The Edge

Vol-II

No. 2-3

April-Sept. 2005

FROM THE DIRECTOR’S DESK We are meeting after a gap of three eventful months. The most satisfying development during this period has been the extent of unsolicited praise that we received on the last issue of the Edge.

My thanks to all who found time to go through the contents and then told us what gripped them most. Thanks to all of you, dear readers.

Elliot wrote’April is the cruelest month, breeding lilac out of the dead land.’ In a B-School’s life, the AprilJune cycle represents the most crucial segment because the task of seeing off the outgoing batch and recruiting the incoming batch fall in this cycle. I am happy to inform you that IILM successfully completed the 12th batch of PGDBM in June, the Convocation being held on August 2, 2005 with Dr. C. Rangarajan as the chief guest. We also completed the admission process to the 2005-07 batch of PGDBM with 180 intakes.

For our PGDBM 04-06 batch, we have lined up several new attractive electives which are unique in the history of Indian B-Schools. Two such electives are Management through literature and Leadership through biographies.

More on such initiatives next time.

12

Who is an entrepreneur?

14

To be a winner

27

Does internet usage affect Sociability

Prof. B. Bhattacharyya

The www.iilm.edu

Edge

CONTENTS IILM’S BI-ANNUAL MAGAZINE

Vol-II No. 2-3

April-Sept. 2005

04

Dr. C Rangarajan on Indian industry and new challenges

08 09 16 19 20 23 26

A partner in singapore Financing problems of small enterptrises Political Economy of Outsourcing Culture Vulture Women on top Human Face of Rightsizing

28 30 38 40 44 52

32

Two-pit wonder man

35

Mittal Steels the show

Realty Check Audit busters Quote Unquote Reading Material Student Corner Campus News

Entrepreneurial portal EDITORIAL BOARD Mrs Malvika Rai Prof. B. Bhattacharya Shree Dina Nath Mishra Mrs. Kakoli Sen

EDITORIAL TEAM Shweta Berry Shuchir Bhatia Arpita Sarkar Vishal Goyal Anusua Mitra Vibhuti Mall

DESIGN: Sunil Kumar

COVER STORY

CONVOCATION ADDRESS

By Dr C Rangarajan Chairman, Economic Advisory Council August 2, 2005; Institute for Integrated Learning in Management, New Delhi

I

T GIVES me great pleasure to be in your midst this evening to deliver the Convocation Address of this new but fast growing Institute for Integrated Learning in Management.

This Institute was set up in 1993 which falls clearly in the post-liberalisation period which demands more than ever a greater efficiency in the use of our resources. Quality education in the field of management has become absolutely essential if we as a nation are to maintain our competitive edge.

I congratulate the Institute on the success it has achieved in a short span of 12 years.

Let me at the outset congratulate all of you who are graduating today. Let me add a word of special appreciation to those who are receiving awards.

One stage in your life is coming to an end and another is about to begin. You are leaving the sheltered collegiate life and entering the wide world with all its ups and downs.

From the country's point of view, we welcome you as our next generation of managers and leaders. May you grow up to provide effective leadership over this new century. In a sense, your future is intertwined with the future of this country. You also have an opportunity to shape it.

We are living in a time of far reaching changes. Modern management must, therefore, be viewed as a dynamic process of seeking constantly to align a firm’s internal resources with The

4 Edge

The path of transition is, no doubt, difficult. A greater integration of the Indian economy with the rest of the world is unavoidable. Even today countries are knocking WTO doors. It is important that Indian industry be forward looking and get organised the external environment. It is this external environment which is undergoing a transformation in this country and elsewhere because of the technological changes on the one hand and of the changing perception of the roles of State and market on the other.

It has always been the case that the extent to which a firm is able to achieve its objectives has been dependent on its ability to understand the opportunities presented and constraints imposed by its environment and to respond with appropriate policies at the strategic and functional levels. Only increasingly, the environment that is relevant is not only domestic but also

global.

Let me say a few words on this occasion on the shifts in the industrial policy paradigm in our country. The process of industrialisation in India in the first four decades was Governed by two considerations, import substitution and industrial licensing.

Import substitution constituted a major plank of India’s foreign trade policy and, therefore, of industrialisation.

Planners more or less chose to ignore the option of foreign trade as an engine of India’s economic growth. This was primarily due to the highly pessimistic view taken on the potential for export earnings. A further impetus to the inward orientation was provided by the existence of a vast domestic market. In retrospect, it is clear that policy makers not only under-esti-

IND &

IAN USTRY NEW CHALLENGES mated the export possibilities but also the import intensity of the import substitution process itself. As a consequence, India’s share of total world exports declined from 1.91 per cent in 1950 to about 0.53 per cent in 1992.

Another important element in the process of industrialisation was a system of industrial licensing under which a licence was required before setting up any large unit.

This practice had roots in the belief that resources could be best allocated only by a planning authority and that licensing was the best way to manage limited resources. While the industrial licensing system underwent some changes in terms of threshold levels and types of products, it formed an essential part of Government policy until the end of the 1980s.

The year 1991 is an important landmark in the economic history of Independent India. The country went through an economic crisis triggered by a serious balance of payments situation. The crisis was converted into an opportunity to introduce fundamental changes in the content and approach to economic policy. The response to the crisis was to put in place a set of policies aimed at stabilisation and structural reform.

While stabilisation policies aimed at correcting the weaknesses that had developed on the fiscal and the balance of payments fronts, the structural reforms sought to remove the rigidities

that had entered into the various segments of the Indian economy. The structural reforms introduced in the early nineties broadly covered the areas of industrial licensing, foreign trade, foreign investment, exchange rate management and the financial sector.

Since then, it has been extended to other areas. From the point of view of industrialisation, changes in licensing, foreign trade and foreign investment had important implications. Even before the onset of reforms, the problems associated with industrial licensing were well recognised.

The approach document of the Eighth Plan submitted in May, 1990 had remarked: “A return to the

regime of direct, indiscriminate and detailed controls in industry is cleanly out of question. Past experience has shown that such control system is not effective in achieving the desired objective. Also the system is widely abused and leads to corruption, delays and. inefficiency".

One early step undertaken as part of the structural reform process was to dispense with licensing. Changes in foreign trade policy focussed on reducing the tariff rates and dismantling quantitative controls over imports. The tariff rates have been brought down in stages. Some caution in this regard has become necessary to enable the Indian industries set up behind high protective tariff walls to adjust to the The

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What India lacks in mass manufacturing capacities can be made up by her capabilities in design innovations and by moving up the value chain. It is worth pondering over.

Experts from various industries must judge the validity of this statement

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changed situation. The policy towards foreign investment underwent a significant change with foreign investors given the freedom to own majority share holding over a wide spectrum of industries.

Without going into details, the common thread running through the various policy measures introduced since 1991 has been the improvement of the efficiency of the system.

The thrust of the New Economic Policy has been towards creating a more competitive environment in the economy as a means to improving the productivity and efficiency of the system. This is to be achieved by removing the barriers to entry and the restrictions on the growth of firms.

While the Industrial policy seeks to bring about a greater competitive environment domestically, the Trade Policy seeks to improve international competitiveness subject to the degree of protection offered by the tariffs. Private sector is being given a larger space to operate in as much as some of the areas reserved exclusively earlier for the public sector are now allowed to private sector. In these areas, the public sector will have to compete with the private sector, even though the public sector may continue to play the dominant role. What is sought to be achieved is an improvement in the functioning of the various entities, whether they be in the private or public sector.

Changes in foreign trade and foreign investment policies have altered the environment in which Indian industries have to operate. The path of transition is, no doubt, difficult. A greater integration of the Indian economy with the rest of the world is unavoidable. Even today there are many countries which are knocking on the doors of the WTO to enter. It is important that the Indian industry be forward looking and get organised to compete with the rest of the world at levels of tariff comparable to those of other developing countries.

Obviously, the Indian Government should be alert to ensure that Indian industries are not the victims of unfair trade practices. The safeguards available in the WTO agreement must be fully utilised to protect the interests of Indian industries. India must take a proactive stand in the next round of trade negotiations and articulate its own demands, focussing on what it wants from the global trading system, such as prohibition of uni-

lateral trade action, establishing symmetry between the movement of capital and natural persons and zero tariffs in industrialised countries on labour intensive exports of developing countries.

The Indian industry has a right to demand that the macro economic policy environment is conducive to rapid economic growth. The configuration of policy decisions in the recent period has been attempting to do that. It is, however, time for Indian industrial units to recognise that the challenges of the new century demand action at the enterprise level as well. They have to learn to swim in the tempestuous waters of competition away from the protected swimming pools. India is no longer a country producing goods and services for the domestic market alone. Indian firms are becoming and have to become global players. At the minimum, they must be able to meet global competition. The search for identifying new competitive advantages must begin earnestly. India's ascendancy in IT is only partly by design. However, it must be said to the credit of policy makers that once the potential in this area was discovered, the policy environment became strongly industry friendly.

How do India and Indian firms maintain a competitive edge? Analysing India's comparative advantage in engineering vis-a-vis China, a leading Indian industrialist had commented that in products that involved flexible manufacturing with a high level of product and industrial engineering, multi vendor coordination and continuous improvement, the Chinese fared badly. They are good at making simple things in large batch sizes. The commentator adds that what India lacks in mass manufacturing capacities can be made up by her capabilities for design innovations and by moving up the value chain. It is worth pondering over this comment. Experts from the various industries must judge the validity of this statement. However, this is just one illustration. Over a wide spectrum of activities, India's advantage, actual and that which can be realised in a short span of time must be drawn up. Of course, in a number of cases, it will require building global scale plants.

But this need not necessarily be so in all cases.

In fact, the advent of IT is modifying the industrial structure. As one commentator has said, "The revolution in tele-communications

and IT is simultaneously creating a huge single market economy, while making the parts smaller and more powerful". In today's environment, the primary focus has to be on the strategy and quality of micro-economic business management and the goal must be to achieve higher levels of efficiency and productivity. A new productivity culture must emerge and with it an organisational structure and incentive system that promote productivity.

Technology is the lifeblood of industry. The future progress will be propelled by technology, as it has been so in the past. Indian manufacturing sector must be fully in tune with the latest developments in technology.

It is in this context that one must note with concern a disconcerting trend. Examination of the operating financial statements of manufacturing companies does not show that research and development expenditures (R&D) are a sizeable or indeed a rising proportion of their operating revenues. The weighted average proportion of R&D to operating revenues for little over 1,000 companies in financial years 2001-02, 2002-03 and 200304 indicate that the proportion was remarkably stable at around 0.40 per cent.

For 2004-05, for a smaller sample of 260 relatively larger companies, the proportion was higher at 0.69 per cent. There is considerable variation across firms, with some pharmaceutical companies for instance registering R&D expense at 15 per cent or more of their operating revenues. At the other end of the spectrum firms engaged in commodity production -such as textiles and sugar recorded nil R&D expense.

The median value of R&D expenditure as a proportion to operating revenue for the larger sample of 1,000 companies was 0.15 per cent, while in 2004-05 with the smaller sample the median value was higher at 0.25 per cent. The size of the firm appears to have little to do with the ratio of R&D to sales, since in each one of the four years the correlation coefficient with respect to sales value has a negative and small value. With respect to R&D expenditures, we need to remember some amount of R&D expenditures may be happening without being classified as R&D expenditure. Normally, it is expected that outward orientation will result in greater in-house R&D. Even adaptation of imported technology will require R&D efforts. It is necessary

that management Institutes and others must make an in depth analysis of R&D expenditures and find out what can be done to bring about a significant change in this area.

What we need today is road maps for the different segments of Indian industry. Such road maps must delineate the path different industries must take to achieve productivity and efficiency levels comparable to the best in the world.

Of course, we must have our priorities. We must know where we have a distinct comparative advantage as in the case of IT. We must also know where the payoff is highest in terms of employment. Agro processing industries and relatively labour intensive industries such as leather and textiles need a more focussed attention in this regard. In effect, what we require is strategic plans for the growth of industries.

