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July 2013

Mumbai | Volume X | Issue 12

Testing times

ahead INSIDE Manage your distractions

by Dr David Rock, Neuroleadership expert

Exclusive interviews with DR DEZSÖ J. HORVÁTH Dean, Schulich School of Business www.advancedge.com

SUNJAY KAPUR MD, Sona Koyo Steering Systems Ltd

editor

If there’s one thing that all management gurus and top professionals in the world of business agree upon, it’s that the mantra to success is hard work.

from the

There’s no doubt that you’ve been putting your hard work in, because, after all, you will be taking some of the most competitive entrance exams in the country in a few months. We all know the three steps to taking such exams – build your fundamentals, develop your applications skills with what you’ve learnt, and hone your test taking skills. You will have covered those first two by now, and with just under three months left before the CMAT, followed by the CAT and all the other exams, it’s time to move on to step three: taking the simulated or mock tests.

Now all these tests basically follow the same pattern, which is to test your concepts and how you apply them, as well as your ability to think on your feet in quite a short period of time. And the only way to make sure you’re not unprepared, and that you don’t get thrown by some surprise that the test might spring on you, is to practise, practise, and practise a little bit more.

I’m sure that you’re not hearing this advice for the first time. Our teachers and parents would always tell us, whenever we would be faced with a subject like Mathematics for instance, that we should practise the problems and sums until they become second nature, and keep practising so that we don’t lose touch. That advice still holds true now, and will do so later in life as well. In fact, everything that you’ve been learning for the last few months, and what you will go on to study and learn during your MBA course, will be applicable in every sphere of your life, as clichéd as that may sound. So pay attention to everything you’re doing now, and you’ll be rewarded for it later.

Speaking of attention, it’s one of the hardest things to keep intact when you’re studying or taking mock tests. There are a thousand distractions around you today, and sometimes, we get tired of focusing and turn to distractions voluntarily. But now you have to learn to focus your full attention during the couple of hours of the tests.

This, too, requires practice.

Take the mock tests, analyse your results, and start identifying your strengths and weaknesses. Only a few months remain for the biggest exams of your life. Make good use of them.

Aditya Prakash Iengar Editor Editor-in-Chief

Head - Publications

Contributors

Kamlesh Sajnani

Anand Sutaria

Dr. David Rock, Dr. Suresh Srinivasan

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contents Cover Story

And now, the mock tests beckon!

05

Manage your distractions

by Dr David Rock, Neuroleadership expert

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July 2013 Corporate World

34 37

The depreciating rupee

Succession crisis at Infosys: Murthy’s back

MBA BUZZ Testing times: Put your best foot forward

08

Countdown Top 10 Countries for business

10

Young Entrepreneur

Corporate Interview

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SUNJAY KAPUR Vice Chairman and MD, Sona Koyo Steering Systems Ltd

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SACHIN GARG Founder, CEO, Grapevine India Publishers Pvt. Ltd

Student Interview RACHIT MITTAL IIM-I, student

Interesting news snippets

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Success Street

19

AKSHAT RATHEE MD, NODWIN group of companies

22

Economic indicators

News in brief

16

DR DEZSÖ J. HORVÁTH Dean, Schulich School of Business

Apollo’s Cooper deal: A brave step to take

40 43

Study Hour Must Reads Who Moved My Cheese

33

Surely You’re Joking, Mr Feynman!

Freakonomics

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Cover Story

And now, the mock tests beckon!

Now is the time when you will start taking simulated test series, to get yourself out of the “concept building” mode and into the “test-taking” mode. Your studying pattern will alter slightly, and you will have to know how to draw the most out of the tests and simulated tests, how to deal with stress, etc. Here are a few general things you need to know about the various tests, such as the CAT, CMAT, XAT, SNAP, NMAT, GMAT, etc, and what you can expect to face in the mock tests.

The Advanc’edge Team

T

he countdown has begun for the few months from October to December that will decide the future careers of lakhs of students. The tension is palpable, with some students delving deeper into their books and others finding that their enthusiasm has suddenly frozen into fear of the test and their performance at it. This is the time that you actually take the concepts that you’ve been studying these last few months, and apply them to tests. In other words, the phase of taking mock test series begins now.

Although some of you may know exactly what the CAT and other competitive exams like it, such as the CMAT, XAT, SNAP, NMAT, among others, entails, you will never get the feel of it until you actually sit down and stare at the questions on the screen, just waiting to be answered. So for all those who

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may or may not be fully aware, here are a few details about the tests that you will be taking.

What’s all the fuss about?

Many might ask: Why all the hullabaloo about these tests?

You only have to know basic

concepts. Well, that’s exactly the point.

Knowledge of basic facts is important, but mere knowledge of these facts learnt in a conventional “orderly” pattern can sometimes act as a hindrance while taking a test

Taking tests in groups can be highly beneficial

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Cover Story such as the CAT, CMAT or XAT. This is because the multiple choice questions attempt to probe that knowledge from an unusual angle. Take, for example, a simple mathematical problem: Q. 5 is 25 percent of _____ (a) 1/20 (b) 5/4 (c) 20 (d) 125 Now this is not a very complex problem (certainly not the sort you’ll find in the actual test!), but what keeps it from being absolutely simple for anyone who has finished his primary school is its unusual nature. We are not used to thinking about percentage problems in this way.

If it were presented in an honest, straightforward “What is 25 percent of 20?”

form, most of us would have no difficulty with it. Hence, a good objective type question is likely to have this unusual twist.

Let us take another example Q. Which of the following could be considered the opposite in conception to secular state? (a) theocratic (b) communistic (c) fascist (d) non-religious Now, you know that the opposite of ‘secular’ in this regard is ‘theocratic’ and that is the right choice.

However, if you are even slightly unsure of your answer, the two alternatives (b) and (c) can easily distract you. It is common knowledge that communist (b) states have no religion. Likewise, alternative (d) would suggest nearly the same idea as “secular”, except that the latter has the backing of usage in politics.

Thus, each of the alternatives, except (a), has an element of distraction built into it. In order to sail through one needs more than mere knowledge of facts.

Duration of the tests

Note how most of the tests have a similar test taking duration. Most range from 120 minutes (2 hours) to 180 minutes (3 hours). The important aspect from this analysis is that you should possess the ability to concentrate continuously for a minimum of 2 to 3 hours. Although most students can solve questions easily when there are no time limits, they find it quite difficult to correctly solve the same questions when they

have to concentrate on multiple areas and sections under time constraints. Your score can definitely improve just by getting used to taking tests under a time frame and for a continuous concentration of 2 to 3 hours.

You have to be disciplined and have the ability to concentrate for long durations.

Negative marks

Almost all multiple choice question tests (MCQs) penalise the students for incorrect answers. This characteristic is unique to MCQs only to help avoid outright guessing. In this case, the test is fair to those test takers who really know the answers versus those who will guess the answers and may get them right. Negative marks ensure that the student more often than not knows the real answers to the questions. This way, the test setter can check if the student is really answering the question or is gambling.

Accuracy

By creating the negative marks concept, the test is clearly harping on accuracy. Therefore, it is important that the student knows how to answer the question as a priority. Most Indian students are used to studying only those portions of the subject where they are good at. However, these tests are very clear on the fact that the student needs to be competent rather than casual.

Speed

Speed is a factor of the number of questions to be answered in the given time. If the number of questions in the test is more and the duration is short, it suggests that the test setter is seeking fundamental understanding.

It’s important to remain calm and unstressed

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Cover Story If the number of questions is less compared to the duration of the test, he is seeking to test not only the fundamentals but has gone a step further by checking applications of the fundamentals. The CAT of the 21st century as compared to the CAT of the nineties has changed from just checking fundamentals to querying the students on applications. In CAT 2012, the test takers had a total of 140 minutes to answer 60 questions, which means the test gave them 140 seconds (2 minutes 20 seconds) to solve each question. Earlier, the CAT used to have anything between 150 and 180 questions, and the duration was just 120 minutes, meaning that the candidate had just 40 seconds to answer a question. So now, although the time given per question is more, the test taking skills are more tilted in favour of applying your knowledge.

No fixed structure

Although you may know the test structures of all the important tests in the Indian MBA calendar, the tests do bring in factors to throw students off balance, such as changing the structure/ pattern of the test subtly. This is done especially since the areas and the subjects tested are same and cannot change. So the test setter alters other parameters, like the duration of the test, quantum of negative marks, breaking up areas into different sections or suddenly combining them into one, altering the weightage of subjects or areas or topics, and changing the level of difficulty of the questions themselves. Very often, the CAT comes up with ingenious ways to unsettle students who have pre-set notions and fixed

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expectations about the structure of the test. Therefore, the two prime requirements to crack the entrance tests are: • Knowledge of the fundamentals of each subject.

• A consciously cultivated ability to think on one’s feet.

Both are absolute requirements to become a successful manager.

Some points that will help

When dealing with a competitive exam like the CAT, it helps to be connected with your peers, especially those who are serious about cracking it. Some peers in your immediate circle may be

Knowledge of the fundamentals and a consciously cultivated ability to think on one’s feet are essential to be a successful manager nervous and don’t do the required amount of work. In fact, friends who are not better prepared will reinforce each other’s negative feelings about how difficult it will be to crack the test. So it’s better to spend time with someone who can enhance your preparedness, rather than with someone who creates tension and continuously complains about the lack of effort you and he or she is putting in.

The CAT does not demand sacrifices, but a balanced lifestyle that keeps your stress under control instead. It has been seen that students spend the last few weeks packing in

studies into the whole day’s schedule. Since the test is a timed test, there is already a pressure exerted on you.

You shouldn’t have to handle anymore. So keep your mind relaxed and uncluttered by spending time in activities that make you happy. This could be anything as simple as listening to music.

Nervousness and panic set in only because of what you feed into your mind. If you keep brooding over the prospect of failing at the test, you will definitely hamper your performance. This test is so competitive that a lot of your preparation can be done in the mind, by dealing in the right manner with your thoughts. It is also important to have back-up plans. Make sure you discuss your options with the concerned experts – if CAT then what, if not the CAT, then what?

You are led to distraction and procrastination only when you don’t have a specific goal in place. If your goal is set in your mind, you automatically find that you don’t waver from it. Again, it becomes important to set aside time for all your activities. For example, you may be spending time with friends, all the while thinking that you haven’t studied for the CAT that day. Therefore, you will end up worrying even more.

Keep these few things in mind, keep the concepts you have learnt in your head, and remember, it’s just about applying those concepts. So start taking the mock tests, and more importantly, analyse your score and performance so that you can improve them in the next. So finally, when you get to the actual exam, it’ll become just another test! A

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MBA BUZZ

Testing times: Put your best foot forward Since you’re going to begin taking tests now, you’ll certainly have a lot of questions. Here’s some sound advice from Vinayak Kudva, Head-Products, at IMS, which should give you the boost you need.

How many tests should I take in the last month?

Taking around five to eight tests in the last fifteen days of October is recommended. But more important than taking the test is its analysis. If you don’t learn from each test before proceeding to the next, there is no point in taking a large number of them.

Try out various strategies for each test, such as dividing your time across questions equally in each section, or spending more time on the more difficult questions by working quickly at the ones you find easier. It is also important to attempt a variety of tests, because you may score well in a test that is more suited to your strengths while the CAT may carry more questions of

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the kind you are uncomfortable with. An exposure to a range of problems and the rationale behind them will ensure that you are better prepared.

How much time should I spend on studying for the CAT every day?

Ideally, you shouldn’t spend more than four hours a day on studying for the CAT. The manner in which those four hours are utilised depends on the individual student’s strengths and weaknesses. Some may prefer to spend more time on the RC section, while others on LR. Ultimately, you must ensure that your progress in each section is equal. This holds greater relevance if you are aiming

only for the IIMs, because at these institutes, cut-offs matter.

Organise your day in such a way that the hours spent studying are those when your brain is most alert. Working professionals, for example, shouldn’t study at night after a hard day’s work.

Preparing for this test is not like preparing for school and college, where you need to spend long hours memorising.

Can I leave out topics that I find too tough?

Students usually find topics such as Modern Math tough, but you must remember that Modern Math questions in the CAT are not always difficult, nor are Arithmetic questions always easy. Your aim is to maximise your score in all sections, and you can do so by solving all the easy questions. The earlier CATs had a greater number of questions, so you could probably afford to leave out certain topics. But today, with 30 questions to a section and a further division into 1 and 2 mark questions, as well a negative marking, you cannot afford to leave out questions.

