A mba may2018 by IMS Publications

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www.advancedge.com Editor-in-Chief Kamlesh Sajnani

“Start with the end in mind.”

This is what Stephen Covey, the educator, author, businessman and keynote Editor

speaker, said back in 1990. In today’s world of advancements in management,

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technology, businesses, this is probably the best advice anyone can give, especially to you who are preparing to enter this world.

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At this point, you’re most likely expending all your energies in your studies, preparing for the slew of entrance tests you will be writing. You’re brushing up on your concepts, reading newspapers and magazines to stay abreast of the news. Good. You’re on the right track. Starting now, the simulated tests – or mock tests – will begin. This is the most important aspect of your preparation. These tests do much more than simply get you ready – put you in exam mode, if you will. They prepare you mentally for the test, stripping from your mind the fear of writing an exam of this magnitude. So start writing the mock tests, evaluate yourself thoroughly at the end of each, identify the areas on which you need to work, and repeat the process again. However much you study, nothing is more critical.

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Another thing you must remember is that the MBA isn’t just any other degree. It is the most important step in your life that will give shape to your career, your future, and to your life as a whole. So apart from your studies to crack the various entrance tests, one of the most important things you should be contemplating right now is figuring out which career path suits you the best, and is the perfect fit for your interests, skill sets and life goals. In this issue of Advanc’edge MBA, we explore a few traditional management fields, and in forthcoming issues, we shall delve into the unconventional ones as well. The crux of the matter is that if you start now with an idea of the career you finally want to build, not only will you have great clarity when you’re facing the institutes’ interview panels, but you will also have a surer idea of who you are.

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You’ve made your start towards the world of management. Now is the time to figure out where you want to end up.

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Aditya Prakash Iengar Editor

CONTENTS 05

COVER STORY Management sectors: Which fits you best?

CORPORATE INTERVIEW Education and learning can never be wasted

SPECIAL REPORT India’s Consolidation saga: A snapshot

MUST READS Mister Pip The Shiva Trilogy The 7 Habits of Highly

COUNT DOWN Top 10 famous brands with wildly varying products

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May 2018

CORPORATE WORLD Bank scams: Tip of the iceberg?

Walmart’s India avatar: Can it take on Amazon?

Personal data security: A long way to go?

OPINION Datagate 2018: What the fuss?

STUDY HOUR Test Q&As

Word Dose: About polymaths

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COVER STORY

Management sectors: Which fits you best? While preparing for the various management entrance tests, you need to be equipped with information about your career and future. Which is your favourite sector? Which sector can be the right one for you? What opportunities does it offer? Here, we give a broad overview of the various sectors in India.

n today’s world of businesses and corporates, there are more opportunities to have a successful career than ever before. With the business environment changing and taking on a global outlook, one of the most fundamental requirements for success in this field is to have a firm understanding of the functioning of the various markets and sectors. Well, for making this a reality, acquiring an MBA degree is an almostguaranteed recipe for success. However, merely chasing after a management degree is not

enough. One of the prerequisites of such a degree is to be highly aware of what’s going on around us, and gather information on the various fields in which one can pursue a career. In this article, let’s take a look at some of the traditional sectors where an MBA will facilitate a rewarding career, as well as some upcoming, notso-traditional fields.

FMCG India’s FMCG industry is expected to grow at 20.6 per cent, reaching the sales figure of US$107.3 billion by 2020.

The fast moving consumer goods, or FMCG industry primarily deals with the production, distribution and marketing of consumer packaged goods, i.e., those categories of products that are consumed at regular intervals, such as food and beverage, personal care, pharmaceuticals, plastic goods, paper and stationery and household products, etc. These can be categorised into three main segments — food and beverages (19% of the sector), healthcare (31%) and household and personal care (50%). The industry is vast and offers a wide range of job opportunities in functions such as sales, supply chain, finance, marketing, operations, purchasing, human resources, product development and general management. In India, the FMCG market growth over the past five years has been phenomenal, primarily due to consumers’ growing disposable income, which is directly linked to an increased demand for FMCG and services; case in point is the consumption expenditure is expected to touch nearly US$ 3,600 billion by 2020, up from US$ 1,469 billion in 2015.

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The Advanc’edge Team



COVER STORY

The sector that students prefer The fast moving consumer goods (FMCG) segment is the fourth largest sector in the Indian economy. Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector. With the FMCG growth in the country being driven by consumption, the sector continues to find favour with students who see it as a sector with huge growth potential.

Major FMCG segments in India

• The opening up of 100% foreign direct investment has seen a lot of excitement in this sector. • The retail sector is also a burgeoning one, expected to reach $1.1 trillion by 2020, and since it is intricately linked to the FMCG sector, it means that the relative growth potential of the latter is also very high. • There are already well known brands in the sector, both international and domestic, which creates competition and therefore increases investment potential.

Sector Products Food and Processed food, health beverages beverages, mineral waters, bread, biscuits, chocolate, confectionary, etc Personal Wash products like soaps and care shampoos, oral care products like toothpaste and toothbrush, cosmetics, etc Household Detergents, soaps, cleaners, care etc Interestingly, another segment of the FMCG is the tobacco industry, the biggest player in the market is ITC.

large sector where Indian

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The Pros and Cons Pros: • Huge potential given expanding urban boundaries and the as yet largely untapped rural market. The rural market is expected to be the primary growth driver for the segment. • The upward trending changing lifestyle of today’s consumers and their increase in income levels mean an enormous opportunity for newer and more varied products to succeed on the market.

 Advanc’edge MBA May 2018

Major companies HUL, ITC, Tata Tea, Godrej, Nestle, Amul, etc HUL, Dabur, Procter & Gamble, ColgatePalmolive, etc HUL, Godrej, Procter & Gamble, Henkel, etc

Cons: • The world today largely relies on emerging technology. However, in the FMCG sector, there is less scope of investing in this technology and achieving economies of scale. • The export potential in this sector is not high. • If import restrictions are removed, the domestic brands may face tough competition from international, more securely placed brands.

BFSI Despite an economic slowdown, both in India and across the world, the Indian finance sector largely remained resilient. Things are certainly not bleak, especially if you’re looking at a career in the

India’s FMCG industry is expected to grow at 20.6%, and eventually reach the sales figure of US$107.3 billion by 2020. banking, financial and insurance sector. In fact, according to a Central survey, the BFSI sector is currently estimated to employ around 40-45 lakh people and is expected to provide job opportunities for 80-90 lakh people by 2022. What students prefer The banking industry is a systemically important industry for the Indian economy in general and financial sector in particular as it comprises nearly 90% of the total financial services sector of the country. The banking industry in India has undergone significant transformation since the initiation of the financial sector reforms that were part of the structural reforms of early 1990s. The banking sector has steadily evolved from a statedirected banking system into a fairly open competitive one. Banking in India has become service oriented, maturing from the days of ‘walking in business’ to the present situation of 24 hour banking solutions to attract customers. The Pros and the Cons Pros: • A variety of roles and responsibilities. • Consumer types vary widely due to the wide range of

COVER STORY

“The IT sector seems to have found favour with students, even higher than the popular financial sector and banks. The healthy performance of the IT sector over the last few quarters seems to have had a positive impact on the students who once again are interested in the sector.”

IT/ITes Today, all companies big and small are driven by technology; some in the core IT field, while others use technology for their day to day transactions. In fact, in a report listing the most valued brands in the world, six out of the top 10 companies are from the IT/ITes sector! The Indian IT-ITes industry has transformed India’s image on the global platform and fuelled

The importance of technology is evident when we see that 6 out of the top 10 most valuable brands in the world are tech companies! the economic growth of the country, employing almost 10 million Indians. Moreover, both Indian and international firms across sectors largely depend on the IT/ITes providers to make their business processes efficient and streamlined. Growth prospects show the sector’s aspiration to touch $350 billion by 2025. Students’ point of view Placement reports of the topranked management institutes in the country show that the IT/ ITeS is consistently among the top three sectors that are most preferred by MBA graduates. According to Dinesh Kapoor, Executive Director of Nielsen,

What you need to succeed The first thing that’s needed in a field like the IT/ITeS sector is the ability to handle pressure, given that with the constant advent of technology, the world keeps becoming smaller. A background in IT will also help, certainly, but isn’t a must for an MBA graduate to possess if he wants to specialise in IT.

Consulting Business consulting mainly deals with helping restructure companies using subjective and objective views of external consultants. Consultants can be engaged for their expertise in a

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products and services, which gives an excellent mix of relationship, sales, operations, analysis and product management opportunities. • Lucrative salaries. • Rise of Fintech: Use of newer and more efficient technologies to the fullest, which means working in topnotch settings with state of the art technology. Cons: • Sector is facing many changes, which means resistance and some conservatism when it comes to adopting, implementing and maintaining these changes.

The Pros and Cons Pros: • Most-sought after in the world, as Indians are more comfortable with English than other countries like Japan, China or Germany. • Most opportunities for on-site projects, which means more global exposure than any other sector. • Mostly young professionals in the industry, meaning more dynamic workforce and creative thinking. • Lucrative salaries. Cons: • Personal life shrinks, have to be on call most of the time. • Depending on who the client is, timing of the job might not be fixed.

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COVER STORY

particular industry or a sector, or as temporary staff members for a one-time project. The hiring of MBA graduates is pretty robust in the domain even in the time of economic slowdown. The argument here is that during a slowdown, consultants are more in demand, since most companies need advice on how to grow during any recession period. Even information technology companies such as Infosys and Wipro are trying to get into the lucrative field of business consulting, as it commands higher billing rates and also influences key strategies of the companies. Types of Business Consulting

of analytical, organisational, and communication skills. • Direct involvement in functioning and the future of firms, leading to greater job satisfaction. • Possibility of garnering a wide network across firms and sectors. Cons: • Hours are long. • Extensive travelling is required in most cases. • Stress levels can be high, since consultants often work on tight deadlines and schedules. Apart from these major sectors, there are also other fields in

Description Offer advice on tackling commercial issues. Use of existing framework to look at business problems Strategy and improve business efficiency by re-engineering consulting them. Recommendations to increase profit, entry to markets, tech upgrades, etc. Specific to domains, involves brining in experienced Domain people for recommendations on best practices and consulting execution. How best to use IT to meet business objectives. Includes Technology customer relationship management, e-procurement, consulting reverse auctions, web collaboration tools, knowledge and content management, etc. Helps accomplish financial objectives by assessing Corporate financial situation, developing and presenting financial finance strategies and plans, monitoring changes in financial status, raising funds, mergers and acquisitions. Consultation on data necessary for preparing financial statements and reports required by statutory and Accounting regulatory authorities as well as internal management. Includes tax advisory work, auditing the firm’s financials, singing off on the balance sheet, etc. Intra-company departments help quick execution of In-house projects, since they are familiar with the corporate consulting culture. Useful for conglomerates that need independent advice from the central staff. www.advancedge.com

Name

The Pros and the Cons Pros: • High levels of income and perks. • Large scope for development

 Advanc’edge MBA May 2018

which the demand for quality MBA graduates is increasing. Moreover, MBA aspirants are now looking beyond the traditional fields of management, and

identifying new areas of management in which a career looks promising. This outlook is linked with how the world and its markets and economies are developing. For instance, the advent of big data and the enormous amount of analysis being required by most major organisations today have given rise to the most lucrative field of Business Analytics. Consider also the growing number of individuals who are becoming, or are on the way to becoming, celebrities. This, in turn, has given rise to Celebrity Management. And of course, with the natural resources in the world being threatened by our very existence, there is a vital need to conserve, preserve and manage them, in order to leave a sustainable world for future generations. This explains why fields like Water Management, Energy Management, Natural Resource Management and Sustainability Management have come up. It is impossible to list all these various fields in one go, so here are a few upcoming management fields that show the most promise, and which will be covered in greater detail in forthcoming issues of Advanc’edge MBA. • Risk Management • Infrastructure Management • Sports Management • Media Management • Healthcare Management • Hospitality/Hotel Management • Intellectual Property Management • Energy Management Be sure to follow the next few issues religiously to gain insights into these fields! A

CORPORATE INTERVIEW

Education and learning can never be wasted ...says PRACHI GARG, owner of GhoomoPhiro, an event management company for corporates. With MBA and journalism degrees up her sleeve, this new-age powerpacked lady tells Advanc’edge MBA how the business acumen running in her blood helped her fulfil her long-cherished dream of turning her passion for travelling into her own company.

