Domination September 2013 by Domination, DoMS IIT Roorkee

DOMINATION

September 2013

VOLUME-III ISSUE-07

NEWSLETTER FROM DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Editorial

……………………………………………………… ……………………………………………………… Dear readers, As we bid farewell to the month of September and welcome the new season, we present another thought provoking and interesting edition of DoMination. This edition contains a number of articles from a diverse range of topics from the growth prospects in North Eastern region to the issue of Employee Poaching to the world of Mezzanine finances. The cover story for this month is jointly written by Nilaya Shankar and Prashant Pandey. It gives us an account of situation and growth prospects for agriculture, tourism, trade and power sector along with action items for improvements. The perspective of this month is on another burning

issue of current times, Employee Poaching. In this, Kunal Bansal tries to look at the root cause of the problem and its solution. On the finance side, Sharad Srivastava presents a piece on Mezzanine Finance, an instrument which occupies a middle spot between debt and equity. The learning does not stop here. The current edition has interview of Mr. Tejasvi Puniani, a 2009 batch alumnus of DoMS. Additionally it also consists of success story of Mr. Sunil Handa, Chairman of Evlavya Education Foundation. These live examples and learning will be helpful for budding managers and leaders. For the creative souls, we present next round of quiz. On top of it, a beautiful poem by Kaushik H Makwana

enhances the charm. The September month also saw various summits being conducted in the department. Among them, the current edition contains Vipanan, the market summit details. In addition to this, the department was abuzz with another high powered activity, Reminiscence in which three batches of department came together. We hope that the current edition will be liked by you. Your suggestions and feedback are always welcome and valuable to us. Happy Reading...

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Contents

……………………………………………………… Growth Potential of North-East States

Faculty Adviser Dr. R. L. Dhar

08 Cover Story

Team DoMination 11 Abhay Kumar

Perspective

Arun George Nilaya Shankar Chlorophyll

Priyank Singhal Qutopia

Rohan Krishnan

Saurabh Paul Sharad Srivastava

15 18

Designing Team Ashish Kumar Jaiswal Dhruv Kadian Rakesh Ranjan Kumar

DoMS da Evince

DEPARTMENT OF MANAGEMENT STUDIES INDIAN INSTITUTE OF TECHNOLOGY ROORKEE

Success Story

20 Mezzanine Financing for Infrastructure Projects

22 Roorkee- 247 667, India Tel: +91-1332-285014, 285617 Fax: +91-1332-285565 Email: domination.doms.iitr@gmail.com Website: www.iitr.ac.in/departments/DM/Pages/ Index.html

Spotlight

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Cover Story ………………………………………………………

Growth Potential of North East States North East consists of eastern most states in India viz. Assam, Arunachal Pradesh, Mizoram, Sikkim, Nagaland, Manipur and Tripura. These seven states are popularly known as “Seven Sisters”. The region is endowed with vast natural resources in terms of forests, biological diversity, hydroelectricity etc. however the region has remained largely underdeveloped. A major limitation to the growth has been poor infrastructure and limited connectivity, both within the region as well as with rest of the nation. The region, linked to the rest of India by a narrow stretch of land called the “chicken neck”,

needs infrastructure to support, significant investments and developmental aids. The region has also witnessed a series of insurgent activities and is alienated from the mainland India in terms of both economic and physical attributes. According to World Bank, NE region has a low-level symmetry of poverty, less development, civil conflict and lack of faith in political leadership. Going by the planning commission data, the total GDP of India was INR 8,53,495 crores for the financial year 2011-12 in which the contribution of North-East India was only 2.3%. This is in spite of the fact that these states

share 98% of the boundary with five different countries of South Asia – Nepal, Bhutan, China, Myanmar and Bangladesh. The region is highly endowed with bio-diversity, hydro-potential, mineral like oil and natural gas, coal, limestone, dolomite etc. and forest wealth. Agricultural Around 70% of the population of northeastern states is dependent upon agriculture. There is a huge opportunity in rubber, bamboo, fruits, vegetables and horticulture. India holds third position in rubber

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Growth Potential of North East States ……………………………………………………… 10,000 hectares of rubber (the available plantation area is 35,760 hectares). Besides Tripura, there is a huge opportunity for rubber production in Mizoram and Assam. The NE states also produce a substantial percentage of bamboo, accounting for 65% of India‟s production value and 20% of the global production value. Mizoram alone contributes to around 40% of the country‟s bamboo production. While India‟s bamboo market is expected to grow to USD 5.5 billion by 2015, the UN‟s Industrial Development Organisation has estimated the NE‟s bamboo production to grow up to USD 1.25 billion in the same period.