The plan should address in relation to each major industry issues relating to technology upgradation, size and structure of firms and export potential. While industry specific policies may be indicated, the focus must be on how to improve the functioning of individual enterprises to reach international standards. Where we cannot achieve such standards, we must be willing and honest enough to admit.

However, the goal must be how through a combination of technology modernisation and changes in organisational structure which promote productivity, Indian industry can compete effectively in the world market "The old economy" dominates the Indian industry. We should not let the old economy to become "older". Cement, Steel and Textiles will not vanish. We must rejuvenate and revitalise the old economy with the new economy tools.

When all is said and done, IT is an intermediate product.

India is among the few developing nations which can seize opportunities provided by globalisation. We must not let these go. Knowledge intensive industries in this context are a natural choice. Globalisation can covert brain drain into gain from brain.

In the world of today, competition in any field is a competition ill knowledge. That is why we need institutions of excellence. I am sure that IILM will play its role in strengthening management education in this country. May I wish you all once again the very best in the years to come.

We must have our priorities right. We must know where we have a comparative advantage, as in IT. We must also know where the payoff is highest in terms of employment.

Agro processing industries and textiles need more attention

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LOOKING EAST

INDIA-SINGAPORE

CECA

A PARTNER IN SINGAPORE

I

NDIA-SINGAPORE comprehensive ecofirst implementation-year, inflows of FDI and nomic co-operation agreement (CECA) is FII into India from Singapore are projected to a significant milestone not only in our FTA rise to 2 billion and 5 billion dollar, respecinitiatives, but also in India's 'Look East' tively, which would be a major gain. policy.

Next, CECA would improve connectivity beWith the agreement in effect from August tween India and Singapore in the movement 1, partnership between the two nations is now of professionals. This is particularly important ready for a take off into a higher growth trafrom India's point of view both because of our jectory. If we believe that India cannot be left competitive advantages and due to large imDr. Amit Mitra behind in the accelerating FTA-paradigm ports of services by Singapore (over $ 36 bilSecretary General, FICCI worldwide, then it is imperative for us to have lion in 2004). Major gains are likely for Indisuch comprehensive agreements with counan service-providers in sectors such as busitries like Singapore ness/professional services, education, distriThe reasons are not far to seek. Singabution, transportation, environmental, conpore is our top trading partner in ASEAN struction and related engineering services. and accounts for 3.4% of our global The practice of Indian professionals in Sintrade. Singapore has progressively gapore would be easier because liberalised over a relatively short mutual recognition agreements period, fostering democracy and (MRAs) on educational and proa strong, transparent regulatory fessional qualifications would be framework. With very few border signed within a year in accounting protection measures, its openness and auditing, architecture, medical to international trade comes to the (doctors), dental and nursing secfore. Singapore is known for high levtors. el of competitiveness and commitment to Such liberalised access to the Singapore quality and standards (75% of its 'standards' market should lead to substantial benefits for are aligned to international ones). An agreement the country. Singapore, too, stands to benefit in sevwith Singapore would help India attain a 'benchmark' and eral areas. In goods, India's import duty was eliminated raise our preparedness and ability to negotiate quality FTAs on 506 items from August this year, while tariffs will be that are under negotiation or consideration eliminated or substantially reduced within 5 years on about We need to recognise that CECA is an integrated pack- 75% of Singapore's exports to India. age of agreements — not an FTA in goods alone. Besides India has agreed to open its doors for banks from Sinagreements on trade in goods and services, this includes gapore. Three Singapore banks would be allowed to set an agreement on investments, mutual recognition agree- up 100% subsidiaries and will be treated at par with naments in conformity assessment of standards in goods, co- tionalised banks. operation agreements in customs, science and technoloThese positive features notwithstanding, one key point gy, education, e-commerce, intellectual property and me- has to be kept in mind to ensure the success and susdia. The opportunities are virtually unlimited because of tainability of CECA. Since about 45% of Singapore's globsuch comprehensive coverage. Take bilateral trade in goods al exports come from Ire-exports, the industry feeling is that currently stands at $ 6.4 billion. The turnover increased that threat of 'trade deflection' is a potential source of worby over 50% last year. Provided business from both the ry. To allay the industry apprehension, rules of origin incountries could exploit the potential advantages, I expect cluding 40 per cent local content and change in tariff clastwo-way trade to move up to $ 10 billion soon. sification (CTC) would have to be strictly adhered to.

When it comes to investment, the scope is great. ComThis would minimise risks of imports from Third counmitments to open up investments and improved double tries. If rules of origin are tightly enforced, it will instill contaxation avoidance agreement (DTAA) would help attract fidence of the Indian business community in the agreement. investment from Singapore. Massive inflow is expected in And that would go a long way in making CECA a "winIndia’s major infrastructure projects like modernisation of win" and realising the enormous potential and synergy both, airports and seaports and special economic zones. In the the countries share.

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FUND

RAISERS

FINANCING

of SMALL ENTERPRISES S

MALL ENTERPRISES have played a catalytic role in the development of nations like Japan, the US and Germany.

Small enterprises are the backbone of any economy, particularly developing economies like India which are faced with the gigantic task of poverty reduction and finding employment opportunities for the teeming millions.

Small enterprises have certain advantages due to which they can play a crucial role in solving economic and social problems. They require smaller initial investment, generate maximum employment per unit of capital employed and are flexible to adapt to the changing market scenario. Therefore, a healthy development of the small-scale sector is of utmost importance to the economy. In India, the small-scale sector has grown fast and now makes a significant contribution in providing employment, industrial production and exports. Table-1 and Exhibit-1 present data about the growing importance of this sector in India.

Unfortunately, Industrial sickness in this sector is causing grave concern to the Government and the society. According to data from the Third Census of Industries 2001-02, as many as about 8.23 lakh SSIs (inclusive of small scale service business enterprises and village industries) are suffering from industrial sickness/incipient sickness.

While industrial sickness can be caused by a variety of factors, in the

four (28%) were set up during 197585, six (42%) during 1986-95 while only one (7%) established after 1995.

These units were engaged in a variety of businesses, including manufacturing floor tiles, hosiery, herbal medicines, auto parts, plastic films, pressure die-casted components, filters and pipe products, terracotta Dr. N.L. Ahuja Mr. S. Karna lamps and gift items.

Professor of Finance Asstt. Prof. - Economics Causes of Financing Problems A major reason for financing probcase of small-enterprises, financing lems is lack of proper planning and problems account for a major part inadequate homework by entrepreof it. neurs. These are aggravated by an inAuthors used a structured ques- different-to-negative attitude of fitionnaire to interview 14 small en- nancial institutions towards the small trepreneurs from Delhi/Gurgaon in sector. Main problems are highlightApril-May 2005 to elicit their re- ed below (names changed): Institutional Financing: Almost all sponse on the cause of financing problems of small enterprises and units interviewed complained about what could be done to overcome lengthy and complicated procedures them. Of the contacted units, three of banks and FIs, too much paper (21%) were established before 1975, work, red-tapism and unnecessary

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'clearances' required from various unrelated departments for securing bank loans. Also, even after all formalities had been complied with, the banks/FIs took unusually long to sanction and disburse loans. The unfriendly attitude of the staff and expectations for bribes/gifts were mentioned by close to 40% of the units covered.

The availability of bank funding for the small-sector has not kept pace with increasing requirements. As shown in Exhibit-2, though the total net bank credit (line 'aa') more than doubled during 1996-2003, the percentage share of SSIs in the total net bank credit (line 'cc') significantly dropped from the vicinity of 16 -17 % in mid 90s to a mere about 11% in 2003.

About the cost of capital, 81% respondents who answered the question "how reasonable is the cost of interest on loans" found the interest rates charged by banks were "high".

Several complained of the additional charges levied by banks/FIs such as up-front fee, file maintenance fee and miscellaneous charges. In addition, inadequate availability of institutional credit forced several SSIs to approach private moneylenders who charged much higher rate of interest.

Working Capital Management: A

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major problem of the small businesses is the relatively heavy blocking of funds in the working capital.

In particular, the negative relationship between credit received and credit allowed might be a cause of concern that can drag down the SSIs profitability. For the group studied, the average credit period allowed to customers amounted to 85 days, while the credit period allowed to them by their suppliers was a meagre 46 days.

Small firms are perceived to be higher risk customers and suppliers insist of being paid promptly.

On the other hand, cut-throat competition often forces the small units to extend more and more credit facility to their customers. In particular, the larger firms have recently been seen to take much longer time to pay for the supplies made by smaller units.

In this connection, till 2001, there was a law (Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act 1993) to ensure that large firms making purchases from small-scale industries did not delay payments; if they did, they would have to pay penal interest based on the lending rate of banks.

These provisions were withdrawn in 2001. This has aggravated SSI financing problems and affected their profitability.

Diversion of Funds: When Mukund received a loan from the bank, he could not resist the temptation to buy a car using part of the loan, thus leading to scarcity of capital for the business. In other cases, diversion of funds happened because the entrepreneur got over-ambitious and started one too many projects at the same time, pulling funds from one project to the other. Out of the units studied, 42% answered in affirmative when asked if the loan funds were ever diverted to uses other than the ones for which they had been sanctioned. In half of such cases, the diversion of funds was on account of "pressing family/personal needs", while in others it was due to a change in the nature/scope of business or to pay back earlier liabilities.

Planning and Home Work: Only 50% respondents said that a proper feasibility study had been conducted before starting their business. "Haste makes waste" is true in business as much as in other aspects of life. Johnnie, who wanted to start a poultry farm, bought a ready-made Project Report from the market and submitted it for bank financing after making a few modifications. Knowing

Financial & Management Training: nothing about the poultry business, banks to allocate a fair share of the he later tried to start another business credit to this sector. Also, alternative The importance of appropriate trainbut found the loan inadequate. A lack ways of providing equity capital to SSIs ing cannot be overstated. Though sevof proper planning led to financial should be explored, including private eral organisations exist to facilitate this problems. placement of equity, widening the aspect, the task at hand - to train sevDebt Servicing and Maintenance of scope of venture capital to cover small- eral million small entrepreneurs in urAccounts: Some businessmen seem to scale enterprises, starting a small-cap ban and rural areas is too gigantic to have this wrong notion that they can stock index, or even setting up a sep- be left in the hands of a few organievade taxes by not keeping proper ac- arate stock exchange for smaller sations. In the UAE, all banks are recounts. In other situations, it may be firms, on the lines of AIM (Alternative quired to set aside 1-2% of their indue to just carelessness or to avoid Investment Market) of the UK which come for training. If such a practice the accountant's wages. In any case, provides relatively inexpensive listing is followed, it would create a massive keeping proper accounts is necessary with extremely lax and simplified con- fund to be utilised for training the bank for legal purposes as well as to raise ditions and procedures. staff and bank clients, with emphasis institutional financing and for inter The entrepreneurs can help their on SSIs. It might also help in minnal financial management. Again, units by doing their homework well imising NPAs. In fact, a minimum timely payment of interest and re- and managing the financial and oth- amount of financial and management payment of loans is essential for in- er resources as sincerely and wisely training should be considered a prespiring confidence of the banker. Carerequisite for project financing by lessness in this regard would prove bank/FIs. It should also form an escostly. sential part of school and adult eduImportance of Stable Equity: Jay cation programmes both in urban and Small firms are perstarted his small business with eqrural areas. uity of Rs 4 lakh and a bank loan [About authors: Dr. N.L. Ahuja ceived to be higher risk of Rs 8 lakh. However, the is a Professor of Finance at IILM customers and suppliers insist amount he showed as his eqand can be contacted at uity had been borrowed from dr_ahuja@rediffmail.com. Mr. on being paid promptly. On the his brother and other relaS. Karna is an Assistant Proother hand, cut-throat competition tives. Hardly had the unit fessor of Economics at IILM started functioning when the and can be contacted at often forces small units to extend relatives wanted their funds sachchi_k@yahoo.com. ] credit facility to customers. repaid. Withdrawal of funds REFERENCES from business to pay back the Besides, larger firms take a relatives started financial prob❏ Finance Association of XLRI, very long time to pay the lems from which the unit could "Industrial Sickness among SSIs in never recover. Adequate equity Jamshedpur", 1986, Research survey SSIs capital on a permanent basis is a must Directed by Dr. N.L. Ahuja. for the success of the business. ❏ Suryanarayana A, "Working CapiThe Response: possible answers to the tal Management in India", ICFAI May problems as possible.

