Corporates wake up to Indian telecom sector

Analysts, industrialists and government all are suddenly wondering why their is this mad rush for telecom licenses in India, so much is the rush that Department of Telecom has announced that it won’t accept any new applications for mobile licenses from October  1st.  Of course after this announcement DoT has received some 200 applications in last couple of days alone.

The front runners  for licenses are the reality majors which includes DLF, Unitech, Jaypee group, Indiabulls, Parsvnath and Omaxe. Other notable names in the race are the Hinduja group, Videocon, Shyam telelink. DoT has some 200 odd applications for Universal Access Service Licenses ( UASL) . UASL comes with 2G spectrum and ability to offer IPTV.

The question on everybody’s mind is….Why Why Why

Well, the subscriber base in India is growing at 8 million per month which is soon expected to touch 10 million. Teledensity is very low at 20%. DoT is thinking of allowing only a limited number of players. The telecom sector is consistently outperforming the sensex and Bharti and Reliance communicatoins are the darlings of Dalal street. Their are very few companies in the telecom space (9 -10). When the reality market goes for a downswing the reality firms will have something to show on their balance sheet. Telecom market in India is still in it’s early stages with most of the revenue coming from voice based services. The market for value-added services is growing fast and will soon account for a huge chunk of revenues for the telcos.

This development opens up huge opportunity for mobile infrastructure providers and MVNO’s (Mobile Virtual Network Operators). Anil Dhirubhai group has already announced setting up of a mobile infrastructure company and a public listing of it. Airtel and Vodafone are already in a tower sharing agreement. Though DoT does not have a policy for MVNO but will soon have to frame one as not everybody with a license is going to set up it’s own towers.

All these plans might get delayed till the defense ministry frees up the reserved spectrum lying idle with it.

Mallya buys Formula 1 team !

Great news for Indian Formula 1 fans. The Spyker F1 team has been bought by none other than Dr. Vijay Mallya of Kingfisher. And he tells some great things about his future plans for the team in this interview. So, we will soon see a F1 team with ‘India’ in its name and may be a Indian driver like Karun Chandok, who is fresh from his first GP2 victory, driving it too.

It is still not clear whether India will host F1 in near future but given this deal we can definitely hope that it’ll be sooner rather than later.

Director, IIT Kanpur visits my room !!

Guess who visited my hostel room in IITK….yeah, the Director, Dr. Sanjay Dhande himself. Half hour after he is gone my heartbeat is still not normal. As soon as I saw him, I prayed to god that he did not recognize my face from our previous meetings which were not so pleasant, at least for me. And he did not, and I made a impression on him at least of an 8 pointer .

Chapa no. 1: Was watching a ibn live video with a panel discussion on ‘effect of social networking sites’

Chapa no. 2: When he asked that why is the book ‘Marketing management’ in your room, I told him that I got it as a gift when I visited XLRI Jamshedpur on a free trip

And when he left, Dr. Goutam Deo who was with him patted me on back and said ‘you are doing good’

Unorganized retail will have to get organized in India

In my last essay on retail we looked at how organized retail is gearing for a big bang entry in India. Now let’s have a look at what the unorganized sector has to do to counter the attack.

With the onslaught of organized retail in India, the Indian press and the Left front are devoting endless articles and speeches about how to safeguard the local ‘kirana’ store owner.

The usual points are:

1. Give personalized services
2. Home delivery
3. Short term credit to customers
4. Providing added services like P.C.O. and Bill payment.

In my opinion, all these things they already did. As far as I can remember whenever I asked my grocer to give me bathing soap, without fail, he always gave me ‘Pears’ (which happens to be our ‘family bathing soap’) and after I have left, dutifully enters it’s cost under our family credit account. Of course whenever we purchased bulk items like sugar, ghee etc. he would deliver it to our doorstep.

No doubt that with the kind of money currently being put in organized retail in India, the share of organized retail is bound to increase from the current pittance of 3-4%.  It’s  increasing share  can be delayed  but  cannot be  averted. Though with a CAGR of 50% or so, still the share of organized retail will reach only to 10 – 15% by 2010. That leaves the unorganized players with ample time to get their act together or perish.

Where the organized players score against local retailers is in bulk purchase of goods. To counter that the local retailers will have to form certain organization at city level so that they can pressurize the FMCG majors into giving them better prices.