I am a simple small town woman with big dreams. After my Class 12, I got introduced to the ways of a big city when I started doing my graduation in Computer Science from Delhi’s Miranda House. Before that I had always been within the confines of a small town in Uttar Pradesh called Bulandshahr. However, I was always interested in going out and exploring new places. Travelling has been a passion that I have nurtured ever since I was a child. So starting a business that involved travelling was always at the back of my mind.

What is GhoomoPhiro all about? What is the kind of work that you do at GhoomoPhiro? Starting this business was more like giving wings to my passion. The fact that I named it GhoomoPhiro also came very spontaneously. One day I was sitting with my father when he suggested that since my area of work revolves around ghoomna phirna, why not name it GhoomoPhiro. So I started off very casually,

but slowly, this company became the most important aspect of my life. At GhoomoPhiro, we organise corporate tours and events. It can be a single day event, a weekend programme or else a trip of four to five days. I inspect everything on my own – first starting from the quality of the hotels, living arrangements, amenities offered and, most importantly, the food offered. I feel quality matters a lot in a niche business like this one. So I try and ensure that I offer the best possible package to my clients. This way they are satisfied and I am content that my job has been done well.

After your graduation you were working in an IT company as a programme manager. What made you realise that you needed an MBA degree to further your career? I always wanted to do my MBA after gaining a few years of work experience. This is how I had chalked out my career path long ago. I view my MBA degree holistically. I could see it connecting the different dots in my life and giving me a newer perspective to go ahead. And honestly speaking, the MBA degree helped me immensely to develop my contacts and reach out to a much more cosmopolitan diaspora.

You were already into business when you studied MBA. How did you manage to balance work and education together? I would want to give full credit to my time management skills for that. (Laughs) In fact, I cultivated this habit of multi-tasking right from my college days. At Miranda House, I not only studied Computer Science diligently, I was also associated with different societies and college groups. I was an active member of the Dramatic Society, president of NSS (National

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Tell us about yourself and what prompted you to start a business of your own?



CORPORATE INTERVIEW

Service Scheme), part of Quiz Society and also an intrinsic member of their Creative Society. I also used to send out my writings to several publications and freelanced with them. I even wrote for Advanc’edge magazine while I was preparing for CAT. (Smiles) So handling multiple things while giving equal attention to each one of them individually was something I was quite used to doing since my college days. Naturally, I didn’t face any problems when I had to juggle my business and education. In fact, I thoroughly enjoyed my journey!

Was there any specific reason that led you to start GhoomoPhiro? Starting a business was always at the back of my mind. And since I hail from a business family, giving shape to an enterprise all by myself was not an alien concept for me. In fact, I was aware of the intricacies and challenges of running a company ever since my childhood. To be honest, although I enjoyed my stint in the company I worked for, a part of me always yearned to start something of my own. I thought that, instead of toiling eight hours every day in an organisation, if I had to work for 20 hours for my own start-up, I wouldn’t mind! After all it would be my baby and I’d bear its complete responsibility – be it success or failure.

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When did you realise that an MBA degree might be crucial in your stint as an entrepreneur? It’s not just about the MBA degree, I feel any kind of training or education is never, ever wasted. My computer science, journalism and MBA degrees put together have made me the person I am today. And whatever I have learnt from each one of them is put to the best possible use, now that I am running a company. But specifically, I’d say my MBA days have helped me expand my social circle immensely, and building contacts is extremely crucial in a business. While studying, we all were like a family and today, I can say that the networking that I established during those days is invaluable and will be an asset to me in the days ahead as well. I would want to add that my stint at Great Lakes was the only period of my life when I got the luxury, or to put it precisely, the right platform, to experiment with my business ideas.

You have mentioned that you come from a business family. Did that influence your decision to start a business?

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Absolutely. My parents are in the publishing business and they are my biggest strength. They encouraged me and helped me carry forward my decision to start a company. Since they were both already running a company, they knew the nuances of the trade and what it takes to successfully start and run a business. So they gave me enough support to sustain through this challenging journey.

You could have easily carried forward your father’s business. Instead you chose the harder way and started your own business. How challenging was that? Share with us your ride. Yes, I could have worked in my father’s company. Even now I help my Dad with whatever I can contribute. But I always wanted to start something completely on my own. My parents had always taught me to listen to my heart. They had encouraged me to do things my way ever since I was a child. So when it came to business, I wanted to pursue my passion – travelling. I felt this business would help me travel more extensively, and naturally I’d feel enthused about my work. And my parents were supportive of my decision and never stopped me.

You have worked as a salaried person and now you are at the other end of the table – you generate salaries of your employees. How challenging is that role reversal? The role reversal is certainly challenging, because now at this juncture of my life when I am running a business, I am responsible not only for my family but the sustenance of my employees’ families as well. So I must say this makes me a more cautious and mature human being. The responsibility is also giving me immense satisfaction at the end of the day. I am thoroughly enjoying this challenging journey. I get an amazing thrill every day to go to work, come up with strategies of expanding my business, deal with my employees and clients and basically run the company I am so passionate about.

Is running a company, however small or big, tougher than working in an MNC? When I am working for someone, I certainly put in hard work and concentrate a lot in order to achieve the best possible results. But when I am running my own company, the dynamics change completely. I will settle for nothing but the best every time my company delivers to the client. It’s a different ballgame completely, because the onus to succeed is completely on me. So I push myself to the limits

CORPORATE INTERVIEW

Share with us some of the day-to-day challenges that you face. While running a business, I am bombarded with challenges continually. But the best part is that I never feel bogged down by them and look for interesting ways to sort them out. For example, I’ve even ended up cleaning my floor and my room on days my maid doesn’t come! This was certainly never the scenario when I worked in the IT firm. But trust me, I love everything that I do for my company. I never crib. At times when the work demands, I often stay back late and finish a particular assignment. But I don’t have a problem because my company is my baby and it’s my responsibility to ensure all the requirements are properly met.

I am sure you will agree networking is an important part of MBA programme. Any advice for students who want to become entrepreneurs? Yes networking is certainly crucial in business and it’s an ongoing process never to be neglected. But I would like to say that students mustn’t treat any lead as insignificant or irrelevant. Life is strange, and many a time the smallest and the apparently insignificant lead can convert into the most lucrative of deals.

Many entrepreneurs start companies to take forward their office work in a more personalised and niche manner. In your case it was not the case. What made you choose something completely different? I am a travel-crazy person so there was never any doubt that I wanted to choose travelling as the main theme of my business. There is one more thing I am interested in. So if not travel, it would have been something to do with it, and that’s food. (Laughs) I love to eat and so again opening a business on food would have been like indulging in the varied gastronomical delights, which I am extremely interested in.

Many students pursue MBA after their computer science. But you have done journalism as well

along with the two. How did you manage to fit journalism into your scheme of things? I have always loved to write ever since I was a child. So I thought that a journalism degree would be excellent to hone my writing skills. I already had a degree in computer science. I used my writing skills to come up with impressive technical articles that received a lot of appreciation. Moreover, I am a person who loves connecting dots from various fields. I feel there is so much to learn in this life. And now that I am running a company, I can utilise my education in the best possible manner because I end up doing multiple things.

What are your future plans with GhoomoPhiro? How are you planning for an expansion? Right now, we are organising corporate trips. Along with this, in future I am planning to organise trips for school children in 7th, 8th,9th and 10th standard. There is also a distant plan of starting a trip for single women in groups of five or six people. Many women are clueless about their travel plans. They also face restrictions from families in the various stages of their lives. And yet, some of them do want to explore unknown territories. I want to help such women discover the uncharted territories of this world.

Any particular advice for MBA aspirants who dream of becoming entrepreneurs one day? Concentrate on your education first, but at the same time, dare to dream. Life is very long, so there is always scope to travel down unconventional routes. It is okay to defy conventions and travel along the road less taken. I would suggest that the best time to take up newer challenges is during your MBA days. MBA gives you an exposure to a lot of new things. So it’s the best opportunity to get experimental at this juncture of life. A

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to get appreciation from my clients. I will not call that challenging, but describe it more as a rewarding experience. My dedication and expectation levels are on a different high completely.

Advanc’edge MBA May 2018 

SPECIAL REPORT

India’s Consolidation saga: A snapshot Even though the concept of consolidation is quite common, it has gained a lot of buzz in recent times in the Indian context. In this article, we explore what consolidation is, what it implies, and the reasons behind the spate of consolidation activities in India. Amarendra Singh

Mentor, Business Head - goFYI.in

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ince the liberalisation in 1991, the Indian economy grew on an average by 8%, and is expected to reach US$ 2.85 trillion in value in 2018. With this growth came opportunities in various industries, and we also witnessed the emergence of new industries. As expected, companies – both domestic and foreign saw an opportunity to either enter the Indian market, or strengthen their position, and performed mergers and acquisitions leading to industry consolidation. The trend that started then has not yet stopped and is expected only to gain momentum as the conditions are ripe for more consolidation. Mergers and Acquisition (M&A) activity in India has crossed US$ 56 bn. 2017 and is predicted to maintain at least at the same level in 2018 as well. There are many reasons for this spike in M&A activities, and one important reason is consolidation among domestic players.