2005.

Given the importance of small-scale Banks and FIs should act as ❏ Dr B. Yerram Raju, Small and sector to our economy, it is clear that mentors and patiently work together Medium Enterprises (SMEs): concerted efforts would be needed to with the entrepreneurs to help resolve Issues in the changing resolve the problems facing this sec- their problems rather than pure global economic environment, tor. The issue requires a multi- moneylenders. http://www.banknetindia.com/ faceted approach with contribution Larger firms buying supplies from banking/ssi3.htm) from the banks, SIDOs, SIDBI, SFCs, small-scale units should help out by ❏ Third All India Census of Small Scale Government and the entrepreneurs paying their dues in time. Hero Hon- Industries 2001-2002, (2004) Ministry themselves. da has reportedly taken a step in this of Small Scale Industries, Government The Government can help in pro- direction, by setting a target of pay- of India (http://www.laghuviding and enabling a fair business en- ing its creditors within 45 days, udyog.com/publications/books/fcenvironment, protecting the small-scale while the industry average is over 60 sus.htm. sector from unhealthy competition days. If all large firms settle their ❏ SSI in India, SIDO Online, created by dumping tactics of foreign payables to SSIs in 45 days, it would http://smallindustryindia.com/ companies as well as by encouraging help the latter a great deal. ssiindia/overview.htm.

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TERM TIME

WHO IS AN

ENTREPRENEUR? E

Dr. Raj Agrawal Professor & Head (IB Area)

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ntrem means to enter in between and prendue means to grasp or seize. So, entrepreneur means a person who penetrates the space between established boundaries and seizes opportunities that are overlooked by others. It is precisely this ability to penetrate established boundaries and to think of the unthinkable that gives the entrepreneur a decisive advantage over those who pursue strategies based on conventional ideas and beliefs. This is evident in today's world of business, where entrepreneurs like Lee Kah Shing and Richard Branson have made their mark by deliberately flouting conventional wisdom.

New technologies, political ideologies and cultural attitudes are transforming markets, products, business processes and the entire outlook of the business environment. Within the context of this rapidly changeable, highly sensitised approaches to the education of managers and entrepreneurs have often proved not

just less useful but also positively productive.

Alternative job focused action learning approaches to management education serve only to restore a problem solving orientation in management thinking.

Such education does not adequately address the central question of how to help managers rethink their entire worldview and hence of opening up new avenues for such interventions and of creating new managerial agenda for effective action in a rapidly changing world.

Schools, because of their focus on discipline based education system, unwillingly propagate a thought style and a mental attitude that pays far too much regards to conventional academic priorities of analytical rigor at the expense of loss of imagination and resource fullness in dealing with practical concerns. The power of broad educational program is always latent and potential. Their power can only be expressed by translating the insights into specific individual circumstances.

However, it is precisely this very aim of freeing the thought from conventional wisdom that modern universities have by large failed to incorporate. They are providing individuals with experiences that have already been held. Rather than aiming towards opening of vision to new ways of thinking, the present situation largely demands absorption of sterile facts.

Entrepreneurial imagination is not to be divorced from the facts. Instead it is a way of discovering new facts and making them pregnant with possibilities. This prepares students for adventure of life.

Toyota produces cars, Disney provides entertainment, Walmart sells Retail products.

Traces of past pattern of thought constrain and help shape the possibilities of future way of thinking.

Colleges have failed to equip their students with necessary changes in the curriculum. In the present scenario India is fast growing in terms of industry and resources. But the major question that remains still demands opening of business operations for those who can take the initiative and seize this golden opportunity.

Four Indian companies- Infosys, Wipro, Bharati and Ranbaxy - recently reached the momentous $1 billion mark in annual revenues. What is common across these companies is that they are representative of the new Indian entrepreneurship- focused in thought, global in outlook, proactive in approach and meticulous in execution.

These companies came of age in the period immediately before economic liberalisation and skillfully used the opportunities offered by deregulation to grow their businesses. At the same time, they built strong organisational capabilities such as project management, quality of execution and speed.

Ranbaxy was already an important player in the Indian market before 1991 but its international business was restricted to the export of formulations to

Entrepreneurial imagination is not to be divorced from facts.

Instead, it is a way of discovering new facts and making them pregnant with possibilities. This prepares students for life.

Toyota produces cars, Disney entertains, Walmart retails products

the Soviet Union and bulk drugs to other countries. When in the early 1990s the then Ranbaxy CEO Parvinder Singh, embarked on his attempt to make the company a global, research based pharmaceutical entity and few believed that he would succeed. Critics felt that his approach would distract Ranbaxy from its strong position in the local market and the company would end up being neither here nor there.

But Parvinder Singh remained firm in his resolve, and planned in his approach - and his vision continues to inspire company even after his untimely death.

Infosys is another company that has remained faithful to its philosophy and strategy. Believing that meeting expectations on a continuing basis is more important than the hype of being known as divergent thinker, the Infosys management team has emphasised excellence in delivery, be it onsite or offsite.

The turning point for Wipro, a mini-conglomerate with interests in fast moving consumer goods, fluid power and vanaspati, was its entry into computer hardware business in the early 1980s. This gave Wipro the " technology" tag and even more- a breadth of skills in IT-related services that is perhaps unequalled by its Indian rivals. Today, Wipro is also firmly linked to outsourced R& D services.

Bharati made its name in telecom services when it bid aggressively for the Delhi cellular service license in 1992 and subsequently became the first private telecommunication service provider in basic telephone services, in Madhya Pradesh.

Through successful bids for new licences, the acquisition of smaller players, a focus on quality and accessibility, and aggressive marketing, Bharti is today a powerful player in telecom with nationwide presence in GSM cellular, basic telephone and long-distance carrier services.

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Edge 13

FUTURE FLOCK

"Developing future leaders as entrepreneurs - an organisational challenge"

WINNER

TO BE A

E Mrs.P.Malarvizhi Asst.Professor - Accounting & Finance

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NTREPRENEURSHIP IS a dynamic process of vision, change and creation. It requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions. As the saying goes, If you don’t know where you're going, you'll probably end up somewhere else.

Vision shows us the purpose for living and the goal gives a direction to that vision. Together, they shore up an optimistic belief in our future. This defines the characteristics of a leader aptly.

Entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner. It is this perspective that has revolutionised the way business is conducted at every

level and in every country. This article sets out to identify the necessity of grooming future leaders as entrepreneurs.

The New Trend of Aberration to a Scintillating Future: The New Millennium brought in liberalisation, privatisation and globalisation (LPG) in every sector of business and facilitated the rapid transformation of conventional business ideologies, primafacie focusing on various ambits of customer satisfaction for sustainable opportunities and continual improvement.

Decentralisation and opening up of many trade avenues invited the participation of global giants, which brought in the climate of competitive business galore.

Business leadership navigating to-

wards sustainability in the competitive environment to garner and retain their place in the market emerged as the need of the hour. Leadership concepts undergo a drastic change in its conventional directorial thinking giving birth to a new era of Entrepreneurs.

Risk taking, passionate, innovative leaders make entrepreneurs. Entrepreneurship requires an application of energy towards the creation and implementation of new ideas and creative solutions.

Essential ingredients include the willingness to take calculated risks, in terms of time, equity, or career; the ability to formulate an effective venture team; the creative skill to marshal needed resources; fundamental skill of building solid business plan and finally, the vision to recognise opportunity where others see chaos, contradiction, and confusion.

Entrepreneurship is more than the mere creation of business. The characteristics of seeking opportunities, taking risks beyond security and having the tenacity to push an idea through to reality combine into a special perspective that permeates entrepreneurs. An "entrepreneurial perspective" can be exhibited inside or outside an organisation, in profit or not-for-profit enterprises, and in business or non-business activities for the purpose of bringing forth creative ideas. Thus, entrepreneurship is an integrated concept that permeates an individual's business in an innovative manner.

Successful Leader but a failed Entrepreneur: Turning back to world history, one cannot lose sight of Winston Churchill. Prime Minister of England during World War II, Churchill epitomised the essence of strong leadership. His speeches were a great inspiration to the embattled United Kingdom.

He took charge at a time Britain was facing an obscure situation and fighting a losing battle. He turned an almost lost battle to a victorious one.

With such accolades, it would be but nat-

ural to expect him to lead the country after the end of the trauma. But to great shock and surprise, he failed miserably in the general election that ensued World War II. Leaving apart the political reasons, his failure could be attributed to his lack of entrepreneurial skills. As a leader he was highly inspiring, ethics driven. But he lacked long-term vision and was not a change leader to take the country to new era of prosperity. Can the traits that so effectively transformed the political arena play out in a business setting though?

Winners make it happen: Losers let it happen Lieutenant General Sir William Butler once said: "The nation that will insist on drawing a broad line of demarcation between the fighting man and the thinking man is liable to find its fighting done by fools and its thinking done by cowards."

There's a business analogy to pay attention to: It's much better to think your way through a problem than to fight your way to a resolution of it.

In this dynamic world of insecurity where

Entrepreneurship is more than the mere creation of business. The characteristics of seeking opportunities, taking risks beyond security and having the tenacity to push an idea through to reality combine into a special perspective that permeates entrepreneurs

every inch of ground has to be earned, where competition has scored its highest level, an organisation besides being equipped with an effective environment should also possess equally effective employees.

They should be encompassed with a vision for interpretation of the illusive, insecure future, has the guts to take risks and are equipped with innovative problem solving skills- making entrepreneurs the future of organisation.

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Edge 15

SOURCE

OF TROUBLES

POLITICAL ECONOMY OF OUTSOURCING

T

HE OUTSOURCING market cycle of further growth. for Information Technology From the Indian perspective, out(IT) services has been trans- sourcing clearly represents a win-win formed over the past decade. situation. Outsourcing brings in jobs, For a developing economy such as In- provides employment for India's dia with a large pool of trained man- large population of educated unempower, outsourcing repreployed graduates. In fact, as sents a huge economic opthe Economist points out Inportunity. Advances in dia has become one of the telecommunications techmost important global offnology that have yielded an shoring destinations pri80% rate reduction for a marily because of the more one-minute telephone call than 300,000 English-speakbetween India and ing college graduates being US/Britain since 2001 churned out by the InShaily Dash have made India one of dian educational system the world's most atevery year. If we factor Fellow tractive destinations in the macro effects of for the offshoring of services. IT and this increased employment, it implies BPO sectors are now lead sectors for more expenditure, savings and India expected to employ 4 million In- demand for goods and services. dians and generate US$57 billion, or From the perspective of the West, 7% of the GDP, by 2006. Outsourcing outsourcing is in line with what neooffers employment possibilities to classical economics suggests. Firms trained labor without requiring labor outsource because they find that cermobility. This has macroeconomic tain processes can be performed more benefits too as increased cheaply elsewhere, possibly developemployment adds ing economies. Outsourcing reduces to Indian National Income and purchasing power which adds to demand leading to a

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costs for firms and increases productivity. In the long run, both the individual firms and the economy can only benefit from such reduced costs and increased profitability. But in the short run, outsourcing causes unemployment. It is these 'adjustment costs' that underlie the high-pitched emotional reaction of the American public, press and even politicians to the issue of jobs lost due to outsourcing. If political conditions in the West turn adverse towards outsourcing it is likely to lead to protectionist tendencies and restrictions on companies outsourcing to India. The key point is that jobs created by outsourcing are not really in Indian hands. We do the work but it is created elsewhere. Therefore, it becomes imperative to understand what the political and economic imperatives are governing outsourcing in the West.