essed and marketed locally. Arunachal Pradesh has taken up the cultivation of horticulture produce especially of subtropical fruits on a large scale with assistance from the government. In Mizoram, which accounts for 12% of the total fruits produced in the northeast, a special purpose vehicle (SPV) has been formed with private sector companies to set up a plant for the processing of turmeric, ginger, chilly, fruits and other horticulture products. There is also scope for dairy processing and poultry, fishery processing in the region. There

is huge demand for dried fish in the region, processing of which is not capital intensive. The National Dairy Development Board (NDDB), which has extensive experience in mobilising producers in milk, vegetables as well as other areas, could play a key enabling role in this process. Increase in milk production will encourage the milk, butter and cheese processing industry in the region. Tourism Opportunity Even though northeast has huge tourism potential yet tourism in northeast region does not figure

The region‟s comparative advantages in producing vegetables, fruits and other horticulture products can be tapped by setting up small-scale processing units for the local market which will also boost rural employment. This set-up is economically viable as well as doable as a small processing unit requires little capital. The region produces a large amount of spices such as chillies, gingers, mustard seeds, fruits and vegetables which can be procSource: North East Vision 2020, Ministry of development of North East Region

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Growth Potential of North East States ……………………………………………………… among top 10 states of India. Lack of transport infrastructure, insurgency and less investment are the main causes that affect tourism industry. The rail network in the North East form only 3.7% of the national network. As for the insurgency, the Institute of Conflict Management estimated that 5283 people had been killed due to related events in the North-East since 2005. Tourism being one of the largest service industries in India, with its contribution of 6.23% to national GDP and 8.78% of total employment, witnesses arrival of more than 5 million annual foreign tourists and 562 million domestic tourists. North-East India is well blessed by Nature and it lies at the centre of one of the world‟s richest bio-geographic areas. It has a rich cultural and ethnic heritage that can easily make it a tourist-spot. Moreover, the wildlife sanctuaries at various places of North-East India can attract the tourists from all over the world. Trade opportunity Cross-border trade is the most important medium of the current wave of globalisation. In

this development, the north east economy has emerged into a new dimension of cross-border trade (informal trade) with neighbouring nations and that increases social welfare of the poor masses. Under the “Look East” policy, India seeks economic cooperation with ASEAN and other neighbouring countries through the gateway of the region. The North East is located at crossroads between three major economies – East Asia, South Asia and Southeast Asia. This geopolitical advantage, has however, not really converted into the region‟s economic improvement. Despite the superior growth in India‟s trade ties with Southeast Asia and China in the recent past, the Northeast‟s role has been marginal in terms of its contribution to trade and as a trade route. It has not been able to integrate and benefit from the various regional and subregional initiatives that neighbouring countries have taken. Out of India‟s export volume of about $254.4 billion, the Northeast‟s share is only about $0.01 billion. In order to benefit from the cross border trade initiatives industries in the region need to develop goods to

be exported to the neighbouring states. Processing industries have to be established to manufacture quality goods, which can be sold in international markets at acceptable prices. Infrastructure and connectivity improvements in terms of strategic roads to border areas as well as Integrated Check Posts and border trade points need to be developed. This will also lead to reduced informal trade between NE and the neighbouring regions. Power Opportunity The region is bestowed with perennial rivers and water bodies, and has a huge hydroelectricity prospect. This potential, if leveraged well, can be used to export energy to other regions of the country. The spillover benefits will be the development of infrastructure such as roads and electricity supply to remote hilly areas, translating in better quality of life. States such as Sikkim, Mefhalaya and Arunachal Pradesh have huge potential in hydropower generation. Many policies such as the „50,000MW hydro initiative‟, the Hydro Policy 2008 have been formulated by the central

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Growth Potential of North East States ……………………………………………………… government to promote investment in hydropower in the region. As per the „North Eastern Industrial and Investment Promotion Policy (NEIIPP), 2007‟ by Ministry of Commerce and Industry, the entire NER has been declared a SEZ and many subsidies, tax exemptions and waivers have been offered on cost of infrastructure, transport,

power, etc. The central government is also promoting private sector in the region to boost investment in the power sector. About 14,000 MW has already been allotted to private players in NER for development as part of the „50,000 MW hydro initiative‟.

the region is promising in terms of return if investments are made. Currently the private partnership is less in this region which needs to be improved. The government is encouraging investment in the region and we can be hopeful about a better future.