MERGERS & ACQUISITIONS ARE AN IMPORTANT STRATEGY COMPANIES USE TO EITHER EXPAND IN EXISTING MARKETS, OR ENTER NEW MARKETS

 Advanc’edge MBA May 2018

Table 1: The Merger Mania - M&As in India, 2017 M&A Target Share of Nos. of Value Industry M&A Deals ($mn) Telecom

18,481.1

33%

Financials High Technology Industrials Healthcare Real Estate Energy & Power

9,602.1 6,524.6 3,997.0 3,273.6 3,262.8 2,703.6

17.2% 11.7% 7.2% 5.9% 5.8% 4.8%

240 162 146 87 61 80

Consumer Products & Services Materials Media & Entertainment Retail Consumer Staples Total

1,841.5

3.3%

160

1,784.1 1,700.9

3.2% 3%

143 85

1,675.9 1,085.9 55,933.1

3% 1.9% 100%

52 128 1,375

Source: Thomson Reuters

Mergers and Acquisitions are one of the extremely important strategies that companies use to either expand their position in their existing markets, or enter new markets. For example, the proposed merger of Vodafone and Idea Cellular makes for an ideal example of how the threat of a new, powerful entrant (in this case, Reliance Jio) can disrupt the market and precipitate the need for the incumbents to join forces to safeguard their market position.

SPECIAL REPORT

It must be understood that M&As are just one of the many ways in which companies join forces, or in other words, the industry consolidates. So the question is: Why should an industry consolidate? For that, we must understand the concept of ‘industry consolidation life-cycle’. In 2002, Graeme K. Deans, Fritz Kroeger and Stefan Zeisel published an article, titled, “The Consolidation Curve” in the Harvard Business Review. According to them, an industry will move through four stages of consolidation. In the beginning, most new industries are crowded and fragmented, and they must consolidate as they mature. This consolidation is a predictable process and follows a clear life cycle, spread across four stages as explained in the figure.

Figure 1 – Industry Consolidation Life Cycle

Stage 2: Scale Stage 2 is all about scalability. The hallmark of this stage is the emergence of big players, buying up competitors. Several companies that found it difficult to operate in the stiff competition scenario in the e-commerce space simply shut shop or sold out to their bigger rivals. For example, Flipkart acquired eBay India, while eBay global acquired an equity stake in Flipkart in exchange. In the latest development, the American retail major, WalMart Inc. is said to be in the process of acquiring majority (51%) stake in Flipkart while this article is being written. In this stage, top players are expected to have up to 50% market share among them, as the industry itself consolidates rapidly. Also, these companies must build their skills in M&A, postmerger integration and other such challenges that come with mergers. Companies also start having a relook in to their core capabilities, and start focus on profitability. At present, the Indian e-commerce industry is in Stage 2, which is expected to last a few more years.

Stage 3: Focus

Time

Stage 1: Opening Stage 1 starts with perhaps a single company, usually a start-up, which has a monopoly stake in the industry. However, the company’s monopoly position quickly vanishes, as more and more players see the opportunity and seize the market. One such example in the recent Indian context is the e-commerce industry. While, it is hard for the writer of this article to point out which company was the first-mover in this space, the industry itself came to the fore with eBay and Flipkart. However, soon, several other players, backed with cashrich private equity firms entered and crowded the market. The industry, which was valued at less than US$ 4 billion in 2009, reached US$ 24 billion in 2015! In this stage, the mandate to these companies was very clear — focus on the revenue, rather than the profits, and gain market share. Not surprising, then, is the fact that none of the e-commerce companies made any profits during this period.

Once the consolidation of Stage 2 ends as explained above, Stage 3 begins. Companies utilise and expand their core business to outgrow the competition. In this stage, the top players are expected to control 40% - 70% of the market among them. Also, by this time, there are very few significant players left in the market. In this stage, one can expect large or even mega-deals to happen. Companies are expected to follow the classical economics path of focus on profits, focus on their core capabilities, divest weak businesses, etc. Underperformers are expected to face stiff competition. The incumbents also look out for start-ups that may disrupt their markets, and may choose to crush them, acquire them, or simply emulate them.

Stage 4: Balance and Alliance In Stage 4, the industry looks pretty matured, with very few, large companies. The top companies may control as much as 70%-90% of the market. Growth at this stage plateaus, and therefore, companies forge alliances with their peers. It is important to note that companies don’t move through this stage, rather, they stay in it. The only option for the incumbents, therefore, is to defend their positions. Companies find new ways

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Market share

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to grow their core business in this mature industry. They might grow by bringing in new businesses or services to industries that are in the early stages of consolidation. Consolidation, therefore, is a normal part of any industry. They help establish efficiencies that drive down the cost of goods & services and make the marketplace more competitive, and hopefully, affordable for consumers. A company’s long-term success depends on how well it rides the consolidation curve. The agility to understand where they are in the consolidation curve, and the speed to respond, is everything.

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Advantages and disadvantages of industry consolidation

UNDERSTANDING THE TERMS Merger:

Merger is full joining of two previously separate companies. In mergers, both the companies must dissolve and fold their assets and liabilities into a newly created third company. A merger involves the ‘mutual decision’ of two companies to combine and become a third entity and can also be seen as a decision made by two ‘equals’. Example: Idea Cellular and Vodafone India coming together is an example of a ‘merger’. The deal size is almost US$ 23 bn. and creates India’s largest telecom operator.

Acquisition:

Acquisition is taking possession of another company (may also be sometimes referred to as a Takeover or a Buyout). Acquisitions may happen through share purchase, where the ‘Acquirer’ buys the target company’s shares from its shareholders, or by asset purchase, where the acquirer buys the target company’s assets. The acquirer acquirers the target company with all its assets and liabilities. An acquisition is characterized by the purchase of a company by a more resourceful company, and this does not have to be ‘mutual decision’. Example: Uber’s Southeast Asian business was acquired by their Singapore-based rival Grab, arguably the largest acquisition completed by a Southeast Asian company. The deal allowed Uber to own 27.5% stake in the merged entity.

Industry consolidation can benefit Joint Venture: the players mostly from the Joint Venture (JV) is two or more businesses joining together under a profitability point of view. The contractual agreement to conduct a specific business enterprise, and incumbents achieve profitability sharing profits and losses. The JV is for a specific project or purpose through the following ways. only, rather than for a continuing business relationship. 1. Economies of Scale: The Example: TireHub LLC, one of the largest tire distributor and ‘consolidated’ companies gain wholesalers, is the result of joint venture between The Goodyear Tire from lower operating cost, lower & Rubber Company and Bridgestone Americas, Inc. SG&A, and lower material costs. Strategic Alliance: At the same time, they are able Strategic Alliance is a partnership of one company with another in which it combines efforts to achieve a specific objective. For to reach a wider market. 2. Market Power: As explained example, securing a better price by ordering in bulk together. The earlier, consolidations help ultimate objective of such alliances is to reduce risk and increase companies in gaining more leverage. Example: Spotify, the music, podcast, and video streaming service market share, resulting in a partnered with ride-hailing service Uber to create ‘a soundtrack for company’s monopoly power your ride’. This was a great example of a Strategic Alliance between and enabling higher prices. two very different companies with same objective – to earn more However, this is also the reason users. why governments regulate Partnerships: such consolidations under the Partnerships are businesses in which two or more companies or Anti-Trust Laws. It must be individuals carry on a continuing business for profit as co-owners. understood that companies may It must be noted that legally, a partnership is not regarded as a achieve bigger market share single entity. objectives, only if it happens in the same industry. near monopoly level, simply because it has no 3. Improved Products: Theoretically, a stronger incentive to do so. company will have more resources to spend There are some disadvantages of consolidation on research & development (R&D), which may too, as listed below. result in newer and more beneficial products. 1. From the consumers’ point of view, more However, as a counter-argument, a strong market competition is a good thing, because company may not need to invest in product they are able to secure attractive prices innovation and improvement if it operates for their purchase. However, as industry

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SPECIAL REPORT

What is driving the current Indian industry consolidation? In India, the industry consolidation at present is driven more by financial distress than anything else. There are financially stressed assets in each industry. An analysis based on the 316 nonfinancial BSE 500 companies for the financial year 2016-17, carried out by Mint newspaper, found that the proportion of debt held by Indian companies unable to meet their interest obligations has risen to its highest level since the global financial crisis of 2008-09. It is also important to note that the profitability situation of the financially stressed companies show no sign of improvement. In the analysis done by Mint, it was found that the companies that are 1

Table 2: Percentage of overall debt held by companies

Year

Profit-making Loss-making companies; unable companies; unable to pay debt to pay debt covenant covenant

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

6.13% 10.94% 12.72% 7.27% 19.15% 17.64% 20.45% 23.32% 20.61% 22.46%

8.25% 10.74% 9.34% 7.99% 5.06% 12.61% 4.32% 9.22% 10.17% 11.46%

able to meet their debt obligation usually have the return on capital employed (RoCE)1 level of ~14%, while the companies that are financially stressed have RoCE level of ~1.5% only. While there is a marginal improvement in the overall debt level, the debt and equity ratio for the companies that are not able to meet their debt obligations is far higher than those that are able to meet their debt obligations. These observations are most pronounced in Telecom and Real Estate companies. The Real Estate sector had an ‘interest coverage ratio’ of 0.98 in the financial year 2017. Interest Coverage Ratio is used to determine how easily a company can pay its interest expenses on loan/debt. When a company’s interest coverage ratio is 1.5 or lower, its ability to meet interest expenses becomes questionable. For the Telecom sector, the interest coverage ratio was 0.76. Other sectors with high leverage and low profitability are Capital Goods and Infrastructure, and Utilities sector (including electricity / power companies). Not surprising, then, that the Anil Ambani-led Reliance Communications Limited was purchased by Mukesh Ambani’s Reliance Jio, as the former may have defaulted on its debt obligations.

Outlook for industry consolidation This is a remarkable situation, one that indicates an unprecedented opportunity for industry consolidation. As demonstrated above, there are financially stressed companies in multiple sectors, and therefore, consolidation through mergers and acquisitions, is expected to happen at greater frequency in coming times.

RoCE measures a company’s ability to generate profits with a given level of capital

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consolidates, the incumbents start to gain more power, thereby making purchases costlier for the consumers. When the industry reaches Stage 4, the industry functions more like an ‘Oligopoly’, a state of limited competition, in which a market is shared by a small number of producers or sellers. The market players can collude and ‘settle’ for the final price of their goods and services. For example, at present, the Indian Telecommunication market structure can be seen as an oligopoly, which is being disrupted by Reliance Jio, forcing the incumbents to react in unprecedented ways. 2. A very large company may get too big, unwieldy and difficult to manage and therefore, none of the expected synergies and economies of scale may actually pay out. 3. Industry consolidation many also lead to reduced choices for consumers. This outcome is closely related to the first point (above) in the disadvantages. For several industries, especially fashion or apparel, retail, food, etc, choice making is as important as price for consumers. 4. A merger can lead to job losses. This is a particular cause for concern if the merger in question is an aggressive takeover by an ‘asset stripping’ company (or a firm, which seeks to merge and get rid of under-performing sectors of the target firm). On the other hand, other economists may argue that this ‘creative destruction’ of job losses will only be temporary job losses and the unemployed will find new jobs in more efficient firms.

