ISB hmm

ISB ISB ISB ISB ISB (then a deep sigh!)
thats how i responded when a dear friend asked me hows ISB..this blog and a few coming after this are dedicated to all those who are curious abt ISB and want to know every gory detail abt the horrors it contains. Let me begin by throwing in a disclaimer every experience of ISB is unique..so while a particular person may find the going tough it might be cakewalk for some one else. What u see here is a self confessed Regular Jane's view of the world. So take it with dollops of salt. :)

How is life at ISB? hmmm imagine all human emotions the gud, the bad and the ugly and then add a few more and this what life at ISB is . Its all that u expect and a lot u dont ! let me begin by saying that there is tremendous scope of learning and growth and how much of it u r able to accomplish depends totally on u. The trick is to identify what is it that u want from ur stay here and work towards it. That said let me tell u figuring out what u REALLY want is decidedly one of the most difficult thgs to do. i mean i still feel like i am standing in front of a lavish buffet with all sorts of exotic dishes with a fork in hand !! Ok thats a bad food analogy..skipping dinner tonite was not a gud idea! What i mean is u just have so much stuff going on that choosing what to do becomes the key ..and the choices are quite stark..markstart decision (grades matter dude or dont they !!!)or say attend Kiran Shaw's talk..u got to choose and manage ur time well..this i think is going to be one of my biggest learings at ISB..i mean the most precious commodity at ISB is time and u better spend urs wisely.

The faculty ..truly world class (well most are anyway!!) i have been taught by some of the best teachers in the world and that has twin benefits : one is obvious ..u end up understanding the most obscure / the most boring subjects and the other follows from it..if u still dont understand the concepts after attending the sessions taken by these gentlemen GIVE up (on that subject that is :) ) the second point is debatable but i kind of stand by it . what i mean is if after sessions by robert stine and richard waterman u still dont get stats leave it !!! try mktg instead !!!
i had my aha moment in the Fin accounts last term.. i finally got it !!! accounting that is and i also realised that its not all that crappy ..an insight that made me warm up to my CA mates (my husband included !! ). the first term was bad ..i mean a lot if us took time to settle in to the ISB way of life ..its a different world all together ..a world were a gud night's rest means 5 hrs of sleep ..where parties typically start at 1 am..where u throw ppl in the pool when u r happy..where u develop a love hate love relationship with ur study group ..where ur self esteem sits on a roller coaster ride which has more down slides than up..where the engineers (IITians ) are gods walking on the planet with a halo around their head (the dean's list) ..well i exaggerated a lil on the halo part..its not always visible..u got to stand close and observe maybe then if u r lucky u can see it :) I am kidding life's not all that bad ..:) i wudnt exchange my ISB days for anythg with any1 ..okay now a lil abt the ppl here ..needless to say they are a talented bunch but i will not gush abt them right now..let me just say that i already have a couple of ppl who are my 2 am friends..i call them when i am happy and more importantly i call them when i have made a mess of things which is quite often it seems these days.oh well..i will consider myself very lucky if i am able to make and sustain a few gud friendships out here..i like and admire so many ppl here ..some for their intelligence..some for attitude and some for sheer goofiness :) the power of positive attitude, the willingness to laugh at oneself, the ability to cheer some1 else these thgs really matter at here

i am in Sec e ..and i swear its the kewlest section !!! we spam like crazy and i love it :) i mean we have had 200 mails in a 2 hr DMOP class, 2 am poetry competitions, a dunk ____ campaign, and hoax mails on just abt everythg from water on mars to kingfisher calender !! the CP is our section is gud ..we have had some gems tht i willl possibly share with u later and yes i think we are the only section that conducts in session polls..ie the class is on..the professor is explaining conjoint analysis and my neighbour passes me a sheet stating - poll of the day -- who is going to start snoring in class today . option 1 , 2 , 3 or 4. i check around to see all the nominees ..needless to say they are inches away from their afty siesta and after much deliberation i put a tick next to my fren's name and then dutifully pass the sheet along ..let me add we all take our voting rights seriously including the TAs. :) last poll list was passed to the TA too

oh that reminds me i didnt mention the sleeping cell of E ..there are a few famous ppl in our section..famous for their ability to fall asleep during all sessions and still get straight As.. thats the sleeper cell ..no i am not a permanent member of the cell (i aspire to be but thats for another day) rather i am the life time member of the Arbit CP (class participation) club..they have put me in the last row at the rightmost corner - the worst place for CP (the prof never sees u) but i am on to them..down but not out..thats the motto here :)

my study group is a unique first at ISB three girls and a guy! so u can imagine :) and no hes NOT having a gud time trust me :D

the markstrat world (for the uninitiated - just know its a simulation we play in marketing class that makes us want to hunt down our competition and beat the crap out of them ) is one thg u will encounter in the second term and let me tell u nomatter what u do ..u will either be screwed by the competition or by the customers ..heard at a markstart meeting :

she says : our product didnt sell
he says : why
she says : it turns out our customers were braindead irrational morons who commited mass suicide!! (translation : no units sold, huge inventory on hand)
he says: oh that explains it ...i thot maybe we took a wrong mktg decision somewhere
:)

i think i have rambled enuff for the day..if u r still reading this ..i just have one question
WHY? :)

btw i heard piece of gud news today after a really long time ..am going to be involved in a very unique project at ISB..really excited abt that but have been asked not to talk abt it so will share it with both of u (the 2 who r still reading this ) later :)

on another note i want to thk a special person in my life who really helped me thru some stuff today..thx dude.. appreciate it big time :)

chalo

more arbit stuff later :)
take care
ciao

Term 1 Ends !!! - 12.5% MBAs

Term 1 ended 5 min back with the completion of the marketing term exam.

The enlightening, rollercoaster ride through Managerial Economics, Financial Accounting, Statistics and Marketing Management comes to an end. And boy what a ride it has been, the first term at ISB, so much gyan coming from all directions, so much to learn, so much to cope up with , lots of unlearning and lots of ego bashing and humbling.

The back to school experience has been both unnerving and fun. Now its time to take stock of the situation, plan our strategies for remaining terms(hoping that we have understood a bit of how ISB works) and to party and celebrate this success of living thru term 1 .

cheers,
--Badri--

Its raining! LRC and Above

Its raining, all sorts!
mid terms have barely gotten over, marketing case study, class quizzes, elections, club meets, industry visits! Damn! Its rain of sorts!