Or maybe some of the local retailers can transform themselves into supermarkets with some loan. It is a necessity in urban areas where organized retailers are fast setting shops and with changing shopping habits more and more urban Indian’s are going for shopping in Hypermarkets.

The threat of organized sector to local retailers is definitely there in the long run, but in short run they won’t feel much of a difference. And those who won’t change on this slight difference will have a hard time, not now, but may be in next 8-10 years.

Trivia: Pears is the only product which is exported from India by HUL.

No computers for first 3 semesters @ IITK!!

In a unique first, IIT Kanpur has barred student’s from buying laptops/computers for their first three semesters. LAN will be disabled from rooms of these students. Though for these students computer center will remain open 24 hrs.

The same step taken a few years back might have had helped in slowly exposing the students to use/misuse of computers when most of them had not seen one till they joined IIT. In today’s scenario, when most student’s are spending a few lacs for JEE coaching alone, most of them would already own a computer or have used/misused it.

If these are the steps IIT Kanpur is taking to prevent the rising number of suicides in campus then it is too little too late.

Indian professional networking space heats up

After lot of me too social networks being launched in India now it’s the turn of professional social networks. With alexa data showing traffic rank of orkut in India to be no. 2 the fate of all those networking sites seems to be sealed. I am afraid the same is going to happen to these professional networking sites unless the make strong corporate connections and offer direct opportunities as well as people-people networking . In that respect naukri.com can come up with some interesting ideas in their newly launched brijj. While on the other hand techtribe is a little old and has been slowly and steadily building user base and also recently got funded by Canaan partners. Unless these sites offer something which is focused only on India, it doesn’t give me reason not to join Linkedin onto which lately many Indian professionals are joining.

Regarding brijj I think they have a strong partner in form of naukri which can help them drive traffic to the new site as the target audience is same. Ideally I would like to see interoperability between both sites. Right now both brijj and techtribe have more or less same features. Also with techtribe there’s a problem of a ‘tech’ in it’s name with can shun potential users in careers other than technology which are fast growing in India such as finance.

Organized retail in India

This is a reproduction of an essay which I had written for an essay competition in IITK of which no results were ever announced. What the hell, I can always consider myself to be a winner   You take a look….. 

Essay: Sunrise sectors for entrepreneurship – Retail
Organized retail is definitely a sunrise sector in India but to say that it is a sunrise sector for entrepreneurship would be wrong. Entrepreneurship is required in those fields in which an individual can go in with small capital and his expertise and go on to create a company which usually yields returns of the order of 10x or more.
The ‘natural barriers’ to enter into organized retail are so large that it would not be wise for and an entrepreneur to jump into it and think that he will be able to compete with the likes of Reliance, Bharti, Wal-Mart etc. Also, organized retail is something which tests your operational and logistics skill rather than entrepreneurship abilities.
Though organized retail is in practice around the globe for many decades now, it’s only now that it is making an entry into India in a big way. The reasons for this are many. With a booming economy and burgeoning middle class the shopping habits of Indians are changing fast. Malls and multiplexes and making headway into tier II and tier III cities also after mushrooming in the metros. Also the fact that organized retail accounts for only 3% of retail sales in India there’s a huge untapped potential. So much so that every conglomerate wants a piece of the pie.
No wonder that every business house from Birlas to Ambanis is busy chalking out their retail plans. Though it will be too early for them to start counting their chickens as the government policy is still hazy and huge amount of expertise is required to run a pan-India retail network. There is scarce managerial talent in retail business and salaries are already skyrocketing.
The government is still in process of studying the effect of organized retail on ‘mom-n-pop’ stores and the economy as a whole. There is huge pressure on government from foreign multinationals to allow FDI in retail. Of course local giants are keen to put their plans in place before foreign players are allowed to move in. The bleak chances of FDI in retail have forced foreign retail giants to look for local partners. Bharti has joined hands with Wal-Mart after failed talks with UK giant Tesco. Shopper’s stop has inked a deal with UK’s Home Retail group to develop Argos retail stores. Bombay Dyeing has tied up with France’s Auchen.
Local retailers who already have a huge presence in India include Future Group (former Pantaloons), Subhiksha, Shopper’s Stop, RPG group. While Reliance retail, Tata, Bharti and Aditya Birla group are soon to start rolling out their retail plans.
The most bullish of them all is Reliance with plans to invest Rs. 25,000 crore in its retail venture. With Mukesh Ambani in driving seat there’s little doubt that reliance will change how Indians shop. His plans include selling everything from vegetables to cars under one roof and even deploying cargo planes to make sure that you get fruits and vegetables ‘farm-fresh’. Reliance has already opened 50 ‘Reliance Fresh’ stores with the very first in Hyderabad. Reliance plans to launch 1000 stores by this year end. Reliance Retail will launch its hypermarket, supermarket and specialty formats in April-June quarter this year. Reliance and Bharti also have plans to set up Micro Finance Institutions along with their retail chains. While Bharti will also offer telecom services in its retail stores.
As a result of hyper growth plans and rushed hiring, most retail ventures are struggling to keep pace. A massive churn is already taking place in retail space while real estate prices in prime locations are going over the roof. Most retail ventures are going in for mixed strategy when acquiring retail space. Some are just buying the land and then building their stores while others are buying finished commercial space or just renting it.
When there is a huge competition in market it’s always a win-win for consumers. They can expect better services from ‘mom-n-pop’ stores and great bargains at their local mall. After all, it’s all about the customers. To keep the prices low the retailers are doing everything from buying cargo planes to sourcing fruits and vegetables directly from farmers. Also the retail stores promise to give the consumers more choices and a better shopping experience.
With the economy growing at 10%, nobody is complaining about the money being put in behind these retail ventures. Though, initially there will be a few surprises and a few new lessons learnt the long term story looks promising.