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Table 3: Sectors with very high likelihood of consolidation in the next 2-3 years Industry Consolidation Industry Characteristics Life Cycle Stage Health & General Insurance e-Commerce Telecom Banking Pharmaceuticals

Real Estate Power & Utilities

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Oil & Gas

Highly competitive; No product differentiation; Capital intensive; Top 5 players have ~75% market share. Highly competitive; Focus has been on customer acquisition and top-line growth; Crowded market space. Sector had been a stable industry prior to the entry of Reliance Jio – a powerful market disrupter. Government mediated mergers, primarily to achieve higher operating efficiencies, in the wake of increasing NPAs. Companies are seeking scalability; The industry is experiencing slowdown in growth and therefore, reduced profitability. Almost all companies are facing serious financial distress; A few policies have permanently impacted the industry; Capital intensive; Small players can only survive if they have serious cash infusion. Companies are facing long-term financial distress; The industry consolidation may be precipitated by National Company Law Tribunal (NCLT). Government mediated merger; Merged entities are seeking greater operating efficiencies.

The inability of several companies to pay their debt covenants will also force companies to sell off their non-core and / or non-profitable businesses. This will bring much needed financial and operational discipline, resulting in industries operating at optimal levels, and improved return on investment. Consolidation is already underway in the Telecom sector. Very soon, Real Estate, Capital Goods and Infrastructure, Utilities, and Life & General Insurance companies too will join the trend. The Indian insurance sector is highly fragmented — there are 24 players, and the top 5 players control about 75% market share. The industry is highly competitive and capitalintensive. In this scenario, and with no tangible differentiation, it is obvious that many companies in the insurance space will be able to sustain themselves. The effect of domestic consolidation will eventually lead to a reduction in the total number of players in some sectors, making them more efficient and profitable. This will also increase competition amongst the surviving players. While there is a positive expected impact on these companies, it is hard to say whether the customers and consumers in these sectors will actually gain any benefits as argued above. Whatever the case may be, consolidation among the domestic companies will play a very important role in redesigning the country’s industrial landscape.

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Stage 2 Stage 2 Stage 4 Stage 4 Stage 2

Stage 3

Stage 4 Stage 4

THE INDIAN INSURANCE SECTOR IS HIGHLY FRAGMENTED — THERE ARE 24 PLAYERS, AND THE TOP 5 PLAYERS CONTROL ABOUT 75% MARKET SHARE. We can expect more industries to ride this consolidation wave in 2018 as well. While it may be very exciting for managers in these companies and those in finance and investment banking sectors, firms must be aware of the fact that they will require substantially greater integration than the industry has historically tackled. In that regard, companies must plan for post consolidation integration planning. In many cases, it may require substantial restructuring of investments, distribution, and operations. A

The author is an alumnus of IIT Roorkee and Kelley School of Business, and has had extensive industry experience with organisations such as Wells Fargo, Cummins India Ltd and BHEL. He currently runs www.goFYI.in, an institute information portal for students, and is a Mentor at IMS.

MUST STUDYREADS ANDHRA HOUR PRADESH

MUST READS

Since you’re planning on doing your MBA, you need to be well read, and not just on current affairs. In this section, we offer you some choices of books that will broaden your perspective, and you will find that you will never be at a loss in a discussion!

et in the Papua New Guinea island of Bougainville, Lloyd Jones’s Mister Pip starts off innocently enough. A small village of people living in the middle of a vast ocean, leading their small lives within their apparently cocooned world of limited technology. Living in the midst of the black community is the only single white skinned man for miles, Tom Watts, the quiet, soft spoken husband of a local woman. Watts takes up teaching the local children, and then, without warning, the reality of the ongoing civil war steps in. Mister Pip is equal parts horrific in the brutal, bestial and often abrupt harshness of war, and equal parts uplifting in the escape Mister Pip of a young girl Matilda into the world of Charles Dickens’s Great Author – Lloyd Jones Expectations, and from there to what we define as “civilisation”. A Publisher – Hodder & Stoughton must read for anyone who yearns a change from light, entertaining Genre – Fiction reads. Price – `539

n the category “Indians writing in English”, Amish Tripathi has firmly cemented his place as an author to be read with his trifecta of books about the Lord Shiva — The Immortals of Meluha, The Secret of the Nagas, and The Oath of the Vayuputras. The trilogy depicts Shiva as a real man — a Tibetan tribal chief — lock-haired, battle scarred and possessing a fierce wit. Shiva hates the frequent inter-tribal fights and seeks a way out. Eventually, the books are about deciding between good and The Shiva Trilogy bad, right and wrong, and becoming man and god. Author – Amish Tripathi A fresh concept of depicting Shiva as a man, with a simple narPublisher – Westland rative, fast paced writing, a strong foundation in history, and an enthralling climax make this trilogy a must read. Genre – Fiction, fantasy Price – `639

r Stephen Covey was and still remains a hugely influential management guru, whose most famous book, The Seven Habits of Highly Effective People, became a blueprint for personal development when it was published in 1990. The principles may be used for life in general — they are not limited to workplaces, management, leadership, etc. The author’s concepts help people to grow, change, and become more effective in really any other aspect of human responsibility that you might imagine. The book is easy to understand, and the “habits” seem very The 7 Habits of Highly simple, and in many ways they are, yet to varying degrees they Effective People may entail quite serious changes to thinking and acting. Author – Stephen Covey The book is really about developing that core set of values to the point where it’s easy to draw solutions to problems from Publisher – Simon & Schuster them, making you a much more effective person in all aspects of Price – `413 life. Genre – Business, Self help

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famous brands with wildly varying products

T b i a t d

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COLGATE Known for: Toothpaste Came up with: Kitchen Entrées

Z K C

The idea behind this product launch must have been that people would eat their Colgate meal and then brush their teeth with Colgate toothpaste. People got all confused and probably thought that Colgate’s ready-to-eat meals will have an extension of that stereotypical taste of the toothpaste! Looks like what seemed workable inside the boardroom wasn’t that great an idea in reality! The food product launch was, quite soon, deemed to be a failure.

I m d a ﬂ f

HARLEY DAVIDSON Known for: Motorbikes Came up with: Cake decorating kit

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You don't often see a bike maker deciding to design cakes! Associating something as iconic as Harley Davidson with a cake decorating kit was something that did not go down well with the loyal followers of the brand. The ultimate in motorbikes, it was too much for the brand loyalists to see Harley associating itself with decoration stuff for cakes, mostly used in birthday parties or soirées! Naturally, this bizarre idea was rejected and people preferred to vouch for motorbikes when it came to Harley Davidson.

 Advanc’edge MBA May 2018

The essence of good advertising is that often a product becomes synonymous with its creator, which is the brand itself. No wonder phrases like ‘I’ll Google it’ instead of ‘search for it’, ‘Would you like some Coke?’ instead of ‘Would you like a soft drink?’, ‘Want to have a Cadbury?’ rather than ‘Do you want a chocolate?’ and ‘Give me the Xerox’ instead of ‘Submit the photocopies’ are common. However, many times, brands that are known for a particular product or service, come up with something that is completely and totally different from the one they are known to be associated with for years. Here, we list 10 very famous brands that have amused us with products that differ wildly from their usual creation.

ZIPPO Known for: Lighters Came up with: Women’s perfumes It’s hard to believe that this well-known lighter manufacturer also comes up with perfumes with bottles designed in the shape of a lighter! However, that brings in an image of bad smells, not to mention imagining spraying flammable lighter fluid on oneself! Definitely an odd choice for Zippo.

COSMOPOLITAN Known for: Women’s magazine Came up with: Yoghurt Most fashionistas would love to remain up-to-date with the latest issue of Cosmopolitan. However, few would know that the company known for its popular women’s magazine had ventured into yoghurt industry as well! Just before their dairy launch, the publication tried to sell their new venture by bringing up a connection between sex and yoghurt. Unfortunately, no one else could really make the connection! Add to it a much higher price than the leading competitors, and you had a product that failed to lure consumers! Soon Cosmopolitan decided to focus only on its magazines.

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GUINNESS Known for: Stout (beer) Came up with: World Record Books What started as a marketing giveaway of 1,000 books has evolved into an annual release and a treasured book series for Guinness. In fact, the company is more prominently known today for its world record books than its primary product, stout. The idea behind the world record books was sparked during a shoot, when Guinness’ then MD got into an argument over what was the fastest game bird.

BIC Known for: Disposable pens/ razors/ lighters Came up with: Disposable underwear

C K C

Disposable pen brand Bic was initially successful in extending the brand to razors and lighters. However, Bic took the bizarre decision to venture into the completely unrelated market of disposable men’s underwear! It was hardly a surprise that this massive deviation did not quite manage to win the trust of the consumers and failed.

C N l t b e o

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MICHELIN Known for: Tyres Came up with: Guides and reviews

 Advanc’edge MBA May 2018

This giant tyre maker had made the ﬁrst Michelin guide way back in 1900 as a means to encourage people to travel and boost the demand for cars, thereby bolstering the business for car tyres. In 1926, the guide started reviewing and rating restaurants and eating joints with its star guide. And, now, after all these years, the prestigious Michelin guide is often considered the pinnacle of restaurant reviewing and rating system.

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DIESEL Known for: Jeans Came up with: Wine When a brand, synonymous with chic urban wear and marking the ultimate fashion statement in clothing, decides to venture into something like wine, how does it fare? We could say it might have been satisfactory, but unfortunately, it didn’t turn out to be so. Diesel’s venture into boutique wines proved too complex, and failed to make a mark in the liquor industry.

CHEETOS Known for: Cheese flavoured snack Came up with: Lip balm Cheese flavoured chips? Yes. Cheese flavoured lip balm? Not really. The company overestimated the consumers’ love for cheese, when they decided to release a lip balm of the same flavour. Snacking on cheesy delights is one thing, but going around with faces smelling like cheese didn’t exactly hit the sweet spot! Naturally, Lay’s, the creators of Cheetos, failed to succeed with their lip balm.

After a successful stint with bottled water, Evian decided to get a little more adventurous and decided to launch an apparently weird product – water bra. A water bra can be ﬁlled with water in order to keep the wearer cool and comfortable. This seemingly random direction was not accepted with any sort of enthusiasm by the consumers and quite unsurprisingly, the product failed to take off.

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EVIAN Known for: Bottled water Came up with: Water bra

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CORPORATE WORLD

Bank scams: Tip of the iceberg? The country’s banking system has been hit hard by a variety of scams and frauds, even as it grapples under stress and NPAs. Close on the heels of the Nirav Modi-PNB scam comes the ICICI-Videocon-Chanda Kochhar allegations. In this article, we explore these matters in greater detail. Dr Suresh Srinivasan

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he flood of bank scams over the last few months has been quite embarrassing for the Narendra Modi-led BJP government. With almost daily frequency, newspapers and TV channels air episodes of fraud that run into thousands of crores. Fraudsters and tricksters apparently effortlessly swindle cores of rupees from the government and taxpayers, and conveniently flee the country, leaving the government and the investigating authorities red faced. With the government already battling problems related to non-performance assets and weak banking financials, such episodes are a serious concern! The Nirav Modi episode — that cost Punjab National Bank (PNB) close to `12,000 crore — wiped out a large part of PNB’s net worth, and made absconding liquor baron Vijay Mallya’s actions look quite small in comparison. Other stories of bank fraud too have been constantly in the news; Vikram Kothari’s fraud through Rotomac, again running into thousands of crores, also recently surfaced.

