman of US Federal Reserve being in support of such a policy of monetary infusion. The capitalist frame of thought on this issue propounded by none other than Ludwig Von Mises, the famous economist of yesteryear is that trying to increase the stock of money when the inflation rises above a certain level and decreasing it when there is deflation at a certain level, in other words,inflation targeting, cannot be achieved without misleading economy with an illusory boom. This would in simple common sense mean that, practices like predatory pricing will not be successfully possible if there is no indulgence of the Reserve bank of India in socialist practices like monetary infusion.

With India targeting a GDP growth rate of 8% there is definitely a need for more capital investment in retail, it being among the largest industries of the country. The influx of new technology like RFID (Radio Frequency Identification Tags) in the retail industry which is bound to follow any FDI in retail will make businesses more efficient. Also the organization which this capital is bound to bring will actually play in favor of the Indian retail scene. A survey by FICCI indicated that there also needs to be a reform in the FDI policy guidelines set up by FIPB. A whopping majority of surveyed foreign investors have indicated that one of the most obvious deterrents for investing in India is the unstable nature of these policy guidelines. It has to be acknowledged that FIPB has put up online a manual which allays the fears of foreign investors by clearly indicating the guidelines and restrictions to foreign investment in India. But a rethink on increasing the cap of investments is required. Economic policy under socialist pretexts tends to be perfunctory in terms of dealing with illusory booms which lead to recessions by calling for more government control, thereby threatening the ideal of a free economy. The caprice by successive Indian governments with regard to reform in FDI policy is a case of a lack of will to weed out communist influence from economic polity. With countries like China being ranked higher than India in the UNCTAD survey of profitable investment locations one is bound to see that there is definitely a trend in favor of a capitalist economy around the world. Ludwig Von Mises, the noted economist strongly voiced his support for lassiez-faire capitalism as the most advanced economic theory; whether India can move, albeit slowly, towards such a system would in part depend on how it deals with this contentious issue of allowing private capital to flow into one of India’s largest industries.

STATE BANK OF INDIA

Posted by Siddharth Roy On Wednesday, September 16, 2009 0 comments





The origin of the State Bank of India goes back to the first decade of the nineteenth century with the establishment of the Bank of Calcutta in Calcutta on 2 June 1806. Three years later the bank received its charter and was re-designed as the Bank of Bengal (2 January 1809). A unique institution, it was the first joint-stock bank of British India sponsored by the Government of Bengal. The Bank of Bombay (15 April 1840) and the Bank of Madras (1 July 1843) followed the Bank of Bengal. These three banks remained at the apex of modern banking in India till their amalgamation as the Imperial Bank of India on 27 January 1921.

Primarily Anglo-Indian creations, the three presidency banks came into existence either as a result of the compulsions of imperial finance or by the felt needs of local European commerce and were not imposed from outside in an arbitrary manner to modernise India's economy. Their evolution was, however, shaped by ideas culled from similar developments in Europe and England, and was influenced by changes occurring in the structure of both the local trading environment and those in the relations of the Indian economy to the economy of Europe and the global economic framework.

Establishment

The establishment of the Bank of Bengal marked the advent of limited liability, joint-stock banking in India. So was the associated innovation in banking, viz. the decision to allow the Bank of Bengal to issue notes, which would be accepted for payment of public revenues within a restricted geographical area. This right of note issue was very valuable not only for the Bank of Bengal but also its two siblings, the Banks of Bombay and Madras. It meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest. The concept of deposit banking was also an innovation because the practice of accepting money for safekeeping (and in some cases, even investment on behalf of the clients) by the indigenous bankers had not spread as a general habit in most parts of India. But, for a long time, and especially upto the time that the three presidency banks had a right of note issue, bank notes and government balances made up the bulk of the investible resources of the banks.

The three banks were governed by royal charters, which were revised from time to time. Each charter provided for a share capital, four-fifth of which were privately subscribed and the rest owned by the provincial government. The members of the board of directors, which managed the affairs of each bank, were mostly proprietary directors representing the large European managing agency houses in India. The rest were government nominees, invariably civil servants, one of whom was elected as the president of the board.