Tired of the above rain, I was secretly wishing to get an escape route! and...Guess what! Half hour back it rained for the first time for Class of '09 here! The original inhabitants of the campus, read the wrigly, jumpy creatures must be having a rollicking time out there playing in water after surviving soaring temperatures here.

The oh-so-drenching 'rains' have taken us all by a storm! Most of us have lost track of time and space and living from assignment to quiz to exam. Time is literally flowing on campus here. It seems like the O-week ( orientation week) was ages ago! Imagine, mid terms have gotten over just now and I realize that end of term one is just 15 days away!

PS: If you are still under the impression that the topic hints something on LRC: the learning resource centre, Dude, chillax ! you been studying too much, it's left, right and centre!

PS2: Oops, gotta sleep, Eco class is exactly 5 hrs from now!

Exams Ache Hain

2 Mid term exams got over today. I am back to my room after experiencing a severe bout of happiness after the exams. You should have seen the crowd outside "The Cafe". Everybody was smiling, joking, laughing and enjoying. At the risk of being labeled as a spoilsport, I felt that people were behaving as if they have achieved something great. But I must say that the happiness was well earned and deserved. Tomorrow is Accounting mid term, but i don't feel like studying, neither do i feel like sleeping. So what's the next best thing to do? Blogging.

Have you seen that Surf Excel advertisement, "Daag Ache hain". I liked the tag line and it has nothing to do with the marketing course that i am doing currently. The Tag line goes something like this, "Agar Daag lagne se kuch acha hota hai to fir daag ache hain". Translated to the context here, it means that if something good can be derived from the exams then exams are good. Today the mid term exams of Statistics and Managerial Economics got over. Everybody was so tensed before the exams. The tension and the stress was palpable. You should have seen the students last night and in the morning today. Everybody was frantically going through the notes, discussing abstruse concepts with others, and swearing at the system that made them slog like anything. And the atmosphere in the evening was starkly different. You could feel the joy and happiness in the air. You could see people indulging in harmless banter and endless chat. Plumes of nicotine smoke and tonnes of caffeine. What made the difference? The pressure and stress was off. Everybody was relieved that in the end its over. Nobody was worried about the performance, since that hardly mattered. Everybody was collectively extremely happy. I could bet that the average happiness quotient had gone up by several notches today. People were never so happy, after joining ISB. I felt like asking Xenobia "I feel so happy, Am I normal?"

So if the aftermath of exams results in increased happiness and joy then I would reckon that exams are good. It was like our Economics professor, Amit Bubna, would say "Nirvana". Don't label me as a jingoist, but I felt today that exams are good and they help in increasing the net happiness quotient of the batch. Everybody was emoting, "Dude, its over". Did anybody say that the Marketing Case study submission is due for Tuesday and Statistics Quiz is there on Tuesday too. But for now, let me sleep for an hour before hitting the books again :(.

A BIG SPLASH is planned for tomorrow night. The mid terms end tomorrow. People will celebrate and party like anything, coz they have survived 1/16 of the MBA course ( half of the term and there are 8 terms, Math is easy guys). I just can't wait for tomorrow evening.

BRING IT ON BABY.

Network,Network and Network!

With modern business practices into play, I have come to realize how effective it is to have a large network and a social following. To build a large social or a business network one has to effectively communicate and converse. The Persian poet Hafiz in describing conversation once said,"Most speaking really say, I am hungry to know you”. That little exchange in the lunch room, those fine pleasantry exchanges on the alleys adds much value and gives me the much needed zest to kickstart my day.

Sometimes I feel really down on days when I have been bogged down by study and not had that chance conversation with someone. I believe it is the inert nature of humans to connect with each other as social beings that makes them tick. This is also empirically and statistically backed by results that show the happiest man is one who is socially supported by both his family and circle of friends.

My life in Sydney for the last few years has certainly nurtured in me the importance of strong business networks to thrive in corporate life. In a corporate life it takes tremendous guts to walk up to a stranger and strike a conversation.What if this conversation opens doors to a brighter future or to a pathway for a business proposition?

It is really hard to break off that comfort zone, but out of the circle is where opportunities exist. If one is not an extrovert by nature, networking and conversations can be certainly graced by sheer practice. There is nothing in this world that cannot be learnt by application and effort.

Often plain conversation over coffee on a lazy weekend is an amazing experience where you simply swap pleasantries with the other person over much laughter and intense listening. I am reminded of the ad which is centered on the theme “Much can happen over coffee”. People have this potent to simply reciprocate the way you treat and give it to them. When you expose yourself with fine details over conversation that is when you simply connect with the other person, in turn inducing her to reciprocate. One of my friends in depicting conversation wrote in the Columbia University student rag “Conversation is not about the prefunctory hello, but that sparkle with teeth shown and eyes lit up”.
ISB is certainly the place to build this massive network and I firmly believe thats the reason we are here at a B-school. A picture insert here of my team at the Dumb-C last weekend-man it was so much fun and laughter we shared-Thanks Guys!

Its been a month!!!

April 12th 2008, we set foot at ISB and then commenced our PGP in Management. Its May 12th 2008 today and at the risk of quoting a cliche "time just flew" , It was hectic, It was demanding, It was fun, It was puzzling, it was interesting but whatever it was we have conquered this last one month and its now behind us. I hope the remaining 11 months fly this way too.

Cheers,
--Badri--

Operation Rescue Dolphin

Contributed by Nalin:

I was working in oilfield 20 Miles offshore of Abidjan, Ivory Coast. A triad of one FPSO (Ship with production and storage of oil) and two Oil platforms made up for production of 35,000 BBls of Oil every day. I was stationed at the ship as Head of Marine and Safety department. On the afternoon of 16th November’07, we had a SOS call from our Oil Platform, 1 Mile East of us, that one Dolphin has got tied herself up in a fishing line and even after struggling for more than 2 hours has the line all around her nose.

Taking two guys, I lowered the rescue boat and we went on the mission 'Save Dolphin'. Since rescue boat is very low in height our view and horizon was very limited, however as we approached East Tower we were helped by the people on the platform, who were at a vantage position due to height. Every one was showing us the Dolphin's location and hurling us strategies to rescue her. Despite loosing our boat hook, bringing in a new gripper (with weight and a long line) and all the sincere advice from East tower operators, Dolphin eluded us. We still could not catch her because every time we used to go close to her she used to dive deep into the water clear of the rope and hook we were trying to pull her with.

So it was time to take the tough decision; to call the experts i.e. Fisher man. Now this was a catch 22 situation. We always shooo away the fisherman whenever they approach within the 500m zone of our territory however now we were inviting them only 20 metres from the East Platform.