In fact, you can’t even assume that the one-mark questions will be easier than the two markers. If you leave out

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MBA BUZZ Modern Math entirely, you have narrowed your selection to only the easy questions in Arithmetic and Algebra. How do you maximise your score then?

Tough questions from any topic should be ignored in any case. For example, in a previously held SimCAT, a student left out a question based on playing cards because he felt it involved permutations and combinations.

When he looked at the problem later, it turned out to be a simple linear equations question. So read problems properly before leaving them; they might be “sitters”.

What exactly do we do when we analyse a test?

For attempted questions • Check whether your mistakes were silly, careless or conceptual errors.

• Check if there are better ways to solve questions • Did you comprehend the problem irrespective of the level of difficulty?

• If the concept is new, learn the concept and move on • If answered correctly, check the explanatory answers – was your solution the best possible approach to the problem? Should you really have attempted these when and if there were easier questions elsewhere in the section? Why were you attracted to that particular question?

For questions not attempted • Solve each of them • Identify which questions were potential score increasers • Why did you leave them?

• Did you even read these questions?

Now you have an idea of where you are faltering.

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Therefore pick one area you need to work upon and spend two to three days solving every possible question of the kind from the material given to you (section tests/ comprehensive tests), from the previous years’ papers, and refer to your Basic Reference Material. In the tests ahead, you’re assured that you will be able to solve any question relating to the topic you picked.

the “right” kind of questions. One of the main reasons people don’t do well is that they get stuck in problems and can’t move on.

If after beginning problem you assumed you’d be able solve, you find that your attempts aren’t leading you to the answer, let it go and move on to the next. You already have an idea of what you can attempt and there might be an easier question elsewhere.

Could you suggest a test taking strategy?

Does analysing a test with a group of friends help?

A suggested strategy is to take a test every four days. If you take a test on Day 1, get into the analysis mode for Days 2, 3 and 4. Make sure you get in touch with the basics of your weak areas in this period. Before beginning a test, ensure you have an overall target score and section target scores. While taking the test, you could mentally slot the questions into those that you can – • Understand and solve • Can solve but will take time • Can’t solve (whatever the reason may be) By dividing the questions in this manner, you will be able to prioritise and plan your time. Also, developing this habit in practice tests will hone your ability to pick

Taking a test with a group of friends is immensely beneficial, because people tend to complement each other’s strengths and weaknesses.

With, say four friends, you will have four different approaches to solving a problem. When you analyse a test by yourself, you will probably come up with time saving approaches for about five to six problems, because one person can come up with only a limited number of perspectives.

With a group however, you can be assured of multiple approaches to a problem. For example, some sums may not require you to use calculations; someone else might see that while it may not strike you. A

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Countdown

Top 10 countries Overall Rank: 4 Economic Integration: 2 Business Startup Cost: 12 Labour/Material Cost: 10 Transport Cost: 9 Less Tangible Costs: 6 Local Consumer Base: 13

NETH UNITED KINGDOM

FRANCE UNITED STATES

Overall Rank: 3 Economic Integration: 14 Business Startup Cost: 9 Labour/Material Cost: 1 Transport Cost: 3 Less Tangible Costs: 13 Local Consumer Base: 20

Overall Rank: 8 Economic Integration: 3 Business Startup Cost: 5 Labour/Material Cost: 13 Transport Cost: 10 Less Tangible Costs: 16 Local Consumer Base: 2

GERMANY

Overall Rank: 6 Economic Integration: 1 Business Startup Cost: 19 Labour/Material Cost: 17 Transport Cost: 1 Less Tangible Costs: 1 Local Consumer Base: 4

Highlighted countries not as per map and scale

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MANY

for business Economic Integration: 10 Business Startup Cost: 1

AUSTRIA

JAPAN Overall Rank: 1 Economic Integration: 13 Business Startup Cost: 2 Labour/Material Cost: 2 Transport Cost: 5 Less Tangible Costs: 2 Local Consumer Base: 1

HONG KONG

SINGAPORE Overall Rank: 9 (tied) Economic Integration: 7 Business Startup Cost: 11 Labour/Material Cost: 8 Transport Cost: 12 Less Tangible Costs: 15 Local Consumer Base: 11

Overall Rank: 9 (tied) Economic Integration: 17 Business Startup Cost: 4 Labour/Material Cost: 15 Transport Cost: 6 Less Tangible Costs: 7 Local Consumer Base: 18

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Economic Integration: 4 Business Startup Cost: 1

Less Tangible Costs: 9 Local Consumer Base: 7

Labour/Material Cost: 3 Transport Cost: 4 Less Tangible Costs: 5 Local Consumer Base: 8

Overall Rank: 7

Labour/Material Cost: 7 Transport Cost: 8

Overall Rank: 2 NETHERLANDS

Countdown

AUSTRALIA

Overall Rank: 5 Economic Integration: 12 Business Startup Cost: 8 Labour/Material Cost: 6 Transport Cost: 7 Less Tangible Costs: 14 Local Consumer Base: 3

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Corporate Interview

‘An MBA gives you a quicker learning curve’ This is what SUNJAY KAPUR, Vice Chairman and MD, Sona Koyo Steering Systems Ltd, feels. A thoroughly proeducation individual, Kapur has constantly been enrolling in different courses to keep learning. In an interview with Aditya Prakash Iengar, he talks about education, his businesses, and why it’s good to have work experience before doing your MBA.

Tell us a little about your early education.

I studied at the Doon School in India, then at the Williston Northampton School, Easthampton in MA, USA, before graduating with a BBA from the University of Buckingham, UK. After that I came back to India, I was quite eager to implement what I had learnt, which was corporate strategy and resource management.

What did you do after coming back to India?

My family is in the automotive component business. So I set up an HR department for our manufacturing business. At that time, manufacturing was primarily geared towards personnel management, and there was no real focus on HR, which was why I set out establishing a professional HR department.

I faced a lot of resistance from within the organisation. Back then, they weren’t really accustomed to that kind of a culture. Yes, there was a lot of quality management and other similar courses, but HR wasn’t something that got much focus.

I did a recruitment process and brought three

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MBA graduates into Sona Koyo. Unfortunately, they left within a year or so, because the truth was that we were really young kids, in our early twenties, up against people who’d been in the hardcore manufacturing business for ages and were quite set in their ways, and we didn’t really have the experience or the weight to push things!

How did you go about starting your own company?

You see, I have always had that entrepreneurial bug within me. So soon afterwards, I decided that I had to start something of my own. I researched the markets a lot, did my homework, and finally set up a BPO of sorts – you might call it an EPO. It was an engineering design and outsourcing business. That was when I first met Pramod Bhasin (former president and CEO of Genpact). I actually spoke to him about doing an MBA, and told him that before I did, though, I’d like to get some work experience. I also spoke to a bunch of different contacts I had in the consultancy world, and one of them happened to be Pramod Bhasin. At the time, he had just set up GE’s in-house BPO division, and Raman Roy

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Corporate Interview

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Corporate Interview who run businesses, or have run them and sold more, are the ones who come to lecture you in that programme.

We had all sorts of people coming and speaking to us – like Roxanne Quimby, the lady who co-founded Burt’s Sunjay Kapur was the global chairman of EO, a US-based organisation Bees, Tom First and Tom Scott, the guys who started had also just come in, and they were all doing the beverage company Nantucket Nectars, fantastic work.

George Nadaff who started Boston Market I was so motivated by these individuals that I (formerly known as Boston Chicken), et al. actually shelved my MBA plans and desires, and It was a great learning experience for me, not I set up the engineering outsourcing company. I only to be able to listen to these fantastic people, focused on that for a while, and it was growing, but also to be part of a class of 60 entrepreneurs but then it was handed over to professional from around the world. management and taken forward, as I was After my car rental experience, I went back required back in one of our family businesses in into Sona Koyo, and I’ve been running it since the automotive space. I got into running the ball 2008. I absolutely love the manufacturing joint business, and ran that for a few years; it was business now, which some might find surprising a strategic business that we got from Sona Koyo. because I’ve never spent a day studying I then again wanted to start something of my own, engineering before this! and I saw an opportunity in the car rental space.

So I again did my research, and set up a car What have you done since then? rental business.

I’m a thoroughly pro-education person. I’m continuously trying to learn and educate Tell us about the time you were at myself, and I believe that there’s no end to it.

Entrepreneurs’ Organization.

So I also did a programme at Harvard Business Sometime in 2003, I became the global School called the Owner/President Management chairman of the Entrepreneurs’ Organization, (OPM) programme, and it’s the only which was formerly known as Young programme that puts you in the alumni. So I’m Entrepreneurs’ Organization (YEO). It’s an actually a graduate of HBS and part of their organisation based in the US with more than alumni now. I would count this programme as 7,000 members around the world. It’s a memberone of the top five experiences of my life. It led, staff-run setup, so you see a lot of voluntary was absolutely outstanding, and the kind of leadership there. For me, it was more of an learning you get and the people who you get it exercise of getting into leadership. Effectively, from was phenomenal.

I was actually leading leaders, and that was a One of the best parts of the programme was unique experience for me. that the 100-plus case studies that we read were I was on the board of the EO for the usual not just from one sector, but from manufacturing, three year term, and it definitely affected my retail, food retail, cross global marketing, car rental business. This is something that I entrepreneurship, finance, etc. So there was a acknowledge honestly see as a failure of mine, lot that one could take back into one’s business, even though the business is still running today. and I have brought back a lot of what I had In between this stint at EO, I did a programme learnt in that programme and applied it to my at MIT in Entrepreneurship. It’s a three year business here. programme, and they do it for a week a year.

I love my business now, especially The difference between that programme and because of the times that we’re in, as they’re many other similar ones is that you get actual challenging, there’s something new that’s entrepreneurs as faculty, and we had many. It’s happening almost every day, and there’s always interesting to note that in the US, the typical an opportunity to manage things better, which is entrepreneur is the serial entrepreneur. So people very important for us.

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Corporate Interview Do you think work experience before MBA is needed?

There’s a lot of weightage given to experience, but the learning curve is far shorter when you have got a management degree.

I think doing an MBA when you’ve worked for a while is far superior to when you don’t have any work experience. In fact, the faculty at Harvard always used to tell us that in a regular MBA class, you might get three answers to a case study, but in a programme such as the OPM programme, you get six more! It’s primarily because you come with so much experience and have got something new to bring to the table. Moreover, if you have work experience, you can absorb much better a lot of the things that they teach you at a business school.

How helpful do you feel a management degree is in today’s world?

There are a lot of different ways of looking at it.

One of them is that it adds a lot of value, in terms of MBA graduates using the degree to get ahead.

I really feel that if you’ve had work experience and then gone and got your degree and then are able to implement what you’ve learnt, it’s phenomenal. Yes, there’s a lot of weightage to experience, but the learning curve is a lot shorter when you have got a management degree.

For instance, I meet a lot of people who are much older, and have been in an industry for

donkey’s years. They too know and are not new to the concepts that I or an MBA graduate would talk about, but they’ve learnt it over time and with years of experience. My learning has been a lot quicker because I’ve been able to absorb what I was taught during my management courses, and adapt that to the business environment.

Then of course, it also depends on the institute and the kind of interaction and feedback you get from the faculty and other students. Many years ago, Sail told its employees to go out and work in another region for a year and then come back, so that the company could then benefit from the new perspectives the employees would bring to the table after their interaction with other people and other cultures and other ways of thinking. So in an MBA course, that’s what you get, a lot of different perspectives.

What do you look for in potential employees when you recruit?

I look for character, and how the person thinks and holds himself. These are important things, sometimes more important than the institute he or she is studying in or the degree or grade that he or she gets. Then I also look at previous records; for instance, if someone has done well in school and college and throughout, and shows the same kind of commitment now, you know they will work with that level of dedication in your business.

In 2001, I wrote down on a note card three things I wanted to do. One was to become the global chairman of YEO, another was to be a part of Harvard, and the third was to play polo. I have achieved all of them. You see, it’s all a matter of focus.

If there’s something in front of my eyes, written down in plain, bold ink, I can really put my mind to it and achieve it. That’s the way I look at things.

