Food and Restaurant Quiz – I

Question No. 1.

 

Name the famous restaurant in Delhi which pioneered Butter Chicken, Chicken Tikka and Dal Makhani. This restaurant is expanding itself as a chain through PE funding.

 

Ans: Moti Mahal

 

Question No.2

 

Which celebrity chef is behind the ready-to-eat foods company, KAR Foods?

 

Ans: Sanjeev Kapoor

 

Question No.3

 

Who is the largest selling Indian author of English books?

 

Ans: Tarla Dalal

 

Question No. 4

 

This Hyderabad company is well-known for over 50 years for its fruit biscuits. Visitors to Hyderabad usually do not forget to pick up a box of these biscuits.  Now it proposes to expand to other cities. Name this company.

 

Ans: Karachi Bakery 

 

Question No.5 

 

Name this potato farmer from the USA who was the man behind putting Idaho on the world map of potatoes. Idaho license plates had “World Famous Potatoes” thanks to his initiative. From 1960s, he was the largest supplier of potatoes for french-fries at McDonalds. From potato chips he diversified into memory chips by acquiring Micron technologies. This multi-billionaire died in May 2008 at a ripe old age of  99.

 

Ans: J.R.Simplot.

 

- G. Mohan.

 

Dodgy Pricing by Hindustan Unilever

My wife recently bought two different size packs of  otherwise identical Clinic All-Clear shampoo. One was a 100ml pack and the other a 40ml one. Both had 02/08  as the date of packing and neither of them had any promotional offer. The 40ml pack is priced at Rs. 15.  Conventional logic and traditional fair pricing practice demand that the 100ml pack should be priced at Rs. 37.50 or less as usually bigger packs are usually cheaper.

 

But what did I see? The price tag on 100ml pack said Rs. 69.  I checked the number twice. Nothing was amiss. Now tell me why should anyone buy a 100ml pack when she can get four 40ml packs at Rs. 60 and will still be left with Rs 9 ?

 

Is it skirting the laws  (if not in letter then in spirit) on weights and measures or is it an honest mistake or is it   HUL’s pricing strategy to exploit different price elasticity of different?

 

 

(Marketing students may like conceive a project to compare the SKU level prices of various FMCG products and discover such anomalies. Maybe, there is some method in this madness.) 

 

 

 

- G. Mohan.

 

Super-indifference of India’s Super-rich

The business magazines routinely carry stories estimating the wealth of the super-rich. It is an ego-trip for the people featured there and voyeurism for the rest. Business World in its latest issue has some interesting facts about the new super-rich in India. 162 new rupee billionaires (over Rs. 100 crore) got created between 2006 and 2008. These billionaires are collectively worth Rs 938 billion.

 

As per DSP Merrill Lynch there are close to 250,000 households with assets over $100,000 or Rs 4 million. There are roughly 100,000 dollar millionaires (over Rs 40 million)  by their estimate in the country. There are 54 dollar billionaires (Over Rs. 4000 crore) in India. 

 

In the latest Forbes list of billionaires, Indians had the maximum representation among Asians.

 

I do not grudge the super-rich their wealth. But one thing which is seriously missing among the Indian Super-rich is philanthropy. Various estimates put the annual philanthropy marketplace no more than Rs 50 billion per annum. This includes the contributions of the super-rich, rich, not-so-rich and poor towards charity. 

 

Anand Jain, a close friend of Mukesh Ambani, who heads the BW list of  new super-rich admits that “I have thought about this (charity and philanthropy) for some time,” . “So have some others, but we have yet to get down to brass tacks and actually formulate any strategy on it.”   

 

Contrast this with Bill Gates. Bill Gates has donated US $ 36 Billion to his foundation. He will be soon leaving his day-job at Microsoft and devote his full-time to Bill and Melinda Gates Foundation. This foundation has US $ 100 Billion in funds, thanks to the philanthropy of the world’s richest man, Warren Buffet, in addition to Bill Gates’ own. Incidentally, this foundation’s activities and charity in India, is bigger than any Indian corporate sponsored foundation. 