We could spot a fishing boat 1Mile away from East tower. Swallowing my pride and ethics, I decided to call them for this (Dolphinitariun) gesture and we caught up with them. Thanks to expertise in French language, of Sr. Cargo operator Ouattara and GPO Silla we convinced them to help us 'release the dolphin' and brought them to the site of rescue.

It took fisherman about half an hour before they were able to fish out the 6 feet long dolphin from the water. Poor creature's nose was badly cut with the fishing line; several other fine cuts could be seen on her body. I am not a mind reader but for sure Dolphin must have thought "Here I go, let me say my last prayer to lord Neptune". Between claps and cheers all around on east Tower and our rescue boat we released the Dolphin who slipped away from the fisherman, dived and swam away.

Pity we didn't see her flip.

Lessons learned:
1. Our line was made of polypropylene, which floats in the water, hence didn't allowed the sinker to go down deep enough to catch the fishing line around dolphins nose.
2. There are no permanent allies or adversaries; there are only permanent interests! So embrace the adversary if the situation warrants and it is to our advantage.

Lesson to learn:

1. We went there to help the Dolphin, but she was suspicious of our intentions hence we could not help her as much as we wanted to. Similarly in our daily life how many times someone tries to reach out to us however due to either preconceived notions or cultural differences we are not sure of others intention and we can not make that connection. Is there any approach we can take to avoid this dilemma?

Matter of the grub

Like I mentioned in one of my previous posts the food here will not win any culinary competition anywhere. I miss my fish & a whole lot of other good stuff. Last night as we were having biriyani outside (pretty good, I must say) I was thinking back to the food scene back in Delhi. Now anybody who's been in Delhi knows that Delhi rocks in terms of food.



Admitted there are lot of traditional goodies which I have not tried out - kulfi, chaats etc. I have not been to Chandni Chowk, Parathewala Gali or other such places. But I have been to some good places some of which both me & Mousumi ended up being quite 'fida' about.

• Italian at Flavors - There is something quaint in this place. It's our favourite joint in the city. Sitting outside beside the lawn, the general confusion in the service & the fab food. We've gone here umpteen times during the close to 4 yrs we've stayed together in Delhi.


• Chinese at Oriental Bloom/Mainland China/China Club - All there are great places. Mainland China is the most affordable while Oriental Bloom has the most amazing dimsums I've ever had.


• Spanish at Sevilla's - Ooh la la....what a setting & what great food. Very steep on the pocket. I would definitely recommend this for celebrating a special night.


• Bengali at Oh Calcutta - Food which went out of vogue with grandmothers. Traditional delicacies which these days you only may get to taste at weddings. Intricate cuisine which me & Mousumi will probably never be able to cook. Go here to find out why Bengali cuisine is probably the best cuisine in the country.

Food wise Hyderabad is also quite hep. The only problem is that the city is a distance away & it's not feasible to go there all the time. But we shall endure....& wait for our first royal meal at the City of Nizams. Till then I can

1.5% MBA and already scared!!!

5 days out of our 357 day course ends today and I am sure i speak for everyone when i say there are been a Gyan overload. The environment here is exuberant, the alums are all pumped up in helping us settle down, giving us gyan, my batchmates are full of ideas and everyone wants to come up with something new of their own.

I am sure if i had a machine that could detect ideas I would find several floating in the air. But with all due respect to my team I must mention though that there is a slight ego/selfish tint to all that is done here and that really cant be denied. But who said we came here to be saints, we came here to be leaders , and most leaders if not all start with a selfish outlook and once they settle into social service become selfless(or less selfish)

Managing time, getting up early in the morning, participating in all the activites and above all that remembering everyones name, address and X-occupation is very demanding. I am a bit scared how the load and time constraints will be once the course starts in full swing, afterall as yet its only orientation thats in progress.

--Badri--

And the journey begins!!!

Is it normal that I am shaken cold?

When I am passed this important baton to hold

Some are born great, Some achieve greatness

But seems the ISBian tag upon me has thrust greatness

But is becoming an ISBian in its own right glory

Or is glory, were I will get if I don’t make ISB sorry.

Hopes of many vested on me

While my own goals, clearly, I am yet to see

I am told this journey might hurt, sometimes I might even hit dirt,

But only if I fight with tremendous success I can flirt,

Now having heard that I am scared to enter, leaving my comfort zone

But then I am promised, me as a person this place will hone

But before I begin this journey its time now for goodbyes

Its corny, sad and there are some drops of tears in my eyes

Oh, near and dear, wait a year and I will be back

In the mean time, God willing, records at ISB and history I will crack.

--Badri--

Finally... The wait is over

It has been more than three months since many of us got THE mail from ISB. Since then I have been itching to get started with life@ISB. However, the interim period has been anything but drab.

The first two months were work, work and some more work! It was a brutal stretch at office where people were keen on sucking every ounce of the juice of life from me before I departed. Nevertheless, I not only survived the ordeal but also came out of it a full month before my scheduled release date! That meant that I had the whole of March at my disposal.

After leaving work, I too took off on a pan-India trip visiting new places and meeting old friends. Be it the white water rafting in Rishikesh or the trek into the mountains in Mussourie, there is a lot of fun in travelling without any plan and just enjoying anything that you find appealing. Of course, I have not been as diligent as Dushyant in capturing and sharing the sights. (@Dushyant: Really cool pictures buddy) The holidays also gave me a chance to catch up with old friends, some of whom I had not seen for almost a decade! Spent quite a few evenings lost in nostalgia reminiscing the good ol' days. The entire trip took about 25 days but each and every minute was worth it. Rarely does one get so much time to just travel and explore places without a care in the world. It was a liberating experience and it definitely did “recharge” my batteries J

The action did not stop on the ISB front as well. I used to think that giving GMAT and getting into ISB was tough. How completely wrong I was!! For the poor souls who decided to bank with SBI, the last month and a half has been nothing less that a soap opera with all its twists and turns. Compared to this the GMAT and ISB application seem to be a cake walk. From the dreaded loan application form and the affidavit in the initial application to the PDCs, another Affidavit and all the signatures needed in the post approval formalities. The entire procedure has been a farce and it really showed the government institution in all its ugly glory. Without the help of a few kind hearted souls like Natarajan, I do not know how we would have successfully navigated the labyrinth that is the SBI loan procedure!

Anyways, the wait is finally over now as we have less than a week’s time before starting off what I believe is going to be a truly amazing year. At this point, my mental state is akin to that of a little kid, who, candy in hand, has been standing in the long queue for the roller coaster ride and now that he is at the front of the queue, is all excited to finally take the plunge.