Business

The business of the banks was initially confined to discounting of bills of exchange or other negotiable private securities, keeping cash accounts and receiving deposits and issuing and circulating cash notes. Loans were restricted to Rs.one lakh and the period of accommodation confined to three months only. The security for such loans was public securities, commonly called Company's Paper, bullion, treasure, plate, jewels, or goods 'not of a perishable nature' and no interest could be charged beyond a rate of twelve per cent. Loans against goods like opium, indigo, salt woollens, cotton, cotton piece goods, mule twist and silk goods were also granted but such finance by way of cash credits gained momentum only from the third decade of the nineteenth century. All commodities, including tea, sugar and jute, which began to be financed later, were either pledged or hypothecated to the bank. Demand promissory notes were signed by the borrower in favour of the guarantor, which was in turn endorsed to the bank. Lending against shares of the banks or on the mortgage of houses, land or other real property was, however, forbidden.

Indians were the principal borrowers against deposit of Company's paper, while the business of discounts on private as well as salary bills was almost the exclusive monopoly of individuals Europeans and their partnership firms. But the main function of the three banks, as far as the government was concerned, was to help the latter raise loans from time to time and also provide a degree of stability to the prices of government securities.

India witnessed rapid commercialisation in the last quarter of the nineteenth century as its railway network expanded to cover all the major regions of the country. New irrigation networks in Madras, Punjab and Sind accelerated the process of conversion of subsistence crops into cash crops, a portion of which found its way into the foreign markets. Tea and coffee plantations transformed large areas of the eastern Terais, the hills of Assam and the Nilgiris into regions of estate agriculture par excellence. All these resulted in the expansion of India's international trade more than six-fold. The three presidency banks were both beneficiaries and promoters of this commercialisation process as they became involved in the financing of practically every trading, manufacturing and mining activity in the sub-continent. While the Banks of Bengal and Bombay were engaged in the financing of large modern manufacturing industries, the Bank of Madras went into the financing of large modern manufacturing industries, the Bank of Madras went into the financing of small-scale industries in a way which had no parallel elsewhere. But the three banks were rigorously excluded from any business involving foreign exchange. Not only was such business considered risky for these banks, which held government deposits, it was also feared that these banks enjoying government patronage would offer unfair competition to the exchange banks which had by then arrived in India. This exclusion continued till the creation of the Reserve Bank of India in 1935.

TRANSFORMATION JOURNEY IN STATE BANK OF INDIA

The State Bank of India, the country’s oldest Bank and a premier in terms of balance sheet size, number of branches, market capitalization and profits is today going through a momentous phase of Change and Transformation – the two hundred year old Public sector behemoth is today stirring out of its Public Sector legacy and moving with an agility to give the Private and Foreign Banks a run for their money.

The bank is entering into many new businesses with strategic tie ups – Pension Funds, General Insurance, Custodial Services, Private Equity, Mobile Banking, Point of Sale Merchant Acquisition, Advisory Services, structured products etc – each one of these initiatives having a huge potential for growth.

The Bank is forging ahead with cutting edge technology and innovative new banking models, to expand its Rural Banking base, looking at the vast untapped potential in the hinterland and proposes to cover 100,000 villages in the next two years.

It is also focusing at the top end of the market, on whole sale banking capabilities to provide India’s growing mid / large Corporate with a complete array of products and services. It is consolidating its global treasury operations and entering into structured products and derivative instruments. Today, the Bank is the largest provider of infrastructure debt and the largest arranger of external commercial borrowings in the country. It is the only Indian bank to feature in the Fortune 500 list.

The Bank is changing outdated front and back end processes to modern customer friendly processes to help improve the total customer experience. With about 8500 of its own 10000 branches and another 5100 branches of its Associate Banks already networked, today it offers the largest banking network to the Indian customer. The Bank is also in the process of providing complete payment solution to its clientele with its over 8500 ATMs, and other electronic channels such as Internet banking, debit cards, mobile banking, etc.

With four national level Apex Training Colleges and 54 learning Centres spread all over the country the Bank is continuously engaged in skill enhancement of its employees. Some of the training programes are attended by bankers from banks in other countries.