Perhaps, because it is a new phenomenon, the economic and rational issues surrounding outsourcing appear to be confused and difficult to identify. Why are exports of service sector jobs causing so much of public anxiety in the US? Outsourcing of manufacturing jobs, for example, has been going on for a much longer time and probably affected far more workers in the early 70s. Nev-

ertheless, outsourcing continues to service-sector jobs once considered its resources on high tech and avoid dominate headlines in the West with safe, can now be easily outsourced to wastage of resources on low-end serincreasingly strident demands by cheaper destinations in the develop- vices. This situation would result in political and labour organisations for ing world. the greatest possible increase in naregulations on outsourcing. OpinA key issue that has to be sorted tional output and hence growth and ions about outsourcing in the US are out is who are the main gainers and social welfare for both nations. Why? divided with the US Government and losers from outsourcing. That profit America benefits because firstly it the corporate sector strongly backing maximising firms benefit from out specialises in production of high tech outsourcing as necessary for en- sourcing is almost self-evident. The products, which it can then export to abling American companies to com- more important question is whether other countries and secondly because pete in a fast changing world econo- the nation as a whole benefits from it gets services at a much lower cost my. In their view, outsourcing may outsourcing? Further when we come than they would cost in America. This lead to temporary job losses but by fu- down to the individual workers do means the bottom line of American elling growth of the American econ- they benefit from outsourcing? Analy- companies improves and they can inomy will actually result in greater job sis of the outsourcing issue using the vest more resources in areas more in creation. models of trade theory provides some line with American comparative adRanged on the other side are US insight into the losers and gainers in vantage. India, which has a ready supworkers. Though the actual number this situation. Outsourcing lends itself ply of educated manpower and hence of jobs outsourced currently are a frac- to being analysed most simply us- low wages and where the level of techtion of the total jobs in the US services ing the simple Ricardian Comparative nological development is still behind and IT sector, there is understand- Advantage Model where a country America, can specialise in producing able unease of competing with peo- specialises in producing the good in and exporting low end services as ple as efficient as you are and work- which it has a comparative advantage. cheaply as possible. India would ing at a fraction of your benefit because of the insalary. Further, outOpinions about outsourcing in the US are creased employment and sourcing is viewed with generated by the divided with the US Government and the income concern not just by disbooming service exports. It placed call centre or Inappears to be a win-win sitcorporate sector strongly backing outfoTech employees, who for both countries. sourcing as a necessity and the workers uation are to be expected, but Unfortunately, at least in also increasingly by the short run there are crying out against what they feel is an white collar employees, problems. Trade theory axe on their earning opportunities especially those working predicts that sectors facing in the services sector. In outsourcing will shrink the past, the service sector was Even if one country can make every- both in terms of output and employlargely considered impervious to in- thing more cheaply than the other, it ment. In this situation, though the ternational competition. For example, still gains from focusing on the goods economics of outsourcing is clear, the accountants could benefit from the in which its relative advantage is politics is less so. If outsourcing cheaper imported manufactured greatest-i.e., in which it has a com- leads to increasing levels of anxiety goods that open trade allowed with- parative advantage-and importing and discontent in the West due to the out fear that someone abroad would the rest. We assume that America has loss of American jobs, the US govtake their high-paying jobs. For this a comparative advantage in high tech- ernment may be forced to put some reason, service sector professionals nology items such as defence equip- forms of protectionist barriers against were likely to be staunch supporters ment, NASA rockets, supercomputers, outsourcing. The moment this hapof open trade. With improvements in etc. India, on the other hand, has a pens, the flow of jobs to India or any communication technology, such as comparative advantage in the pro- other outsourcing destination may the Internet, services can cross polit- duction of low end services, i.e., Call start to dry up. Many economists arical borders. Jobs in fields ranging centres, computer code writing, etc. gue that the fears of American workfrom architecture to radiology seem The comparative advantage argu- ers are misplaced and that outsourcmuch more at risk. The main fear of ment would go as follows: America ing will actually lead to higher growth the American public is that in a world, should specialise all its resources in and hence employment in the US. where technology is evolving rapid- the production of high tech products Yes, some Americans in low value ly, the information revolution (espe- - both, service and manufactured, and service jobs do lose their jobs due to cially the Internet) strikes at the very import cheap services from India. This outsourcing. But, this should be more roots of the American economy. Even essentially enables America to focus than compensated by the increase in The

Edge 17

In a fast changing world where technological and comparative advantage equations change rapidly between nations, measures that put legislative brakes on a firm's ability to reduce costs and increase productivity will ultimately damage growth prospects in the US

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18 Edge

employment and output in industries higher up the technological ladder that are more in line with America's comparative advantage. A recent widely-cited report by the McKinsey Global Institute estimates a net cost reduction of 58 cents on every $1 "off shored" by firms, "even as they gain a better (or identical) level of service". Further, the McKinsey Global Institute has estimated that for every dollar spent on outsourcing to India, the United States reaps between $1.12 and $1.14 in benefits. U.S. firms save money and become more profitable, benefiting shareholders and increasing returns on investment. U.S. labor can be re-allocated to more competitive, better-paying jobs; for example, although 70,000 computer programmers lost their jobs between 1999 and 2003, more than 115,000 computer software engineers found higher-paying jobs during that same period.

Outsourcing thus, enhances the competitiveness of the US service sector (which accounts for 30 percent of the total value of U.S. exports). Analysis of BOP statistics shows that contrary to the belief that the United States is importing massive amounts of services from low-wage countries, in 2002 it actually ran a $64.8 billion surplus in services.

Outsourcing has led to calls for increased

protection by workers and the media in the West. Proposed protectionist measures that have been suggested include a requirement for a company to notify workers 90 days in advance of its intention to outsource their jobs overseas. Such measures would be difficult to enforce, since it would be complicated to determine which jobs were transferred overseas, rather than eliminated. In Europe, eliminating obsolete jobs is an expensive, lengthy process for businesses and hampers the ability of the firms to adjust to a fast changing business environment.

In a fast changing world where technological and comparative advantage equations change rapidly between nations, measures that put legislative brakes on a firm's ability to reduce costs and increase productivity will ultimately damage growth prospects in the US. It is impossible for US firms to compete without utilising all possible opportunities to reduce costs. Putting quotas and tariffs to stop people from importing software and data from other countries over the internet when it is much cheaper, makes little economic sense.

Such restrictions may save a few jobs in the short run, but they will come at the expense of better jobs in the future — jobs that will not be created.

CHICKEN OR EGG?

Culture Vulture

D

OES IT sound elementary? Think again. It is undoubtedly Culture that has the major influence on marketing. But, once marketing becomes powerful, as it is in the hands of giant business houses, it moulds culture at least superficially.

If it isn’t so, then, is it in our culture to wear friendship bands, celebrate Valentine's Day, eat burgers and apply nail polish and lipstick?

Well, one might be tempted to argue, in that it is not in our culture too to wear English pants and shirts, drive automobiles and use computers —all of which were invented outside our culture. That's why I said, think again.

The logic is that there is a difference between influencing the culture — which stands for one's shared values, beliefs and customs — and improving one's living standards. I agree that the line between the two is fine, very, very fine. Wearing pants and shirts instead of dhoti-kurta, driving automobiles instead of bullock carts and using computers instead of palm leaves are all fine because they are improvements in the living standards.

But celebrating Valentine's Day eating burgers and applying lipstick, do they increase living standards?

If so, the whole world should be doing the same like in the case of pants and shirts, automobiles and computers.

One more reason for changing to cars, computers etc, is the dynamics of time and money which often forces to change to devices that may be costlier but increase the efficiency of free household labour. The need to send children to school for education reduces their presence in the house to extend a helping hand in household chores. The absence of young men and women in the

By S Shyam Prasad Assistant Professor (Marketing) IILM Academy of Higher Learning, Jaipur

house decreases household help but increases the household cash and the purchasing power. There comes a need for pressure cookers, gas stoves, washing machines, refrigerators etc. But one cannot find a good plausible reason for a Valentine's Day celebration.

There is another angle to this issue. This is somewhat akin to asking did the egg come first or the chicken? The one leading the other would influence the latter. And one might feel that culture existed much before marketing started to evolve. But is it correct? Isn't it true that we say marketing started since the human being came into existence?

Like in the case of egg and chicken, I believe it is all the matter of definitions. I quote what I read sometime back: "What exactly do you call a 'chicken' or an 'egg'? Evolution theorists

should define what they mean by a chicken egg. Actually, this definition seems to already answer the question when we follow the evolution theory. The two definitions are: Ø A chicken egg is an egg from a chicken. Ø A chicken egg is an egg from which a chicken (f/m) is born.

In case of the first definition, the chicken clearly must have been first.

How the chicken came into being?

The evolution theory gives the answer as follows: Some kind of animal that was not a chicken but resembles a chicken quite a lot has an egg with a mutation, and from this egg, the chicken is born.

In case of the second definition, we assume like in the previous case there was some animal, not a chicken, that made an egg from which a chicken was born. By definition, now the egg is a chicken egg, so the egg was first".

The answer then lies in how we define Culture and Marketing. That, however, is out of the scope for this article.

Hence, I tend to call the initially discussed changes as aberrations in our culture caused by many factors, one of which is marketing activities.

One may wonder what are those 'many factors'.

As a quick passing remark, some of those many factors are LPG i.e.

Liberalisation, Privatisation and Globalisation. In fact, the world is passing through a phase of fast changes and high commercialisation. It is moving towards materialism - led by big brother US - in contrast to our own philosophy of spiritualism.

To conclude, undoubtedly culture has the major say on marketing activities but marketing is also making inroads wherever we are weak in our shared beliefs and customs.

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Edge 19

FAIR

SHARE

to encourage women's involvement in the decision-making process and occupying prominent positions in all walks of life.

male population, which was 204 lakh in 1971, increased to 308 lakh in 2001.

Social reformers and political activists had recognised the inherent strength of the woman force and the problems related to women from time to time. Authors have mentioned the plight of the women in contemporary literature. The efforts of Raja Ram Mohan Roy for the improvement in the social conditions of women are remembered and respected.

The struggle for women's equality began in India in the 20th century, as an offshoot of the fight against British colonialism. Western-educated leaders like Mahatma Gandhi initiated this struggle by stating that a woman is equal to a man. Millions of women, educated and illiterate, housewives and widows, stu-

In this scenario, the welfare of women living in rural areas, slums and tribal areas, women who are divorced/separated, migrant women, physically or mentally handicapped women, widows and destitute constitute are the core of the problem.

WOMEN IN INDIA: Women are the latent force of society and the female population reflects the disguised potential of the country. In demographic terms, even though the annual growth of the female population fell in tune with the male population, the growth of females obtained at a level higher than that of males. The size of fe-

dents and elderly, participated in India's freedom movement because of his influence. At the same time, women recognised their strength when they took over from imprisoned men and expanded the push for Independence.

In itself, the idea of equality between genders, which derives from Western ideas of individual freedom, was alien to the traditional, family oriented Indian society.

History remembers the role played

by Prime Minister Indira Gandhi in Indian and world politics. She downplayed her pioneering role as a woman in politics by saying, "I do

WOMEN on I TOP NDIAN ECONOMY is predominantly peasant and almost 75 per cent of its population lives in villages. According to the census, two-third of its workforce is engaged in agricultural and allied activities, which contributes to about 27 per cent of India's gross domestic product.

In an agrarian country like India, rural development is sine qua non for national development and essential for proper utilisation of natural, human, material and financial resources to achieve higher levels of development. It is, therefore, imperative to organise the rural people within an institutional structure.

Women constitute around half the population, globally as well as in India. It is not possible to ignore such a large group of individuals and leave them with residuary functions and a subsidiary status in work participation. This would not only slow down the rate of progress but would also waste human resources.

There are several issues which have placed women as unequal partners in the development process, for instance, low literacy level, lack of appropriate skills, low income earning capabilities associated with the denial of equal participation and access and control of productive resources.

There have been efforts to make socio-economic provisions for women constitutionally, but the traditional set-up and values system hinders their emancipation and empowerment.

Keeping these problems in mind, programmes were designed in a way that women were assigned the position of active partners in developmental activities. Though overall progress is not enthusiastic yet it shows that an impact has been made The

20 Edge

Dr. Anima Sharma Faculty, Social Sector (Dept. and Healthcare) Institute For Integrated Learning In Management

not regard myself as a woman. I regard myself as a person with a job".