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There has been a huge outcry at the apparent ease and regularity with which public monies are being swindled by the rich and powerful who are proximate to regulators and the government. However, the damage is not restricted to the public sector banks. Private banks too have been caught in the storm; the recent investigations into conflict of interest allegations against ICICI Bank CEO Chanda Kochhar in extending financial assistance to the Videocon group also brings to table how vulnerable the entire banking system is today! Credible reports have surfaced where, in a single year, more than 3,000 cases of bank fraud have been detected. Not only public sector banks,

private sector banks too, as well as their employees, appear to be deeply entrenched in such frauds. Thousands of cores of the taxpayer’s hard-earned monies are being lost every year to such frauds and scams.

PNB, Rotomac and others In the Nirav Modi case, midlevel officials designated as deputy general managers at PNB’s Brady House branch in Mumbai issued letters of undertaking to banks outside the country, empowering them to extend ‘foreign currency’ credit to Nirav Miodi’s suppliers. Ideally, such transactions need to be authorised and promptly

CORPORATE WORLD

Lack of control? Looking at all these cases of fraud and collusion, it is evident that there is a lack of internal control mechanisms within such large banks. Lower and mid-level employees are not aligned with the senior management, and cases of collusion between the bank employees and customers are clearly visible. Internal control lies at the heart of risk management within banks, and

The various scams reveal that banks, whether private or public, are suffering from a lack of internal control mechanism. is the most important factor to secure the interests of the deposit holders in a bank. Unfortunately, this is exactly what stands to remain compromised! One can, of course, argue that public sector banks are inefficient, and that their large scale makes it difficult for them to be managed perfectly, leading to the near-ubiquitous instances of frauds. Unfortunately, recent reports show that private sector banks too have been plagued by a number of cases of fraud and financial loss. These include banks like ICICI Bank, HDFC Bank, Standard Chartered Bank and a number of other private sector banks. Scams don’t necessarily relate to direct financial misappropriation. There are other means through which the deposit holder and shareholder

monies are at risk. Take for the example the case, currently under investigation, of ICICI Bank’s CEO extending financial assistance to the Videocon group.

The ICICI case The Videocon Group, which is headed by Venugopal Dhoot, secured a loan of around `3,000 crore from ICICI Bank. Subsequently, Dhoot set up a company with three people at the helm — Deepak Kochhar, Chanda Kochhar’s husband, and two other relatives of hers. Dhoot gave a loan of around `60 crore to this newly set up company, and then transferred the loan he gave to a trust that is owned by Deepak Kochhar. This could have well been an ‘arms length’ transaction justified by the required security norms, but given the circumstances and the people involved, the whole transaction can be viewed in a very different light — as a loan given out by ICICI which could have been unduly influenced by the MD, as the eventual beneficiary is the MD’s husband. More importantly, part of the transaction is merely routed through an intermediary corporate that is Videocon; this could have easily been designed so that Videocon would be an offthe-book beneficiary for having been an intermediary. Such questions and doubts, therefore, put the entire original loan of around `3,000 crore at risk. This transaction was flagged by an activist investor, who questioned the ICICI MD’s motive in this transaction. ICICI Bank and its board immediately set up an internal committee that investigated and gave a clean chit to the MD. But the issue started gaining traction,

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recorded in the bank’s electronic and accounting systems, so that such liabilities are recognised and honoured as they come up for payment. It has been alleged that Nirav Modi, in collusion with the bank’s employees, concealed such transactions and the resultant liabilities, while the funds were released by many well-known public sector banks that include Allahabad Bank, UCO Bank, State Bank of India and Union Bank. As and when such transactions came to light, Nirav Modi and other key officials of Gitanjali Gems fled the country, and they continue to remain untraceable. A clear case of another Vijay Mallya episode emerging! In a similar case reported a month ago, the CBI has issued lookout notices against the promoters of the Dwarka Das Seth International, a jewellery company that used a modus operandi similar to Nirav Modi’s, to defraud Oriental Bank of Commerce to the extent of around `400 crore. In the Rotomac case, Vikram Kothari and his son Rahul Kothari were arrested by the CBI for defrauding a consortium of banks for close to `4,000 crore. The promoters diverted several crores of loans taken for Rotomac to other businesses and ventures against the very purpose for which such loans were sanctioned. There are other numerous cases of frauds apart from the high profile ones discussed above. Last year, a few people opened close to 400 bank accounts with Syndicate Bank and defrauded the bank to the extent of exceptionally large sums using fake checks, letter of undertakings and insurance policies.

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CORPORATE WORLD

prompting regulators to step in and open up investigations into the entire transaction to ascertain the presence, if any, of foul play.

Companies Act 2013 has very strong requirements to flag such conflict of interest in a timely manner when it relates to a ‘related party’. Hence, if the allegations are proved Chanda Kochhar’s right, although Chanda involvement Kochhar may technically be The stature of Chanda on the right side, given her Kochhar is massive, her stature, her actions might achievements in scaling ICICI not have been ethical, given Bank awesome, and she comes Chanda and Deepak Kochhar have been the positions that she holds. with an ethical track record embroiled in the Videocon controversy Given all of these, that is impeccable. However, the Reserve Bank of India given the circumstances, there that ‘technically’, Kochhar may (RBI), the key stakeholder is clearly a point of contention not have actually committed that provides oversight on with respect to a conflict of any wrongdoing. For example, the commercial banks in the interest in this transaction, under Section 20 of the Banking country, as well as the bank and it is one that needs to be Regulations Act 1949, a director boards have their work cut out ruled out. is not required to disclose a for them to sort out such a big There have been several transaction that is provided to problem that is plaguing the clarifications along the way a related party, whereas the Indian banks! A

INDIA INC: AT A GLANCE Groceries, household products big growth driver for Amazon Amit Agarwal, the India head of Amazon, has stated that Amazon Inc expects groceries and household products to account for over half of its business in India in the next five years. The company has been trying to foray into areas such as fresh produce, in addition to its traditional online retail business.

Ford tips Hyundai as India’s largest exporter Ford Motor Company has ended Hyundai Motor’s more than a decade-long record as the largest exporter of cars in India. Ford recently shipped out 181,148 units, surpassing Hyundai’s tally of 153,942 units. These are good representations of a deepening of the ‘Make in India’ philosophy.

Sundar Pichai to cash in $380mn in stock options Successful companies provide stock options to their senior executives to align their interest with that of their company’s. At the time of this magazine going to press, Google CEO Sundar Pichai is set to cash in US$380 million (around `2,500 crore) of shares this week. An award of 353,939 restricted shares he received before a promotion in 2014 will vest. This is one of the largest single payouts to an executive in recent times.

Regulations covering FDI rolled out

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India has rolled out the long-awaited regulations to allow cross-border mergers and amalgamation that could boost foreign direct investment into the country. The Foreign Exchange Management (Cross Border Merger) Regulations, 2018, will cover both inbound and outbound investments.

M&As key for Infosys growth: CEO Infosys CEO Salil Parekh has stated that mergers and acquisition deals will form a key component of Infosys’s three year growth strategy. Recently, the company acquired WongDoody Holding Company, a US-based digital creative and consumer insights firm, for a total consideration of around $75 million.

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CORPORATE WORLD

Walmart’s India avatar: Can it take on Amazon? With the Walmart-Flipkart deal almost in its final phase, the stage is set for the two global behemoths Walmart and Amazon to fight it out in the Indian e-retail space. In this article, we explore the challenges Walmart is expected to face, and how it can tackle the unknown waters in India. Dr Suresh Srinivasan business, Amazon acquired Whole Foods, the ‘brick and mortar’ retailer for US$13.4 billion. In effect, both the players have been attempting to strengthen themselves with an omni-channel capability. The endgame: Not to lose ground to the other as the customer’s shopping preference transforms.

Walmart-Flipkart deal There is an interesting angle to the deal that is brewing with Flipkart. SoftBank invested close to $2.5 billion barely 9 months ago, and is now reportedly prepared to exit Flipkart through the sale of its shares to Walmart. SoftBank invested in Flipkart when the latter was valued at around $12 billion. Now, it is being reported that Walmart’s acquisition will result in Flipkart’s valuation turning out to far higher than the last year’s figures. This might have been the trigger that encouraged SoftBank

to exit Flipkart. More importantly, with SoftBank already staying invested in Paytm, the other leading e-commerce player in the country, controlling close to 32%, SoftBank will continue to maintain its presence in the attractive Indian e-commerce space. Nine months ago, SoftBank, the majority shareholder in Snapdeal, was vigorously trying to broker a deal that would merge Snapdeal with Flipkart, providing a stronger platform for the merged company to compete with Amazon. However, the proposal did not go through, as Snapdeal promoters were not in agreement. SoftBank immediately exited Snapdeal and invested in Flipkart, which they will now be selling to Walmart. Close to 60% of Flipkart is owned by SoftBank, Tiger Global and Naspers. The rest is fragmented across a number of smaller investors, including China’s Tencent Holding, eBay, Microsoft, Accel India and Flipkart promoters Sachin and Binny Bansal.

Attractive market, expensive valuation and higher risk As a proportion of Walmart’s total revenue, e-commerce is still miniscule, at around 3%. However,

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almart is believed to be entering the Indian e-commerce space through acquiring a majority stake in Flipkart, the second largest e-commerce player in the country. The Indian e-commerce industry, pegged at more than two`2 lakh crore, has been fast growing and the size is expected to cross `10 lakh crore by 2022. Today, four players dominate the industry — Amazon, Flipkart, Snapdeal and Paytm. While none of them are making profits, bleeding cash has been the industry norm. Over the last year or so, the industry and its players have been visibly moving away from the ‘discount’ model to focus on ‘customer experience’ and last mile delivery capabilities, for which scale becomes critical. Consolidation, therefore, has become a key strategy, and the race to consolidate between the two largest players — Amazon and Flipkart — is heating up. The global rivalry between Walmart, the largest retailer in the United States of America, and US e-commerce giant Amazon is quite well known across markets. While Walmart acquired Jet.com for close to US$3.3 billion in order to gain a foothold in the e-commerce

Advanc’edge MBA May 2018 

CORPORATE WORLD

the proposed Flipkart deal is sensible from the perspective that it directly gives Walmart access to one of the largest and fastest growing markets in the world. Flipkart has a dominant position in electronic product segments like mobile phones and fashion products, especially with Jabong and Myntra under its fold. On the fashion merchandise front, Flipkart already holds a dominant market share, and it is aggressively targeting to retain its leadership position. This is an area where Amazon is lagging. Again, India being the fastest growing economy with a large population still underserved from an e-commerce point of view, Walmart’s India entry through Flipkart is a logical move to grow the e-commerce component. With both the number of Internet users and mobile handset penetration growing, more and more customers are accessing the Internet through mobile handsets. In such a scenario, India is poised to be an attractive market, especially in the following 10-year horizon.