An MBA with work experience is superior to an MBA without it, feels Anything is possible! A Sunjay Kapur

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Student Interview

‘My biggest obstacle was my job’ After getting his electrical engineering degree in 2009, RACHIT MITTAL worked at an engineering consulting company called Energy India Ltd. for three years. He scored 99.23 percentile in his CAT in 2011, and got calls from IIM-Indore, MDI, IIFT and NITIE. Currently, he is in his second year of his MBA studies at IIM-I. Here, he talks with Puja Shah about his CAT preparation, selection rounds and life at IIM-I.

What led you to pursue an MBA?

While I was working, I realised that I wanted to handle greater responsibility than the technical product handling I was doing. As a consultant, I had frequent contact with clients and vendors, so I had a good understanding of the functioning of the corporate sector, but I wanted more exposure and a good position, especially in the same energy sector.

This was my main reason to study for an MBA.

What was the biggest hurdle in your test preparation? How did you overcome that?

As it turned out, the biggest obstacle I faced was my job. While working, it is very difficult to make time for studying. You need to allot a certain amount of hours daily for the preparation. The key is to remain focused and to see how you compare with other candidates. One good way of doing this is to enrol for a test series. Daily practice is a must for at least four months, because you cannot score well in the CAT with last minute study.

Which section was the toughest for you?

When I cleared the CAT we had only two sections – Quant and Verbal Ability. For me, language was the tougher part. Also, you can always judge how well you’ve done in the quant section, but it’s very difficult

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to do so for the VA section. However, repeat practice in the VA section helps a lot, especially with the online material that test prep centres provide.

How do you think your work experience counted in the selection rounds?

I don’t really have an answer, since I don’t know how they judged me or exactly what their criteria to select me were. Generally, B-schools they divide their applicants into freshers and those with work experience. They have a certain percentage allotted to each, so that they get a mixed batch. There is a different set of job profiles for freshers and different for people with work experience. Having said that, I think that relevant work experience always helps.

How was your experience in the GD-PI rounds of B-schools?

I attended the GD for IIFT, MDI. For IIM-I there was no GD. It was certainly an experience I won’t forget!

What really helps in GDs is knowing when to talk and how to put your point across. This will come naturally if you know your topic well. For the interview, you have to be extremely honest. You cannot fake anything. If they suspect you of lying, they will simply keep grilling you on the topic mercilessly until you Turn to Pg 18

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Student Interview are honest. If you’re not sure about something and are just guessing, tell the interviewers that you are taking an educated guess. Again, for the interviews, you must be well read and be able to put your point across in an articulate manner, for which communication skills are very important. I prepared for the GD-PI by revising my electrical engineering fundamentals and reading newspapers and magazines, because having an opinion on current issues is a must.

Tell us about your reasons for choosing IIMIndore as your MBA destination?

Out of the colleges that I converted IIM-I had always been my top choice. One of the main reasons for my choosing the institute was that it is one of the older IIMs.

How has your experience been so far at IIM-I? What, according to you, are some of the benefits of studying there?

My time at IIM-I has been enriching. There is a lot to do on campus and all of us have a lot of fun together with many games, events, etc. On the other hand, there is a lot of studying and project work as well.

They provide you with hostel accommodation so that you are on campus for 24 hours, and they use every one of those 24 hours, believe you me!

Campus life is totally different from the corporate world or what we had seen during our engineering days. IIM-I is a progressive college and it is trying to differentiate itself by focusing on student needs.

We have programmes such as a rural development programme, where we are sent to a village in MP so that we know what the needs of rural India are and which policies are being implemented there. We also have a week-long Himalaya programme, where we are sent to any of the Himalayan hill stations for a team-building exercise and to introspect. We have an industrial visit too, where every student is allotted

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an industry and every week we visit that industry and do project work so that we know what is happening in that sector. All the subjects are taught with cases and not just theory.

As part of the campus life, what should one look forward to at IIM-I?

There is so much. We have a sports complex and a gymnasium. There is a squash court too. It is one of our best colleges, speaking from the point of view of infrastructure. It is spread over around 200 acres, and they’ve made use of all the space judiciously.

You’ll find everything you need, right inside the campus, and there really isn’t any need to go out at all!

What is a typical day like at IIM-I? Which extracurricular activities do you participate in?

We have around three to four classes a day, each of an hour and 15 minutes. In the first half, classes get over by 1 pm and the second half is from 2 to 6 pm. The rest of the day is spent in club activities or preparing for the next day. We often have volleyball matches with other schools, and we have an active cultural community where every festival is celebrated.

What are your plans after your MBA and how does studying at IIM-I help with these plans?

The plan is to put what I’ve studied into practice and add some value to the company I eventually join. I basically want to leverage my work experience and find a place where I can use the knowledge that I have. IIM-I has a huge alumni network that we can make use of. The institute has also given us the flexibility to choose our own subjects and when you’re studying a management course, it is up to you to figure out how much you can extract from it. A

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Success Street

Schulich relaunches the India MBA Called Canada’s global business school, the Schulich School of Business is rated one of the top B-schools in the world by a number of rankings, including Bloomberg Businessweek, Financial Times and Forbes. The school has relaunched its India MBA in a tie-up with the GMR Varalakshmi Foundation. In an interview with Puja Shah, Dean of Schulich School of Business, DR DEZSÖ J. HORVÁTH, shares his expectations for the Schulich India MBA.

Tell us about the Schulich India MBA and the GMR tie-up.

The Schulich School of Business has always been among the premier business schools in the world, providing global and innovative programmes to students from over 90 countries. Now we are re-launching our India MBA with a new campus in Hyderabad in a tie-up with the GMR foundation. It is an AICTE-accredited MBA, and will have around 45 students in the course, starting from September 2013. Students will spend the first year at the Hyderabad campus and the next at Toronto.

Schulich had a previous tie-up with S.P. Jain, but it did not give us the freedom to have our own campus.

Now, with GMR’s help, a great new campus is being established near the Hyderabad airport, and it will allow us to meet the country’s growing demand for world-class management training.

Schulich has had its presence in India for over two decades now. We have had exchange programmes with IIM-A, IIM-B and ISB, among others. We have also had a satellite centre in Mumbai since 2005 that recruits and provides placement support to students.

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Success Street What do you expect from the Schulich-GMR tie-up?

We want to give business education of top notch quality to Indian students. Of course, I’m not saying that India does not have good business schools. There are certainly a number of excellent institutes in India, but that number is not enough. Furthermore, there aren’t too many institutes that are truly global as compared with schools world over.

For instance, the United States churns out as many as 1,10,000 quality MBAs a year. China produces up to 50,000. However, in India, there are not more than around 5,000 MBAs of that quality every year, and the truth is that the demand is so much more.

Another factor is that Indian B-schools are generally more focused on the local market, and mostly provide managers locally, whereas we would like to focus on the global need. One thing we would like is to have more women in our programmes. In Toronto too, we have more men than women in our MBA programmes, and the same can be said of schools the world over. Indian parents, we have seen, mostly prefer their girls to be in the same country, so the Schulich India MBA provides is a very good opportunity for Indian women, who can get a truly global education and at the same time, find an opportunity in their own country. Of course, a n o t h e r important factor is that t h e tuition f e e f o r the

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Schulich India MBA will be lower than that for the MBA in Toronto.

What is the admission process to the Schulich India MBA programme?

The admission process to the India MBA is pretty much the same as that at any other global business school. Candidates are judged on their GMAT scores, essays and interviews. It is a standard procedure and the same is employed for the Schulich MBA in Toronto as well.

What is the student profile that you expect for the Schulich India MBA? We prefer students with a minimum work experience of three years. In Toronto, we require five years, but we decided to lower that figure for the India MBA, since we know that Indians like to finish their studies and then work. We’d like to have students from varied backgrounds.

Right now, 40 per cent of our students are from the sciences and engineering, but we have some from the arts, medicine and commerce fields as well.

What scholarships can students avail for the Schulich India MBA? The school has allocated a lot of money for scholarships. We offer bursaries to Indian and Asian students. We also have a student financial loan structure, but that is applicable only to students who are going to stay back in Canada.

As you know, Canada allows graduates to stay back and work in the country for up to three years, as well as allowing them to take up parttime work during their study years. Also, the return on investment for Schulich is very high, and most graduates make up their study and living costs in approximately 3.2 years. One reason for this is that Schulich MBA’s tuition fee has always been far lower than other top ranked B-schools.

The other reason is the benchmark that we set for our recruitments. So my advice to students — generally — is to

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Success Street concentrate on their studies and not work during their MBA, since you can easily make up the cost in a few years.

What difference might a student find between studying the Schulich MBA in Canada vis-Ă vis the Schulich India MBA? The only difference between the Schulich students in India and in Toronto is the cost of studying. As you know, the tuition fee and living expenses are high in Canada, especially when you compare it to Indian standards. So you might say that we have endeavoured to provide Indian students with a global programme, for which they pay in Indian rupees.

Once they get to Toronto, the students of the Schulich India MBA will interact with students from across the world who will have different cultures, languages and varied perspectives on business.

Their class will include people from different sectors and will be from different schools that have exchange programme tie-ups with Schulich. They will be a part of an alumni network that works in more than 90 countries in the world. We have faculty from 30 different countries, all of whom have expertise in all areas of business. They will be holding lectures in India as well. So, essentially they get the best of both worlds.

Do you think the MBA degree holds the same importance as it did around five or six years ago?

Obviously, the MBA degree does not have the same impact that it did many years ago. Earlier, you would graduate with an MBA from a good school and would land a high powered job and a senior management post with excellent salary. Now, graduates have to struggle to get management jobs even lower down the order. There is so much more competition in the fray, since countries such as the US and China produce so many thousands of good quality MBAs a year.

However, I can say with conviction that the MBA will always be in

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demand. New sectors like mining, healthcare and infrastructure have come up in the last couple of years. These sectors never needed management graduates before, but now they cannot function without them. Therefore, the nature of the demand might change, but the demand itself will not cease.

In fact, catering to this kind of change in sectors, we have started an MBA specialisation in Mining and one in Healthcare.

What do you think of the current and future employment scenario, both in Canada and across the world?

The scenario is not as bad as it was a couple of years ago. It is only southern Europe that still faces some problems. Northern European countries such as France, Germany, Switzerland, Netherlands and Sweden are all doing well. The US has started to recover, and as we can see, the dollar is strengthening every day. China and India have slowed down a bit, but it is only temporary and does not pose a big problem as of now. Mexico is coming up as well. In Canada, consultancies and financial services are doing well and the demand for MBA graduates in these sectors is quite high.

So the employment scenario across the globe is improving, except for certain pockets.

Placement records are a priority for students anywhere. Tell us about the placements at Shulich. Would they be same for the India programme?

Yes. In fact, as soon as the programme gets going, one of our senior executive directors will be in India to assess the fields of interest, aspirations, and inclination of students in the India campus. After they start their second year in Toronto, they will be trained with a series of corporate presentations, interviews, etc, specific to the sector of their interest, just like any other student on the Toronto campus. A

The Hyderabad campus will be along the lines of the Advanc’edge MBA July 2013 Schulich School of Business’s Toronto campus

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Success Street

‘Even the wildest idea can become a successful business’

Entrepreneur AKSHAT RATHEE is the MD of the NODWIN group of companies, board director of ten invested companies as well as a strategic advisor for numerous start-ups. He is also involved with the non-profit youth organisation AIESEC. Akshat got his MBA from ENPC Paris and graduated in computer engineering from MIT, Manipal. He also has extensive knowledge of mergers and acquisitions, business risk assessment, process designing and optimisation that he accumulated at companies like Ernst & Young, IBM Consulting and Columbia Tristar. In an interview with Puja Shah, he talks about start-ups and how NODWIN helps them get established.

According to you, what does the current business environment in India look like, in the context of start-ups?

Through initiatives such as the National Innovation Fund and the National Innovation Council, the Indian government is doing a good job of encouraging entrepreneurship in the country.

Moreover, there are a number of incubators and accelerators that are coming up in the country, and with their help, entrepreneurs have a good chance of seeing their business ideas become reality.

While the flow of funds here is still not as free as it is in some other countries, things are becoming just a little easier for start-ups to raise money through venture capitalists.

There is a point to be noted here. India has around 55 crore young people below the age of 25, and every year, almost two crore students start looking for job opportunities. A fair number of these individuals look to start their own ventures. S0, apart from the government’s support in creating a favourable environment at the regulatory level, and

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apart from the equally important step of ensuring adequate capital flows, the support from their families and the society is equally important.

