IIPM Editorial: 02/01/2013

Saturday, February 9, 2013

Back to the drawing boards

DTH players were on a dream flight in India so far, but the delay in rollout of Phase II of CAS has dampened expectations. Vareen Gadhoke Ray & Surbhi Chawla discuss the upcoming trends and how DTH players can make them count

When Direct-to-Home (DTH) first came along, it brought the promise of streamlining the highly fragmented pay-TV market in the country, which had hitherto been the stranglehold of local cable operators (LCOs). All that the players really had to do was conquer, which they continue to do, through mud-slinging, comparative advertising and even some cheap ground level tactics. DTH was a very welcome platform for broadcasters and media houses, which were fighting these LCOs on the grounds that they were not declaring their total subscriber base. The launch of the first phase of Conditional Access System (CAS) brought more transparency, thereby aiding higher yield in subscription revenues. But the launch of the second phase of DTH, which was to make CAS mandatory in more areas of the country, has been delayed quite unexpectedly. This has stymied their dream run, and slowed down their onward march quite considerably. In such a scenario, what does the future portend for these players in India?

Direct to Hell or Heaven

The future of pay-TV in India is being driven by media owners and distributors, which are expanding market share with an eye on profits, rather than at the expense of profits. The major concern for this sector was that at a very nascent stage, seven major players (Dish TV, Tata Sky, BIG TV, Airtel Digital, Sun Direct, DD Direct and the newly launched Videocon d2h) along with organised CAS operators (like Hathaway and Sify) were slugging it out to get the maximum share of this growing pie. As a result, the first phase of growth saw the basic DTH box being offered at a subsidy, and at times, even virtually free of cost to catch hold of the early adopters and get them to experience this new wave of technology. The plus point of this can be seen from the fact that the Indian pay-TV sector generated sales to the tune of $6.5 billion for financial year ending March 2010 [Media Partners Asia (MPA)].

Thanks to the continously intensifying tussle among the players, the sector is facing the same fate as the telecom operators. DTH players too are unable to garner as much in ARPUs. The tempering of their enthusiasm due to delay in Phase 2 rollout make it worse. EBITDA profits for the sector reached $800 million for the financial year ending March 2010, implying a modest profit margin of around 13%.

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2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)

Friday, February 8, 2013

Satisfied with the performance of Sushma Swaraj?

The current Leader of the Opposition in the Lok Sabha has failed to take the Congress to task in the Lower House. Factionalism within the party as well as a lack of charisma on part of the tallest leaders have made Swaraj's task harder. She will need to make a deep impression if the BJP's image and future poll prospects are to brighten.

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Wednesday, February 6, 2013

Has Barack Obama shot himself?

When Obama took office in 2009, the projected US 10-year deficits stood at $8 trillion. In one year, the figure’s jumped to $16.2 trillion. Is Obama on a fatal track?

Is Uncle Sam attempting a fiscal suicide? Or is US pushing itself to redefine the very levels of sanity that a budget can present? Far-fetched thoughts, but quite possible too! These are precisely the questions that several economists are asking today, keeping in mind the federal budget for FY2011 announced on February 1, 2010, by the US President Barack Obama. So what makes this budgetary document read more like a financial exotica menu? One element, and one only – it foresees colossal budgetary deficits till 2020! What more? The pandemic starts this very fiscal, with budgetary estimates pegging the federal deficit for FY2010 at a mind boggling $1.6 trillion, adding to Uncle Sam’s already gigantic heap of debts. This figure of $1.6 trillion is way above the ‘combined’ budgets of advanced European countries like Switzerland, Belgium & Norway put together. And as far as US is concerned, the danger is that this shortfall represents almost 10.6% of its total annual output – the highest levels the nation has reached since World War II.