Expensive valuation Digesting the valuation, especially given the financials, is a challenge. This is where Walmart seems to be taking its time to wrap up the deal. Turns out, the financials of Flipkart is not at all exciting for Walmart. On an annual basis, although Flipkart is clocking revenue of close to `20,000 crore, its recorded losses stand at around `9,000

crore. With accumulated losses standing close to `25,000 crore, the company has virtually burnt through a large part of the funding it has received from investors over the last 10 years. Despite such financials, the positioning of the company and the attractiveness of the Indian e-commerce market are the key drivers that are pushing the valuation to around $14 to $16 billion (over `1 lakh crore).

High risk Assuming Walmart is reconciled to shelling out the money and gaining entry into the Indian market, the risk associated with the venture is quite significant. Compared to Amazon, Walmart is still unaware of the e-commerce business, as well as the nuances of the Indian market. A large part of its e-commerce revenue comes from the sale of its own merchandise through its website Walmart.com. Hence, compared to Amazon India, which has a five-year learning streak in India, Walmart needs to ramp up its the learning curve, both in terms of understanding the e-commerce business as well as India’s specific trends and requirements. So Walmart will, in most likelihood, retain the top operating management of Flipkart for quite some time. Over the next few years, the competition will most likely centre around grocery and ‘hyper local’ deliveries. The last mile logistics will take the centre stage, and fulfilling returns will become

crucial. Both Amazon and Walmart have adequate bandwidth in this area, and each one will strive to gain stronger capabilities. To seal the deal, there are still a few challenging issues that need to be overcome. Flipkart has far too many divergent strategic investors who can stall the deal. eBay, for instance, has its own agenda. A high valuation could possibly entice such fragmented shareholders to sell.

What Walmart entry entails Overall, there isn’t any doubt that Walmart’s entry into the Indian market will do the industry good. First of all, two strong players with deep pockets and global expertise in retail and logistics will deepen the capabilities within the industry. The competitive rivalry is likely to be intense, eventually benefiting the customer. The growth is more poised in Rural India, and hence, largescale infrastructure and logistics investments will become essential. Core promoters with operating expertise will be more comfortable with putting in such investments, as compared to passive investors without the operating expertise. Given Flipkart’s dominance in mobile handsets and fashion merchandise, Walmart will have to leverage its expertise in grocery retailing, where it controls close to 18% of the entire groceries sold in the United States. If it can, Walmart can well give Amazon a run for its money in India! A

INDIA INC: AT A GLANCE

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M&As worth $19bn in 2018 Q1

Indian companies have announced US$19 billion of M&A deals in the first quarter of 2018. Although this is positive, it is important to note that the figure is substantially less than the deals that were announced during the corresponding quarter in the last year. As reported in the Special Report section of this magazine, mergers and acquisitions are the future for growth and consolidation. Meanwhile, M&A deals in the Indian telecom sector scaled a value worth $14.7 billion in 2017, reflecting a more than five-fold jump from $2.7 billion in 2016. Telecom industry is in its consolidation phase and M&As have been a key strategy for the players.

 Advanc’edge MBA May 2018

CORPORATE WORLD

Personal data security: A long way to go? In the light of Facebook’s data breach by Cambridge Analytica, a host of thorny issues have arisen. In a world where user data has become the basis of company profitability and strategy, the world needs to move towards a more secure structure that regulates data security.

Dr Suresh Srinivasan

Cambridge Analytica: A little background

developing countries like Ghana and India. It is important to note that their work in the Bihar Assembly elections in 2010 has also been reported. The data collected by Cambridge Analytica ranges from demographics, consumer behaviour, internet activity and more focused data for other public and private purposes. In the Indian elections, Cambridge Analytica’s data capture, research and analysis has been extensive; these involve video interviews and surveys, ‘on

ground’ voter demographic data collection and analysis, behavioural polling, media monitoring, target audience analysis and caste research. All of this eventually culminates in an effective poll planning campaign that purportedly gives their clients a winning strategy. Cambridge Analytica seems to be fully exploiting the power of big data and high end analytics and psychographics in the electoral process. This is a high end service, for which they have built powerful capabilities, and

To put things in perspective, Cambridge Analytica is a United Kingdom-based data mining firm that primarily operates in the political space. The company mainly provides data consulting and communication strategies to political parties around the world, and is known to work with various political parties across countries. In 2016, the company supported Donald Trump during his presidential campaign, as well as providing data consulting and strategic insights for the Brexit voting, and providing electoral consulting to political parties in

The data breach has brought the issue of data privacy to the fore.

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he recent FacebookCambridge Analytica episode has triggered a number of controversial issues, including placing Mark Zuckerberg, CEO of Facebook in a defensive position, but the biggest takeaway is that this issue has changed the world’s perspective on privacy matters. To that extent, the Facebook Cambridge Analytica issue is a positive development!

Advanc’edge MBA May 2018 

CORPORATE WORLD

this is the service the company is paid for.

So what’s the problem? In order to provide winning strategies to their clients, the basic raw material required is the personal data of individuals. And the problem lies in the way Cambridge Analytica has chosen to secure this data! The recent Facebook Cambridge Analytica data breach brings to light how some of this data was acquired. Approximately five crore Facebook users and their network of friends were tracked, and their data was acquired when they performed some activity on specific apps. These apps also collected information from individual users on the pretext of academic research. The key problem lies in the fact that not a single user among these was aware that their data was being collected without their consent. Facebook claims that the data captured by some of these apps from the Facebook platform was delivered to Cambridge Analytica, thereby breaching Facebook’s terms of service. In effect, personal data collected on the Facebook platform, without the knowledge of the users, eventually has found its way to Cambridge Analytica.

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Data is public In this age of information and data analytics, thousands of data points of individuals are floating around in the public domain. And the competitive advantage of companies in this era seems to be stemming from the companies’ ability to gain access to such data and use it for commercial

 Advanc’edge MBA May 2018

purpose; in Cambridge Analytica’s case, irrespective of the final outcome of such data. To be realistic, given the potential profitability, companies will not hesitate to tread this path! To be fair, it is highly unlikely that Facebook users today are unaware that their personal data is no more ‘personal’. However, when the reality hit and the Cambridge Analytica episode brought to the fore such breach of trust issues, the reactions, across sections of public, governments and regulators, have been quite profound and

essentially similar.

The Pandora’s box The Cambridge Analytica episode has opened up a number of questions that we need to answer. How far can private personal data be used for public purposes, which includes commercial, political and national security related purposes? To what extent can this be regulated? Do the uses the data is put to breach the fundamental right of citizens as far as their right to privacy is concerned? Especially since technology companies and data scientists, backed by large corporates, are pouring millions of man hours and resources into developing these technologies, what are the possible implications, given such

uncertainties? Private data is also being widely tracked by the government and other agencies. Today images, photos, videos and satellite tracking systems are quite ubiquitous. Facial recognition, fingerprint matches and biometrics are becoming cheaper and more accurate with every passing day, and these methods are being deployed extensively by commercial entities. The database of government agencies too is exponentially increasing, even as the size of such data balloons. An unfortunate truth also is that once one of the above agencies secure such data, the probability that another gets hold of the same data is quite high! Today, ‘data brokers’ are selling private data like marital status, income levels, phone number, email id, online purchases, etc for ridiculously low prices. And the Cambridge Analytica episode serves to conclusively prove the same!

Privacy laws & data regulation Another cause for concern is that privacy laws across nations have not kept pace with the speed at which technologies are emerging. Regulators have always been on the backfoot, playing a game of catch up. Events such as these spur the regulators into action and enact more stringent regulations. The Facebook Cambridge Analytica episode and the subsequent testimony of Marc Zuckerberg that followed has done precisely this, and have given the required impetus to the latest law on privacy, the General Data Protection Regulation (GDPR).

CORPORATE WORLD

Replacing the age old data protection directive of mid 1990s, this new regulation GDPR, which becomes enforceable effective May 2018, is a European Union law on data protection and privacy for all individuals within the European Union. The law is wide enough to cover personal data relating to private, professional or public life. It can range from a name, a home address and e-mail address, to financial and bank details, posts on social networking websites including photographs, medical information, etc. The new law addresses the export of personal data outside the EU. The GDPR is reported to be quite far reaching and severe when it comes to protecting consumers on their personal data. The regulation addresses organisations that collect or process data captured from EU residents. The regulation also applies to organisations based outside the EU if they collect or process personal data of individuals located inside the

EU. Effectively, the EU has shown the path, and other countries, including India, need to strengthen their privacy laws. Hopefully, it will be only a matter of time before other countries catch up!

The EU has drafted the new General Data Protection Regulation (GDPR), and other countries are expected to follow suit soon. Effect of the GDPR Under the GDPR, companies can be fined up to 4% of annual global revenue, and to that extent the penalties can be severe. Companies like Amazon, Google and Facebook are already preparing themselves to comply or mitigate their exposure to this

new privacy regulation. Facebook’s reaction to the new law is quite interesting. Although Facebook has been apologetic for its actions on data breach, including a personal apology from Zuckerberg carried in newspapers, the company has skilfully moved the location of more than one hundred and fifty crore users from its international headquarters in Ireland to its corporate office in the US. This helps Facebook minimise its exposure to the new EU privacy law as it takes effect from May 2018. In summary, regulations do help only to a certain extent. It is for companies to follow these in spirit, more than what is there in the print. A Dr Suresh Srinivasan is a Chartered Accountant, has an MBA (Bradford UK) and a Doctorate in Strategy. He is the Director of the 2-year PGDM at Great Lakes Institute of Management, as well as a Sr. Associate Professor. He is also a management consultant.

INDIA INC: AT A GLANCE M&A activity expected to look up by FY end Merger and acquisition (M&A) activity in the consumer and retail sector took a breather in 2017, with deals worth USD 392 billion announced in 2017, down 16 per cent from the year ago period, a report by EY has stated. However, domestic consolidation, market share expansion and entry into new markets are expected to keep the M&A activity in India positive this year. According to Ernst and Young, companies are embracing the ongoing digital evolution and adopting an inorganic route to growth amid supportive economy and easing credit availability.

TCS 1st Indian IT co to cross $100bn in market cap

Hiccup in Airtel’s Telenor takeover? Bharti Airtel’s acquisition of Telenor India may hit roadblocks, with the Norwegian company’s local unit considering filing for bankruptcy protection. The latter’s filing comes amidst mounting daily losses and complications arising from legalities and required regulatory approvals.

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India’s largest IT company TCS (Tata Consultancy Services) touched the iconic $100 billion mark, becoming the second Indian company to achieve the $100 billion in market capitalisation. The first to achieve this was the Mukesh Ambani led Reliance Industries in 2007; however, at the time of going to press, RIL’s market capitalisation had fallen to around $900 million.