The percentage of women in Parliament is 9 per cent, down from a peak of 10 per cent in 1988. By comparison, women make up 14 per cent of the representatives in the US. INDIAN WOMEN IN HISTORICAL PERSPECTIVE: In the ancient Hindu texts, the women have been very highly regarded: Yatra naryastu poojayante, ramanti tatra devta. Their role as mother, wife and daughter has been respected. Emphasizing on the independent character of the Indian women, recently, Indian classical dancer Mallika Sarabhai observed, "Hinduism is the only philosophy in the world where the woman does not come out of the man." But this statement is not conclusive. In several texts, women are equated with un-

bear the curse of dowry, officially banned in India in 1968 but still prevailing.

Demographic figures tell that even child marriage can not be prevented, especially in North India, where 75 per cent of rural marriages involve brides under 18. The average age of a Hindu bride is 15 to 16.

Women between 15 and 29 have more than three-fourths of the children born in India. Illiterate women are estimated to have four children while women with at least high school education have only 2.2 children each, close to the number of 2.1, the target for stabilising the population.

Currently, India has one of the highest birth rates in the world, with a nationwide average of 3.4 children per woman. This number is a tremendous decline from the aver-

touchables and similar treatment is supposed to be rendered to them both in terms of restricting their participation in religious activities, rituals and even citing hymns from Vedas in doing so. Socially, women's rights of inheritance of material and immaterial property in the patrilineal families are limited. The male child is preferred and proffered over the female child.

Indian society bears the curse and brunt of several controversies, especially for women. Though in economic terms, women are considered the most important asset and earning member in most societies, they

age of 5.9 in 1960.

The Indian women who suffer the most are those living in tribal areas. Despite several decades of constitutional protection, they remain the most backward ethnic group on the three most important indicators of development: Health, education and income. Tribal women’s lives are characterised by over-work, illiteracy, sub-human physical living conditions, high fertility and malnutrition. India’s population of 68 million tribals is the largest indigenous population in the world.

The literacy rate of rural tribal women is below 13 per cent, the

lowest of all groups in India. The school dropout rate for tribals at the secondary level is as high as 87 per cent and for girls it is almost 90 per cent. Consequently, there is a negligible amount (0.06 percent) of tribal women in colleges and universities.

The above description emphasises the fact that for the development of a society or a nation, the development of women needs to be addressed at the grassroots level. Empowering women and encouraging entrepreneurship would help a great deal in the overall improvement of a particular society.

Building on the tradition of women’s focus on families may be a way to make life better for India's women according to development agencies. They see women as the real agents for change because their research shows that raising a woman's income through training, education and micro-credit lending raises household income. Women spend their extra money on their families while men spend it elsewhere. Hence, involving women in the development process would be beneficial for the family at the micro level and for entire Nation on the macro level.

MINORITY AND WOMAN ENTREPRENEURSHIP The Minority and Women Division seeks to address issues related to diversity as they impact entrepreneurship and small business management. Topics relevant to this division include conceptual and practical applications involving gender and ethnicity and other social identity groups. As the global business landscape in the 21st century becomes more multicultural and interconnected, the changing face of the entrepreneur influences entrepreneurial processes and content.

This division provides a forum for discussion about research, case studies, and real world situations regarding diversity and entrepreneurship.

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CONCLUDING REMARKS: The above discussion leads us to conclude that a lot of planning and effort has been put in making plans and programmes to increase the socioeconomic status of the vulnerable sections of the society in general and the women in particular, still much is needed to be done. The entire strategy of women's entrepreneurship and empowerment is not a hoax, there are a number of success stories too where the 'Mahila Mandal' in tribal or backward area has played a significance role. The recognition of services rendered by women in development process assumes much significance. Still, the loopholes in planning could be attributed to several factors. It is true that a large amount is spent annually to make these plans still it fails to bring out the desired results because of several reasons, including: Lack of in-depth knowledge of grassroot level issues Apathy shown by the officials of the implementation agencies Inappropriate funds allocated as per the demand for a particular scheme Lack of proper training for skill/capacity building Lack of mentors/trainers/motivators No planning is flawless. But, we can make an effort to reduce the shortcomings of a plan to a minimum. The entire purpose of encouraging the culture of entrepreneurship among women is to make them economically independent and socially empowered. But because of the issues cited above the entire strategy becomes a mockery and a toy with which those in power play as and when.

References: Aziz, Abdul. 1989. Development Programmes for Weaker Sections.

Jaipur: Printwell Publishers Bert F Hozelitz, 'Early History of Entrepreneurial Theory', Explorations in Entrepreneurial History, The

22 Edge

III-4 (April 15, 1951) Sharma Anima. 2003. Socio-Economic Development of Indian Tribes (Introduction). Delhi Singhal, R. 1994 Gender Issues in JFM More than A Tender Issue.

IIFM, Bhopal Undocumented NGO Publications, Pamphlets and News paper articles etc. http://www.usasb.org/about/division/minority.htm http://www.woman21.gov/index.cfn/FuseAction.org END NOTES 1. The Western Scenario: The Western feminist movement of the 70s and the simultaneous media boom brought another wave of change to Indian feminism. The emergence of formal feminist networks is new, but informal women's networks for sharing, learning and socialising have long existed. Radical protests in India were few and anti-feminist protests continued until 1985, where some women argued that Indian women were not oppressed and were happy as wives and mothers.

Much of modern Indian feminist activities bypassed a majority of India's women, those living in rural areas, ending up aiding mostly middleclass, urban women.

The growth of women entrepreneurs in the US has been spectacular. Today, there are 6.2 million women-owned firms employing 9.2 million people and generating sales of $1.15 trillion. But women are impacting much more than how business gets done in America. They are shaping and redefining the workplace, the nation's business networks, financial institutions, and our culture. Most of all, women entrepreneurs are deeply influencing how the business community, public officials and the media perceive and respond to women.

This administration is determined to promote policies and programmes that remove roadblocks to growth and ensure the long-term viability of

women in business. The US Department of Labour and the US Small Business Administration have partnered to keep the focus on this vibrant sector of the economy. We recently launched women-21.gov, a premier one-stop federal resource for targeted information, registration for online programmes, and networking opportunities to help women entrepreneurs navigate the ever-changing business world and do what they do best: Innovate, create jobs, and make a vital contribution to the strength of America.

2. Case Study: Here, I would like to quote the case study of an NGO, which has done remarkable work on the socioeconomic issues at the grassroots level.

The Indian Institute of Youth Welfare (IIYW) conducted various programmes like Rural Entrepreneurship Programme, Community Life Programme, Anganwadi Training Programme and it started a project titled, Empowering Rural Youth and Women in Asia and the Pacific region. It worked on rural development, entrepreneurship and environmental sustainability. This initiative addressed the issues of lack of knowledge, lack of materials/resources, limited support systems, poor economic conditions in the country, poor or no employment policies, and poor social conditions.

This project helped build the skill assets of rural youth and women.

This led to overall development and strengthened rural community. This programme assisted youth towards gaining meaningful employment, which enhanced their potential towards achieving success in their lives. The focus on providing costeffective training programmes and financial support of local Governments and institutions contributed to the success of the programme. Similar initiatives can be replicated in other communities so that the same level of success can be achieved to benefit more rural youth and women.

CUT

& PASTE

in February, 1996.

AT&T had too many employees in jobs that were soon to become outdated and at the same time not enough workers with skills and ability to handle critical future needs. The impact was about to take a huge toll on its employees through the process of subsequent elimination or internal reorganisation.

Galvanek found that AT&T would not be alone in experiencing such wrenching upheavals. Many major companies were shifting priorities, addressing new skills that employees needed to know, defining clearly the business requirements and anticipating quickly the big trends in industry that were coming.

She came up with an idea: "We needed to come up with new models for shared success. AT&T should bring together a group of companies to discuss common interests in which they did not compete.� The idea developed over time into Talent Alliance, a private not-for-profit coalition established in Morristown, New Jersey, by several companies including AT&T, Dupont, Johnson & Johnson, Unisys, NCR Coop and TRW. The Alliance launched its first programme phase by providing four services — an online database to match applicants from downsizing companies with available jobs at other member companies, a 'lease link' system allowing member companies to lease need employees with special expertise from other in the Alliance, a career growth centre offering counselling, networking, interviewing and negotiating and, lastly, a research forum

Human Face of Rightsizing

J

EANNETTE GALVANEK, vice-president of Human Resources (VP-HR) AT&T, was at project when a senior executive of the company asked her to examine the strategic implications of the Telecommunication Act of 1996, US. The Act implied quick and dramatic changes for AT&T as well as transformation of the telecommunications industry in its entirety since its passage

Koustab Ghosh Faculty OB & HR IILM Institute for Higher Education, Gurgaon The

Edge 23

for job trends and workplace issues.

The second phase programme on training and education will focus on interpersonal leadership and networking, including video conference seminars to reach out to employees around the country and training programmes on CD-Rom. "The real issue is not to focus on jobs that are obsolete. We need to make people employable for life. That's one reason skills are at the centre of the Alliance's mission," says Galvanek, now on loan from AT&T to serve as the Alliance president and CEO.

gave them a sigh of relief.

New HR Paradigm in the context The newly evolved employment relationships that govern today's business organisations confer on HR professionals the opportunity to play a more active role in shaping and executing corporate strategy. Throughout the process of rightsizing, the challenge for HR manager lies in balancing the role of being a strategic partner with being an employee counsellor.

has to decide who really delivers most value to the customer.

Performance based Pay The trend towards pay for performance is another hallmark of the new employment agreement. Employees who are skilled and able to generate new ideas are always in demand. Companies use cash incentives and stock option plans to retain all these 'star' performers.

High technology companies frequently rely on stock options to attract quality employees. Cisco emFocus on continuous learning ployees receive stock options when Changing Business Perspective As companies are changing to find they are hired and become fully vestThe above illustration relates the new ways of doing business in on- ed after four years of service. future of corporate people manage- going basis, all companies need to Employees can receive annual ment to single important issue of provide more employee training additional options based on their 'multi-skilling'. The expectation of and career development options performance. lifetime employment at one compa- under new terms of employment. “There are measurable goals peony is mostly a thing of the past. The Continuous learning and increased ple have to accomplish in order to evolving employget paid incenment relations tives,� says BarThe challenge for HR is finding a way to match the are based on the bara Beck, VP-HR, needs of both the employers and the employees company's finanCisco. cial and market and, in the process, to develop a tie of a Decision to Down success in terms mutual business partnership size of business performance baromA well-impleeters. Continuous skill upgradation skills are the only survival means in mented downsizing focuses not onhas become the call of the hour be- fast-changing, high-technology in- ly on removing employees but also cause of the changing contextual fac- dustry. The 'knowledge workers' on changes in work design. Each tors like: would be in the best bargaining po- stage of downsizing works to miti Competitive Benchmarking sition and can leverage some intel- gate mistrust and disempowerment.

Diversification of Business Scope lectual capital that strengthens the How managers plan, announce and Strategic Restructuring bottom line of the company. Even implement downsizing will have an Business Process Outsourcing during the crisis period of redun- impact on employee contributions.

Technological Changes dancy, training helps employees In any future crisis, employees who Delayering and Job Redesign. find jobs elsewhere. remember how well the company All these issues stem from the fact treated them and managed the imBuilding Business Partnership that these days most companies are plementation will be able to trust the increasingly restoring to restructurThe challenge for HR is finding a organisation and build a better, more ing and focusing on their winning ac- way to match the needs of both em- effective organisation. tivities and pruning down all fancy ployers and employees and in the HR Interventions at Various Levels and losing activities that they had un- process to develop a tie of mutual dertaken in their heyday. business partnership. HR profesHR intervention strategies that The wave of shedding unnecessary sionals should focus employees on match organisation development flab has splurged many Indian com- the financial success of the compa- interventions in the challenges of panies, including HCL and SAIL. ny and that the increase in jobs and rightsizing enable the creation of a These organisations were overbur- salary is directly proportional to the new corporate culture that is comdened with high incidence of ad- competitive business performance. patible with new business strategy ministrative overhead costs and While all employees may be valuable, and structure of the rightsized orsubsequent internal restructuring at some point of time, management ganisation. These interventions The

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would facilitate to create a clear vision of the future and involve employees to become active agents in supporting and achieving the new vision.