 

If Indian super-rich emulate the Americans in making wealth by exploiting the opportunities in the market, they should be emulating them in philanthropy too !  

 

- G. Mohan

 

One More Reason to Buy Infosys Shares

Some shareholders buy shares of companies for reasons other than dividend and capital appreciation. A few shareholders buy Raymond’s shares to get the discount coupons. There are legions of small shareholders who have a token holding in Reliance industries, just to get an invite to attend the AGM. The high-tea is usually the high-point of the RIL AGM. Gift hampers given at the ITC AGM makes the day for some. I have retained a few shares of Infosys to get their Annual reports.

 

The Infosys Annual Reports are extremely well produced documents. The thought and effort put into its preparation, makes the otherwise staid document, come to life. Many companies use glossy paper and nice photographs to cover up for their lack of information. Infosys annual reports have both content and style. No wonder, Infosys has received numerous awards for its Annual Reports.

 

Leafing through the pages of the latest Infosys annual report, I got answers to a few questions, which I have found hard to explain, particularly, to those outside of the IT industry. What is high-end and low-end in IT Services? Why is BPO considered low-brow ? Why is consulting so aspirational for IT Services companies ? Why is software products business superior to the services business ?

 

The revenue generated per employee in each of the different areas gives a good metric to judge what is high-end and what is low-end. Infosys and almost all of the SWITCH companies get  bulk of their revenues from software services like Application Development and Maintenance (ADM). They employ thousands of programmers for this service-line. Infosys generated Rs 150 billion revenue in FY’08 by employing about 73,000 software engineers/programmers. So, each engineer is generating Rs 2 million in revenues per year.

Software products business generated Rs 5.97 billion revenues from 2000 odd employees. The revenue productivity from each employee thus becomes nearly Rs 3 million per year.

Infosys BPO generated Rs 9.37 Bn revenues from 16,295 employees. Each BPO employee contributing just about Rs 575,000 per annum.

 

The consulting business for Infosys generated Rs 2.46 Bn revenues from just 265 employee. Revenue productivity from each employee is nearly Rs 9.3 Million.

 

In other words, if we consider the ADM business as the base, BPO is low-end and Consulting is the high-end. Revenue productivity per employee in BPO is just 30 % of what an ADM employee gives.  The productivity for an engineer engaged in software products business is 50 % higher than the software services business.Consulting is so aspirational because each consultant gives nearly five times productivity of a software engineer.

 

A small twist in the tale. All the product-lines except consulting  were profitable for Infosys. Infosys Consulting incurred a loss of Rs 510 Million. High productivity does not mean high profits, it seems !!

- G. Mohan.
 

ICICI Bank’s Act of Atonement

ICICI Bank  has started Disha Financial Counselling service (www.dishafc.org)  as a Corporate Social Responsibilty (CSR) initiative. Disha offers one-to-one free counselling on credit, debt management and general financial education. These centres have been started in seven cities. 

In an advertisement for Disha in BusinessWorld, the copy mentions that a large number of credit card holders have over 25% of their annual income as credit card debt. This service is aimed at those people who are unable to plan their finances and know their limits. 

With RBI and courts coming down heavily on strong arm tactics applied by recovery agents on behalf of credit card issuers like ICICI Bank, Disha is a long-term initative to reduce credit card defaults.  

Is Disha, a penitence by ICICI for bringing in an American illness into Indian middle class ?

 - G. Mohan.

 

 

Malvinder Singh Writes to the Late Dr. Parvinder Singh on Ranbaxy Sellout

June 12, 2008 

Tokyo 

Dear Papaji, 

Sat Sri Akal!

It is with a heavy heart I wish to inform you that I have just sold our family’s stake in Ranbaxy to a Japanese company, Daiichi Sankyo (DS). You may remember Sankyo, now it is Daiichi Sankyo.