LAN ban: Now at IIT Kanpur

Following in the footsteps of IIT Madras and IIT Bombay, now IIT Kanpur too has come up with a proposal to ban LAN/Internet in hostels. What’s surprising in our case is that the proposal in itself is being put up by student gymkhana. Here’s the proposal that they wish to pass:

1. No Internet and LAN facilities to the undergraduate students in their first three semesters.
2. No Internet and LAN facility from 12:00 midnight to 6:00 morning for the next three semesters, i.e. 4th to 6th semester.
3. To provide 24 hours enhanced Computer Center (CC) facilities to fulfill immediate needs.
4. To enhance the computer center facilities in hostels.

Here’s what they want to achieve through this ban

‘they (students) need an implicit system which teaches them how to make the best use of the facilities as well as how to handle the freedom and take mature decisions‘

Now how is banning a facility teaches you how to use it?

In my opinion IIT Kanpur should study various US universities and how they coped with the advent of LAN/Internet  in their campuses. Given the contacts which IITK has I don’t think it’s that difficult a task.

CFA India students left in lurch

So after assuring Indian CFA candidates that they will be able to defer their exams to December 2007, now CFAI has infromed that it’s not sure whether exams will be held in December or not. So, thousands of wannabe financial analysts are left in lurch. I wonder if CFA Institute will refund the Level I fee and the registration fee for candidates who got refund for Level II examination because now, technically, they won’t be able to get a CFA charter and Level I exam is a waste. So ethically and morally (championed by our CFAI) those candidates should get a full refund of their previous exams.

What I feel is that they have posted all these warnings just to save them from a ‘contempt of court’ charge. Actually there is no check on Indian candidates as long as they give postal address of some other country and sit for the exam in Nepal or Sri Lanka.

What you should do? Just wait till august for the 2nd deadline, if no court decision comes till then (which won’t, given Indian judiciary) then go ahead, call up your relatives in US, UK, anywhere but India, take their address and register for CFA and give exam center as Nepal as you will be on a trip to Nepal at that time

The build up to iPhone

3 days to iPhone launch and news is flying left right and center about how it’s being shipped to betting to the success of iPhone. Riding on one of the biggest buzz in recent years there is no doubt that there will be a long waiting list of Apple fanboys waiting to get their hands on iPhone. After the announcement in January the Apple stock price has climbed from 85$ to a current all time high of 123$. Can apple live up to the hype?

I am afraid the answer would be a no. No in a short term. But yes in long run i see Apple delivering.

As the iPhone rolls out, at least the first version is bound to be buggy with so many features crammed into one machine. People with quickly come out with what’s wrong with the iPhone and the stock price is bound to take a hit.

Let’s wait for June 29th to see how true all this is.