Techno-Structural intervention This intervention is required to help employees to respond to structural changes, often experienced in the aftermath of rightsizing. Structural changes imply different co-ordination and control system, participation, communication, problem-solving and employee involvement programs.

Communicating the message of change is important. The survivors need information about their future role and position within the company and mechanisms that help them achieve this.

Human Process interven tion This should be complimentary to HRM intervention which is necessary to re-establish the psychological contract.

Survivors are characterised by behavioural outcomes such as decreased motivation, morale, commitment, confidence, increased stress, lack of trust and loyalty to the organisation. They also face the dismay of losing the peers who have formed the social fabric of their work life. This intervention focuses on team-building activities to encourage open communication and rebuild and take care of issues like changing nature of work, personal development and career concerns.

Employee Support intervention Counselling and support for the survivors need not only address the issue of surviving the immediate change but also extends to long term

measures of 'person-organisation' fitting measures like training, employee development and career management. Trust between managers and employees are critical for effective work relationships, especially under conditions of high uncertainty or conflict.

Rightsizing - The New Business Direction at IBM To many, rightsizing is nothing but just another name for downsizing and a thinly veiled euphemism for

massive job loss. Take the case of techno-major IBM; over 65,000 IBM employees had taken early retirement since their first major downsizing effort in 1988. The company even lost some of its best employees who opted for the attractive termination program.

Implications and Conclusion By now, it is evident that downsizing and rightsizing are not just

two sides of the same coin. While downsizing is concerned with reducing the burden of headcount in a highly unsystematic and irrational way to simply get rid of excessive administrative costs, the focus of rightsizing far extends to future strategic intent of the organisation by not only scaling down the level of administrative expenses but also retaining and maintaining the most competent 'people base' to achieve corporate objectives.

It is hard to deny that there is little the HR function can do to prevent the impact of external circumstances, which impose change on the organisation. However, the reality of transitions imposed by the organisational change put both the organisation and individual in the process of 'unlearning' and 'relearning' on a continuous and conscious basis. The HR professionals need to be instrumental in managing the new workforce by driving change at strategic level and fulfiling new roles as consultants, counsellors and brokers of the psychological contract.

The real question is how downsizing is done, rather than whether to downsize.

Companies that downsize through buyouts and attrition, that help their workers get new jobs and sometimes provide outplacement services, end up much better positioned than companies which simply wield the axe. They have a better chance of retaining the loyalty of the surviving workers. Trust is one of the most valuable yet brittle assets in any enterprise. So over the long run, it pays to companies that downsize in a humane and socially responsible way. So let effective rightsizing enable the organisations embark upon a continuous stream of growth, which is a journey, not a destination!

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WEB SIGHT

ENTREPRENEURIAL PORTAL

ENTREPRENEURS' ORGANISATION (EO) is a membership organisation for entrepreneurs only, designed to help business owners from around the world on their path to greater business and personal fulfilment.

The EO is a global community that enriches members' lives through dynamic peer-to-peer learning and once-in-alifetime experiences. It is a different type of catalyst that enables entrepreneurs to learn from each other, leading to greater business success and an enriched personal life.

In a market characterised by an abundance of business resources, only EO provides entrepreneurs with a safe environment to learn and grow surrounded by business people like themselves who "get it."

EntreWorld: an online resource centre: Launched in 1997 as one of the first small business websites, EntreWorld is part of the legacy of one of America's greatest entrepreneurs Ewing Marion Kauffman. His vision "self-sufficient people in healthy communities" was the driving force behind the Ewing Marion Kauffman Foundation.

Through EntreWorld, Kauffman Foundation experts on entrepreneurship offer resources which entrepreneurs need to succeed. The EntreWorld search engine delivers the best and most useful information, guidance and contacts for the entrepreneur.

It is well recognised by noted organisation like USA Today, Forbes, Inc. and Fast Company. They seek out and provide A+ content and more than 1,000 articles, audio clips, tools, a database and even town-to-town small business event listings — to put the most essential entrepreneurial resources on the fingertips of entrepreneurs.

Source : http://www.entreworld.org/About/EntreWorld.cfm Forum for Women Entrepreneurs and Executives: The mission of FWEs is to accelerate The

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Shantanu Ganguly Library & Information Manager

women’s opportunities to start, manage, lead and invest in market-leading companies by providing its members with powerful access to powerful networks through national and international visibility as well as networking, educational and social programmes.

The activities are focused on supporting the success of their members, which is accomplished through — Networking, Educational and Social events and through national programs and activities that: Position members as Thought Leaders and Success Stories Position Membership in FWE as an Aspiration/Accomplishment and Develop National Brand Equity, by increasing Visibility & Awareness.

Source: http://www.fwe.org/ Young Entrepreneurs Association (YEA): The Young Entrepreneurs Association is a volunteer-driven non-profit organisation whose mandate is to support young people in business. Aimed at business owners 35 and under, YEA provides its members an opportunity to learn from one another's experiences and take advantage of peer support and mentorship as they grow their businesses.

YEA connects young entrepreneurs with

each other both physically and via the internet. YEA facilitates connections with government, industry service providers, other businesses and the media. YEA works with private and public organisations to provide members with relevant and timely information and tools to strengthen their businesses.

The YEA is a pitch-free environment where members meet their peers and confidently share their triumphs and challenges.

Source: http://www.yea.ca/aboutus/index.php American Entrepreneurs for Economic Growth (AEEG): AEEG works to inform its members about investment trends, entrepreneurial experiences, and noteworthy events. The association provides members with periodic policy updates and alerts, timely statistics and trends related to growing innovative companies, a quarterly newsletter and access to many of the National Venture Capital Association's programs.

The Venture Capital Alliance — AEEG is the only organisation affiliated with the National Venture Capital Association (NVCA), which represents the majority of active venture capital firms. The AEEG/NVCA alliance provides unique and valuable networking opportunities.

The NVCA and its members take an active role in developing and strengthening AEEG. Source: http:// www.aeeg.org/

NET

TROUBLE

?

INTERNET SOCIABILITY

DOES USAGE AFFECT

T

HERE ARE complex ways in versus "good Internet" debate. On the which the Internet affects inter- one hand, we have the utopians who bepersonal communication and so- lieve that the Internet leads to more and ciability. better social relationships by creating anDynamic new time-diary daother medium of communicata identify when and where Intion with friends and family and ternet use impacts face-to-face establishing new relationships interactions. Whereas the Inthrough Internet introductions. ternet use at home has a strong On the other extreme are negative impact on time spent doomsayers who conclude that with friends and family as also Internet use can be socially isoon social activities, at the lating because time on the Damini Grover workplace it has no such Internet is often taken at effect. the expense of social acFellow IT, IILM Institute Similarly, Internet use for Higher Education, Gurgaon tivities and face-to-face induring weekends is more terpersonal interactions. strongly related to decreased time spent Clearly, the overall effect of the Interwith friends and family and on social ac- net is not so simple-there are both intivities than Internet use during week- stances in which the Internet can endays. hance and inhibit sociability. Using more These findings offer support for a "dis- detailed, reliable and definitive diary daplacement" theory of Internet usage. ta, one is better able to explain the comTime online is largely an asocial activ- plicated and particular ways in which ity that competes with, rather than com- the Internet affects interpersonal complements the face-to-face social time. munication and sociability.

However, it is the location and timing of At the heart of this debate are definInternet use that determines how in- itions of sociability. What exactly is meant terpersonal relationships are affected. by sociability and personal interaction?

Lets delve deeper into this realm!

In examining the social consequences of Recent studies about the effect of In- the Internet, lets try to focus on the priternet use on sociability have polarised mary social environment and face-tointo an overly simplistic "bad Internet" face interactions.

This is not meant to trivialise the utility of email for staying in touch with both immediate and distant friends and relatives, but it is not yet known how these social benefits compare to primary personal interactions. The benefits of face to-face social networks for personal wellbeing are well documented (Wellman and Wortley 1990, Kadushin 1982, among others).

To some extent, the Internet and email have transformed definitions of sociability; and this calls attention to the need to understand the qualitative differences between face-to-face interactions and online interactions, as scholars explore the tensions between the potential benefits and possible dangers of new information technologies.

The conclusion is simple: The Internet has created a shift in people’s time allocation. The more time they sit in front of a computer screen, the less time they have for interacting directly with family and friends. This "displacement" model holds that time on one activity simply cannot be spent on another activity, since time is a zero-sum phenomenon. Because there are only 24 hours in a day, time spent on one activity must often be traded off against time spent on other activities. Like any activity, time online fundamentally competes with, rather than complements, face-to-face social time.

Another point of view can be that the Internet offers an additional technology for both engaging in social interaction and coordinating social activities.

This thought contends that the Internet makes other activities more efficient, resulting in less stress and more time for social activities. For instance, if an individual is able to shop online more quickly than shopping at a store, it may free up time to spend with friends or family.

The effect of Internet use on sociability is a debatable point —whether it more closely adheres to the above-mentioned effect of efficiency or to that of displacement.

Let’s put on our thinking caps and try to resolve it!

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LANDED ASSET

REALTYCHECK REITs will be the big new thing that may happen to Indian Real Estate if SEBI manages to devise a foolproof plan to introduce this professional property management system to the country.

REITs is the surest shot to boost indigenous economy

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T

RADITIONALLY, PEOPLE look in this segment and most deals are conforward to parking their savings ducted in a secretive manner. In addition, or surplus funds by sticking to managing a real estate portfolio in itself conventional investment avenues is a very daunting task scaring away polike bank deposits, fixed detential investors. The answer to posits, post office schemes, these is investing in real estate mutual funds, bonds or stocks. funds, one of the means by They are generally averse to which the small investors can hard assets other than their participate in real estate and own house. This strategy make money.

REITS may seem balanced enough but in today's uncertain capReal Estate funds are quite ital market conditions where popular abroad. In the US, no investment option can these are generally known Sweta Gupta be categorised as safe as "Real Estate Investment and providing high yield, Trusts" or REITs. Faculty Associate - Finance the investor can pepper an REITs are companies that investment portfolio with other options like buy, sell, manage and develop real estate real estate. assets. Much like stock market mutual However, investing in real estate is an funds, REITs put together the investments intimidating task. Most investors lack the of individuals and institutions; and then requisite awareness and the financial deploy the money in real estate assets. REstrength to make the right decision. The ITs distribute profits generated from propreal estate market is not as transparent erty investments to investors. They, thus, and well regulated as the equities mar- facilitate small investors to participate in ket. In fact, there is hardly any regulation professionally-managed properties.

Types of REITS By and large REITs invest in real estate, shopping malls, office buildings, apartments, warehouses, and hotels and specialise in one or more of the following activities: Equity REITs: They invest, develop and own realty. Their main sources of revenue are property rents, lease charges and appreciation in property values.

Mortgage REITs: They generally do not own or operate real estate but extend finance against mortgage of real estates. Their main source of revenue is the interest that they earn on mortgage loans.

Hybrid REITs: They invest in properties and mortgages.

Some distinct advantages of investing in via the REIT route: Institutional as well as retail funds.

It creates the right to the underlying property of the trust which helps in allaying the fears of investor's, especially foreign investors who do not want to risk their money in an alien unorganised market.

REITs employ multitude of real estate professionals and legal eagles, with sufficient technical, financial and legal expertise to negotiate and finally consummate the deals.

REITs have large resources which enable them to invest across different locations, and different class of real estate assets thus reducing risk through diversification.

The income of a real estate investment trust like other mutual funds is tax exempt. This makes REITs a tax efficient investment vehicle and helps the investors to maximise their returns. However, the performance of REITs is sensitive to economic indicators like: Population and employment rate: The change in population and employment rate has a significant impact on supply and demand for the property. For example, due to the growth of IT & BPO sectors in India, employment and salaries are booming. This has opened up a new segment willing to invest in real estate. Increase in population also creates additional demand for real estate.