Give us some examples of problem areas that first-time entrepreneurs generally need help with.

Most first-time entrepreneurs need help with their go-to-market strategies. We often find that they forget the most basic rule of starting a business — having a customer for their product or service!

After all, it is the customer who will be responsible at the end of the day in keeping your business running, isn’t it? So while entrepreneurs spend a lot of time and effort on the technology and teams, they actually forget to keep their customer in mind.

Another thing that we help entrepreneurs with is to make them understand and have a realistic valuation of their businesses. A business on paper is just that – one on paper. It is when the business takes off from the paper into the real world that having a realistic valuation is vital.

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Success Street According to you, what is the difference that is generally perceived between starting a business in India, compared to starting one in any developed country?

There is something called “Friends, Family and Fools” funding for startups. It is much more difficult to find the Friends, Fools and Family round of funding here in India than in other developed countries. Here, being in a job is still considered cooler, especially if the job is in a big and famous corporate.

Is there anything one must keep in mind if one wants to start a business and make it global?

Very few B2C (business-toconsumer) businesses translate worldwide. Most of the globally successful businesses would have to be B2B (business-to-business).

In either case, don’t forget local customisation. Without this, you cannot expect to garner any significant share of a global market.

What advice would you offer to MBA students who want to become entrepreneurs?

My advice is twofold. First, you should try not to be burdened with education loans by the time you finally graduate from college. If you do indeed have loans to be repaid, it will make you favour stable jobs, so that you can repay the loan, rather than take on a potentially risky venture.

Secondly, it is best if you start working on your idea as soon as you enter your college. If you do so, you will get an opportunity to work on your idea throughout the time you’re in college. Keep entering business plan competitions that are held at your college or elsewhere – they provide excellent exposure and some much needed seed money for when you are ready to

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actually set up shop. In fact, most top MBA colleges in the country today have incubation cells that support students and help them pursue their entrepreneurial dreams.

Honestly, even the wildest of ideas can be converted into a successful business reality. But it is vital for the youngsters to follow their passion, so that they don’t quit the venture and leave sometime in-between when the going gets tough. At the same time, there should be a deadline, so that up until that time comes, if you do not make revenue, you need to take a call on whether you will give up on your venture. Drawing that line is very important.

It is also important to believe in oneself and not give in to the pressure usually put on by parents. You must try to take up the challenge as soon as you complete your studies, especially once you have decided to become an entrepreneur. In fact, it is even better if you start just after you

complete your graduation.

Having said this, it is a well known and proven fact that a failed entrepreneur has a much better chance to get into the corporate sector (for a job), even after investing two years in his unsuccessful venture, when compared to a management graduate who is looking for a job immediately after completing his or her studies. And the reasons for this are quite obvious. Even though his venture may have failed, the entrepreneur will have a first hand experience of the business environment. He would know how to sell, what works and what doesn’t. He would understand the environment and what can lead to a successful business. These are skills that can only be obtained if you start your own venture. So failed or not, a corporate will usually prefer such a candidate.

Bottom line: Believe in yourself, don’t give in to pressure, start early and have a real world strategy in place. A

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Success Street

Manage your distractions

Easily distracted? Finding it difficult to concentrate on your studying, or problem solving? Well, apart from there being just too many distractions in the first place, there’s a reason why you find it hard to focus. Here’s why, and what you can do about it.

DR DAVID ROCK is the director of the NeuroLeadership Institute, a global initiative bringing neuroscientists and leadership experts together to build a new science for leadership development.

He co-edits the NeuroLeadership Journal and heads up an annual global summit, and is the author of the business bestseller Your Brain at Work, as well as several other books. He blogs for the Harvard Business Review, Fortune Magazine, PsychologyToday and the Huffington Post, and is quoted widely in the media about leadership, organisational effectiveness and the brain.

O

ne of the ideas in my book Your Brain at Work that’s been having the biggest impact is how to manage distractions. If you are paid to answer emails or deal with customers all day then this post might not be for you. But if you’re someone who often needs to get some thinking done, read on...

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An epidemic of overwhelm

People everywhere seem to be experiencing an epidemic of overwhelm at work. I believe it’s a function of two things. Firstly, it’s the amount of information we now process, which our brain may not be used to. I read somewhere that The New York Times on Sunday contains more information than the average 18th century French Nobleman learned in his lifetime

(now, if only I could remember where I read that...!)

Secondly, we have all these new technologies which are very good at distracting us, but which our human habits have not caught up to. The challenge is that we have not realised the true cost of distractions: they use up what is actually a limited supply of attention each day, and make us far less effective

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Success Street if we need to do deeper thinking work. For example, a University of London study found that being “always connected” impacts your IQ, equivalent to losing a night’s sleep or taking up marijuana!

Attention resource

is

a

limited

an average of 11 minutes on a project before being distracted.

Now, after an interruption, it takes them as much as 25 minutes to return to the original task, if they do at all!

People switch activities every three minutes, either making a call, speaking with someone in their cubicle, or working on a document. Of course, this is applicable to everyone, everywhere. And distractions are not just frustrating; they can be exhausting. By the time you get back to where you were, your ability to stay focused goes down even further, as you have even less glucose available now. Change focus 10 times an hour (one study showed people in offices did so as much as 20 times an hour), and your productive thinking time is only a fraction of what’s possible. Less energy equals less capacity to understand, decide, recall, memorise, and inhibit. The result could be mistakes on important

tasks. Or distractions can cause you to forget good ideas and lose valuable insights. Having a great idea and not being able to remember it can be frustrating, like an itch you can’t scratch, yet another distraction to manage.

Remove temptation

So how can we address this?

The answer is really quite simple. Once you understand how much energy is involved in high-level thinking like planning and creating, or problem solving, you might be more vigilant about allowing distractions to steal your attention. One of the most effective distraction-management techniques is to switch off all communication devices during any thinking work. Your brain prefers to focus on things right in front of you. It’s less effort. If you are trying to focus on a subtle mental thread, allowing yourself to be distracted is like stopping pain and enjoying a mild pleasure: it’s just too hard to resist! Blocking out external distractions altogether, especially if you get a lot of them, seems to be one of the best strategies for improving mental performance.

Unfortunately, there is no “trick” to this: you simply must practise, and learn to switch things off, or you won’t focus.

So part of the solution to managing distractions is quite easy in theory, it just takes some courage.

It’s also not really negotiable: there’s no way not to be distracted by distractions, it’s built into the brain in the way we There are literally thousands of things that can distract you from doing pay attention to novelty.

Every time you focus your attention, you use a measurable amount of glucose and other metabolic resources. Studies show that each task you do tends to make you less effective at the next task, and this is especially true for high-energy tasks like self control or decision making.

So distractions really take their toll, and they’re everywhere. So, with the always-on technologies of today, they take a heavy toll on productivity.

One study found that office distractions eat up an average of 2.1 hours a day. Another study, published in October 2005, found that employees spent

what you need.

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June 2013 July 2012 Advanc’edge MBA April 2013

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CAREER WATCH B-schoolStreet Vibe Success

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Success Street Awash with activity

Distractions are not just external though.

As adolescence hits and you become more conscious of an inner life, many people notice that their mind is harder to control. Strange thoughts pop into awareness at odd moments.

The mind likes to wander, like a young puppy sniffing around here and there. As frustrating as this tendency can be, it’s quite normal, and it tends to stay this way throughout your life.

One reason for your wandering attention is that the nervous system is constantly processing, reconfiguring, and reconnecting the trillions of connections in your brain each moment.

The technical term for this is “ambient neural activity”. If you were to look at the electrical activity even in a resting brain, it would look like planet earth from space with electrical storms lighting up different regions several times a second.

Trey Hedden and John Gabrieli, two neuroscientists from MIT, studied what happens in the brain when people are distracted by internal thoughts when doing difficult tasks.

They found that lapses in attention impair performance, independent of what the task is, and that these lapses in attention involve activating the medial prefrontal cortex.

The medial prefrontal cortex is located within the prefrontal cortex itself, around the middle of your forehead. It activates when you think about yourself and other people. This region of the brain is also part of what is called the “default” network.

This network becomes active when you are not doing much at all, such as being in between activities while in a scanner.

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Hedden and Gabrieli found that when you lose external focus, this default brain network activates and your attention goes to more internal signals, such as being more aware of something that may be bothering you.

Driving away distractions

from

With all this around you, you might wonder how you can ever stay focused at all! We have specific neural circuitry for this process, though it doesn’t work the way you might expect. A key part of maintaining good focus occurs based on how well you

Blocking out external distractions, especially if you get a lot of them, is one of the best strategies for improving mental performance. inhibit the wrong things from coming into focus.

A common test that neuroscientists use to study the act of focusing is the “stroop” test. Volunteers are given words printed in different colours, and told to read out the colour of the text, not the word itself. In the example below, the brain has a strong desire to answer “grey” for option c., as it’s easier for the brain to read a word than to identify a colour. a. Black b. Grey c. Grey d. Black To not read the word

“grey” requires inhibition of an automatic response.

Using scanning technologies, neuroscientists have observed people inhibiting their natural responses, and discovered the brain networks that are activated when this happens.

There is one specific region within the prefrontal cortex that keeps showing up as being central for all types of inhibition.

It’s called the right and left ventrolateral prefrontal cortex (VLPFC), and it sits just behind the right and left temple.

The VLPFC inhibits many types of responses. When you inhibit a motor response, a cognitive response or an emotional response, this region becomes active. It appears that the brain has many different “accelerators”, with different parts of the brain involved in language, emotions, movement, and memories. Yet there is only one central braking system used for all types of braking.

Your ability to use this braking system well, the VLPFC, seems to correlate closely to how well you can focus. It seems that to focus we need to learn to stop ourselves from going down the wrong path. One of the challenges with this process, though, is that this braking system isn’t really all that effective.

Putting on the breaks

If you were a car company and were building a new type of onroad vehicle, you would make sure the braking system was made out of the most robust materials possible, because brake failure is not a happy thing. Well, in the case of human brains, the opposite has happened. Our braking system is part of the most fragile,

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Success Street

temperamental and energyhungry region of the brain, the prefrontal cortex. Because of this, your braking system only works at its best every now and then. If cars were built like this, you’d never survive your first drive down to the store. All this makes sense when you consider it: stopping yourself from acting on an urge is something you can do sometimes, but is often not that easy. Not thinking about an annoying, intrusive thought at times can be very difficult. And staying focused, well, sometimes that appears downright impossible.

Timing is of the essence

So, inhibiting distractions is a core skill for staying focused. To inhibit distractions, you need to be aware of your internal mental process and catch the wrong impulses before they take hold. It turns out that, like the old saying goes, timing is everything. Once

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you take an action, an energetic loop commences that makes it harder to stop that action. Many activities have built-in rewards, in the form of increased arousal that holds your attention. Once you open your email programme and see the messages from people you know, it’s so much harder to stop yourself from reading them.

Most motor or mental acts also generate their own momentum.

Decide to get out of your chair

Manage what you focus on. Pay attention to your attention, and stop yourself from getting on the wrong train of thought early, before it takes over.

and the relevant brain regions, as well as dozens of muscles, are all activated. Blood starts pumping and energy moves around. To stop getting out of your chair once you start will take more focus and effort than to decide not to get up when you first have the urge. To avoid distractions, it’s helpful to get into the habit of stopping the wrong behaviours early, quickly, and often, well before they take over.

And here’s a big take away from all this. Manage what you focus on. Pay attention to your attention, and stop yourself from getting on the wrong train of thought early, before it takes over. This is the opposite of being mindless: it’s being mindful.

The best way to do that is to practise being aware of your own thoughts, by activating your observer function. How do you do that, when you have a tonne of information pouring through your head as you process a hundred emails in the morning? The answer is clear: you can’t. If you want to do deeper thinking work, don’t start your day overwhelming and exhausting your brain. Start with the tougher work that requires a more focused, quiet mind. Many people have this back to front. If your job is to think, tackle thinking tasks early, and tasks that are relatively “interesting” such as checking your emails (which means your brain will go there easily) later when you are tired.

So in summary, how do you beat back distractions? Turn everything off. And do your deeper thinking work in the morning while you still have the ability to control your attention.