Overall, we can conclude that

ByNilaya Shankar DoMS, IIT Roorkee (2012-2014) nilayamitashshanker@gmail.com Prashant Pandey DoMS, IIT Roorkee (2013-2015) prash.pandey88@gmail.com

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Perspective ………………………………………………………

Employee Poaching Why is this even a topic worth debating? Well, for me, if some other firm is offering better incentives and lots of money, does it really matter whether my present employer is worth sticking with? For starters, the net worth of every company is its people and the satisfaction index of the employers is what defines the real assets. Not the patents, not the machineries and certainly not the closingopening stock. Now, if you are not creating a suitable environment for your employees, it is certainly your loss. A study by The American Society for Training & Development predicts that by 2015, 60% of the new jobs created will require

the special skills held by only 20% of the population. In 1991, not even half of the U.S. jobs needed skilled workers. Hence, the poaching. Where does the problem lies then? The problem lies in the unethical way and going beyond what

is fair and legal. For example, well known stock brokering firm OrdMinnett recently fell afoul of restraints in a different way. It utilized the classified information of Wilson HTM, an employer of some persons who were involved in angling for jobs at OrdMinnett, to try and 'lure away' even more of Wilson HTM‟s employees.

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

EMPLOYEE POACHING ……………………………………………………… From the prospect of employers, they always look for growth; and rightly so, but the effect on the employee can be hazardous due to this reasoning. In several corporate trainings, employees are trained to respect the brand they are associated with, to fill them with a sense of pride and understanding. But when the same people step into the corporate boardrooms, the result turns out to be destructive. Instead what employers should do is, to take more care on their HR policies, rather than filling the employees mind with garbage. If we look at the present statistics, almost 12% of the Google engineers are now working for Facebook. It was not the monetary incentives, as we already know both the companies are very competitive. Then what was it that changed the perspective of those 12% employees. It was the sudden urge for entrepreneurship, as most people in the tech savvy Silicon Valley aspire for. And here comes the crazy Poaching part, where possible start up companies look for these people, provide them with great incentives and the biggest advantage- give them freedom like never before. And,

you have your skilled employee in your lap. As soon as the brand name has been established and the IPO on the way, these people look for “other exciting stuff”. So, what should be done? There are some provisions to retain your key employees. The first and foremost is the legal way. A contract signed and secured with the penalty clause will effectively protect a business from the illegitimate conduct of employees and competitors. The second option is to provide them with the freeness to work. As seen previously, the handcuffed employee is more prone to poaching cases. Jack Welch started a new concept to curb employee poaching

on a higher level. Whenever a new VP or CxO wanted to go to another firm or start his own, his only reasoning was to train his successor. And if duly tested for the job, he allowed it. The effect of this was the training and cost could be saved. The points worth considering before deciding the final decision on employee poaching are:  Know your employees right. Make every suggestion count. Feel the need to change the strategy whenever necessary.  Link employee success to business success. It may be monetary, non-monetary or even a pat on the back incentive.  Find out the reason why they really want to leave. Is

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

EMPLOYEE POACHING ……………………………………………………… it because some executive will always prefer to be in an well. 

decisions or internal disputes? Find out what others are giving and why? The basic poaching methodology comes down to identifying your competitors and monitors them closely.

At the end, it comes down to staff satisfaction. Employees

organization where they feel happy and motivated. The risk (or curiosity) in the uncertainty will be outweighed by the employee‟s happiness in their current offices. Businesses that facilitate to foster this environment will see the advantages, not only in reduced turnover and poaching, but also in productivity and performance as

ByKunal Bansal DoMS, IIT Roorkee (2013-2015) kunalbansal17@gmail.com

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Chlorophyll

……………………………………………………… Its wise to learn, its GOD like to create

यकीन "..शिखर पर है तू,

और जमीन पर मै, पर एक यकीन है मुजमे कही है तू.. महऱो का साया छत पे उसके झोपडो मे रहता मै पर एक बात जो मुझ्मे है कक मझ ु मे कही है तू

सर पे तेरे छत न थी, रास्तों पे तू रहता था, तेरी यही तो बात है ,

जो तेरी थी, जो मेरी है .. बद्ऱेगा एक "ददन" यह ददन, मै बनॉग ू ा "त"ू

क्योंकक एक यकीन है , मुझमे कहीॊ है तू..."