Interest rates: A rise in interest rates signifies an improving economy, which is in favour of REITs as people spend more and rent additional space for their burgeoning business. An increasing interest rate scenario is considered good for apartment REITs as people prefer to remain renters rather than purchasers. In a decreasing interest rate sce-

nario REITs takes advantage of lower interest cost and hence increasing profit margins.

Inflation: Real estate returns are positively correlated with inflation. That is, rise in inflation is followed by increase in real estate prices. The investment, therefore, can be classified as inflation-protected. So a welldiversified portfolio with assets like stocks, bonds and real estate is expected to yield high returns in even negative economic conditions.

In India, real estate investment vehicles are not permitted. But the Association of Mutual Funds of India is working on a proposal to flag off Real Estate Mutual Funds which would work like REITs in India. For this, SEBI needs to design an appropriate regulatory, legal, accounting framework and address issues like structure of REITs, calculation of NAV, the exit and entry loads.

REITs would boost the real estate industry in India with improved rentals and cheaper funds for this sector. Small investors will also be able to share the growth.

A rise in interest rates signifies an improving economy, which is in favour of REITs as people spend more and rent additional space for their burgeoning business

REFERENCES · http://www.investopedia.com/terms · http://www.reitnet.com · http://www.gurgaonscoop.com/story, "The REIT (Real Estate Investment Trust) Way to Invest in Property". · http://www.investors.com/breakingnews.asp, "Commodity, real estate funds boost return, reduce risk" By Jonathan Burton, May 27, 2005. · http://www.investopedia.com/articles/04/030304.asp, "What are REITs?" By David · Harper, March 3, 2004 · http://www.investopedia.com/articles/03/013103.asp, "The REITs Way?" By Investopedia Staff, January 31, 2003 · The Hindu, September 11, 2004 · Investors Guide, May 09, 2005. · http://www.thehindubusinessline.com, "Soon there may be a REIT way to diversify", By B. Venkatesh, Jul 18, 2003 The

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FORENSIC ADD-ONS

AUDIT BUSTERS M

Navneet Saxena Fellow, IILM Institute for Higher Education, Gurgaon

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AJOR ACCOUNTING scandals have been widely reported. KPMG Forensic conducted a survey of directors of Canada’s 75 biggest companies which revealed that more case of financial accounting manipulation would emerge in the coming year. In this background, the technique of forensic auditing has gained importance.

Financial statements, complied on accrual basis represent the following: Actual receipts and payments Recognition of certain items of expenditure or income on accrual basis, in accordance with the applicable statements Estimates of provisions and bad/irrecoverable debts Provisions for intangible items Adjustments on account of prior period transactions Accounts may be falsified to conceal: Absolute theft of money or money's value (mainly relating to employee frauds) True results of operations or financial position of the entity with a view to prevent timely detection of corporate frauds.

'Fraud' refers to an intentional act by one or more individuals among management, those charged with governance, employees or third parties, involving the use of deception to obtain an unjust or illegal advantage. Fraudulent financial reporting involves intentional misstatements, in any one or more ways state below: Deception such as manipulation, falsification or alterations of

accounting records Misrepresentation unintentionally or intentionally, omission from the financial statements Intentional misapplication of accounting principles Motives for fraudulent financial reporting by management: Management is under pressure, from sources inside or outside the entity to achieve target, where consequences of failure are significant To increase the entity's stock price or earnings trend To keep the results attuned to knowingly unrealistic forecasts made to creditors Tax-motivated reasons To raise capital either by further issue of shares at a premium and/or through borrowings The concept of Financial Auditing may be defined as 'a concentrated audit of all the transactions of the entity to find the correctness of such transactions and to report whether or not any financial benefit has been attained by way of presenting an unreal picture'. Forensic auditing aims at legal determination of whether fraud has actually occurred. In the process, it aims at naming the person(s) involved (with a view to taking legal action).

Forensic auditing should focus on significant transactions — both reflected in financial statements and off balance sheet items. The techniques mainly are Critical Point Auditing and Propriety Auditing.

Critical Point Auditing: This technique aims at filtering out the symptoms of fraud from regular and normal transactions in which they are mixed or concealed. Financial statements are analysed mainly to find out: Trend analysis Unusual debits/credits in accounts Discrepancies in receivable or payable balances/ inventory as evidenced from the nonreconciliation between financial records and corresponding subsidiary records Accumulation of debit balances in loosely controlled accounts False credits to boost sales

Cross debits and credits and inter-account transfers Weaknesses/inadequacies in internal control/check systems Propriety Audit: In this audit, the ‘value for money audit' technique aims at lending assurance that economy, efficiency and efficacy have been achieved in the transactions for which expenditure has been incurred.

Financial frauds are results of wasteful, unwarranted and unfruitful expenditure or diversion of funds by the investigated entity to another entity.

Examination methods are: Tests of reasonableness: Check weaknesses in internal controls Identify questionable transactions: Indicating wide fluctuations from the normal ones and not, in general, related to main objectives Review questionable transaction documents for peculiarities, like improper account, classifications, pricing, invoicing, or claims etc.

Historical comparisons Develop profile of the entity under investigation, its personnel and beneficiaries, using available information Identify questionable accounts, account balances, and relationships between accounts, for finding out variances from current expectations and past relationships Gather and preserve evidence corroborating asset losses, fraudulent transactions, and financial misstatements.

Off-balance sheet transactions: There are certain transactions not prima facie discussed in financial statements and nor suitable disclosures are made. Since these are intangible in financial statement or auditor may not consider these as significant or material, no statement/qualification is normally made in auditor's report. These may encompass: Significant purchases/sales of raw materials and/or finished goods with only a particular dealer or group companies of such companies of such vendor Over/under-invoicing of capital goods, raw materials/components, services etc. as compared to normal arm's length prices for the same Diversion of funds through group companies and setting off such debits as expenditure in accounts with proper authori-

sation before closure of accounts to avoid detection Cost over-runs in major capital expenditure without corresponding benefit or convincing reasons.

The objective of forensic audit is to find whether a fraud has taken place. A forensic auditor shall have to examine voluminous records and witnesses, if permitted by law.

Proper documentation is vital in substantiating the findings. The outcome shall focus on the following, in case of frauds: Proving the loss Proving the responsibility of loss Proving the method/motive Establishing guilty knowledge Identifying other beneficiaries Skills for Forensic Audit: Knowledge of entity's business and legal environment Awareness of computer assisted audit procedures Innovative approach and sceptic of routine audit practices Forensic Accounting and Audit may be applied in the following areas besides fraud detection: Conducting due diligence Business valuation Management auditing Assessing loss before settling insurance claims Conclusion Forensic auditing combines legalities alongside techniques of propriety (VFM audit), regularity, investigative and financial audits. The main aim is to find out whether true business value has been reflected in the financial statements and whether any fraud has taken place. It differs, altogether, in form and content from statutory audits of financial statements. It may be beneficially applied in other areas where due diligence exercise is required to be carried out.

References: 1. Forensic Auditing, Chartered Accountant, September 2004 2. Fraud Auditing and Forensic Accounting, Bologna and Lindquist, John Wiley & Sons, 1995 3. KPMG Annual Survey on Risk Assessment

The aim is to find out whether true business value has been reflected in the financial statements and whether any fraud has taken place. It differs in form and content from statutory audits of financial statements.

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QUERY TIME

TWO-PIT

WONDER

MAN

BINDESHWAR PATHAK: An entrepreneur with a difference

D To him goes the credit of sensitising Indians towards sanitation and those engaged in sanitation work. Apart from low-cost sanitation, Dr Pathak’s contributions are widely known in bio-energy and bio-fertiliser, and poverty alleviation programmes The

32 Edge

R BINDESHWAR Pathak is a great humanist and social reformer of contemporary India.

For the weaker sections of society, he is a paternal redeemer, an icon of new culture which embraces the poor and extols the dignity of labour.

He is the leader of a national crusade for restoration of human rights and dignity to millions of scavengers (cleaner and carrier of human excreta), traditionally known as untouchables; and for providing safe and hygienic human waste disposal system to 700 million Indians who go outside for open defecation even along roads and railway tracks described graphically by VS Naipaul and Ronal Segal.

Dr Pathak's multi-pronged efforts in bringing scavengers, the worst victims of institutionalised caste discrimination engaged in a sub-human occupation, into the mainstream has taken the shape of a movement for social justice.

He is an internationally acclaimed expert on sanitation and has developed and implemented on pan-Indian scale a lowcost and appropriate toilet technology recommended by UN bodies for about 3 billion people across the globe.

To him goes the credit of sensitising Indians towards sanitation and those engaged in sanitation work. Apart from lowcost sanitation, Dr Pathak’s contributions are widely known in the areas of bio-energy and bio-fertiliser, liquid and solid waste management, poverty alleviation and integrated rural development.

In fact, he is the modern Renaissance

man and combines in himself the traits of a social scientist, an engineer, an administrator and an institution-builder.

Dr Pathak has been awarded with Padma Bhushan, the KP Goenka Award and the International Saint Francis Prize, not to mention UNEP's Global 500 Roll of Honour.

IILM salutes his forward thinking contribution to society and brings you excerpts from an interview with IILM students at the Sulabh Complex in Mahavir Enclave, New Delhi: How did it all start?

I wanted to become a lecturer and was a top performer throughout school. But I could not keep my rank at college, which brought in the first turning point in my life. Subsequently, I followed many professions — from a school teacher to a translator of Hindi to English in an NGO in Bihar with a salary of RS 200.

When I was about to board a train to MP for further studies, I was stopped by one of my relatives and taken to an NGO in Bihar for a job that could fetch me more money.

Landing there, I found that there was no job available. However, I continued to work there as a translator for six months and was transferred to a division involved with human rights and uplift of scavengers.

With a non-engineering background and being a Brahmin, initially it was difficult for me to work in this field as I faced the danger of being outlawed by my community for touching a scavenger. My boss said he saw light in me and really moti-

vated me to work in this field. I took up the challenge and went to stay in a scavenger colony at Champaran for three months in order to study them closely. I used to have food with them and taught them in evenings.

It is a common theory that an entrepreneur is one who is able to innovate. In 1970, you came up with a simple design of Sulabh Sauchalaya (latrines- pour- flush toilet with twin leach pit). Tell us more about it.

The inspiration came in form of a WHO book (1958) which talked about the efficacy of two pit design in rural areas out of the several options of safe and hygienic disposal of human waste. So, I came up with a simple two-pit system. None of the earlier systems — the bucket system, septic tank and sewerage system —were ecofriendly and had their own limitations. My two-pit design is indigenous, eco-friendly, safe and hygienic. It requires very little water and is cost effective.

Till date 1.2 million toilets have been made with this technology. Today, Sula-

bh is the first organisation to make biogas from human excreta. It has not only developed a technology for treating human excreta but has also come up with technology that can be well applied to water and waste management and processing. This technology reverses pollution from sewage.

Your innovations have liberated scav engers. What resistance did you face from other castes?

Not only was I mocked at, but also had to face familial opposition. I was threatened to be outlawed. But as a true believer of Gandhi, I never gave up and worked as best as I could for this noble cause. At work also, there were reservations among volunteers What prompted you to undertake this mission? Did you ever imagine that one day it would be as big as it is today?

Let us save them from squalid conditions and in doing so we'll be saving the national conscience, was my belief. I equipped myself intellectually to construct an irrefutable thesis on the subject.

Till date, 1.2 m toilets have been made with twopit technology.

Sulabh is the first organisation to make biogas from human excreta. It has developed a technology for treating human excreta and also one that can be applied to water and waste management The

Edge 33

I started this organisation with the the way? Any regrets? paisa. Many people visited the comonly intention of benefiting scavEvery human being makes mis- plex out of curiosity and to see how engers and helping them join the takes, so did I. What is more im- it worked! mainstream. Each day was a new portant is to accept them. Say sorIn 1978, a national seminar on pubday and a new challenge. Working ry and improve on it. lic sanitation was organised in which relentlessly for a cause, Sulabh You have almost created a revolu- members and engineers from WHO, gained support and recognition from tion. Your comments on it.