Sounds easy enough. In practice it’s tough, but it works. A This article was originally posted in Psychology Today

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Young Entrepreneur

‘I always had my MBA to fall back on’ SACHIN GARG, founder and CEO of Grapevine India Publishers Pvt. Ltd, is a first generation entrepreneur and author of 3 bestselling books. Prior to starting his own venture, Sachin did his MBA from MDI Gurgaon, and previously worked in JSW (a part of Jindal Steel Group) as an assistant manager. In June 2011, Sachin started his own company, called Grapevine Publishers, which has touched a turnover of `6 crore within a year of its existence. In an interview with Puja Shah, he talks about his company, how he started it and the help he got from his alumni.

What made you start your own venture?

I was pretty young when I started out as an author. I was 21 when I published my first book. I reached a stage in life where I realised that my true calling lies with books. I used to go through the routine motions in my day job, but I wasn’t really enjoying the way my life was going. Luckily, when I decided to start my own company, I didn’t have any additional responsibilities, which meant that I was in a position where I could take risks. So without putting together any business plan and without looking at any numbers, I quit my job at Jindal Steel and came back to Delhi.

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What obstacles did you face while starting your venture?

I’m a first generation entrepreneur and I didn’t have much money to start with. Fortunately, my first job was in a village where the salary was decent, the cost of living was low and I had no other avenues to spend money on. So, in the one-and-a-half years I spent in the village, I managed to save up a decent about of money.

Actually, the real challenge I faced — far more than the funding — was that I had no mentors in the publishing industry. Since I was the first person to start a business in my family, I didn’t get much guidance from that avenue either. I had

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Young Entrepreneur to learn everything from scratch — from the business plan to language. I kept meeting people from the industry and tried to understand from them how the industry works. For the first four months, I just spent time on the roads in Delhi, Mumbai, and Bengaluru, learning the ropes of the publishing industry.

A few months after all this, we actually became operational and published our first book.

One of the main aspects of taking a company forward is having good advisors who know how entrepreneurship works and have been in the business.

Do you think an MBA degree is necessary before starting your own venture? How did your degree help you?

MBA helped me in a big way. I wouldn’t say that it helped me in starting my venture, but the ways in which the degree assisted me are far subtler. For instance, once the company became operational and

things started rolling, I faced the challenge of taking the company to the next level. One of the main aspects of taking a company forward is having a bunch of good advisors, people who have been in the business and know how entrepreneurship works. That was where the alumni network came in handy, and as of now, three of my closest advisors are MDI alumni.

Another way the MBA degree helped me is that it allowed me to be free and not panic. What I mean is that my quitting my job was a huge risk, and I had no idea whether my business would even take off. But somewhere at the back of my mind, I had the assurance that if my venture did indeed fail, I always had my MBA degree to fall back on. This internal reassurance made it easy for me to go ahead and do what I wanted to.

So, when you decided to do your MBA, did you know that you wanted to start your own venture?

Yes I did. An interesting thing happened when I was joining MDI. I was given a prejoining assignment from my seniors to put together a business plan. Coincidentally, the business plan I put up was for a publishing house, and I called it Grapevine India, which is, incidentally, the name of my company now. So yes, you might say that I did have this at the back of my mind somewhere, even though my plan at the time was quite different.

Tell me why you did an MBA? What made you decide to do one?

Books written by Sachin Garg

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I had actually studied engineering, but by the time I graduated, I had the strongest feeling in my mind that I could not see myself living and working as an engineer. Even during my studies, I would take part in management contests. All this showed me that I was more of a management guy than an engineer. When I was in my third year of engineering, I won a contest for the best business plan and I was coming up with business ideas almost once in every three or four months!

Advanc’edge MBA July 2013

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Young Entrepreneur Tell us a little about Grapevine.

I believe that the Indian publishing industry is actually on the brink of an explosion. There is huge potential for growth in the coming future.

At the moment, Grapevine is just two years old. We started out exploring the market, trying to find the gaps in the industry that we could fill, and today, I think I can say that we’ve done what we set out to achieve. Let me explain what I mean. A year after we became operational, I was going through the Top 250 Bestsellers book list compiled and released

by AC Nielsen. I was surprised to see that we were the highest represented publisher in that list! Out of 250 books, 13 were ones we had published, whereas other big publishers had 10 or 12 at the most.

We have tie-ups with several regional language publishers and some of our books have been translated into several languages. In 2012, we also became one of the few publishers to launch the e-book format of our complete catalogue. So, in an industry where it takes decades to form a brand for a publishing house and your return on investment is slow, we have accomplished the phenomenal task of being the most represented publisher on a respected bestseller list. We became profitable within the first eight or nine months, which is quick. On the other hand, operational and marketing costs have also gone up. However, we’ve still not needed any outside funding until now, and that is a fact that surprises most people.

Do you think the Indian publishing industry has good growth potential in the near future?

I believe that the industry is actually on the brink of an explosion. If you ask me, Indian publishing – especially the commercial segment – is only five years old. This branch has just come up, and people are now starting to read Indian authors. So yes, there is huge potential for growth in the Indian publishing industry in the coming future.

What are your future plans for Grapevine?

Until now, we have been focusing on fiction, but in the next three months we are going to launch three new imprints. There will be an imprint for non-fiction, which will include business and management books, one for self-help books and another for the young adult section.

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Recently, India has had many management graduates who have turned authors. What are your thoughts on this?

I don’t think it is by design. A lot of people like to read books, and many people who get into management have always been big readers. In my opinion, there exists a culture in India according to which every person should do an MBA. So people get into management fields, and after a few years, they realise it isn’t what they want to do and return to books.

What do you think of management education in general?

If you talk about just the higher education, then I would say it’s a little overrated. However, if you combine it with other aspects of management education – things like peer group learning, alumni network, learning to work in a team, learning communication skills, working in a team, etc, then doing an MBA would certainly be fruitful.

Given a choice again, would you still prefer to start your own company or would you take up a job?

I will always choose to start a company. Of this there is absolutely no doubt in my mind. I love what I’m doing right now. One of my friends recently asked what I would do if, as an author, I received a lot of money for my book. I replied, “Exactly what I’m doing right now, only maybe at a different level.”

What advice would you give to MBA students and young would-be entrepreneurs?

To MBA students, I would say that the degree is only what you make of it. You need to make friends and have a good rapport with your professors. Use this time to learn about business, teamwork and to soak up new skills. For students who want to be entrepreneurs, I would tell them to build and maintain a good network, talk to people and be persistent. It is a slow process, but I have never met an entrepreneur who’s stuck to his plans (even if takes a while) and not made it big. A

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Must Reads

W

ho Moved My Cheese has been a phenomenon since it was released.

Author: Spencer Johnson The story is about two mice, Scurry Publisher: Random House and Sniff, and two “littlepeople”, Hem and Price: `118 Haw. They have found a huge source of their Genre: Non-fiction, Business favourite food — cheese. Hem and Haw have moved their houses to be near it and it has becomes the centre of their lives. They are devastated when they arrive one morning and find the cheese gone. This is where the story splits in two. Scurry and Sniff quickly accept the loss of the cheese and go off. The littlepeople, because they have built their lives around the big cheese, cling to the loss and go hungry.

The book is reminiscent of times when we lose a job or a relationship and believe it’s the end of the world. Johnson’s message is, instead of seeing change as the end, we must learn to see it as a beginning, or else you will perish. What they discover is that breaking through your fears makes you free. The book is old, but its valuable lesson is easily remembered: Do you have a “cheese” in your life that you believe will last forever?

Who Moved My Cheese?

W

hile picturing a Nobel Prize-winning Surely You’re Joking, Mr theoretical physicist, one inevitably Feynman! imagines a bespectacled, unfocused, Author: Ralph Leighton absent-minded individual who lives more in the Publisher: Random House abstract world of science and theory than in the Price: `315 real, material world. And yet, this is exactly what Genre: Non-fiction, Humour, Richard P Feynman, the said theoretical physicist, Autobiography, Science was not. He was a genius, no doubt, with a prodigiously scientific bent of mind, something that became apparent when, as young boy, he figured out how radios work, and went around repairing them where he lived.

The book follows Feynman’s journey from New York to MIT in Massachusetts, Princeton to the Manhattan Project, from Brazil to Japan and back again. The narrative is filled with evidence of Feynman’s scathing wit and penchant for pranks.

From cracking safes containing top secret US military documents, just because he was bored, giving advice on best ways to pickup girls at a bar, to learning to play the drums for a ballet, the reader finds ample evidence on the esoteric, and yet grounded, practical character of the Nobel Prize winner. This is a book that can be enjoyed anytime, anywhere, and by anyone.

W

hich is more dangerous, a gun or a swimming pool? What do schoolteachers and sumo wrestlers have in common?

Why do drug dealers still live with their moms?

How much do parents really matter? How did the legalization of abortion affect the rate of violent crime?

These are just some of the questions that, in an unusual pairing, University of Chicago economist Steven Levitt and New York Times journalist Stephen J Dubner try to answer in the enormously successful Freakonomics, a book that melds pop culture with economics. Levitt is something of an economist, but more of a social scientist using the tools of Microeconomics applied to other fields that happen to catch his interest (often having something to do with cheating, corruption, crime, etc.) Even though this may sound dull, it is quite the opposite, as the authors use straightforward analysis to turn conventional wisdom on its head. Freakonomics is not an in depth analysis of the issues presented, so you needn’t expect to see any technical economics in there, but the book will certainly give you plenty to talk about, as well as a fun read.

Freakonomics Author: Steven Levitt and Stephen J Dubner Publisher: Penguin Price: `198 Genre: Non-fiction

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Advanc’edge MBA July 2013

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Corporate World

The ground reality is that the value of the rupee is falling dramatically – it has touched almost `60 to the dollar. This will make the already weak Indian economy even weaker, given the current trade deficit. And although several initiatives have been introduced by the Indian government to arrest the fall of the rupee, none of them seem likely to yield any short term result.

Dr Suresh Srinivasan

T

he Indian rupee, which has depreciated by around 10 per cent during the last two months, is now valued at close to `60 to a US dollar. A weak rupee plays havoc, especially in terms of making imports into the country more expensive; this is a major concern for us, as India has significant crude oil imports, which is the lifeline for the growth of the Indian economy.

The depreciating rupee is partially a cause and, at the same time, a result of the current weak economic scenario prevailing in

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the country. Over the last month, the Indian economic scenario has sharply weakened; Sensex, the barometer of the country’s corporate performance, dropped by close to 8 per cent from 20,223 points to 18,719 points.

Imports increased sharply by close to 7 per cent, while exports decreased by around 2 per cent, widening the trade deficit.

Industrial production has more or less remained unchanged.

Retail inflation continued to remain high, and hence, the Reserve Bank of India (RBI) has been unable to cut interest rates

further. Had that if happened, it could at least have spurred economic growth!

Why is the depreciating?

rupee

The primary reason for the depreciating rupee is the widening of India’s trade deficit, which has now reached a seven month high. Primarily, exports have not grown in line with the imports – it has suffered due to the poor economic conditions prevailing across the globe. Imports have surged primarily due to import of

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Corporate World

The primary reason for the depreciating of the rupee is the widening of India’s trade deficit, which has now reached a seven month high.

crude oil, commodities and the The stimulus programme uncontrollable imports in gold of the US Federal Reserve and silver! has been going on for the last In spite of various regulatory five years, and was originally restrictions imposed on gold intended to uplift the sagging imports, the government has US economy by injecting been unable to control the government funds in order to import of the yellow metal. The improve liquidity in the system, current account deficit continues which will in turn aid economic to be high and is expected to recovery in the US. A significant remain above 4 per cent of the part of this enhanced liquidity country’s GDP, a fact that is was, in fact, flowing into extremely worrying! emerging markets as Foreign It is a known fact that more Institutional Investments (FII), than 70 per cent of India’s crude including India, for securing a oil requirements are currently The US factor higher return on investment. being met through imports. Another major cause for the With the Federal Reserve’s However, the truth is that this rupee to depreciate stems announcement that such could have been controlled from the improvement in liquidity will soon cease, the had India proactively planned United States (US) economic investors have started pulling a sustainable reduction in conditions and the resultant out FII investments out of India, import of crude oil, by allowing policy announcement from the as well as from other emerging more private firms to explore United States Federal Reserve markets, thereby exerting and produce oil within India. Chairman intending to withdraw pressure on the value of the Although the New Exploration the stimulus packages and Rupee against the US Dollar. and Production Policy initiated the bond buying programme. With the rupee weakened by the government during the This is expected to commence by around 10 per cent, other late nineties was intended during late 2013 and end by emerging market currencies to achieve this objective, the early 2014. like the South African Rand and policy was poorly Brazil’s Real have implemented; even also weakened after ten years of its more than 10 per implementation, there cent. Far East has been no major currencies have change in India’s also significantly self sufficiency in weakened. terms of crude oil But why are and gas. Facilitating FII investors more private sector pulling funds companies to invest, out of India and and thereby expedite other emerging exploration and markets? production of oil Funds invested from Indian fields, in bonds in the US is a very important and in emerging solution for reducing markets were the trade deficit, but primarily placed unfortunately, this will as a “safe haven”, take a significantly yielding higher long time even if growth, when, in the government spite of higher gets its act together With the US economy showing signs of recovery risks, the US investments in emerging markets like India will fall right away! economy was

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Advanc’edge MBA July 2013

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Corporate World

Government is looking to open up the limits in FDI to bolster the sagging Indian economy

underperforming. However, with the US economy having started to show strong signs of recovery, investors have started moving funds placed in bonds in the US and emerging markets towards equity in the US markets. This is also reflected in the improvement in the US stock markets, where more funds have now started to flow in.