ByKaushik H Makwana DoMS, IIT Roorkee (2013-2015) khmakldce@ymail.com

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Qutopia ………………………………………………………

It’s Exquizite, Kills your Quriosity and adds to your Quizdom. Need we say more? ‘Qutopia’ – A Utopia of the

best Biz Quiz Tidbits to wreck your brains! Rush in your answers to domination.doms.iitr@gmail.com before 21st October, 2012. The winner will have their names published in the next issue. Also, person getting the highest score in the current quarter will get a gift voucher. Answers in the next issue of DoMination.

Section A (1 Point for each correct answer)

1. What is called as the powerhouse of a biological cell? 2. .......................is the first state to register its brand with Government of India‟s trademark registry. 3. Many elements have been named after countries. Which is the only country to be named after an element 4. In late 1960s, this company was criticized for its marketing of powdered milk formula in developing countries. Identify the company. 5. Headquarter of Tata Group is known as ........................................ 6. Who are Bretton Woods sisters?

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Qutopia ……………………………………………………… Section B (2 Point for each correct answer)

1. Identify the occasion by the Google doodle.

2. Identify the organisation by the logo given below.

3) Identify the country by its flag.

4) Identify the below personality.

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

……………………………………………………… Qutopia Answers for July edition

1. Death of Thomas Edison 2. Albert Einstein said it for Mahatma Gandhi 3. Ministry of Corporate Affairs 4. Toxic Assets 5. General Motors 6. Accenture

1. 2. 3. 4.

The Big Bang Theory Air Jordan Angola Rex Tillerson, Chairman & CEO at Exxon Mobil

Winner of August edition Shreyas Shrivastav OSM India Pvt. Ltd.

………………………………………………

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

DoMS-da-Evince Tejasvi Puniani is a 2009 batch pass out of DoMS and presently working as Pro-Manager at Mizuho Corporate Bank

Q: Please let us know about your journey prior to joining IIT Roorkee. Ans: I am basically a mechanical engineer from DBCRUST Murthal. I don't know from where I got interested in MBA and started preparing in the final year. I had a pretty tough time in the interviews as I appeared for 15 odd companies before getting selected in two companies Vedanta Resources and Isgec Thomson. I joined Vedanta in Orissa and left it in 15 days as I was not getting enough time to prepare for my MBA. Then I joined ISGEC and side by side prepared for my MBA. I appeared for test series and appeared for JMET and got AIR 337. I got calls from all IITs and finally joined IITR. Q: What are your roles and responsibilities at Mizuho?

Ans: I, like most of you, had not heard the name of the bank prior to my interview. Mizuho Bank is the second largest Japanese bank and a Fortune 303/500 player having presence in more than 60 countries. I have been with Mizuho for almost two years. The business has been divided into Japanese corporate and Non Japanese corporate. I am a part of Non Japanese corporate looking after large corporate. My role includes day to day interaction with the clients as well preparing the credit appraisal note for sanctioning the limits to the client as per their requirements and our analysis. The credit appraisal is similar to what you study in Project Appraisal. Ironically, I did not choose that subject as my optional subject. Yeah the dynamics of real analysis is different from what you study but yes you get the

basic knowledge of what it is and how it is to be done. Q: How your experience at Mizuho is different from Care ratings or SIDBI? Ans: I am a 2009 (during recession times) passout and did not have much choice except to join SIDBI. I am thankful that I got a good profile of credit appraisal as first think that comes to your mind once you hear bank is loan/credit or in a sense credit is the bread and butter of banking. I worked there for 1.5 years and I believe that helped in learning the basics of credit evaluation. Corporate whether small or big, are good at making stories or presenting rosy pictures but it‟s your duty as a credit person to question his every assumption and do the threadbare analysis of his business and his projections. I joined CARE Ratings where

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

DoMS-da-Evince ……………………………………………………… Q: Please share your thoughts whether credit rating depict true picture of a sector or company. Ans: I am glad you asked this question as I wanted to express my opinion on this. I believe – yes, they do or try to depict the true picture of the sector or company. Assuming you are an investor who does not know much about any particular sector/company/country and you want to invest first thing you look is the rating of the company and how this company stacks among its peers. Credit rating analysts purely do the analysis part and express their opinion. I was with rating agency so I know how things are done over there and now I am a part of the bank and quite often we use ratings from different agencies to get the first feel of how good a company that is through its rating. I read it somewhere Credit rating companies and politicians are pretty much not contributing but indispensable part of the system which is fairly true. Q: How much importance you give to qualitative assessment in risk analysis?