The bank is also looking at opportunities to grow in size in India as well as Internationally. It presently has 82 foreign offices in 32 countries across the globe. It has also 7 Subsidiaries in India – SBI Capital Markets, SBICAP Securities, SBI DFHI, SBI Factors, SBI Life and SBI Cards - forming a formidable group in the Indian Banking scenario. It is in the process of raising capital for its growth and also consolidating its various holdings.

Throughout all this change, the Bank is also attempting to change old mindsets, attitudes and take all employees together on this exciting road to Transformation. In a recently concluded mass internal communication programme termed ‘Parivartan’ the Bank rolled out over 3300 two day workshops across the country and covered over 130,000 employees in a period of 100 days using about 400 Trainers, to drive home the message of Change and inclusiveness. The workshops fired the imagination of the employees with some other banks in India as well as other Public Sector Organizations seeking to emulate the programme.

The CNN IBN, Network 18 recognized this momentous transformation journey, the State Bank of India is undertaking, and has awarded the prestigious Indian of the Year – Business, to its Chairman, Mr. O. P. Bhatt in January 2008.

BOARD OF DIRECTORS

r. No.

Name of Director

Sec. of SBI Act, 1955

1.

Shri O.P. Bhatt

Chairman

19(a)

2.

Shri S.K. Bhattacharyya
MD & CC&RO

19(b)

3.

Shri R. Sridharan
MD & GE(A&S)

19(b)

4.

Dr. Ashok Jhunjhunwala

19(c)

5.

Shri Dileep C. Choksi

19(c)

6.

Shri S. Venkatachalam

19(c)

7.

Shri. D. Sundaram

19(c)

8.

Dr. Deva Nand Balodhi

19(d)

9.

Prof. Mohd. Salahuddin Ansari

19(d)

10.

Dr.(Mrs.) Vasantha Bharucha

19(d)

11.

Dr. Rajiv Kumar

19(d)

12.

Shri Ashok Chawla

19(e)

13.

Smt. Shyamala Gopinath

19(f)



FOREIGN SUBSIDIARIES

SBI International (Mauritius) Ltd.,
Offshore Bank


(A subsidiary of State Bank of India)

State bank of India International (Mauritius) Ltd is one of the first offshore banks to be established in Mauritius in 1990, with a paid up capital of USD 10 Million. The Bank has had a consistent record of having earned profits since its very first year of operations.

SBIIML, with the expertise of its management and personnel, is customer focussed, and offers to all its clients, all over the world, high quality, cost effective professional services and innovative products. The Bank lays emphasis on technology, which is an integral part of its operations having a significant impact on services rendered. It has, presently, clients spread over 40 countries.

STATE BANK OF INDIA (CALIFORNIA)

State Bank of India (California), a wholly owned subsidiary in California is a California State Chartered Bank and a member of the Federal Deposit Insurance Corporation. With four full service branches and a money transfer office, the Bank caters to the Banking needs of the community, ethnic and non-ethnic alike, through various deposit and loan schemes. The Bank also provides Internet Banking, Tele-Banking, ATM service and Credit Cards.

STATE BANK OF INDIA (CANADA)

State Bank of India (Canada) - a wholly owned subsidiary of State Bank of India - has been operating in Canada at four locations Toronto ,Vancouver, Surrey and Mississauga , extending various facilities to the Indians settled in Canada such as remittance of funds through a network of over 9000 offices of State Bank of India, the largest commercial bank in India and through the branches of its Associate Banks. SBI(C) has also been instrumental in fostering trade ties between India and Canada by extending financial, advisory and logistic support to Canadian and Indian corporates.

INMB BANK LTD, LAGOS

A subsidiary of SBI, INMB Bank Ltd, (formerly Indo-Nigerian Merchant Bank Ltd) was incorporated on 26/11/1981 under the Banking Act, 1969. The principle activity of the Bank is providing Banking Services, mainly to corporate clients. Such services include the granting of loans and advances, equipment leasing, corporate finance activities, financial advisory services.


PRODUCTS:

  • Loans
  • Credit Cards
  • Savings
  • Investment Vehicals
  • SBI Life (Insurance) etc.
REVENUE:
US$ 24.577 billion (2008)


NET INCOME:

US$ 2.25 billion (2008)


TOTAL ASSETS:

US$ 257.183 billion (as of 31st March 2008)

EMPLOYEES:

205,896


SOURCES:


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