Further, with the US economy showing signs of recovery, international prices of crude oil is set to go up, which will further exert pressure on India’s trade deficit. This will, in turn, eventually put increased pressure on the Indian rupee.

So, to sum up, we can say that the developments in the global environment is a major cause for the depreciating rupee, for which the Indian government may not have any effective short term solution!

All that the government can do is to improve exports, reduce imports, especially oil and gold, which again is likely to yield results only in the long run. Are there any other short term measures that can be implemented to hold back the rupee from depreciating further?

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Advanc’edge MBA July 2013

Steps taken by government: Are adequate?

the they

The finance ministry of India has mentioned that it is taking steps to increase foreign investment flows into the country to strengthen the rupee. The government has also committed to easing Foreign Direct Investment (FDI) limits in order to attract more funds into India.

The government’s announcement of its intention to free up FDI on a fast track is a positive move, but the ground realities seem to be vastly different. The recent opening up in FDI limits in the aviation sector was well received by the

Foreign investors have started pulling out investments out of India, thereby exerting pressure on the value of the Rupee against the US Dollar.

foreign investing community.

Foreign airlines like Etihad Airways of the United Arab Emirates (UAE) and Air Asia of Malaysia immediately showed keen interest in the proposal and committed to invest into Jet Airways and a new airline in partnership with the Tata Group respectively. However, these investment proposals have still not been approved by the Indian government, and are currently pending with the Foreign Investment Promotion Board (FIPB) for various reasons. At this pace, it seems extremely unlikely that opening up FDI can provide any immediate relief in terms of higher foreign currency inflows that will go to arrest the depreciation in rupee value!

Such solutions and initiatives taken by the Government of India to arrest the fall in the value of the rupee are, therefore, likely to yield results, if at all, only in the long term. As things stand today, there does not seem to be any short cut solution — a “quick fix”, if you will — for this problem.

Although it is extremely difficult to predict the future and say where the value of the rupee will end up, the harsh reality is that there are still further possibilities for the value of the rupee to depreciate even further!

More specifically, with the US economy continuing to become stronger, global funds will most certainly find their way into the US equity stocks, thereby depriving fund flows into emerging markets like India. Furthermore, with the weak economic fundamentals in India, there does not seem to be a quick solution to improving either the current account deficit or the fiscal deficit. All of these strongly point towards a trend of further weakening of the Indian rupee! A

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Corporate World

Succession crisis at Infosys: Murthy’s back We all know Infosys is in a spot of bother, which is why former CEO Narayana Murthy is back at the helm of the company. But why was he needed back in the first place, and what exactly does he have to do to get the company back on its feet?

Dr Suresh Srinivasan

R

ecently, the board of Infosys has recalled N.R. Narayana Murthy as its executive chairman, the man who had earlier served as its CEO from 1981 to 2002 and as its chairman from 2002 to 2011. The response to this has been mixed. However, one thing is certain — this is a clear manifestation of a leadership crisis at Infosys.

There definitely may be a rationale for Murthy’s induction back into the company and at the helm, but does it set a good precedence? In fact, the move throws up a number of questions. How are the shareholders of Infosys viewing this development? How are the employees and senior managers of Infosys likely to react with respect to Murthy’s “homecoming”? What does the annals of history have to say with respect to experience from other global companies that have recalled their CEO’s?

Deteriorating performance The

information

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technology

(IT) sector in the country has done quite well over the last few months, with IT stocks increasing by about 7 per cent at time when the market, as a whole, fell by around 3 per cent. In this backdrop, where other IT firms have done well, Infosys has been consistently underperforming with respect to its peers.

The performance of Infosys, under the leadership of S.D. Shibulal (managing director and CEO) and K.V. Kamath (executive chairman), has been steadily deteriorating over

Infosys’s operating margins have been deteriorating steadily, from just over 30 per cent in September 2011 to just 23.5 per cent by March 2013.

the last two years, with share prices dropping from a high of `3,452 in Jan 2011 to `2,274 in August 2011 to `2,200 in early June 2013. Share price is the reflection of a company’s worth, and such a steep drop manifests the perception of the investors on the declining value of the company. It must be noted that in contrast, the share price of Tata Consultancy Services (TCS) increased from `1,100 to `1,300 and further to `1,500 during the same period.

Infosys’s operating margins have also been deteriorating steadily. In September 2011, margins reached a peak of just over 30 per cent, which is considered very healthy. But since then, margins have dropped to 23.5 per cent by March 2013. With TCS maintaining healthy operating margins of around 27 per cent, this has been a major concern for the shareholders of Infosys.

Apart from profit margins, Infosys has also failed to maintain growth in its top line revenue as compared to industry peers, with competitors like TCS and Cognizant having

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Corporate World

Narayana Murthy (Left) is back at the helm after the Infosys 3.0 Strategy formulated by S.D. Shibulal (Right) let to deteriorating performance of the company

substantially overtaken Infosys as a prominent player in the IT industry.

Over the last two years, the Infosys management has repeatedly failed to meet the revenue growth guidance it had provided earlier. The company missed the 2012-13 guidance of 5 per cent revenue growth.

For 2013-14, it has provided a guidance of around 7 per cent, while industry bodies have indicated that IT companies’ “top line” could grow at around 14 per cent. These sort of conflicting perceptions create doubts in the minds of the investors on the capabilities of the company’s senior management, especially their ability to assess the market and build appropriate capabilities within the organisation.

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Advanc’edge MBA July 2013

There have also been widespread grievances from the investors with regard to the low levels of dividends being announced by the company, in spite of profits and large cash reserves on the balance sheet.

While most of the IT companies pay out 75 per cent to 90 per cent of the net profits as dividends, Infosys has paid only 30 per cent as dividends, which has disappointed the shareholders.

Return of N.R. Narayana Murthy

After returning back at the helm, Murthy has taken stock of the issues and has announced that a number of painful decisions need to be taken and that it will take at least three years for him to get the house back in order.

He has attributed Infosys’s

recent inferior performance to the management’s loss of focus and moving away from the core business that it has built over the years.

Basically, after Murthy’s exit, the management focused on what they called the “Infosys 3.0 Strategy”, which moved away from the traditional Infosys model that comprised its core business of application development and maintenance, testing, business process outsourcing (BPO) and infrastructure management.

The new “3.0 strategy” focused on emerging areas like “endto-end” solutions, consulting, software products and platforms, all of them a brain child of the CEO Shibulal.

The basic reason attributed to abandoning the core business, and focusing on new areas aggressively, was to reorient the company in order to gain presence and a strong footing in cutting edge emerging businesses ahead of the competition.

But unfortunately, according to Murthy, Infosys’s loss of focus on its “bread-and-butter” business, resulted in its inability to win highly competitive, high margin outsourcing projects that related to the company’s core business. Of course, it is fair and reasonable to expect that Infosys eventually needs to move into cutting edge businesses like end-toend solutions, c o n s u l t i n g and software products, but the strategy of trying to gain presence overnight, and effectively

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Corporate World abandoning its core business in the process, has been the biggest blunder that the company under the leadership of Shibulal has committed.

Murthy will now strive to unwind the scenario slowly to bring back focus on the core business, which, understandably, will take its own time. In order to achieve this, Murthy has started inviting senior managers who left Infosys to come back, in order to build a solid team that will help him get back to the basics.

Globally, the trend of bringing back earlier CEOs is not new and has been in vogue. The success of these initiatives has been mixed. While the return of the legendary Howard Shultz to Starbucks Coffee in the US and the return of A.G. Lafley to Procter & Gamble (P&G) seems to have paid off, the return of Michael Dell to Dell Inc., failed.

Everything said and done, the very fact that the former CEOs are brought back into the fold is a clear manifestation of a failure in succession planning.

One of the key functions of the leadership of an organization is not only to lead the company into uncharted areas successfully ahead of the competition, but also to ensure this success is sustainable by having a clear succession plan, so that the leader himself is dispensable! This is where companies like Infosys seem to have failed.

It has to be admitted that after Murthy’s exit in 2011, there was certainly a void — a charismatic leader who could bring all the stakeholders together. to grow beyond its promoters?

Although Infosys was always considered to be a great place for professionals to work at, were the leadership positions exclusively reserved for promoters and their relatives?

And was this the cause behind many professionals leaving the company?

It has to be admitted that after Murthy’s exit in 2011, there most certainly was a void — a charismatic leader who could bring all the stakeholders together was missing. Murthy was able to carry all the stakeholders along in a way his successors have not been able to. It clearly seems that both Murthy and Nandan Nilekani

failed to create an effective succession plan before they left the company.

Murthy’s return actually complicates leadership succession planning further, especially given the appointment of his son Rohan Murthy as his executive assistant.

Even though Murthy Jr will be in a non-executive role, this could give a wrong signal of reemergence of family culture to the professionals who had earlier left Infosys.

So, given the number of challenges faced, only time will tell whether Murthy’s return will position Infosys back as a professional company meeting the expectations of the shareholders and staff! A

The future ahead

The question that naturally comes to the mind now is that by the time Murthy left Infosys in 2011, did he not have a clear succession team lined up that would have taken Infosys to the next level? Has Infosys failed

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The return to the helm of Howard Schultz (above left) of Starbucks Coffee and A.J. Lafley (above right) to P&G paid off well, while that of Michael Dell (top right) to Dell Inc didn’t.

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Corporate World

Apollo’s Cooper deal: A brave step to take

The announcement of the $2.5 billion acquisition of Cooper Tire by Apollo Tyres led to its shares dropping sharply. However, the deal will propel Apollo into the big league of global tyre makers, increase its revenue almost threefold, and make a headway into global markets as yet unreached.

This is a particularly courageous and laudable move by the Apollo management, who clearly have a long term vision.

Dr Suresh Srinivasan

A

pollo Tyres has agreed to acquire Cooper Tire of United States (US) for $2.5 billion, equivalent to `14,500 crore in cash. This is considered to be the largest ever acquisition in the Indian automobile industry, beating even Tata Motors’ acquisition of Jaguar Land Rover (JLR), which was completed at $2 billion. Apollo Tyres has agreed to pay Cooper shareholders $35 per share,

which is a 40 per cent premium on its closing price, meaning that Apollo will be paying a very high premium to acquire Cooper Tire.

The share price of Apollo Tyres dropped close to 40 per cent in seven trading days between June 13 and 21 2013 once this deal was announced.

The drop in share price is a result of unsatisfied shareholders who are selling away Apollo shares, as they are not convinced that such a mammoth deal would

Established 1976

benefit the company, especially at a juncture when the markets are struggling to grow out of the recession.

Is this a wrong acquisition?

Has the management of Apollo erred? Or are the shareholders taking a very “short term” view, while the management under the leadership of Apollo chairman Onkar Kanwar has taken a “long term” view that is beneficial to the company in gaining competitive advantage?

Established 1914

l Cost of the acquisition: US$2.5 billion l Cooper shareholders to get US$35 per share, which is a 40% premium on the closing price l Before deal, Apollo 15th largest tyre maker in the world. After deal, it will be 7th. l Revenue will increase from `14,000 crore to `38,000 crore, an increase of approximately 170%

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Corporate World Positives of the deal

Apollo Tyres is currently the fifteenth largest tyre maker in the world, and this deal will position Apollo to become the seventh largest player globally.