Ans: This question was asked in some interview if my memory is serving me right. Qualitative analysis is very important from the point of risk analysis. You evaluate the promoter‟s credentials, number of years he has been in this business, various business risks in relation to operations, pricing power, industry structure, his position in the market etc. which provide you with very good insights. Q: What are your views on Basel III reforms and its implications in India? Ans: Basel III reforms are set of reforms to maintain financial stability and common standards regulations across banks. Basel III norms are made with strict regulations with better risk management techniques which are focused more on funding, liquidity of banks, leverage and more stringent capital adequacy requirement. Indian banks are needed to adopt these norms to have universal global standards to avoid any inconvenience in overseas transactions. Banks have to infuse an additional capital of Rs 5 lakh crore to meet the Basel III norms out of

which share of equity capital has to be 1.75 lakh crore and non-equity Rs 3.25 lakh crore. The Government of India, which owns 70 per cent of the banking system, has to incorporate Rs 90,000 crore into the state-run banks which looks tough at this point in time so it will take some more time to implement. Q: What is the most challenging role in your career so far? Ans: My role in Mizuho is quite challenging as the quantum of money involved in lending is huge and you have to do the ground work properly so that you can get the approvals. On the other hand while doing the operational work; you have to interact with people at different hierarchical levels. On one hand you would be interacting with Director of any large corporate and on the other hand some person at really lower level in your own organization. So you have to apply interpersonal skills and deal differently with people at different levels of hierarchy. In corporate world always follow top to bottom approach to get your work done.

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

DoMS-da-Evince ……………………………………………………… Q: Would you like to share an interesting incident with us? Ans: While we were at DoMS we wanted to organize an event and we discussed it with Thomso organizing committee. They gave us CORPORATA. I, along with Prashant, Rahul, Abhishek and Tushar (my batch mates) formed a team, roped in AIMA and started working on it. We were worried about the registrations but due to our marketing efforts, we got really good response and had to close the registration half way through. On the day of the event, we came to know that MPH has been allotted to some

other event and we were left high and dry. Left with no other options, we had to split the participants into two groups as the place we got finally was very small. Therefore, we had to reconduct the whole exercise twice but at the end of the day it was very satisfactory. Q: Any message for readers, especially for the current batch of DoMS? Ans: I would advise you guys to increase your participation in the events held at other Bschools. You have to participate so that you can win. Keep trying. It also adds value to your resume. Secondly, at the start of

the career you can experiment with career opportunities and 23 years down the line when you become aware of what actually you are looking for you can build your career in it. Thirdly, I had a tough time clearing the interviews particularly HR round and somewhere found this 64 interview questions (type on google you will get it). This questionnaire takes care of everything except technical. Must read. Any of you if interested in Banking then credit is good platform to start your career. You will have opportunities as credit is very basic profile and is offered in almost every bank.

“Strive not to be a success, but rather to be of value.” Albert Einstein

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Success Story ……………………………………………………… Mr. Sunil Handa is Chairman of Evlavya Education Foundation, Ahmedabad – a nongovernmental and not for profit organization.

Peter Drucker once said that “The best way to predict the future is to create it”. And here is a man Mr. Sunil Handa who is silently following the rule. In spite of being an alumnus of top rated institutions of the country he chose to pursue the less chosen path. Mr. Sunil Handa an entrepreneur, a teacher, a motivator and a main man behind the LEM (Leadership and Entrepreneurial Motivator) course at IIM Ahmedabad. In his childhood days he was an average student and scored only 45% marks in class X. However a radical change happened in class XII when he was one of the of the top ICSE students. This score had helped him to get admission into BITS Pilani.During his days in BITS Pilani, he got so much mesmerized and attracted by solar energy that at one point of time he wanted to pursue careers in Re-