Ladies and Gentlemen, Fasten your seatbelts.

Its Showtime!!!

Kashmir - Paradise on Earth

Chicken Soup for the Taxed Soul

Each and every tax that the government imposes, gets collected, in the very end, from a person's profits. So, why not scrap all the taxes and levy just a single one, to be directly collected, once a year, from the end profits of the person?

(Guys, I'm NOT trying to be sarcastic or funny here. I got this idea sometime back and am asking you this question earnestly.)

A Failure of First Principles

Yet another post to add to the posts about the credit crisis. Although I don't work for a bank, I think the current credit crisis shows all the symptoms of a failure to follow sane and conservative banking principles. The reasons for the crisis described in this post, although not exhaustive, are an attempt to examine the problem from the point of view of a banking institution/lender issuing credit in highly speculative markets.

What happened - A Look at the Balance Sheet

The events leading to the credit crunch are common knowledge now. But, how do these events pan out in a banking institution's financial statements? Consider that I'm a bank/lender who offers a long term loan to a creditor. On my bank's balance sheet, such a loan would appear as an investment on which I receive yearly interest and am liable to receive principal over the payment period. Considering this is a long term investment, the debtor assures me he will back up this loan in case of default with an asset - in this case, his house. Mortgage backed securities is a term being thrown around for this kind of an 'IOU'. Such assets appreciated in price disproportionately with their real value because of speculative buying and selling of such securities. When the asset prices drop drastically due to such reasons, the effect on the balance sheet is disastrous. An investment in a secured loan, say $ 1.5 million, is now defunct and the only way to retrieve this investment is by taking possession of the asset backing that loan. However, the asset is now only worth $ 1 million, resulting in a $0.5 million write-off (bad debts) for the bank. In the event that a bank has invested a large portion of its credit in such markets, the write-offs are a major portion of its investments and we'll see a Bear Stearns.

Where did they go wrong - What can we learn ?

a. Risk Profiling and Credit Structuring

Lending in highly speculative markets has the uncharacteristic effect of making some banking institutions relax. Banks that are suffering or likely to suffer are most likely the ones who :

• Did not intelligently profile the risk involved in lending major portions of their credit in a speculative environment. Asset prices have seen a sharp and unrealistic rise and such volatility does not last long term (more on speculation later) in which case banks underestimated their risks. Or overestimated their gains.
  
• Did not responsibly structure their lending portfolios to diversify into stable markets, prone to less speculation. One of the first rules of investment - even in mutual funds or stocks - is to have a broad and diverse portfolio. Financial analysts examining this issue point out to the irresponsibility with which banks which are liable to go down have invested in unstable markets. If such banks had a foundation of stable portfolios from markets such as pharma, infrastructure and health services where speculation is less likely to influence your investment, there would have been a better chance of living to fight another day. It's a sad case of poor structuring where your most risky investments make up a major fraction of your credit.

b. Know where your debtor is coming from

A bank that fails to examine the credit-worthiness of a prospective debtor fails to do its job. One does not need to elaborate on this, except for the fact that a highly 'positive' market tends to build on euphoria and kill rationale in decision making.

c. Know where your money goes

A lot of people talk about complex securities and inter-linked securities. People complain that banks that had mortgage backed securities ended up using such securities to cover their own from their own creditors. What I do know is that when a bank which first does not analyze its risk on an investment properly, then passes on the risk on such an investment to gullible creditors has only compounded the sin. Creditors who did not realistically analyze the risk behind such securities were partially to blame. The solution is to hold banks accountable for the securities they market and tie these to a specific asset - which when assessed independently - can be shown to be overpriced or volatile.

Judging from some of these decisions, I believe the current crisis is a result of poor financing decisions, the principles of which have been lost in the illusion of short-term gains. The answer to this crisis does not lie in drastic measures but in a return to the forgotten first principles in banking

And now to touch upon speculation :

Speculation - Is it really that bad ?

It has been pointed out that the root cause of all this mess is a highly speculative environment. Hence instead of just regulating banking institutions, regulate speculation as well. I tend to disagree with this line of thought for a couple of reasons:

Suppose a product is scarce in the market and yet reasonably in demand. The price for such a product is high but expected to go higher due to the scarcity value and demand. A speculator, seeing the future potential of profiting from the sale of this product, comes to town and buys large quantities of this product at existing prices. This speculative buying pushes the product price even higher to a point where some consumers forego the purchase of the product. In other words, demand/consumption reduces by way of speculative buying. Secondly, when prices are higher than speculators like, they sell. This reduces prices and encourages consumption.

The bottom line here is : The short-term volatility in prices ends up regulating prices faster.

Speculators also tend to invigorate markets which do not have enough liquidity. A product that is low in demand will have a big disparity between the price a new entrant to the market is willing to pay and the asking price. A speculator, in conjunction with competing speculators, tends to reduce this disparity and create a more efficient market.

Regulating speculation for fixed periods of time (due to the above reasons) can also have the undesirable effect of prices changing with a huge lag with respect to demand and supply. The time lag will create more inefficient markets.

I believe one needs to think of addressing a major malady in the system - the folly of predatory lending and abuse of banking principles - which will come with more financial regulation. Such efforts will ensure greater robustness against volatility in secured lending than shooting small birds.

It’s strictly business

As the famous lines in “The God Father” go, it is very important to demarcate between personal and business issues. Let me cite Michael Corleone's words “It's not personal…. It’s strictly business”.

Like many, I was a keen follower of Mergers & Acquisitions which took place over the last few years. I am very impressed by the scale of acquisitions taking place across various verticals in the industry. I believe, owing to several factors, many industry verticals (irrespective of how mature they are) are going through a consolidation phase. In every industry, this phase is bound to happen at one time or the other.

I was also following the JLR (Jaguar-Land Rover) deal which the Tata Motors won. I am glad that Tata’s can use their expertise in turning around unprofitable businesses to turn around two iconic British brands. Like many, I too have my own concerns. Considering the portfolio of Tata Motors, terms of the deal etc, can Tata’s turn around these businesses. On the positive side, this deal could potentially make Tata Motors a “one stop” for car enthusiasts. Also, a typical customer could start with a Nano, upgrade to Indica/Indigo/Palio few years later and could upgrade to some high end model (Range Rover, X* series in Jaguar) when he/she could afford. So, a customer could purchase his first car and his last car with Tata Motors, provided that the customer is extremely satisfied by the service received from Tata Motors. Not to forget, the international market Tata Motors would be targeting with JLR. Of course, all this requires lot of effort and planning on behalf of Tata Motors.