 

The decision was not easy. I was constantly remembering you and thinking, what you would have done if you were faced with a similar situation. I had no plans of selling out. In fact, I had come to Japan looking for a partner for our R & D venture. One thing led to another and I found DS willing to partner us, only if they had a controlling stake in Ranbaxy.

 

I came back to Delhi and discussed with the family members. I told them that they are giving us a good offer, only if we sell them our entire stake. Honestly, it was not the money alone that was tempting. You have left enough money for us. But it was the entire set of circumstances.

 

Increasingly, business has become very difficult. In our generics business, which you built to a global scale, we are having serious margins pressure. Our success in litigations on patents in US is going down. We haven’t made much headway with our R & D after you left us. In fact, ever since Rashmi ( Dr Barbhaiya) left us, our R & D is directionless. The stockmarkets have also got wind of all these problems and during the bull-run in Indian markets after you died, Ranbaxy stock is just languishing.

 

You will accept that, along with the global pharmaceutical company, that we inherited from you, we also inherited the family disputes. The disputes you had with your father and brothers are still unresolved. Chacha Analjit has not forgiven you to this day and never leaves a chance to get back at us. These disputes take a lot of my and Shivi*’s time.

 

Shivi is doing pretty well with the Fortis Hospitals business, which you had started in a small way. He wants to make it a national chain. Religare ( which was known as Fortis Financial in your time) is also showing good promise. Both these businesses will do much better, if we infuse capital. 

 

Thinking all of the above, I thought that this was a once-in-a-lifetime opportunity. So I decided to accept the offer. I know you had a  dream of making Ranbaxy an Indian MNC. Now it will be a subsidiary of a Japanese MNC. You will be happy to know that they have agreed to retain the Ranbaxy name.

 

I have also negotiated a good deal for myself. They have retained me as the MD and CEO for five years. I know it is not going to be easy, reporting to the Japanese managers. I am used to being an owner-manager. Their slow consensual decision making is surely going to get on my nerves. I am sure, they will appoint a number of Japanese managers all around me. Sooner, rather than later, I will be a puppet in their hands. I have seen this in Maruti. But atleast I will be the public face of Ranbaxy. I can retain the family honour this way. If things get diffcult for me, I will not stay on for the full-term. By then the spotlight will be out of Ranbaxy and I can go on to do something else.

 

I think, the Indian media and the CII-types are not going to like this deal. They will feel let-down.Ranbaxy is often taken as an example of  Indian pharma’s success story. I have learnt from you, that ultimately, the company, our family and our shareholders matter. This deal is good for all of them. Let the chatterati keep talking.

 

Emotionally, it was very difficult to let go. Ranbaxy and our family identity is so intertwined. But logically, I found that it was in the best interest of all of us to let go. I hope you approve of this.

 

By writing this letter, I feel a great sense of relief. Please forgive me, if I have disappointed you. Seeking your blessings for my future endeavours.

 

Yours affectionately, 

Malvinder.

 - G. Mohan.

Disclaimer: If at all a disclaimer is needed, the letter above is a pure piece of fiction.

 

 

Mukesh or Anil – Pick Your Favorite Ambani

Even when it comes to dealing with shareholders, the Ambani brothers seem to differ in their styles. Mukesh Ambani while addressing the Reliance Industries AGM this month got annoyed when a shareholder pestered him about bonus shares. He said ”If you don’t like the Reliance stock, sell them away,” reports ET. 

 

In stark contrast, when the Anil Ambani promoted Reliance Power had a poor debut in the stock market after the mega offering it issued a press-release, stating the board will consider “a proposal for issuing free bonus shares to all categories of shareholders, excluding the promoter group, thereby protecting investors even from notional short-term losses on their shareholdings”. The company issued 3:5 bonus.

 

It will be interesting to watch what wins in the long run. Solid performance or great investor relations!

 

- G.Mohan

Women in the Indian IT Industry

Browsing through the latest Annual Report of TCS, a piece of statistic caught my attention. Women constituted 28% of the company’s workforce as on March 31, 2008. 28% of 111,407 would mean nearly 30,000 women.