search.He along with his friends has written a paper on their research work which got published in an international conference in Italy. They also got the opportunity to present the paper in Italy. In his final year of graduation he has job offers from USA, Australia, New Zealand and Israel. At that time he was not interested in management education. His perception got changed only after meeting Mr. Vijay Vannikar, Personnel Manager of Jyoti R&D and an MBA from IIM A. In year 1977, he himself got admitted into IIM Ahmedabad. After graduating from IIMA in 1979, he joined FAIR – „Foundation to Aid Industrial Recovery‟. FAIR used to take sick industries and turn around the industry without firing any employee. During his stint at FAIR he worked with many industries. After that he and his brother Sushil started a com-

pany called Core Consultancy Services whose main area of business a management consulting and consulting related to computers. Within one year the company turnover crossed Rs 1 crore with a profit of Rs 60 lakh. His entrepreneurial spirit had motivated him to close the consultancy company and opened a pharmaceutical company named Core Laboratories Ltd.By 1994 Core Laboratories was an Rs 600 crore company with five huge factories. After 1994 he got separated from his brother. The separation has a massive impact on his life and he lost his interest in doing business. He even got into depression. After being in depression for 10 months he decided not to do a normal business but to open a school and the idea of Eklayva School came to his mind. Eklavya is a non-profit making company but is very entrepre-

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Success Story ……………………………………………………… neurial. Before opening school he did a lot of research on schools. He visited nearly 150 schools situated in seven countries. He has also put lots of innovation at Eklavya like financial assistance to poor students, small classroom, mother involvement and other small

things which helped Eklavya to become most sought out school in Ahmedabad. Beside this, he has also affected the entrepreneurship environment at IIM Ahmedabad. He is taking LEM (Laboratory in Entrepreneurial) course in IIM Ahmedabad since 1992. Sunil believes many of

his students will turn entrepreneurs one day. Sunil is not only encouraging entrepreneurs among young graduates but also embedding value and ethics among them. Truly speaking nation needs more of such people.

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Regardez I’economie ………………………………………………………

Mezzanine Financing for Infrastructure Projects Infrastructure is among the fastest growing sectors in India. It has been accorded high priority by the government of India and the total investment is envisioned to be around $1 trillion in 12th Five year plan. The infrastructure projects are a capital intensive business with long payback periods and financing is a key concern in these initiatives. The funding for such projects is usually done by two methods, Debt and Equity. Both have their own advantages and disadvantages and a mix of the two is em-

ployed to meet the capital requirement. Debt is given preference as it is cheaper than Equity. However considerable default risk and regulatory pressures have compelled banks to put a ceiling on the debt financing. Adding to this, the no recourse or limited recourse fac-

tor makes the situation worse. Equity, by virtue of being a costlier source, is always a notso-preferred choice. In light of such situation, there is a need of financing methods which lie in between the above two modes. Such types of modes are called Mezzanine Financing.

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

MEZANNINE FINANCING FOR INFRASTRUCTURE PROJECT

…………………………………………………. Mezzanine Financing is done through instruments that have features of both debt and equity and occupies a middle position in terms of risk-return spectrum. In terms of hierarchy of creditors, it comes after debt but before equity. Overall, Mezzanine capital could be understood as the layer of finance which bridges the gap between debt and equity and therefore helps in optimizing overall capital structure. It has several advantages such as minor dilution of existing ownership, freeing up equity which can be deployed in the project and thus reducing the risk and increasing the return on equity. Additionally, Mezzanine Finance is treated like equity capital on balance sheet and hence facilitates smoother standard bank financing procedure. The most popular instruments for Mezzanine Financing are subordinate unsecured debts, convertible securities or preferred stocks. Among them subordinate debt is the most common form of financing. The lender of this instrument is in a junior or subordinate, lien position to senior lenders and has no equity participation in the project‟s cash flow and do not have any role

in the management of the project. The advantages and disadvantages are listed in the figure. Mezzanine Finance is in practice for more than two decades but limited mainly to USA and European markets. With the growing Indian economy and infrastructure sector becoming a hot spot, it is gaining acceptance here as well. ICICI Venture‟s Mezzanine Finance was first to concentrate on such finance opportunities. Recently Mytrah Energy India Limited has raised Rs. 1200 million ($17.5 million) by mezzanine financing which will be subscribed for by Bindu Urja Infrastructure Ltd. and Mytrah Wind Developers Pvt. Ltd. Another Asian example is of China‟s Zhuhai Highway Company Ltd., which succeeded in raising $115 million in the form of

subordinated notes in international capital markets. The Manilla Skyway project in Philippines, acquired a substantial amount of capital through mezzanine financing. Currently, India is viewed as a flag bearer of the developing world, with sufficient scope for financial investments into infrastructural sector. Therefore investors across the globe are eying this sector for investment which has huge growth potential. Considering the unique benefits offered by the Mezzanine Finance it is poised to see the growth as already evident from few examples.

