Boycott TOI, Boycott Reebok

29 10 2010

“Run Delhi Marathon only if you have Reebok” could well have been the headline for a sports column in Times of India, Hyderabad edition today ( 29/10/2010),. Since it is not an advertisement and is published in Times of India, a newspaper with over 100 years history, the headline was just a wee bit subtler in   ”It is important to wear the right gear while running.” The author of the column is the cricketer Yuvraj Singh. The column is sponsored by Reebok Zigtech, a brand endorsed by Yuvraj Singh. The columnist goes on to write a full paragraph on the virtues of Reebok Zigtech. There is no disclaimer that Yuvraj Singh endorses Reebok Zigtech. The para is reproduced below

It is also important to wear the right gear while running. Reebok has recently launched the most technologically advanced running shoes ZigTech. The shoes help to reduce wear and tear by up to 20 percent in key leg muscles, especially shins and hamstrings. These shoes are my personal favourite and I feel they serve as the energy drink for my feet.

This is yet another instance of advertising passing of as a news item or an editorial in Times of India. TOI has often compromised on separating the advertising from its editorial. For the right price, it will sell anything, including its masthead. In today’s newspaper, the first page delivered a full page ad for a Delhi based developer with some false news about Govt approving FDI in retail. The look was exactly like the normal TOI first page, masthead and all. It is a different matter that the normal first page was also there actually in Page 3.

Advertisers like Reebok would like to use the goodwill of sport stars like Yuvraj and the reach of TOI, to make their brand a recommendation to the gullible Indian public (?). I am certain they pay a disproportionate sponsorship rate for such columns.

To stop being deceived, the public should boycott such products. This will hurt the advertiser and advertiser in turn will stop using such tricks. This will also hurt TOI.

– G. Mohan


Fiat’s Flat Tire in India

23 10 2010

 At a time when the car market is booming in India, one company that is still in rut is Fiat. Fiat announced the day before yesterday that it would create its own retail network to push Fiat cars. Currently, Fiat cars are sold through Tata Motors’ dealer network.

Fiat is a well-known brand in India, having been one of the 2 big car brands in India right through the ’60s and ’70s. Fiat cars were manufactured by Premier Automobiles, a Doshi group company. Even after PAL decided to rename Fiat 1100 as Premier Padmini, the man on the street always called the car Fiat.  

Despite a head start, the history of Fiat in India is one of misses after misses. Post liberalization, Fiat set up a JV with PAL their earlier partner and launched UNO. It was an unqualified failure. The JV itself had its set of problems.

Then Fiat came on its own and launched Fiat Palio, Siena and Petra. After tasting some initial success with Palio, the sales started declining. Poor after-sales service, low mileage and limited dealer network were some of the reasons cited for this failure. Siena and Petra were bad products.

In 2007, Fiat realizing the need for a dealer network signed joint venture deal with Tata Motors. Fiat Automobiles India Ltd is a 50:50 JV between Fiat and Tata Motors. After this deal, Fiat launched some good models and backed it up with a visible marketing campaign. Fiat Grand Punto and Fiat Linea were definitely vast improvement over its earlier products and definitely in consideration for any car purchaser looking for a premium hatchback (Punto) or a sedan (Linea).

The journey of Fiat in India is not unlike Yuvraj Singh, its brand ambassador for Linea. Both have been underachievers. The talent is unquestionable, but somehow performance leaves much to be desired. Sometimes it is an injury, some other time it is a relationship issue and indifferent form at times.

Yet, in the April- Sept 2010 period, Fiat has reported a decline in sales when the rest of car market is booming. This must have forced the Italian bosses to look at a new strategy.

From the experience of Fiat and also Mitsubishi, it is pretty evident that having partners like PAL or Hindustan Motors, who had lengthy experience in  the Indian market, is more of a liability than a strength. Car companies who have come on their own like Hyundai, Honda (JV with SIEL, a passive partner) and Skoda/Volkswagen have done much better.

– G. Mohan

Engineers as SBI Clerks

8 10 2010

Recently a news item appeared in many newspapers including Economic Times.

ET said:

This may surprise those aspiring to be engineers, and may even cause a rethink among job seekers: Over 3,800 graduate and 200 postgraduate engineers are set to join State Bank of India (SBI) in the clerical cadre. SBI had a year ago advertized for over 27,000 posts in the clerical cadre. While 38 lakh aspirants from across the country applied for the jobs online, 28 lakh of them appeared for the written exam. There were 88,000 successful candidates and 27,000 were finally selected after personal interviews. “It was the biggest such exercise for us,” a senior SBI official said. 

This news item has triggered a variety of responses ranging from bewilderment to pity to anger. Some also see this as a positive happening which will bring in innovation in the dull and staid bank clerks’ job. 

In my humble opinion, this is a reflection of the Indian job market in 2009-10 just after the slowdown. There is a premium for stability and security. In the minds of Indian middle class, an SBI job, it cannot get safer than that. Secondly, there is a glut of engineers in many states. Private engineering colleges have sprung up in such big numbers that annual output of engineers is nearly seven lakhs. The hope of jobs in the fast growing IT industry is a mirage for many engineering graduates, with IT industries slowing down their recruitment and also giving many a certificate of ‘unemployability’. (Just like Rajiv Gandhi’s famous quote of only 15p out of a rupee spent in Delhi reaching the common man, NASSCOM’s finding (?) that only 15 % of Indian graduates are ‘employable’ has been accepted as popular wisdom.)