Primarily, this acquisition has given Apollo the ability to scale and increase in size. Apollo’s revenue will go up from `14,000 crore to `38,000 crore, a factor of almost 2.7 times. Its capacity will increase from 1,500 tonnes per day to 3,500 tonnes per day, and the number of employees will increase from 16,000 to 30,000. The company will also gain access to very important markets like China, Africa and South America, where it currently has a low presence.

Cooper has eight factories in countries such as China, Serbia, the US, Mexico and the UK. The biggest achievement for Apollo in this deal is the scale it has managed to achieve!

Why is growing larger or increase in size so important to organisations?

With the tyre industry steadily maturing, more players are moving towards consolidation, which means growing bigger will give companies the capability to reduce costs and become more competitive in the market.

By growing larger in size, the ability of the companies to spread their fixed costs across a larger quantity of output gives them the “cost competitiveness” they need. That is why, in most of the industries where the competitive rivalry is very high (like steel, airlines), acquisition and consolidation is a strategy to gain competitive advantage.

For Apollo, due to the sheer size gain, management expects around `800 crore of savings to come through, year over year, from better negotiating

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Apollo Tyres chairman Onkar Kanwar

capability in procuring raw materials, manufacturing efficiencies and elimination of duplications, enhanced product technologies, cross utilizations and superior product development across the combined entities.

Furthermore, Apollo will gain substantial access to the US market, where Cooper is the second largest tyre maker, serving the profitable “replacement” truck tyre business, which is considered to be “high margin”. Also, the

By growing larger in size, companies can spread their fixed costs across a larger quantity of output, which gives them the “cost competitiveness”.

revenue “mix” will change — the Indian business which currently contributes 65 per cent of Apollo’s consolidated revenue will be reduced to 22 per cent, thereby spreading the risk across global geographies.

The future potential for tyres and access to global markets needs to be mentioned here.

Consumption of rubber in India is around 12 lakh tonnes per annum, and the US records a similar volume as well, while China records around 40 lakh tonnes. Any deal that will strengthen Apollo’s presence in these bigger markets is likely to be a “win-win” situation for them. This is exactly where Apollo’s deal to acquire Cooper stands apart!

With respect to the scale and size in the global tyre business, the top two players in the world, Michelin and Bridgestone, have revenues in the range of `1,70,000 crore each. Both have manufacturing plants around the world and cater to various global markets.

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Corporate World Their size and scale are the primary drivers for achieving the lowest cost of production, marketing and support. So, if Apollo Tyres needed to move into such a league of large global tyre companies, it had to grow in size, and a timely large acquisition was the only solution; which Apollo Tyre has now achieved successfully.

Long term vision

The vision of the Apollo management certainly needs to be commended. Taking a huge risk by investing in a company that is almost double its size, at a juncture when the market outlook is weak, shows the courage and strategic aggression of the management.

If we compare this deal with the other miniscule deals made

by Apollo’s competitors like JK Tyre in the recent past, it goes to demonstrate the long term vision of Apollo clearly!

More importantly, the timing of this deal has been perfect — the US economic situation has

just started improving and the stock markets are still at the bottom. Apollo’s acquisition of Cooper hence has been at the lowest price.

Although Apollo has been criticised for paying a much higher price for Cooper shares (a 40 per cent premium), it needs to be understood that Cooper is a profitable entity, having cash reserves to the tune of half a billion, geographically well spread, having a number of renowned brands across geographies, and has close to 14,000 skilled staff. If Apollo Tyres were to acquire all these attributes “in-house”, without going in for an acquisition, it would take years to achieve this feat. Therefore, the premium paid in the acquisition could be well justified!

Potential downsides to the deal The biggest downside to the deal is the high level of debt that is being sourced by Apollo Tyres to acquire Cooper. The `14,500

TOP TEN TYRE MANUFACTURERS IN THE WORLD 2012 Company / headquarters 2011 tire sales (100 Ranking country or region million U.S. dollars) 1 Bridgestone / Japan 284.5 2 Michelin / France 274.14 3 Goodyear / United States 204.9 4 Mainland China / Germany 106.45 5 Pirelli / Italy 78.02 6 Sumitomo Rubber Industries 74.13 / Japan 7 Yokohama Rubber / Japan 60.28 8 The Korea Tire / 57.44 South Korea 9 Cheng Shin Rubber / China 42.68 Taiwan 10 Cooper Tire & Rubber / 39.27 United States Source: China Chemical Industry News

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crore acquisition is entirely funded through loans. Currently, Apollo has a debt of `2,500 crore, which by itself is much higher than its competitors like MRF. But it will need to additionally take on `14,500 crore of debt, which will reach `17,000 crore on completion of the deal. Of course, the acquisition will result in Apollo’s revenue increasing by around `24,000 crore, but still, a high debt on the balance sheet is considered to be a “bankruptcy” risk, and is treated very warily by the markets!

This is the key downside to this acquisition. Although fundamentally there are a number of synergies coming out of this deal, Apollo could reconsider the funding mix for this acquisition, possibly by bringing in more equity and reducing the level of debt.

Other concerns include the flooding of market by cheap unbranded tyres, especially from China, Korea and Russia, and the improvement in technology for “retreaded”, tyres which could have an impact on the overall demand for branded tyres.

In summary, although the shareholders have dumped Apollo shares, dropping the value by close to 40 per cent when the deal was announced, Apollo has made a well thought out synergistic acquisition that has a good long term potential to create shareholder value.

However, it needs to manage the short term cautiously, where its debt levels are being stretched beyond the comfort zone. The key would be to successfully integrate the global operations of the two companies and reap the synergies that have been targeted! A

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Corporate World

Economic indicators Global economic update

According to a recent report released by the World Bank, global economic growth is expected to be about 2.2 per cent in 2013 (earlier forecast 2.4per cent) and steadily strengthen to 3.0 per cent in 2014 and 3.3 per cent in 2015. Developing-country GDP is now projected to grow at around 5.1 per cent in 2013, strengthening to 5.6 per cent and 5.7 per cent in 2014 and 2015 respectively.

Unemployment rates in the developed economies were at 8 per cent, but the same was extremely high in the Eurozone at 12.2 per cent. However, unemployment in the US reduced to 7.5 per cent. The fragile European economic situation is magnified due to the unemployment rates, especially 11 per cent in France, 12 per cent in Italy, a whopping 17.8 per cent in Portugal and 26.8 per cent in Spain, and 27 per cent in Greece. These figures indicate that a catastrophe is waiting to strike, unless the respective governments get their act together.

Global growth targets have been scaled down primarily because the growth in the emerging markets like China, Brazil and India has substantially slowed down.

The uncertainties in the European situation have also had a negative impact on the global growth prospects. The World Bank estimated that the European economy could contract by around 0.6 per cent, while the US and Japanese economies are likely to grow higher than the earlier forecasts due to appropriate government interventions.

The World Bank projects that India is likely to grow at 5.7 per cent during 2013, which could increase to 6.5 per cent in 2014 and 6.7 per cent in 2014. This is not very encouraging news, as India is targeting to grow at close to 10 per cent for the next 20 years. The World Bank’s not-so-enthusiastic forecast on Indian growth primarily stems from the subdued global economic conditions and India’s inability to achieve higher export targets (while imports will continue to increase), thereby having cascading effects on fiscal and current account deficit as well as a weak currency.

The World Bank also stated that the South Asian GDP growth is not likely to cross the 5 per cent mark due to the weak economic conditions in India, Srilanka, Nepal, Pakistan and Bangladesh.

Indian economic update

The key Indian economic parameters have been discouraging for the review period. The index of industrial output (IIP) remained more or less flat. Consumer price index-based inflation remained at 9.39 per cent, marginally reducing from 10.39 per cent in March 2013. Food and beverages recorded an inflation of 10.65 per cent, the prices in the vegetables basket rose sharply to 9.78 per cent and inflation in protein-based items like egg, meat and fish declined to 12.52 per cent per cent during the month. But all of them are still high!

The Reserve Bank of India maintained the interest rates and did not decrease them as expected by the market. The repo rate remained at 7.25 per cent and the Cash Reserve Ratio (CRR) was held at 4 per cent without any change. However, the RBI warned that the global liquidity needs to be cautiously watched, and if the US pulls back the bond buying programme, such developments could impact fund flows to emerging markets including India, sharply impacting our foreign currency reserves.

Global rating agency Fitch raised India’s outlook rating to “stable” in spite of low industrial output growth, the depreciating rupee and consumer price inflation remaining high. However, Fitch warned that India’s outlook is uncertain due to risks from potential global developments that could have adverse effects on the Indian economy, lack of policy reforms high inflation and the higher levels of trade, fiscal and current account deficits. Fitch also said that the slow pace in reforms with respect to curtailing subsidies poses a dangerous situation and the amounts targeted to be raised by privatising public sector-owned companies is also not proceeding on targeted lines.

The Passport Seva Kendra, a public private partnership between the government and TCS has completed issuing one crore passports in one year; truly a milestone to be celebrated. This is a classic success story of how the government could leverage private sector strengths in achieving better governance.

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Corporate World

Key knowledge for

Global Markets, American, European and Japanese Markets

The global economic situation has deteriorated during the review period. Virtually all the global markets have recorded sharp decline in their indices; the American markets (NYSE) dropped by 3 per cent, the European markets (FTSE) fell by close to 6 per cent, the Japanese market (Nikkei) fell by more than 15 per cent and the Chinese markets fell by 3 per cent. The Indian markets (Sensex) decreased by more than 5 per cent. There are serious concerns of the global liquidity being drained out as an outcome of the recent speech by the Federal Reserve Chairman, indicating that the economic stimulus and the bond buying programme could come to an end very soon.

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Corporate World

aspiring managers

Asian markets The Federal Reserve’s potential pulling back of the bond buying programme is a major concern affecting all emerging markets. Over the last five years, substantial funds from the developed countries have been flowing into emerging economies for investments and higher rates of returns. This has helped the poor trade deficit positions of many emerging economies (due to sluggish exports as developed economies are in slowdown) by providing fund inflows that compensate.

Global currencies The Japanese yen, which was until recently depreciating against the US$, sharply strengthened by about 7 per cent during the review period. This is not good news for the Japanese economy, which is an export oriented economy, and a strengthening currency makes its goods and services uncompetitive in the global arena. The Euro also sharply strengthened by more than 3 per cent against the US$. The Indian Rupee had a free fall of around 6 to 7 per cent against the US$, which is a concern for India.

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Advanc’edge MBA July 2013

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Snippets

News in brief BSNL to close down telegram service On July 15, one of India’s oldest communication services - the telegram - will become history.

Financial constraints have forced BSNL to wind up the telegraphic service, which will be remembered mainly as a historically inexpensive and relatively quick method of sending alerts related to births, deaths and emergency situations. Over the years, the BSNL made several technical upgrades in the telegraph service, with the latest being the introduction of a web-based messaging system in 2010. However, growing Internet penetration and cheaper mobile phones in the last decade have kept people away.

Mt Fuji, 6 Rajasthan forts now world heritage sites Japan’s highest mountain (3,776 m) Mount Fuji, located on Honshu island, was given world heritage status by the UNESCO’s World Heritage committee.

Mount Fuji, which last erupted around 300 years ago, is the seventeenth site in Japan to be included on the list. UNESCO has also included six forts of Rajasthan in its list of world heritage sites.

Global fish prices at record high in May UN’s Food & Agriculture Organization announced that the global prices of fish reached a record high in May 2013 because of rising demand of salmon fish and failing supply of the tuna fish.

Prices for the farmed fish like salmon increased faster than the ones captured from the fisheries in 2012. It has been predicted that the aquaculture production will increase to 5.6 per cent in 2013, while the capture of wild fish will increase 0.9 per cent.

ome H e re a re s bit s t it i nt e re st i n g he f ro m o ve r t la st m o nt h Twitter lets brands reach viewers of their TV ads For those inclined toward social media, using Twitter while watching television has become a ritual, with viewers commenting on everything from sports events to nighttime dramas. Executives from Twitter are planning capitalise on that activity by allowing advertisers to send ads to people who are watching specific programming. The new product, called Twitter Amplify, will help brands match advertisements with Twitter commentary by viewers. Brands can then send messages to selected Twitter users who have already seen their ad on television. Twitter also announced it would work with a number of media companies, including Time Inc., Bloomberg, Discovery, Vevo, Warner Music Group, etc to sell advertisers content, which probably will be digital video or television content like clips from shows. The content can then be shared on Twitter, and advertisers can run ads before the videos are viewed.