BySharad Srivastava DoMS, IIT Roorkee (2012-2014) sharad.iitr@gmail.com

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

Spotlight

Reminiscence Alumni meet is always an emotional subject for students, be it current students or passed out ones. The passed out students are eager to go back and feel the life where it all started and on the other hand, current students have a chance to meet the seniors and learn from them. We, at DoMS, had such an experience on 20th Sep 2013. The occasion was Reminiscence where three batches (first year, second year and recently passed out) of the department came together. It was one of the most awaited events for the students. The pass out students were looking for their degrees and

reunion whereas second year students were having an opportunity to meet their seniors again and revisit the good times. First year students were more enthusiastic about meeting their seniors.

The event was organized by Alumni committee of DoMS, IIT Roorkee. It started with a welcome speech and then our Head of the Department Dr. Santosh Rangnekar addressed the students. The event was also graced by Dr. M. K. Barua who

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

REMINISCENCE appreciated the efforts of the students. After the addresses it was the time for thrilling performances. A series of high voltage and enthralling performances were given by the first year batch. Meanwhile the alumni are entertained by various fun games.

After the performances, it was the time for alumni to come forward and share their experiences. It was a pleasure to listen to their stories. Meanwhile dinner was also served. Finally a note of thanks was delivered and it marked the conclusion of the event. Now it was the time to rock the stage. The past and

present students danced to their heart. They lived once again what they called as “Life”.

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

SpotLight ………………………………………………………

VIPANAN Big data is already a buzzword in the field of Marketing. Marketers are getting increasingly interested and involved in capturing and analyzing Big Data for a variety of reasons. For a management student, it is of vital importance to understand about this new concept. DoMS, IIT Roorkee found such an opportunity to discuss the topic and learn from the industry leaders. The event was marketing summit, Vipanan which was organized on 15-Sep-2013 at Department of Management Studies, IIT Roorkee in association with ISTD Dehradun chapter. The event was sponsored by brands such as Namo Alloy & Indian Oil and conducted by MarkIIT, the marketing club of DoMS, IIT Roorkee. There was an aura of excitement in the department and students were

enthusiastic about the same. The event saw participation of some of the industry stalwarts. A total of four eminent personalities joined the occasion and shared their experience with the students. Their brief profiles are mentioned below:  Mr. D. Bhattacharyya – Sr. Executive Director (HR), IFFCO  Mr. Shushobhan Chowdhury – VP and Head of Digital Strategy India, JWT  Mr. Raghu Iyer – Head Marketing (Vaccine Business), Panacea Biotech Ltd.  Mr. Divyang Gupta – Account Manager, IBM The summit was also attended by the head of the department Dr. S. Rangnekar and Dr. J. K. Nayak.

The event took off by welcoming all our guests and lightening of the lamp. Then batch profiles of DoMS, IIT Roorkee were presented. Then a welcome note was delivered by Dr. Rangnekar, HoD where he touched upon various activities of the department. He elaborated on the four basic objectives of teaching, training, consulting and research and the initiatives taken by the department in these areas. It was now the time for renowned speakers to enrich us. The first speaker was Mr. D. Bhattacharyya who expressed his happiness to be with the youth. He took us a few years back when an Indian was contributing to around 70% of the total wealth of the world. He also recalled how

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

VIPANAN

rupees and the dollar was equivalent 70 years ago. He shared his concern that now a days Indian people do not follow its own history. He explained further by citing an example of a Bangladeshi youth and his ignorance about his own history and leaders. He compared the similar situation for India as well. According to him, people now are more open to the leadership of Jack Welch rather than Mahatma Gandhi. This has led to a shift in the overall value system which is now centered around “only we win”. He stressed on the fact that inclusive growth is essential for the nation and need of the hour. This can be achieved by focussing on the rural India and he shared some statistics on the condition of rural India. In this backdrop he introduced his organization IFFCO, the largest marketer of chemical fertilizer in the world. He revealed the fact that IFFCO is owned by 5.5 crore farmers of the country. If we include their families the figure reaches to one fifth (2022%) of the total population of the country. This way IFFCO is a direct stakeholder in the food security bill which is expected to provide subsidy to 75% of the rural population and 67% of the total population (82 crore people).