 

One would imagine that the representation of women would be uniform across all levels of the company. But it is far from that. In the board of directors consisting of 11 directors, there is one woman- an independent, non-executive director. In the leadership team there is no woman, at all. In the Management team of 62 executives, there are just three women.

 

A look at the Annexure to the report, giving details of all employees drawing over Rs. 2.4 million per annum, the under-representation of women becomes clearer. Out of 402 executives, included in the list, there are just 24 women executives, just over 5 %. The youngest woman executive making it to this list is 39 years of age and the median age is around 43 years.

 

It is tempting to attribute this to the existence of glass-ceiling for women in the IT industry or corporate sector. I would attribute this more to the fact that 20 years ago, very few women took to technical education and software careers. Hence, we see very few women at the top now Ten years from now the IT company boards would have far more women.

 

IT industry in India awaits for its own Carly Fiorina. 

 

- G. Mohan.   

Is Infosys Launching a Global B-School ?

A campus spread over 270 acres, a capacity to train 13000 graduates, 500 faculty rooms and 10,300 residential rooms. Is it Harvard, MIT or Stanford? None of these. This is the Global Education Centre (GEC) of Infosys at Mysore.

 

When completed, it “will be the largest corporate investment (Rs. 165 billion) in educational infrastructure in India and one of the largest globally,” said N.R. Narayana Murthy, Chairman and Chief Mentor, Infosys, at the 27th Annual General Meeting last Saturday, reports Business Line.

 

The company recruited over 25,000 freshers in 2007-08. All these freshers undergo a 14-week rigorous induction program at the GEC. Separate programs were also conducted for Infosys recruits from China, Europe and USA at the GEC. The GEC also houses the Infosys Leadership Institute, the management training facilities for senior Infoscions.

 

 The Indian IT services industry is probably at the last legs of the manpower-multiplication game which has kept them growing. I believe the number of freshers, that Infosys is going ti recruit year-on-year can now only go down.

 

 

Till now, Infosys has maintained that GEC ramp up is entirely for in-house training only. But the scale and the level of investment look disproportionately large. If they are left underutilized, shareholders are likely to punish Infosys

 

I guess, Infosys is getting ready for policy changes with regard to Foreign Direct Investment (FDI) in higher education. When the policy changes are announced, Infosys will tie-up with one of the world-class universities like Harvard/MIT/Stanford. For the Ivy League B-Schools, a readymade world class campus will give them a head start in India.

 

- G.Mohan.  

 

An Unsolicited Advice to Praful Patel

The airlines in India are crying hoarse about mounting losses due to rising fuel cost. Vijay Mallya, has declared if the government does not reduce the ATF prices through tax concessions, Kingfisher would be forced to cut flights. Spice Jet has already announced a reduction of flights from 117 to 100 per week. Praful Patel, the Minister has sought the appointment of the PM seeking concessions in taxes to prevent the industry from going belly-up. 

 

Indian, the domestic airline division of Air India, is under direct control of  the Union Ministry of  Civil Aviation. Indian had a 22% market share at the end of 2007-08. It made a loss of Rs 2.75 billion in 2006-07. In 2007-08, Air India is likely to report a loss of Rs 20 billion, out of which Indian’s share will be over Rs 10 billion. The projected losses for 2008-09 will be much higher.

 

Here is an unsolicited advice to the Minister. Instead of giving tax concessions to the industry, the Minister through an administrative order could simply withdraw all passenger flights of Indian, until the situation improves. This would correct the demand-supply situation quickly, improving the viability of the industry. As such the average seat factor for most airlines is less than 70%.

 

This would save the government twice over. It will save the revenue loss by giving tax concessions to the industry. It will alsoreduce losses in Indian. Its staff will be happy coming to work, doing nothing and collecting their salaries. They are quite used to it anyway.

 

- G.Mohan.