I came across a post on JLR deal in BusinessWeek and it is worth motioning. For the post, click here

While this post is a very good write up on JLR deal, I would say I am disappointed by the comments section. After I read the comments, for a while, I really had second thoughts on free e-media. The context of the post is lost just in the first few comments and it looks as if the comments turned out to be arguments. Phew! (Few comments reminded me of dialogues in Rajnikanth's movie).

After I read the comments, I am all the more puzzled due to several questions that ringed in my mind. They are:

1) In this globalized world, how fair are the words “Indian (any country for that matter) Company”

2) What does it take for a company to be called an Indian company? Do the founders need to be Indian? Do the majority of operations focus on India? Do majority of share holders need to be Indian? Do all the share holders need to be Indian? Do the CEO and majority of the management team need to be Indian? Should the company be funded by Indian government and the company be responsible to the cabinet?

3) When Tata signing JRL deal can be compared to the victory/domination of Indian businesses over British businesses, what does Vodafone’s purchase of majority stake in Hutch signify?

4) Does the fact that every body is using electric bulb signifies the power of American innovation over ignorant rest-of-the-world.

All such comparison with foreign institutions and brands does no good to organizations and brands emerging out of India. Instead of focusing on differences, I think one should focus on common strengths and spread globalization to every corner of the world enriching people. At a time when Indians (including me) need to educate the rest of the world about India’s rich and diverse culture, all this rant and unnecessary comparison makes the task much more difficult.

By the way, congratulations to Tata Motors for sealing the deal. The real deal (turning the two brands around) starts NOW.

P.S: I have created a poll on my blog. You can express your opinion on the Tata-JLR deal by casting your vote @ http://vijaybhaskarvbc.blogspot.com

The Problem with the World Markets and How to solve it

“Yet another article related to the credit crisis? Noooooooooo… I can’t take it anymore! Have I not read, heard, seen, discussed, analysed, reanalysed the issue enough already? Then why do I need to go through another insanely long piece of shit discussing the same damn thing?”

If that was your first reaction upon reading the title of this post, then, well, I can understand your frustration. I too have begun to cringe at the sight of the words “crises” and “credit”, especially when they appear together. I have waded through seas of articles on the subject, which all seem to say the same thing, and at the same time, nothing at all. Most articles attempt at explaining the root cause of the problem. They don’t do a good job of it. Some try to propose solutions. They don’t do a good job of it either. With the exception of just a single article, by The Economist, none of the articles come even close to understanding the crux of the problem. But, unfortunately, the article by The Economist does not propose any solutions for the problem.

So, here’s my take on the REAL problem in today’s markets and the solution for the same. It’s kinda radical, so don’t hate me if you don’t agree with me. Nevertheless, I think you’ll at least have fun reading it. Well then, here it goes…

The price of something depends on 2 things, viz. demand and supply. (“Dude! What a radical proposal! I wonder if someone can get more radical than this!”) In a market where there are only 2 kinds of participants, viz. pure sellers and pure buyers (pure sellers are those sellers that are selling “something” that they themselves have “produced” and have not simply bought it from someone else, while pure buyers are those buyers that will use that “something” for their own consumption and not sell it further), change in the price of the product will reflect real supply-demand disparity, given that other conditions are near the conditions of perfect competition. For example, if we consider the entire supply chain as one “seller”, then a multiplex selling movie tickets is a pure seller and movie-goers buying them are pure buyers. For ease of understanding, if other factors show tendencies as in the state of perfect competition, the price of the movie tickets would rise if the demand rises relative to supply and would fall in the contrary case. So far so good.

But what if the sellers and buyers in a market are not of a pure nature? What if anybody and everybody, regardless of the consideration that whether he has produced the product or not or is the end consumer of the product or not, is allowed to buy and sell those products? What will be his motivation to participate in the market? To answer these questions, let’s bring back our example of multiplexes and movie tickets.

Let’s say that a movie is scheduled to be released on 1st January 2009. The producers decide to start selling its tickets from today itself. Nobody buys the tickets because the movie’s release date is far away. But, after a few days, suddenly the movie becomes extremely controversial. Almost everybody comes to know about the movie and gets really interested in watching it when it releases. They still don’t buy the tickets because the release date is far away. But a few smart people, realising that people will give anything to watch this movie when it releases, buy the tickets by the truckloads. Their calculation is that they’ll sell these tickets at the time of release at a higher price and earn fat margins out of it. A few days later, there are rumours that the movie might be shelved. So the guys who bought the tickets by the truckloads start selling them to other people who think that there are still chances that the movie may be released. As various positive and negative news keep coming out about the movie, such trading keeps happening and the price of the movie-tickets keeps going up and down.

Far fetched as the above example may seem, it summarises the way in which all “investment” markets function. The motivation of an individual or an entity, which is not a pure seller or a pure buyer, to participate in a market, is to simply profit by buying at a low price and selling at a higher price. He has no concern with the inherent value of the investment, only with its price movement. And herein lays the problem: speculation.

To be sure, in any investment market, the initial change in direction of prices, whether upwards or downwards, happens due to solid reasons. For example, when the Indian stock markets started rising in March 2003, it was because of real factors, such as the country’s growth potential in the near future. At this point of the cycle, people who understand the fundamentals of the market, and the companies, invest in them because they can see real corporate growth in the future. The question being asked at this stage is, “Will this company perform well in the future or not?” The change in prices at this stage is slow and steady. As the markets keep rising and start delivering good returns to its investors, they start attracting a lot of publicity. When others see that a few people are minting money by investing in a market, they naturally feel like getting their piece of the pie too. From this point on, most of the money that comes into the market is speculative. The question that is being asked at this stage changes to, “Will the price of this share/ commodity/ property go up or not?” The change in prices at this stage is extreme and volatile. (I have seen, with my very eyes, the share price of a company named Reliance Natural Resources Limited rise by 41% in a span of 5 and a half hours! And that too without any announcement by the company that could have greatly affected its future profitability.) This is the stage when newspaper headlines scream about new milestones reached and new peaks conquered. Insane predictions of future growth start flowing in (like an article published only a few months ago, proclaiming that the Sensex will reach 50,000 points by the end of 2008). But, at some point, the direction changes. First, the people who understand the fundamentals of the market, start selling their assets as they come to realise that the speculative boom will not last any longer. Prices fall as they make their selling. And then the entire cycle plays itself in the reverse, until the prices in the market have reached insanely low levels.