Advanc’edge MBA May 2018 

OPINION

Datagate 2018: What the fuss? As users, we generate a huge amount of data, from reading emails to browsing the internet to online shopping. And all this data is out there. The question is: Who has this data, and what are they doing with it? Tushar Dharkar

Head, Marketing & Operations, IMS

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n FMCG company had developed a new energy drink. It had properties that none of its own brands or any of its competitors had had before. Just like any other marketer, the company decided to do a Market Research (MR) study to understand its consumers better. This MR would help the company to

travel along the holy grail of marketing: Segmenting – Targeting - Positioning (STP). On the basis of the STP, the company could design its communication and hit the right spot with its consumers.

Pretty regular stuff for a marketer, right? So,

they

commissioned

The US and China have had rocky trade relations in the recent past.

 Advanc’edge MBA May 2018

One way to conduct a market research is to call consumers for an interaction. Cambridge Analytica did something totally different. MR agency to undertake this activity. As for any MR, the larger the data sample, the better or accurate the results will be, in this case clearly identifying the consumer segments. The hitch was this: How should one conduct a nation-wide MR, and that too in the shortest of times? So, one of the smart guys at the MR agency suggested that they to take help of the internet. Instead of sourcing its consumers and then calling them for an interaction (qualitative and quantitative research), they decided to ditch this conventional process and

OPINION

Facebook CEO Mark Zuckerberg has testified at a congressional hearing with regard to allegations of data collection and abuse by Facebook, admitting that the company does keeps logs of users’ web browsing ‘temporarily’ to find out interests for ad targeting. He also said that data of non-users of Facebook is tracked as well. After the Facebook-Cambridge Analytica scandal came to light, Facebook has also changed its terms, and highlighted new data rules. Zuckerberg admitted that social media networks need to be regulated, adding that the data Facebook collects is used specifically for ad targeting. However, he declined to mention the data points that are collected. Interestingly, in response to a question on whether Zuckerberg would be willing to share his own personal details, such as the hotel he was staying at, the Facebook CEO said he wouldn’t. gather data through a ‘modern’ approach. They designed an app and encouraged the audience at large to download and use the app. They would make a consumer play games, interact with each other, allow them to share their ideas, voice their opinion, etc and reward them on achieving certain benchmarks. A very unconventional MR approach indeed! By remotely studying the various activities by of its users, the MR agency was able to finally form clear consumer segments. The segmentation was done based on the opinions voiced, thoughts & ideas shared, etc. A mental map was getting formed of the various segments, and that too on a nation-wide scale. After the completion of the survey, the company used the data, finished the STP process and launched the energy drink. And as predicted, the communication hit the bullseye and the product was an instant success. It achieved a status like no other. Very normal stuff for a

Partial blame lies with consumers, as they used the app without questioning why they had to share their information. successful marketer, right? The only problem was that the consumers who downloaded the app were not aware that they were a part of an MR activity, and that the objective of the app was actually something else. The users were not aware that they were being observed for their behaviour, and that data was being used to segment them.

Is it acceptable to conduct an MR like this? Did the company do anything unethical here? Well, had the user known the real objective of the MR, they might not have exhibited their

true behaviour. In fact, most of them might have opted out of the MR activity completely. Now try co-relating this scenario with the Cambridge Analytica (CA) Facebook (FB) episode. The jury is still out on whether this behaviour from CA and FB constitutes unethical behaviour, and to what extent these two companies need to be fined. However, a partial blame lies with the consumers too, those who downloaded the app and used it without ever questioning the information that was being gathered tacitly (the consumer had to agree to allow the app to access their behavioural information, albeit in the fine print). No one questioned till they found out! No one would have even questioned anything, until the lid on the whole affair was blown by a whistleblower.

So, what next? Is it the end of road for such apps? Will the consumers become smarter now and disconnect from all such apps that access their behavioural data with or without permission? My take is that this controversy will die down very soon. I am not sure what happens to organisations like CA, FB and the likes hereafter. But the fact remains that the lure of the apps is so strong that the consumers themselves kneel down, accept the intrusion knowingly or unknowingly, and cry themselves hoarse only when one of the many culprits gets caught. Till that moment, we simply continue and really don’t care who is, or rather who all, are watching us! A

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Mark Zuckerberg testified at a US Senate hearing

Advanc’edge MBA May 2018 

STUDY HOUR

Are you a Brainiac? In this section, we shall explore several different types of questions from the various areas of entrance exams like the CAT, CET, GMAT, etc, and how to best solve them.

Quant 1. In DABC, AB = 5 units, AC = 7 units and (A = 900. If AD is the angle bisector of (A and B-D-C, where D lies on BC then find the length of AD. 1]

units

A(DABC) =

Let AD = x

Now, A(DADB)

= × AB × AD × sin45o

×x

A(DADC) =

× AC × AD × sin45o =

×x

A(DABC) = A(DADC) + A(DADB)

units. Hence, [3].

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2. 60% of a class are boys and 25% of the boys are at least 5 feet tall. If 25% of the girls are less than 5 feet tall, what is the fraction of the students in the class who are at least 5 feet tall?

15% of the class (boys) are at least 5 feet tall and 30% of the class (girls) are at least 5 feet tall.

of the students are at least 5 feet tall. Hence, [1].

 Advanc’edge MBA May 2018

4] Cannot be determined

STUDY HOUR

A man’s property was distributed between his son, daughter and wife in the ratio 2 : 3 : 5. He had a plot of land, a house and Rs.1 lakh. The son got two-thirds of the land, the daughter got the house and the wife got the remaining land and Rs.1 lakh. What is the value of the land and house, respectively? 1] Rs.60000, Rs.90000 2] Rs.75000 each 3] Rs.75000, Rs.112500 4] Data insufficient

Let their shares be 2x, 3x and 5x.

of the land is 2x.

Then, the remaining part of the land i.e.,

of the land = x.

Hence, from the wife’s share, Rs.1 lakh = 4x.

x = Rs.25000.

The value of the land and the house = 3x each, i.e. Rs.75000 each. Hence, [2].

Verbal DIRECTIONS for questions 1 and 2: The following questions have a paragraph from which one sentence has been deleted, indicated by a blank. From the given options, choose the sentence that completes the paragraph in the most appropriate way.

(1) Therefore, Project Gutenberg is not in the business of establishing standards.

(2) Therefore Project Gutenberg is powered totally by volunteers.

(3) Therefore, we offer as many freedoms to our employees as possible, in choices of what books to do, what formats to do them in, or any other ideas they may have concerning “the creation and distribution of eBooks.”

(4) Because we are totally powered by investors we are hesitant to be very bossy about what our investors should do, or how to do it.

The last two sentences give us the clue as to which options can be discarded. According to the last two sentences, Project Gutenberg is powered by ideals and not money. Eliminate [4] immediately which talks about the power of investors. [3] can also be eliminated since we are not sure about the connection between “high ideals” and “not powered by financial or political power” with “as many freedoms to our employees as possible” stated in [3].Ideally we need a sentence in between to explain this connection logically. [1] can also be discarded since the connection between the last two sentences and “not establishing standards” as stated in [1] is also not logically clear. [1] implies that since Project Gutenberg is not investor driven and is an idealistic mission therefore it does not intend to have high standards. Therefore, eliminate [1]. If a project – such as Gutenberg – is idealistic and not driven by finance, then it is likely that it will be staffed almost entirely by unpaid volunteers. With such a mission statement Gutenberg will probably not have adequate resources to recruit paid employees on a large scale. Hence, [2].

Q2) Cuba and the US have formally restored diplomatic relations after an agreement struck last year putting aside decades of hostility came into force. Just after midnight on Monday, the diplomatic missions of

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Q1) The mission of Project Gutenberg is simple: To encourage the creation and distribution of eBooks. This mission is, as much as possible, to encourage all those who are interested in making eBooks and helping to give them away. In fact, Project Gutenberg approves about 99% of all requests from those who would like to make our eBooks and give them away, within their various local copyright limitations. Project Gutenberg is powered by ideas, ideals, and by idealism. Project Gutenberg is not powered by financial or political power.______________________.

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STUDY HOUR

each country became full embassies. US Secretary of State John Kerry is due to hold talks with his Cuban counterpart Bruno Rodriguez later in the day in Washington._________________. There were still “issues that we don’t see eye to eye on”, a US state department spokesman admitted.

(1) But Cuba says the restoration of diplomatic relations with its giant neighbour - which it calls an economic coup – will make it an economic vassal of the United States.

(2) But distrust for each other still remains due to the Bay of Pigs Cuban missile crisis which occurred in 1961.

(3) Despite the historic shift, both sides admit to lingering difficulties.

(4) The agreement is expected to be immensely beneficial to Cuba since the decades old US blockade was hugely damaging to its economy.

The final sentence of the paragraph indicates that despite the normalization of relations between Cuba and the US, there are still some hurdles that the two countries have to cross before they become friends and not just countries with diplomatic relations. Therefore, the blank sentence must contain the fact that not everything is rosy in their relations with each other. [3] states this and effectively forms a link to the last sentence of the paragraph. If [1] was true, Cuba would not have agreed to full diplomatic relations with the US. [2] does not link logically with the final sentence which is about “issues” (meaning current issues) the two countries do not agree on. Historical events are not current issues. [4] is entirely positive and does not bring out the obstacles still pending between the two countries. Hence, [3]. DIRECTIONS for question 3: The sentences given in the following question, when properly sequenced, form a coherent paragraph. Each sentence is labelled with a letter. Choose the most logical order of sentences, from among the given choices, to construct a coherent paragraph.

A) But the actions needed to avoid, reduce, capture, and store emissions would bring much wider benefits as well; in addition to reining in emissions, maximizing the land’s potential and protecting its vegetation is an efficient way to provide assistance to a large number of increasingly vulnerable people.

B) For starters, deforestation and agricultural emissions from soil, fertilizers, and livestock account for around one-quarter of the world’s greenhouse gases.

D) Better management of the land could not only reduce emissions, but also trap the equivalent of 7-10 billion tons of carbon dioxide per year by 2030.

The land beneath our feet holds huge, largely untapped potential for rapid gains in both the fight against climate change and efforts to achieve the sustainable development Goals, which the international community is expected to adopt later this year.

This amounts to roughly half the emissions we need to cut in the coming decades to meet the international goal of preventing a global rise in average surface temperature of more than 2º Celsius.

1) BCDEA 2) CBDEA 3) BDCAE 4) BADEC

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At first glance, B seems to be the opening sentence. BD are linking sentences since D mentions how the greenhouse emissions from soil, fertilizer and livestock can be reduced from “around a quarter of the world’s greenhouse gases” mentioned in B. Only [2] and [3] have a BD link with only [3] having B as the opening sentence. But in [3], C and A occur directly after D and neither DC or CA can be linking sentences as they make no sense when placed together. However, DE and EA make sense when placed together as E mentions the number in terms of reduced emissions first stated in D and A describes the wider benefits of such a cut in greenhouse emissions. This combination is present in [2]. Hence, [2].