My message to the engineers who have been chosen is: First of all, congratulations! Being in the top 1 % of any national selection is an achievement. The decision to appear in the SBI clerical examination was a pragmatic one, given the circumstances. Now, that you have been selected make the most of it. It is true that a B.Tech or an M.Tech is an over-qualification for the clerks’ job. You will have batch mates, who may be less qualified. Instead of sulking about the circumstances, prove that by performance you are more capable than the others. Learn banking and acquire whatever professional qualifications are required for getting promoted in banking.

Please do not look down upon the tasks that are assigned to you, because you think you are overqualified. In many foreign and new generation private sector banks, many of the tasks usually handled by clerks in SBI like being a teller or handling counters in the front desk are handled by MBAs. It is just incidental that they happen to have fancy designations like Asst Manager or AVP and get paid higher. Remember, the private bank jobs carry much higher risks.

As for the recruiter SBI, my opinion is that they have done a great service by recruiting in such big numbers in a poor job market. They have perhaps got a relatively superior batch of clerks which includes so many engineers. Accepting engineering as basic graduation, rather than a specialized professional degree, reflects a pragmatic approach to current Indian reality. Rather, than feeling smug about it, SBI needs to design jobs and create a conducive environment so that these talented clerks are able to perform well. Otherwise, in a growing economy, these engineers would leave them as easily as they have joined.

– G. Mohan

The Hypocritical Succession Culture of Indian Business Houses

4 10 2010

In a recent interview to Business Standard, Kishore Biyani, the Founder and CEO of Future Group made a very controversial quote

“I don’t believe in the hypocrisy of asking family members to join at a junior level. The CEOs would run the business and be accountable; family members would set broad guidelines and manage relationships.”

There is no denying that several business families in India induct the sons and daughters at a junior level initially in their family owned company. Then they make accelerated progress through the ranks of the organization, before being appointed on the board and then eventually becoming the successor. The Bajaj sons, Ranbaxy inheritors, Birla inheritors, all have gone through this route.

The hypocrisy of this route can well be seen in the recent example of Rishad Premji, son of Wipro’s Chairman, Azim Premji.

In a 2007 article in Rediff, it was reported:

The elder of Wipro  Chairman Azim Premji’s  two sons, Rishad studied at the Harvard Busines School and graduated from Wesleyan University, Connecticut. With a penchant for software and music, Rishad sure has learnt one thing from his father, and that is to maintain a low profile.

Rishad, who is currently with Bain and Co, had a brief stint with GE before doing his MBA. His move now to join his father’s empire is interesting considering the fact that Azim Premji once said he did not want Wipro to become a family business.

Sources in Wipro maintain that Rishad will have to work his way through to the top. It is said that Rishad was keen on joining Wipro. Like everyone else, he too had to send in his resume and as luck would have it, he managed to find a placement.

Rishad will join the 70,000-employee-strong software-led conglomerate, which also makes soaps and bulbs, as a business finance solutions manager. It is also learnt that he will report to its president, Girish Paranjpe.

In September 2010, The Hindu Business Line reported :

Mr Rishad Premji, son of Wipro Chairman Mr Azim Premji, has been appointed Chief Strategy Officer of IT Business, Wipro Technologies. In a statement, Mr Saurabh Govil, Senior Vice-President – Human Resources, Wipro Technologies, said Mr Rishad Premji was till recently General Manager – Treasury & Investor Relations and brings with him a diversified experience of Consulting, Finance, Treasury and Operations. In this role, Mr Rishad will report to the joint CEO’s, IT Business.

Within three years, Rishad has moved from an entry level position to become a direct report to the CEO of the IT business. This blogger believes at this rate Rishad will be the CEO in another three years. No prizes for guessing why this movement has been so rapid.

 Azim Premji owns 85 % of Wipro and if he feels his son Rishad is his rightful successor nobody can question him. His dilemma, perhaps, is the cloak of professionalism that he wishes Wipro to project. 

Kishore Biyani has no such dilemmas. His daughter Ashni Biyani has joined directly as Director of Future Ideas and his nephew Vivek Biyani has joined as the Director of Home solutions retail.

 The second part of Mr Biyani’s quote is also very interesting where he says “The CEOs would run the business and be accountable; family members would set broad guidelines and manage relationships.” A textbook role of CEO of any company would include setting broad guidelines  and managing relationships, yet Biyani feels CEOs just stop at running the business. In other words, what he really means is Chief Operations Officers ( COO) will be professionals but CEOs and Board members will be family members. Just that, in these title fluffing times, COOs will be called CEOs, without having the role and responsibility.

Now let us look closely at what a rich businessperson running a public limited company can bequeath to his sons and daughters. He has wealth which he has by virtue of the shareholding in his companies. He can sell his holdings in the companies and bequeath the wealth to his inheritors. He can bequeath the shareholding directly to his inheritors, thereby they becoming claimants to board positions as owners. He can not only bequeath the shareholding, he can also appoint them as successors to the top job, thereby becoming owner-managers. 

A vast majority of Indian family owned public limited companies choose to bequeath their holding as well as appointing them as successor. Contrast this with what Bill Gates is doing.

Bill Gates, one of the world’s richest men, has said that he is not interested in using his billions to launch a dynasty and would not leave his fortune to his children. Gates and his wife Melinda, 44, have three children –Jennifer, 14, Rory, 11, and eight-year-old Phoebe. 

“I knew I didn’t think it was a good idea to give the money to my kids. That wouldn’t be good either for my kids or society. So the question was, ‘Can I find something that had incredible impact?’ I knew I wanted to do that,” Gates was quoted by The Sun as saying.

So far, Gates and his wife, through their foundation, have given away £18 billion which has helped deliver vaccines to more than 250 million children in poor countries. 

If Indian businessmen cannot do what Bill Gates has done, they should go by what Kishore Biyani says and spare us the hypocrisy. 

– G. Mohan

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