Each and every boom and bust cycle in each and every investment market can be explained by this hypothesis. Speculation consecutively plays the hero’s role and then the villain’s role in each of the stories. One may pick up any boom and bust cycle from the past century and it will display the above characteristics. The Indian stock-market boom of the early 90s, the dotcom bubble at the turn of the millennium, and the recent US real estate boom, which is the real culprit behind the subprime mortgage crises and the ensuing credit crises, are some of the examples from recent decades.

Economic theory says that markets will be extremely efficient at price discovery when there are a large number of participants, among other things. Today’s investment markets definitely have a large number of participants, if nothing else. So why are they not efficient at their price discovery? Why do we CONSTANTLY see such anomalies as stock prices rising by 41% in a span of 5 and a half hour, without any apparent reason? That’s because there is a fundamental flaw in the economic theory and thus in the markets that have been designed on its basis.

The economic theory of efficient price discovery in a market holds true only when the participants of the market are pure sellers and pure buyers. This is because it assumes buyers and sellers to be 2 mutually exclusive sets and does not consider the possibility that buyers may themselves want to become sellers once they acquire the products. So, when non-pure sellers and buyers enter the market, the economic theory breaks down and efficient price discovery becomes a dream. This is the root cause of the problem plaguing the world’s investment markets. (The current unprecedented boom in the commodity markets of the world seems to be a result of the same phenomenon. Let’s wait and watch how it turns out to be.)

Thus, the solution to the problem is quite simple. Keep the non-pure sellers and buyers out of markets. This means that only those market participants that actually “produce” and “consume” the objects offered in a market, should be allowed to participate in it.

Implementing this solution is easier than it seems. We do not need to check the background of, and approve licenses to, each and every individual and entity that wants to participate in a particular market. That’ll be a bureaucratic nightmare. We simply need to introduce 3 conditions for participating in a given market:

1. Buying an item from a market, should always result in an ACTUAL delivery of that item to the buyer.

2. All the derivatives of a given market that do not result in an ACTUAL delivery of the underlying asset should be removed from the market.

3. A MINIMUM lock-in period should be imposed, before the buyer is allowed to sell his purchased item in the market.

The third condition is a crucial one. For example, if the lock-in period in the stock markets is 1 year then only those individuals and entities who think that a particular company will perform well over the next year will buy that company’s shares, thus removing speculation from stock markets. In the case of the property market, such a lock-in period will be longer, perhaps 10 years.

The above 3 rules will ensure that the only market participants are the ones that are pure sellers and buyers and not speculators. This will not only lead to efficient price discovery in markets, but it will also drastically reduce the occurrence of boom and bust cycles that are an inevitable part of a speculative market.

Jooce

Check out this BusinessWeek article on a new path-breaking service: http://www.businessweek.com/globalbiz/content/mar2008/gb20080325_844094.htm?chan=top+news_top+news+index_global+business.

And check out the path-breaking service itself at http://www.jooce.com/.

For the love of Office Emails

Most of us would have resigned from our present workplaces by now! I did the same recently. Now, I belong to that breed of people who love to save/keep e-mails on office email ids saved. For this purpose, people usually take the backup of mails by copying the NSF file for Lotus notes or PST file for Outlook or Thunderbird Local folders and then keep them in hard disk somewhere and forget it later.

That defeats the whole purpose and is like keeping them away trashed and would not be of much help.
Enter Google again to my rescue!
We can upload all important (personal) communication on office email id to a new google account!

Google recently launched IMAP access of their mail
http://mail.google.com/support/bin/answer.py?hl=en&answer=75725
with its help, I can configure Thunderbird or any other email client I use at Office to make a new email connection, this time to a gmail account

Just follow these steps:
1. Create a new google account and enable its IMAP access ( Enable IMAP in the settings link on top right hand side)
2. In the Local Email Client at your office, go to the menu where you can Add a new account
and Create and Configure the New Google IMAP account as per the instructions in this page:
http://mail.google.com/support/bin/answer.py?hl=en&answer=75725

3. Now you should have two accounts listed in your email client say thunderbird. Now, just just drag and drop emails from office email account in thunderbird to google imap a/c in thunderbird

Do the third step taking mail size and speed of internet at your place in consideration Or the email client may seem to hang. I suggest moving mails to google account in chunks of 50 each.


Let me know of any queries !
-AJ

Bear Sterns Bail Out

To start with little history, Bear Sterns is a financial giant with 80 + years of experience in financial world. This company withstood The Great Depression, the stagflation of the 70s, the dot-com burst but succumbed to the subprime mortgage crisis.

Now what is subprime mortgage crisis?

Subprime mortgage crisis is sudden increase in foreclosures by home owners.

Now, who are “these” home owners and what is foreclosure?

These home owners are people with not so good (less than generally accepted) credit rating and ended up taking home loans with higher interest rate. Subprime loans provide an opportunity for borrowers with less than "not so good" credit rating to access loans at higher interest rates.

With the real estate prices’ increasing continuously, the lure of hedging on homes is too good to resist. Even if the lure is not good enough to entice people to buy homes at high prices, the fear that “if not today, I may never be able to buy a home in this ever rising real estate market” could also be a significant reason.

Let’s look at an example:

A person XYZ takes a loan at higher interest rate (subprime rate) when the real estate prices are sky high with the hope of refinancing at a low interest rates. If XYZ does not have good credit rating, he/she is not entitled to loans at attractive interest rates. However, XYZ can improve his/her credit rating by paying EMIs on time for one year. The problem arises when XYZ cannot pay as planned. The credit rating worsens and the chances of refinancing at lower interest rates are minimal. To add to the problems, if the real estate prices collapse in the midst of all this, XYZ is in real soup now. XYZ took a loan at higher interest rate when the home is valued at a higher price. Now, the home is not valued at the rates for which it was paid for. That means, XYZ is paying more than the current value of the property and he/she is not financially sound enough to manage this. So, XYZ chooses to foreclose the property. When this happens on a bigger scale, boooom, crisis starts.

So, how did a company which was awarded “Most Admired” securities firm in Fortune’s "America's Most Admired Companies" survey get involved in all this? Bear Sterns invested heavily in hedge funds that lost almost all of its value because of subprime mortgage crisis. One thing led to the other and finally, the share which was valued at 87 USD during the last week of February 08 is offered 2 USD on 14/15^th of March 08 by JP Morgan Chase. The firm whose net income during the previous year was 2.1 billion USD (source: http://www.businessweek.com/bw50/2007/74.htm) was purchased 236.2 million USD. That’s how quick fortune changes. One of my colleagues was talking about an English guy who holds 10% in Bear Sterns. Man, that guy would have wept his heart out after all this. I even came to know that few employees of Bear Sterns who hold stock options could not control their emotions during all this mess. After all, we are all human.