In a communiqué to B&E, sources at the US Department of the Treasury accept that, “Deficit trends of this level are not sustainable. Beginning to correct them will require cutting deficits enough to stabilise the debt-to-GDP ratio at a manageable level so it is no longer rising.” Several economists have already raised the danger flag of unsustainable deficits. They feel that US can only sustain a deficit of 3% of total output if it is to remain healthy. However, considering the proposed budgetary allocations made by Obama, the projected deficits don’t seem to fall any lower than 3.6% over the next 10 years! This grim forecast certainly adds to the challenges faced by Obama, who is not only emphasising a message of fiscal discipline, but is also seeking stimulus measures to boost the struggling economy in the short term. In fact, on the day President Obama took charge, the budget deficit (for 2009) stood at $1.3 trillion (9.2% of GDP) and the projected deficits for the following 10 years were $8 trillion. Today, the total deficit for the next decade (till 2020) stands at $16.2 trillion – 100% more than the figure forecasted last year. Can one man achieve so much in so short a time? As per experts, the Bush Administration’s decision to enact large tax cuts and a prescription drug bill will add up to $5.8 trillion to the total deficit over the next 10 years. Then there is the administration’s spending on safety net programmes, including the controversial TARP, which will increase deficit figures by about $2.4 trillion by 2020.

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Monday, February 4, 2013

Let’s test your endurance...

The intention is good, but with their own policy differences, can the Euro zone countries successfully execute the stress test?

What works for one might not work for another! Policy makers at the European Union seem to have simply ignored this age-old saying. They have not only instructed the Committee of European Bank Supervisors to organise a stress test on the European banking system, but are also planning to keep the exercise similar to the ones recently completed in the US and UK. And, no wonder, the decision seems to be in a hurry!

Raison d’être: European banks are under immense pressure. As per the European Central Bank (ECB), lenders in the Euro zone will have to write off $283 billion in the next two years as loans to corporations and households go bad. In fact, Moody’s has just slashed the credit ratings of 25 Spanish banks, arguing that the speed and severity of Spain’s recession will inevitably hit their balance sheets. And that’s the case with almost all member states. “Policy-makers and market participants will have to be alert in the period ahead. The credit cycle has not yet reached a trough,” says the latest Financial Stability Report from ECB.

Moreover, there has been no clear policy initiative till now to force European banks to raise their capital cushions, despite the fact that the region has the biggest problem with toxic assets. According to the International Monetary Fund (IMF), the global banking system holds $2.8 trillion in toxic assets, with a little over half – $1.426 trillion – on the books of Western European banks, while US banks account for only $1.05 trillion. In fact, IMF estimates that it would take a fresh $975 billion to recapitalise Western European banks to levels that prevailed in the mid-1990s, compared to $500 billion for the US banks.

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Friday, February 1, 2013

It’s the smaller players that are bearing the brunt

While the big player (read Indian government) is playing the ‘bore-me-to-death wait and watch’ game in the tightly regulated domestic food processing industry, it’s the smaller players that are bearing the brunt, for not being able to relish the fruits of their efforts. angshuman paul and romsha singh write a cheesy note...

Though, big corporate houses have enhanced their competitiveness in this sector, yet only a few have actually started the process of backward integration to venture into the arena of food processing. In fact, many of them still don’t have any inclination towards setting up a sturdy base with adequate logistics and infrastructure, a necessary condition for the healthy growth and development of the Indian food-processing industry. What’s worse, even players like the Mittals, Godrej, Ambanis and several of their ilks, who are currently feasting on the sizzling hot opportunities offered by the Rs.3.6 trillion Indian food & beverage industry (which is swathed by the brawny recession proof raincoat), have shown no intentions to pay adequate attention to the global market, unless they have a dependable strategic alliance with some global behemoth. For instance, Mahindra Shubhlabh Services Ltd. (MSSL), the agri-business arm of Mahindra & Mahindra Ltd. has tied up with South Africa’s ‘Capespan’ to export branded fruits (under the MSSL brand name) to South Africa. So, what is really scaring the soul out of players in the Indian food processing industry? The truth is that players in India and overseas look at India as simply a forest of raw materials and agricultural produce and not as an industrial hub for manufacturing as P. L. Kaul, President, All India Food Processor’s Association (AIFPA) regrettingly adds, “Even a multinational like Coca-Cola is also looking at India as merely a sourcing hub for global players, and is in no mood to set up any processing unit here...” Therefore today, when it comes to deriving full-fledged opportunities in the country, the game is simply left to the SMEs, truly depriving the industry of the much-needed investments!

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Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program)