 Advanc’edge MBA May 2018

WORD DOSE

STUDY HOUR

About polymaths Baldassare Castiglione’s guide stressed the kind of attitude that should accompany the many talents of a polymath, an attitude he called “sprezzatura”. A courtier should have a detached, cool, nonchalant attitude, and speak well, sing, recite poetry, have proper bearing, be athletic, know the humanities and classics, paint and draw and possess many other skills, always without showy or boastful behaviour, in short, with “sprezzatura”. The many talents of the polymath should appear to others to be performed without effort, in an unstrained way, almost without thought. In some ways, the gentlemanly requirements of Castiglione recall the Chinese sage, Confucius, who far earlier depicted the courtly behaviour, piety and obligations of service required of a gentleman. The easy facility in difficult tasks also resembles the effortlessness inculcated by Zen, such as in archery where no conscious attention, but pure spontaneity, produces better and more noble skill. For Castiglione, the attitude of apparent effortlessness should accompany great skill in many separate fields. In word or deed the courtier should “avoid affectation ... (and) ... practice ... a certain sprezzatura ... conceal all art and make whatever is done or said appear to be without effort and almost without any thought about it”.

1. 2. 3. 4. 5.

Stressed - (stress-d) (v) Polymath – (pol-ee-math) (n) Courtier – (kohr-tee-er) (n) Detached – (dih-tacht) (adj) Nonchalant – (non-shuh-lahnt) (adj) 6. Bearing – (bair-ing) (n)

7. Showy – (shoh-ee) (adj) 8. Unstrained – (uhn-streynd) (adj) 9. Gentlemanly – (jen-tl-muhn-lee) (adj) 10. Depicted – (dih-pikt-ed) (v) 11. Courtly - (kohrt-lee) (adj) 12. Piety – (pahy-i-tee) (n)

13. Obligations – (ob-li-gey-shuhn) (n) 14. Facility – (fuh-sil-i-tee) (n) 15. Spontaneity (spon-tuh-nee-itee) (n) 16. Affectation (af-ek-tey-shuhn) (n)

a. an act or course of action to which a person is morally or legally bound; a duty or commitment b. chivalrous, courteous, or honourable c. the quality of being religious or reverent d. (of a person or manner) feeling or appearing casually calm and relaxed; not displaying anxiety, interest, or enthusiasm e. the condition of performing as a result of a sudden impulse or inclination and without premeditation or external stimulus

f. give particular emphasis or importance to (a point, statement, or idea) made in speech or writing g. Portrayed in words, described h. aloof and objective i. behaviour, speech, or writing that is pretentious and designed to impress j. a person’s way of standing or moving k. a person who attends a royal court as a companion or adviser to the king or queen l. not forced or produced by effort

m. Absence of difficulty or effort, a natural ability to do or learn something well and easily n. having a striking appearance or style, typically by being excessively bright, colourful, or ostentatious o. a person of wide knowledge or learning in several fields of study p. very polite or refined, as befitting a royal court

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MAT CH T HE WO R D S W IT H T H E IR M EA NING S

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STUDY HOUR

A quiz to boost your General Knowledge 1. Which Indian sportsperson has won the 2018 Asian Billiards Championships, retaining his title of Indian, Asian and World Champion in billiards for 2017-18? a. Pankaj Advani b. Manan Chandra c. Geet Sethi d. Chitra Magimairaj

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2. Noted Telugu poet-composer, musicologist and artist Balantrapu Rajanikantha Rao recently passed away at the age of 98. He wrote and composed the first ever Telugu song (Mroyimpu Jayabheri) to be broadcast in Independent India after midnight on August 14, 1947, following the famous speech of Jawaharlal Nehru, India’s first Prime Minister. Which of the following states did Rao belong to? a. Maharashtra b. Kerala c. Andhra Pradesh d. Haryana 3. Krem Puri is a sandstone cave discovered back in 2016; the cave system contains fossils of dinosaurs dating back around 70 million years. Recently, Krem Puri was measured and ascertained to be the world’s longest sandstone cave, with a length of over 24 km. In which country is the cave located? a. Indonesia b. Phillipines c. Egypt d. India

 Advanc’edge MBA May 2018

4. The first official World Creativity and Innovation Day (WCID) was recently celebrated. Instituted by the United Nations, the WCID is to encourage people to use their inherent creativity to solve problems. Which of the following dates is the official WCID? a. April 20 b. April 21 c. April 22 d. April 23 5. Down Syndrome is a chromosomal condition associated with intellectual and learning disabilities. The 2018 National Conference on Down Syndrome was recently organised by the National Trust under this ministry in New Delhi, with a book entitled Twilights Children based on the lives of person suffering from Down Syndrome being released on the occasion. Which ministry? a. Ministry of Rural Development b. Ministry of Home Affairs c. Ministry of Health and Family Welfare d. Ministry of Social Justice and Empowerment 6. Which country is hosting the meeting of the Council of foreign ministers of the Shanghai Cooperation Organisation (SCO), into which Indian and Pakistan were recently admitted?

a. Russia b. China c. Japan d. South Korea

7. Who among the following was recently sworn in as the new president of Peru? a. Martin Vizcarra b. Fernando Zavala c. Marisol Espinoza d. Mercedes Araoz 8. Tim Bergling, better known as the DJ Avicii, one of the world’s most famous EDM composers, passed away recently in Oman. Which country did he belong to? a. Netherlands b. Sweden c. Britain d. Norway 9. The Indian Space Research Organisation (ISRO) has signed a technology transfer agreement with a public sector company for the production of space grade lithium ion cells. Apart from its use as a power source for satellites and launch vehicles, the Li-ion cell can also be put to other energy uses. Name the public sector company. a. DRDO b. SAIL c. BARC d. BHEL 10. Previously known as Narayanpur Dam, the Basava Sagar dam is constructed across the Krishna River in

STUDY HOUR

which of the following states? a. Maharashtra b. Karnataka c. Telangana d. Andhra Pradesh

11. According to data released by the Ministry of Social Justice and Empowerment, this state has the most number of beggars among all Indian states, with the total number of beggars crossing 81,000. (Interestingly, Lakshadweep, a union territory, has only 2 beggars.) Name the state. a. West Bengal b. Uttar Pradesh c. Andhra Pradesh d. Bihar 12. The 2018 Global Malaria Summit was held recently in London to make significant commitments to eradicating malaria, even as efforts for the same have stalled. The summit featured collective commitments worth over $4.1 billion dollars from governments, private sector, philanthropists and international organisations. Which of the following countries was absent from the summit since the country has not made a commitment at the summit? a. Rwanda b. Democratic Republic of Congo c. Nigeria d. India 13. Nabi Tajima, the world’s oldest person, passed away recently in Kikai, Japan. She reportedly has over 160 descendants, including greatgreat-great grandchildren, and had become the oldest person after the death of Jamaican Violet Brown at

the age of 117. How old was Tajima when she passed away? a. 115 b. 116 c. 117 d. 118

14. Which of the following districts became the first Indian district to have fully solar powered health centres, resulting in an expected reduction of electricity bills by 40%? a. North 24 Parganas b. Surat c. Wardha d. Warangal 15. Which of the following countries has officially changed its name to ‘Kingdom of eSwatini’, to mark 50 years of independence from British rule? a. Swaziland b. Tanzania c. Eritrea d. Niger 16. Earth Hour is observed every year on March 24, 2018, where peoples across the world are urged to turn off non-essential electric lights for one hour from 08:30 pm to 09:30 pm. At the 12th edition of the Earth Hour in 2018, what was the campaign launched by WWF India? a. Darkness Brings Light b. Give Back To Earth c. Save Electricity, Save Earth d. Give Up To Give Back 17. The Airports Authority of India has signed an agreement with this state government under its CSR initiative for sustainable development of human settlements in Kamrup. Under this initiative,

the AAI will provide funding to the tune of `4.58 crore. Name the state. a. Mizoram b. Assam c. Odisha d. Jharkhand

18. The global Football For Friendship (F4F) is a social programme supported by Gazprom and FIFA, and is aimed at developing youth football, as well as promoting tolerance, open-mindedness and respect for different cultures between children from across the globe. Surya Varikuti and Rudresh Gaudnour have been chosen as India’s representatives. In which country was the 2018 F4F held? a. Russia b. Spain c. Germany d. Brazil 19. Who among the following has become the first Bollywood filmmaker to be featured in the Madame Tussauds collection? a. Vishal Bhardwaj b. Rohit Shetty c. Sanjay Leela Bhansali d. Karan Johar 20. Which of the following states has been awarded the Most Film Friendly State award for 2017 at the 65th National Film Awards, for creating a well-structured website, film-friendly infrastructure, offering incentives, maintaining databases, undertaking marketing and promotional initiatives? a. Maharashtra b. Uttarakhand c. Madhya Pradesh d. Tamil Nadu

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Advanc’edge MBA May 2018 

STUDY HOUR

21. The Supreme Court recently appointed Justice Jawad Rahim as the acting chairperson of which of the following? a. Telecom Regulatory Authority of India (TRAI) b. Insolvency and Bankruptcy Board of India (IBBI) c. Central Administrative Tribunal (CAT) d. National Green Tribunal (NGT)

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 Advanc’edge MBA May 2018

GLOBESCAN

SUDOKU

1.a 2.c 3.d 4.b 5.d 6.b 7.a 8.b 9.d 10.b 11.a 12.d 13.c 14.b 15.a 16.d 17.b 18.a 19.d 20.c 21.d 22.b 23.c 24.a 25.d 26.b

For more similar puzzles, visit: www.sudoku.com

WORD DOSE

1.f 2.o 3.k 4.h 5.d 6.j

24. Who among the following was conferred the All India Management Association’s annual award in 2018 for their lifetime contribution to media? a. Indu Jain b. Shashi Tharoor c. Vikram Chandra d. Prannoy Roy

ANSWERS

7.n 8.l 9.b 10.g 11.p 12.c

23. Which of the following countries will be hosting the 2018 Global IT Challenge for Youth with Disabilities, which is expected to be attended by around 300 people, including a total of 120 youths with disabilities from 24 Asia-Pacific countries? a. South Korea b. China c. India d. Philippines

How to Play Fill in the grid so that every horizontal row, every vertical column and every 3x3 box contains the digits 1-9, without repeating the numbers in the same row, column or box. You can’t change the digits already given in the grid. Every puzzle has one solution. Hint: Don’t fill in numbers at random. While filling a particular square, write numbers 1-9 on a pad and start eliminating those numbers that already appear in the same row, column or 3x3 box.

13.a 14.m 15.e 16.i

22. In order to ease the cash crunch being faced in various parts of the country in the month of April 2018, this nationalised bank has allowed depositors to withdraw cash from its point of sale (PoS) devices. Name the bank. a. Punjab National Bank b. State Bank of India c. Saraswat Bank d. Bank of Baroda