Internet users in India to touch 33 crore by 2016 A report recently released by the Boston Consulting Group has stated that the number of Internet users in India is likely to almost triple from 12.5 crore in 2011 to 33 crore by 2016.

The report also states that nearly 40 per cent of India’s 9 crore urban Internet users are influenced by online activities such as product research and price comparison while buying products. For the survey, BCG’s Centre for Consumer and Customer Insight took responses from 25,000 Indian consumers on their online activities during each step of the purchase cycle in different product categories to determine how Internet use affects buying decisions.

Edward Snowden blows the whistle on US surveillance programmes Former CIA employee, 29-year-old Edward Snowden leaked details of a top-secret American programme that collects vast streams of phone and Internet data. He said his sole motive was to inform the public as to what is done in their name and what is done against them. “I’m willing to sacrifice all of that because I can’t in good conscience allow the US government to destroy privacy, Internet freedom and basic liberties for people around the world with this massive surveillance machine they’re secretly building,” he said. Snowden said the US intelligence agency NSA’s reach poses “an existential threat to democracy”. He said he had hoped the Obama administration would end the programmes once it took office in 2009, but instead, he said, President Obama “advanced the very policies that I thought would be reined in”.

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Advanc’edge MBA July 2013

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Study Hour

The sign of society in science In 1977, Stephen Jay Gould and Niles Eldredge published an article in the scientific journal Paleobiology that explained how prevalent social views of the nineteenth century about the nature of history are embedded in the natural sciences, with Darwinian gradualism in biology providing a prime example. In the midst of the Industrial Revolution, and the social upheavals that came in its wake, older notions of stasis, of an eternal order ordained by divine providence, had given way to conceptions of historical development, the view that history has a trajectory. However, the prevailing views generally favored slow incremental change, which did not threaten the status quo with the potential for revolution.

Gould and Eldredge wrote that the preference for slow change in evolutionary theory represented in part “the translation into biology of the order, harmony and continuity that European rulers hoped to maintain in a society already assaulted by calls for fundamental social change.” Charles Darwin reflected the zeitgeist in his strong preference for gradual change.

In pointing to a social origin for Darwin’s preference for gradualism, Gould and Eldredge clarify: “We mention this not to discredit Darwin in any way, but merely to point out that even the greatest scientific achievements are rooted in their cultural contexts—and to argue that gradualism was part of the cultural context, not of nature.”

Gould and Eldredge presented an alternative view of historical change, one often associated with Karl Marx — a punctuational view that does not assume historical change occurs in a slow, smooth, and seamless manner.

MAT CH T HE W OR D S W IT H T H E IR M EA NING S 1. Prevalent – (prev-uh-luhnt) (adj)

7. Providence – (prov-i-duhns) (n)

2. Embedded – (em-bed-ed) (v)

8. Trajectory – (truh-jek-tuh-ree) (n)

3. Gradualism – (graj-oo-uh-liz-uhm) (n)

9. Incremental – (in-kruh-men-tl) (adj)

4. In its wake – (idiom) – as a result of 5. Stasis – (stey-sis) (n) 6. Ordained – (awr-deyn-d) (v)

10. Status quo – (stey-tus kwoh) (n) 11. Zeitgeist – (tsahyt-gahyst) (n) 12. Discredit – (dis-kred-it) (v) 13. Seamless – (seem-les) (adj)

a. the state of equilibrium or inactivity caused by opposing equal forces

h. as a result of

b. increasing or adding on, especially in a regular series

j. a theory maintaining that two seemingly conflicting notions are not radically opposed, but are related by others partaking in varying degrees of the character of both

c. the foreseeing care and guidance of God or nature over the creatures of the earth; the manifestation of divine care or direction d. the spirit of the time; general trend of thought or feeling characteristic of a particular period of time e. to order or command f. smoothly continuous or uniform in quality; combined in an inconspicuous way

i. the existing state or condition

k. the path or curve described by a projectile, rocket, or the like (history, as an abstract noun in this case) l. to injure the credit or reputation of; defame m. widespread in a particular area or at a particular time

g. to incorporate or contain as an essential part or characteristic

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Study Hour

A quiz to boost your General Knowledge 1. Which international tennis player won the Indian Wells BNP Paribas Open 2013 held in March.

a) David Ferrer

b) Rafael Nadal

c) Andy Murray

d) Roger Federer

5. Which Hollywood actor became the new face of the men’s perfume Dior Homme on 12 June 2013?

a) Henry Cavill

b) Benedict Cumberbatch

c) Robert Pattinson

d) Brad Pitt

2. The parliament of which country recently “blocked” a law aimed at strengthening provisions for women’s freedom, citing that the law violated Islamic principles and encouraged disobedience? a) Turkey b) Israel c) Afghanistan d) Iran

6. Who has been appointed the new chairman of the Life Insurance Corporation of India?

a) S.K. Roy

b) Thomas Matthew T

c) Usha Sangwan

d) J.D. Seelam

3. In the 27th edition of the North-East Games played at Imphal, which Indian state claimed the title of overall team champion? a) Manipur b) Meghalaya

c) Arunachal Pradesh d) Tripura

4.

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Mass death of a species was found to have occurred on the beach in Coronel city, around 530 km from Santiago, Chile, in the third week of March. The probable reason, experts say, is the presence of power generation plants Bocamina 1 and 2 as well as Colbun. Name the species. a) Crabs b) Prawns c) Blue whales d) Turtles

Advanc’edge MBA July 2013

7.

Which 24 hours news channel did media organisation TV18 Broadcast launch in June this year in the UK? a) CNN-IBN b) CNBC Profit c) CNBC India d) News18 India

8. Which new feature that was already being used by the likes of Twitter and Instagram, was introduced by Facebook this year to identify topics of discussions?

a) ‘!’ symbol

b) ‘#’ symbol

c) ‘@’ symbol

d) ‘*’ symbol 9. Under the Campaign Clean India, the Indian Ministry of Tourism given the task of maintenance and cleanliness of the Taj Mahal, as well as five other tourist destinations, to which of the following companies?

a) ONGC b) Bharat Petroleum c) Reliance Infrastructure d) Indian Oil

10. Which top seeded doubles players defeated Mahesh Bhupati and Rohan Bopanna in May this year to claim the Rome Master 2013 title? a) Martin Damm and

Leander Paes

b) Mike and Bob Aryan

c) Mariusz Fyrstenberg

and Marcin Matkowski

d) Philipp Marx and

Florin Mergea 11. Name the famous Academy Award winning director who directed The Last Waltz, the “farewell concert appearance” by The Band.

a) Clint Eastwood

b) Kevin Costner

c) Steven Spielberg

d) Martin Scorsese 12. The International Olympic Committee (IOC) and Indian Olympic Association (IOA) recently held a meeting to identify the principle on a roadmap to bring India back in the Olympic Fold.

Where did the meeting take place? a) Geneva b) London

c) New Delhi d) Lausanne 13. Which Indian islands were declared a world biosphere reserve by the UNESCO in May this year?

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Study Hour

a) b) c) d)

Andaman Islands Nicobar Islands Lakshadweep Islands Daman and Diu

14.

Name the controversial religion, founded by L Ron Hubbard, that has followers such as Tom Cruise and John Travolta. a) Scientology b) Sciencology c) Raëlism

d) Church of Euthanasia 15. US-based company Wainwright Industries was acquired in a deal worth `50 crore by

a) Honda Motors

b) TVS Logistics Services

c) Tata Group d) Gartner 16.

In May this year, the European Union formed a decision to impose a continentwide ban on -esticides called neonicotinoids to help which species of insects?

a) Honey bees b) Locusts c) Ants d) Ladybirds 17. American scientists used the Somatic Cell Nuclear Transfer Technique to clone the embryo of a) Sheep b) Rats c) Humans

d) None of these 18.

India dropped nine places in the list of 179 countries in the latest World Press Freedom Index 2013 — the lowest since 2002. What was India’s rank earlier?

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a) 32 b) 174 c) 140 d) 112

19. Harlequin Enterprises has released two of its bestselling international books in Tamil and Hindi, and will soon release them in Malayalam and Marathi as well. Name the famous series of books that Harlequin Enterprises publishes.

a) Mills and Boon

b) The Hunger Games

c) The Chronicles of Narnia d) Hardy Boys and Nancy

Drew series 20. With which country has India signed an extradition treaty after nearly two decades of negotiations? a) Myanmar b) Thailand c) China d) Pakistan 21.

In India’s journalism, _________ is celebrated every year on May 30. This year was the 187th year. a) Hindi journalism

b) Freedom of press

c) English journalism

d) None of these 22. WR 104, a Wolf-Rayet star some 8,000 light years away, is ripe to undergo a corecollapse supernova and could generate a seconds-long burst of _________; scientists say the Earth may be in a direct line of fire to this emission, which is potentially lethal, and might wipe out a quarter of the protective ozone layer.

a) X-ray radiation

b) Gamma radiation

c) Infrared radiation

d) None of these

23.

The Department of Telecom (DoT) decided to levy a penalty of `650 crore on which telecom provider for violating licence conditions?

a) Bharti Airtel b) Vodafone

c) Idea Cellular d) Reliance Communications 24. Australia and the US has teamed up with which third country to develop climate resilient crops? a) UK b) Canada c) India d) China 25. Which country’s parliament passed a bill in June this year criminalising gay marriage punishable by a 14-year sentence? a) Afghanistan b) Pakistan c) China d) Nigeria 26. The Union Cabinet of India in June this year approved a bill for the setting up of a regulatory authority for which sector in the country?

a) Real estate b) Insurance c) Mining d) Transport 27. A 2013 survey published in June and conducted by The Energy and Resources Institute (TERI) in six metros of India – Kolkata, Hyderabad, Chennai, Mumbai, Bengaluru and Dehli-NCR – found that quality of surface water deteriorated in every metro except –

Advanc’edge MBA July 2013

49

Study Hour

a) Bengaluru b) Kolkata c) Delhi-NCR d) Mumbai

32. Gold coins said to be from Gupta period were recently unearthed in which state of India?

a) Odisha b) West Bengal c) Bihar d) Madhya Pradesh

28. The Arms Trade Treaty, which was signed on June 3, 2013, regulates the multi-billion dollar arms trade, and signing it is expected to start the first crucial international campaign to curtail the illicit trade of weapons.

How many countries of the world have signed the treaty? a) 190 b) 145 c) 132 d) 65 29. Apple Inc has recently signed an agreement with which company for music licences to create a streaming music service?

a) Sony Music

b) Warner Music Group

c) Universal Music Group d) Polygram 30. The first all-women police station has become functional from June this year in which state?

a) Arunachal Pradesh b) Maharashtra

c) Tamil Nadu d) Meghalaya 31.

In Windows 8.1, the updated version of the Windows 8 operating system, Microsoft has brought back which functionality that was demanded the most by users?

a) Search feature

b) Firewall customisation

c) The Start button

d) The stylus

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Advanc’edge MBA July 2013

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.

ANSWERS SuDoKu

GLOBESCAN

01.(b) 02.(c) 03.(a) 04.(b) 05.(c) 06.(a) 07.(d) 08.(b) 09.(a) 10.(b) 11.(d) 12.(d) 13.(b) 14.(a) 15.(b) 16.(a) 17.(c) 18.(c) 19.(a) 20.(b) 21.(a) 22.(b) 23.(a) 24.(c) 25.(d) 26.(a) 27.(d) 28.(d) 29.(b) 30.(a) 31.(c) 32.(b)

WORD DOSE

1. m 6. e 11. d

Solution, tips and computer programme at www.sudoku.com

2. g 7. c 12. l

3. j 8. k 13. f

4. h 9. b

5. a 10. i

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Sep 2013 & Feb 2014

“I would like to thank IMS for providing continuous support in my CMAT preparations. An important difference at IMS was the student-centric attitude of not just the teaching staff but the non-teaching staff as well. ....�

Sagar Padaki (IMS Student)

All India Rank-2 in CMAT Feb 2013