However, If one looks at the bigger picture, I think this is all part of economical cycle. Not everybody would get rich all the time. Few get rich, few get richer and this might mean few getting poorer. It’s all in the game. Mankind has seen many financial collapses like this in the past for different reasons though; many of which we don’t even remember vividly (For those who forgot, remember, there was a much bigger financial collapse just few years back. Does ENRON sound familiar?). The collapse of ENRON had far reaching consequences than the collapse of Bear Sterns. A typical investor in Bear Sterns is much richer than a typical investor in ENRON. Also, it is not as difficult to find another job for employees of Bear Sterns as it was for employees (most of them not highly skilled) of ENRON.

My point here is: We should all look at the bigger picture and not panic when a blip takes place in the economy. An economy is not bound to grow unprecedented. It is bound to have recessions. We should not loose confidence and rather work towards a better tomorrow and a brighter future.

DISCLAIMER: The contents of this blog are strictly my personal opinions and not those of any organization/institution I am a part of, nor made in any official capacity of such organization/institution unless expressly stated otherwise and where I am explicitly authorized to do so.

Web2.0 Startups –Indian Edition

Having a candid conversation with a friend the other day, I realized he was quitting his prestigious job at Credit Suisse NY to move back to India to materialize his dotcom dream.

What is that the Web can do for you? In this Web second edition what is otherwise known as the Web 2.0, there are certainly clear winners (lets call them Flickr, Facebook and Utube) with great potential for future revenues even though their profitability or business model is still being questioned very much. Some of my friends seem to have gone absolutely head over heels crazy for this Web stardom, not that I have not! They have tread another step further and left their secure jobs in the biggest cities around the globe to have their own web startup in India after listening to that inner voice deep down. I firmly believe one of them is surely going to do a Sabeer Bhatia or a Larry Page flick very soon. How good it is to be Mark Zuckerberg, the Harvard educated wiz kid who started Facebook only to realize i its now worth close to $750 million?

One should not forget the fact that many startups that go belly up for every Facebook or Google to emerge. It is very confounding at times to note how startups survive the initial hiccups and have different approaches to profit route. Well, after the initial thrust, one has to certainly look out for a model to channel in some kind of profits rather than just run the footnote Google ads.

But, I have been so enticed recently to the world of Dot.com every since Nokia, the company that I work for completely changed the corporate structure as a Dotcom company and acquired Ovi.com and twango.com Even the grand old Rupert Murdoch, believes the dotcom is the way of the future for News Corp,proving it with his recent online shopping of myspace.com.

The question now is how far can we stretch this Web, going forward?

Given the fact there are going to be some real smart bodies at ISB, it will be exciting to swap ideas looking towards a venture. www.lootstreet.com is a new startup that gained sufficient media attention just because it was by IIM grads, even the home page proudly paints the IIM story. I am very sure ISB too has big ones coming in the class of 2009. Some of the Indian startups I will be watching closely some exciting ones here in the near future

www.loandukaan.com

www.aisapaisa.com

www.lootstreet.com

North East - The last two days

Well - the last two days were definitely worth the trip - also they helped turn this trip from 'hopeless' to 'good'. Went for a jeep safari on the first day and was able to get many great shots of rhinos, elephants, water-buffalos, hog-deers . . . . Was great fun. Of course the fun cannot always continue and had to "suffer" an afternoon of site-visits (which were supposed to be visits to tea-garden) with my friend. However on the whole - very nice. Few photos at the end.

Yesterday was great - I was finally alone - and realised that I actually love my company. Went for an early morning elephant safari (got up at 4:00 !!!) - interesting - but the jeep safari was better. Spent the rest of the day exploring the place - chilling out and all to soon the day was over.

More later .. . - have to catch my flight now.

North East Day 3-4: Never again . . .

Never again am I going to let someone else plan my trips.
The last two days have been absolutely useless. Yesterday was spent waiting for the ILP and then travelling to Tezpur (3 hour journey which took almost 6 hours) - where we were to board a night bus for Tawang (one of the oldest monasteries in India right next to the China border). It was all fine as long as there was something to look forward to. Then all hopes were dashed - there were no night buses / jeeps / bullock carts !! You can reach Tawang only by jeep and they leave only at 5.30 in the morning. Also it takes more that 12 hours to reach. So that meant wasting one day to go and one to come back - that left me with a night when I could stay there. Made no sense at all. Plan 2 was to go to an eco-camp for rafting -- seems that was too expensive - no idea how much though. Plan 3 was to go to Bomdila (supposedly 3 hours from Tezpur and supposedly very beautiful). So we opted for plan 3 - little did I know it would take 5 hours to reach - 1 hour for lunch and 5 hours to come back !!!
So I ended up spending 11 hours for lunch - that ought to be a record. Finally I took matters in my hand and decided to spend my last two days in Kaziranga and stop sitting in buses / jeeps for the rest of the trip. So I'm writing this from a beautiful resort in the middle of the jungle . . . .. . . Lets see how the rest of my trip goes . . And as my school motto goes "Never Give In" - I'm not going to lose hope and discard this trip as totally hopeless.
More tomorrow . . . . . . .

Of People and Technology

The Man or the Machine?Analyze this...

There is an organization called Dell Computers which "was" market-leader in the PC business.There is an organization called Toyota Motor Corp. which "is" a market-leader in the Automotive business and by-far the most profitable auto-maker in the world.While the former is panting for breath with the competition catching up with it (or otherwise), the latter is rolling like a juggernaut.

Why this uncanny comparison between two non-competing entities?The point is this...Both Dell and Toyota are names to swear-by when it comes to supply chain efficiencies.Both have pioneered such great processes by virtue of which they had the competition running for cover.
Direct model from Dell was such a brilliant strategy that it threw the likes of IBM out of Business.And contrary to the popular misconception, there is something that is actually perfect in this world and that's the Toyota Production System.

While Dell's innovation relied mostly on Technology, Toyota relied on its people.

Dell had almost everything going right (which is against the laws of nature).If everything is going right...something has to go wrong and wrong it went.The competition soon caught up with the Lenovos and the HPs quickly realizing the benefits of mimicking the Dell model and the whole competitive advantage of Dell is fast fading away.