The scheme would cost approx. 130 lakh crore to the government. Overall he opined that rural market is expected to see high growth and it should be the area of focus. Another issue he touched was the gender diversity i.e., participation of women in the labor force. He supported greater participation of women and gave the example of the matured economies. The speaker was also a great admirer of Swami Vivekananda and quoted him several times in his speech. As a whole it was a great inspiring speech and a treat to listen to. The next speaker was Mr. Shushobhan Chowdhury who initiated his dialogue with the quotation “Be the change you want to bring”.

He narrated his own story how he went through many adverse conditions before tasting the success. Mr. Shushobhan is an in and out marketing guy and he reflected upon the role of marketing. He said that it is more important how to see than what you sell. He then ran through a presentation which explained the digital media revolution. It also contained information about Big Data and supported by insights from the

speaker who said that Big Data is actually a rehashing of the term business intelligence. He also explained how digital marketing is helping in bringing loyalty. An example of Pepsi was given. According to the guest, 72% of the people who drink Pepsi are also a customer for Coke hence hinting that there is no absolute loyalty. The data can only give us details such as what share of people of using a product but can’t tell us how to induce loyalty. Big Data can help us to predict, analyze and narrowing our decision making but can’t help with sales, creativity and marketing. We can have insights from the data but not at the cost of marketing. Therefore he concluded that data could not replace the marketing, at least not in the visible future. Nevertheless he acknowledged the power of data and quoted example of retail sector where Big Data is extremely helpful in increasing efficiency. He also encouraged students to study about digital media and shared few sources where we could learn from. The third speaker was Mr. Raghu Iyer, an alumnus of SIES Mumbai. His areas of specializations are brand management, marketing

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

VIPANAN and product analysis for pharmaceutical products. He first explained us the distinction between generic and branded drugs and some patent laws related to that. He also spoke about how cost of R&D is growing day by day and there should be a pipeline of future projects. He mentioned that now the complete lifetime of a product is around 8-9 years which used to

be 12-13 years earlier. This also contributed towards growth in the R&D costs and on top of it, there is no guarantee of success (actually the success rate is one in one thousand). He then went on to describe the pharmaceutical industry in India which is dominated by local players, although foreign companies are catching up. It is a recession proof industry

and poised to be $70 billion market by 2020. He also introduced his organization Panacea Biotech Ltd. which is at number 3 in words as far as no. of tablet consumption is concerned. He also shared that India is hub of clinical trials too as per patient recruitment cost is low here. The speaker then discussed the delivery network in which doctors play a central role. The marketing is very different as well due to the fact that medicines are considered a need in a negative sense. The sales representative becomes a key player in overall marketing efforts. Opinion leaders are other important players of the game. In this context, he talked about the digital social media marketing and how is changing the landscape. Lastly he enumerated the main features of a brand plan and its key elements. The fourth and final speaker of the day was Mr. Divyang Gupta. He is a 2005 batch alumnus of DoMS, IIT Roorkee and currently associated with IBM. He has also worked with organizations like TCS, PwC and E&Y in the past. The speaker briefed us about the IT industry. He also deliberated upon the changing nature of the

industry in which customers are at the center now. He explained us the various products and services offered in IT industry and also introduced us to the world of ERP. Then he went on to social media and what kind of role it is playing. He also walked through the different functions of IT companies. This marked the end of the event. A note of thanks was delivered and mementos were presented to the guests. This was a very well organized session with the well known names of the industry. The topic of the summit was as relevant as it could be. The take-away from the session was immense and students were very appreciative of the same. The Vipanan is over now however the learning is

there to stay.

Department of Management Studies IIT Roorkee

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DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE ROORKEE - 247667, INDIA Comment/Feedback Mail to : - domination.doms.iitr@gmail.com Contacts: Nilaya Mitash Shankar (+91-9415580227) Sharad Shrivastava (+91-9627419049) Follow us :Blog Page- http://domsiitroorkee.blogspot.com/ Twitter Page- http://twitter.com/#!/doms_iitroorkee Facebook Page- https://www.facebook.com/pages/DoMS-IIT-Roorkee/156383884413349