On the other hand, Toyota has proved to the world that smart people come in small packages and are not too abundant.Inspite of the huge consulting assignments that Toyota has done with a number of American companies on its production system, the world is yet to see anything even close to Toyota.No complex softwares for inventory optimization and Production Planning for Toyota.Just an inclusive manpower and some excellent execution strategies at its perusal.

Technology is definitely something but man seems to be everything for he clearly, still, seems to be the Master!

Mom & Pop vs Supermarkets

I visited my friendly neighborhood panwaala, Ashok, after a long time today. I was just getting pally with him. He inquired about my absence, "Long time no see bhaiya", I told him that I had been living on my stock for sometime. I observed that:

He knows the choice of his customers and the moment they come, he digs out their brand in a flash.
He is an enterprising person and always greet me with a smile.
He is benevolent enough to give me loose change whenever I need them.
He is open from 6 AM to 11 PM.
He is diversifying, he stocks up groceries, water cans, ready to eat, phone booth and other sundry things.
He gives credit to lots of his customers.
He knows most of his customers by name and address.

That made me ponder over the onslaught of supermarkets and hypermarkets on these Mom and Pop stores (hereafter referred as M&P) that dot the Indian landscape. No doubt the ripple effects are being felt by these small unbranded grocery and retail outlets, but these M&P stores might just have an ace up their sleeves.

M&P have few advantages over the multi million square feet retail chains. M&P know their clientèle and their preferences. M&P know their terrain and have deep penetration. M&P can improvise upon and provide customized service (for example door to door delivery) to their clients. I remember having a chat with a senior client member, he pointed out that his wife still likes to buy fresh vegetables from the sabziwala who comes every morning. He reasoned out, that his sabziwala knows how much quantity is consumed and which vegetables are preferred by his family. That sums up the advantage that M&P might be having.

In India unorganized retail still accounts for over 90 percent of the retail market, but M&P are facing a constant and increased threat from organized retail chains. These retail chains bank on the seamless supply chain that they have built and also on the economies of scale. Till now Organized retail has appealed premium and high end customers. But it wont be long before no-frills retails chains on the lines of Subhiksha and others give M&P a tough fight for the turf.

But Ashok is unfazed, he knows that market is big enough for everybody to survive and innovation will be the key to the survival of M&P in the times to come.

North East Day 2: Guwahati Temples

Today was a day for temples - it seems Guwahati is called a city of temples - there are quite a few of them here.

First we went to the Arunachal Bhawan (found it after a loong search - as it is in a small house on the end of a smaller street) and applied for the ILP (In-Land Permit) which is required for going into Arunachal. If you don't want to "waste" a day in Guwahati - I would suggest that you get the ILP from Delhi or Mumbai. Anyways - I missed out on that option - and spent the day in Guwahati. 

As I said - a day for temples - Kamakshi Devi (the line was sooo looooooooong I didn't even think of going in) - Umananda (small temple on a river island - very nice place to go) - had lunch - and the Balaji temple (very beautiful South Indian temple - nicely landscaped - unfortunately my camera went crazy - the mirror got stuck and many photographs came half black :-((((( )

And last of all Kalakshetra - a nice park with a small museum and a big open-air theatre - very nice place. 

Well - that was the end of the second day - quite uneventful and not the best - but lets hope for the best - should get my ILP tomorrow - and then its off to Arunachal - Bomdila and Tawang - then Kaziranga. Lets see what else can go wrong. . .

It seems the North-east area hates my camera - last time I had come to Calcutta - and my SLR was stolen - this time - first I got fined for using the camera yesterday - and today the mirror got stuck - now till I can get it repaired I've lost the ability for auto-focus . . . . . but I guess things could be worse :-)

North East Day 1: Shillong

Reached Guwahati early in the morning and met up with my old friend - Nakul. Even though we had met after many years - it felt as if we had met yesterday. Went to his place - met up with his cousin. Relaxed for a while and then had breakfast - which was so heavy it was more of a lunch !! 

Nakul had to go to Shillong for a small site visit - and asked me to tag along. Also a few architects from Nepal had come to attend a workshop organised by Nakul - and they joined us for the trip. Two hours up - the journey was through a small winding road. We stopped at the "Orchid" for some lunch - and it was absolutely beautiful. The lake was on three sides of the restaurant. and with the large windows it looked simply amazing. Unfortunately the food left much to be desired. 

Further on we went to Shillong Peak - which had a panoramic view of the entire city of Shillong - however the weather became foggy and getting good pictures was not possible. Still - it was beautiful. Then - but not before getting in a small tiff with the **supposed** authorities about the use of a camera - we went to the Shillong Club to meet Nakul's client - owner of one of the best restaurants (The Bamboo Hut) in Shillong and he asked us to wait in his restaurant while he took Nakul along to the new site. The food here was amazing and the ambience of the place was also cool.

None to soon the day ended and we reached home. . . . .

A few photos to show what I mean

Dushyant Ahuja

When we remember we are all mad, the mysteries disappear and life stands explained

Creating segments along the way

Usually a company introduces a new product in one of the target market segments. In not-so-common cases the new product creates a new segment altogether, mainly due to technological breakthrough achieved. But it is surely rare that new market segment is created twice in a row in the same industry that too by the same company.

I am referring to Tata motors.

Until Nano the lowest segment in 4 wheeler market was the ‘low end hatchback’. Much has already been talked about Nano and how it has created a sub ‘Maruti 800’ market segment. Less popular though is Tata motors vouch to shake up the sedan segment.

Budget 2006 brought in separate excise duty for small cars, 16% instead of usual 24%, which has been further brought down to 12% in this budget. The classification of a vehicle as small car is determined by the length of the car being lower than 4 metres (and also engine capacity upto 1200cc for petrol and 1500cc for diesel). By smartly modifying Indigo (entry level sedan of Tata motors) Tata motors got its length to 3.95 metres making it eligible to claim the excise rebate. The new car is called Indigo CS (compact sedan) & will be priced starting at a coooool 3.79 L. The price is set to target potential high end small car buyers. What Nano has done for small car segment, Indigo CS plans to do for the sedan segment. Also note that CS has created a new segment without any major technological breakthrough.

Indigo CS has one more key advantage. Indica, Indigo and Marina all have the same engine. The tooling and R&D cost of engine can be recovered from the volume sales of Indica. Hence Tata is in position to price CS aggressively to keep competitors at bay. Competitors also may come up with ‘sedanese’ versions of their hatchbacks. Although unlikely, they may also pressurise government to make the excise rule more stringent so that CS cannot be claimed as small car.

Whatever happens, the vacant space between high end hatchback and low end sedan will definitely see lot of hot action.