UNICEF and the Government of India all over the world and expanded to All I would like to say is that we participated. In unison, they recomits current status. have shown a way. A lot still remains mended the propagation of the twoHow did you turn a social service unit unachieved. pit technology. Today, the Sulabh techinto a self sustaining organisation Why did you choose to extend your nology and complexes have spread all and diversified into other areas? programme to urban cities? over India. Besides India, many othEstablishing such a plant is very Sewage is a major problem in er countries like Bhutan, Uganda, expensive and maintenance is a big- cities. The sewage disposal plant was Ethiopia and Afghanistan etc. are ger issue. There are 120 billion hous- first set up in Calcutta in 1870 and making use of this technology. es across the world which do not since then, out of 5,200 towns, there As MBA students, we are keen to have toilets. Sulabh has not only tried are only 232 towns today which have know what factors brought your orand tested its technology but has sewage disposal plant. Establishing ganisation to this level. proven its implementation to be most such a plant is expensive and mainI can point out five things — vision, friendly both to user pockets and to tenance a bigger issue. Sulabh has mission, commitment, efficiency and the environment. provided an intermediate solution for capability. It is important to set your Sulabh has provided an interme- towns where sewage plants will be goals and work for it efficiently, but if diate solution for you are not capable Sulabh has provided a revenue generation towns where of doing your work, sewage plants will will never be commodel. In a country where people did not pay itpleted. be established as it Besides this, for bus tickets, they have started using paycan be connected personally I feel, bewith sewage plants intuitive helps a and-use toilet. Added facilities at minimal cost ing with pipes. lot. became a prototype for officials to study Any message for the Sulabh has proy oung generation of vided not only e n t r e p r e n e u r s ? waste management and hygiene established as it can be connected but also a revenue generation mod- with sewage plants with pipes ; and The most important thing is to be el. In a country where people did not permanent solution in smaller cities honest and transparent. One should pay for bus tickets, they have start- and rural areas. remain focused on his goal. Also it is ed using pay-and-use toilet. Facili- It must have been tough acquiring well known that there can never be ties were added to the initial service land and developing complexes for a substitute to hard work. Above all, at minimal cost and it became a pro- public convenience. How did you go remain positive and optimistic even in about it? totype for officials to study. the most trying circumstances.

Today, times have changed and In 1878, an Act was passed in the My message to young Indians is that have taken a 360-degree turn. There erstwhile Bengal to maintain, use they should take up sanitation as a cais a lot of competition in this field and and pay for toilets. In 1970, I reer. The world requires 2.6 billion toipeople both in India and abroad are thought of starting a use-and-pay lets and as more and more towns and competing to get projects on the job public toilet complex in Patna. The cities get developed, there will be more that was once the domain of only the idea was ridiculed. To imagine pay- need of professionals in this field. The scavengers. ing for this in India at that time was technology has established itself globWhat were the key factors in bring- unthinkable. ally and is both socially and economing your organisation to this level?

Patna Municipal Corporation pro- ically acceptable. My advice is to take Perseverance. I had a mission and vided the land and money to build the up the challenge and start now. a vision for the organisation which complex and for maintenance, the Dr Pathak developed a museum I worked hard to pursue. I was com- money was to be realised from the of toilets in 1994, the only museum mitted to it and kept working to cre- public. Along with the basic toilet faof its kind in the world. He was ated capabilities to achieve the cilities people were also provided with interviewed by PGDBM students same. other facilities like laundry and of IILM alongwith faculty members Have you ever made mistakes along bathing. Initially, the usage fee was 10 Sangeeta Yadav and Kakoli Sen. The

34 Edge

PERSONABLE L N MITTAL

S

MITTAL

TEELS the HOW Anamika Bhatnagar

T

Accelor, a 46-mt behemoth formed in 2001 by merger of 3 European steel companies, hasn't moved into takeover mode yet. By contrast, the LNM Group has kept up a blistering pace through good times and bad. It currently produces about 38 mt steel, is upping production steeply and constantly scouting for new ventures

HERE'S ONLY one question left about billionaire Lakshmi Mittal: When will he become the King of Steel? Answer: In about six months.

That’s when he is scheduled to clinch the deal to buy Polskie Huty Stali, a rundown Communist-era steel conglomerate in Poland. When the ink's dry on that deal, Mittal will either have seized the global crown or he will be a million tonnes or so behind Accelor, the current world Number One. But there’s one vital difference between Mittal's LNM Group and Accelor. The LNM Group is racing at lightning speed compared to its lumbering, slowmoving rivals in the world of steel.

Accelor, a 46-million-tonne (mt) behemoth formed in 2001 by the merger of three European steel companies, hasn't moved into takeover mode after its amalgamation. By contrast, the LNM Group has kept up a blistering pace through good times and bad. It currently produces about 38 mt of steel but it's upping production steeply and constantly scouting for new acquisitions.

His bid for the top slot is all the more remarkable because he has — like the rest of the steel industry — just weathered remarkably tough times.

Four years ago, as the steel industry slumped into one of the worst recessions in modern times, it was belt-tightening time at the LNM Group. Soon afterwards, LNM’s efforts to grab a share of the e-business pie evaporated into cyberspace. He attempted to marry technology and steel by setting up an e-exchange where steel could be traded, but the effort was aborted.

His venture capital fund which hoped to strike a gusher in the hi-tech sector also didn't score any big multi-bagger hits.

Nevertheless, in 2003, Mittal is triumphantly reaching for the top. Despite the recession, he bought stakes in four companies in three years and has almost doubled capacity.

The

Edge 35

In the process, the LNM Group has moved from 6th to the second slot. It has pulled this off in the face of mounting competition from other industry giants who are now trying to emulate Mittal's tactics.

Mittal now owns, or part owns, 12 giant-sized mills that are part of a far-flung empire stretching from Canada to Trinidad & Tobago to Kazakhstan and Indonesia.

Says Mittal: "There have been a number of interesting opportunities over the past three years as a result of which we have grown considerably in a relatively short period of time."

As the LNM Group turns around smartly the profits have also poured in. In 2002 on revenues of $8.7 billion the Group made net profits of $613 million.

Astonishingly, the biggest profits are coming from Mittal's riskiest and most ambitious buys. The giant Karmet steelworks in Kazakhstan bought in 1995 was reckoned to be a knife-edge gamble when it was bought.

Famously, when the LNM Group bought the plant, it also inherited the local branch of the KGB and the steel town’s tram service. Today, production has climbed from 2.2 million tonnes when the LNM Group took over to 5.2 million tonnes.

Fortune, as the saying goes, favours the brave and Mittal has had giant-sized slices of luck on way. The Karmet plant is perfectly positioned to supply the steel-hungry Chinese market, which has developed an insatiable appetite for the commodity (it's about 400 miles from the Chinese border).

Since Chinese demand is almost the sole factor driving global steel prices upwards, Karmet is now in a win-win position. To keep pace with demand, the LNM Group has hiked production steeply by over a million tonnes this year at Karmet.

Also, the Group has opened sales offices in China. Says Mittal: "Demand from China continues to rise and Karmet is in an excellent position to benefit from this."

In the entire last decade, Mittal has never let an opportunity pass. He has voraciously gobbled up steel plants around the world.

In the past three years, he has moved from Algeria to South Africa to Romania and the Czech Republic, grabbing nationalised rustbuckets that were being privatised — and which other steelmakers were afraid to The

36 Edge

touch.

In each, he has had an Alchemist's effect. At Ispat Sidex in the Czech Republic, production climbed from 3.04 million tonnes to 3.65 million tonnes, a year after it was acquired.

Similarly, production has already zoomed at Ispat Nova Hut in the Czech Republic where the deal was closed last year.

Mittal denies that he’s concentrating mainly on Eastern Europe. "We take opportunities where we find them," says a company spokesman.

That seems to be the truth. In 2001, the LNM Group took a 70 per cent stake in Algerian company Ispat Annaba. Similarly, it has a 47 per cent stake in Iscor, a South African steel company.

On one occasion this year, as the pace of acquisitions heated up, LNM Group chief financial officer Sudhir Maheshwari found himself jetting straight from Poland to South Africa dealing with one takeover bid after another.

What’s the glue that binds this disparate empire? The best explanation is that Mittal has a remarkable eye for a bargain and has figured the art of turning around rundown steel mills. Also, he is willing to walk away from a deal if the price is not right.

Rivals say that his investment per tonne has always been low throughout his career as a takeover artist.

Says a London-based analyst: "The assets he buys are not in good condition and most people shy away from that. LNM seems to have a skill at managing that type of problem."

Once LNM takes over a plant — whether in Kazakhstan or in Canada — it flies in a crack team that always includes large numbers of Indian executives. Most have been handpicked from the Steel Authority of India during the last decade.

Group President Malay Mukherjee was a former general manager in Bhilai and was the man-on-the-spot soon after the Karmet takeover.

Another former SAIL employee Narendra Chaudhary is the managing director of Ispat Sidex in Romania and K A P Singh the chief operating officer at Nova Hut. International analysts have given SAIL managers high marks for their skills. Working in places like Rourkela and Bokaro, they know all there is to know about rusty

state-run enterprises.

Other Indian businessmen — hopMittal, who has long stopped ing that the Mittal effect would rub gauging himself against the Indian off on them — have also taken up steel industry, made the leap into the premises near the LNM office in global top table during the '90s. Back Berkeley Square House, Mayfair. in 1998, the LNM Group announced Mittal has always insisted that he its arrival by bidding $1.4 billion for is on the lookout for buys anywhere US rust-belt giant Inland Steel. in the world. But he has followed a That is still its single biggest acclear pattern. quisition but it is spending giant In the early 90s, he focused on amounts on plants it has bought reNorth America. Then he shifted focently. It plans to invest a total of cus to Western Europe and bought around $500 million at Iscor. It's plants in Ireland, France and Gerreckoned that the group invested many. about $700 million on upgrades at These moves gave him a strongKarmet. hold in west European market for There have been deals that have what are called ‘long products.’ stayed out of reach along the way. A His moves in eastern Europe could few years ago, the LNM Group was also pay off in a big way. By 2005, on the verge of clinching a deal to the Czech Republic and Poland will buy Sidor, a be part of the enVenezuelan plant Mittal owns 12 giant-sized mills as part of an empire larged EU and by but found the 2007 Romania stretching from Canada to Trinidad & Tobago to Kaza- will also join the prize snatched from it at the last khstan and Indonesia. The LNM Group, under Mittal’s fold. moment.

That means the expansionist midas touch, has moved from the 6th to LNM Group will More recently, the going has bebe producing the 2nd slot on the global steel index come tougher. around 15 million Other steel giants tonnes in the EU. are learning to play Mittal's game. mills in places like Trinidad and folSays Mittal: "The major companies The main competitor is US Steel lowed that up in Canada. in eastern Europe are now privawhich beat the LNM Group in the The greatest coup was when he tised. The opportunities now lie in race for VSZ in Slovakia. This year, snapped up the loss-making Sibalsa the enlargement of the EU into cenit also beat Mittal to the draw for Sar- Mill in Mexico for $220 million in tral and eastern Europe." tid, a Serbian plant.

1992. The 20-year-old facility was As it set out on the acquisition trail, Similarly, both US Steel and Ac- originally built by the Mexican Gov- the LNM Group hasn't been afraid to celor, bid for Polskie Huty Stali which ernment for around $2 billion. leverage itself. seems certain now to fall into MitMost steel industry analysts say the At Ispat Karmet, for example, it tal's empire. deal was extremely favourable and, took a $450 million package put toThe story of how Mittal rose from till recently, the plant was the main- gether by the European Bank for Rerelative obscurity to become a mod- stay of the LNM empire. construction and Development ern day Andrew Carnegie is well His mills in Trinidad and Canada (EBRD) and the IFC. Similarly, at known. and Ispat Mexicana gave him a Sidex it has taken a $100 million He was born in Sadulpur, Ra- strong base in North America. In EBRD loan. jasthan. His father's business Ispat 1998, he consolidated his position in What next? Mittal once said that India has weathered many storms in the continent by buying Inland Steel. a modern steel company would be the last decade.

In the mid-90s, Mittal decided that right-sized at around 20mt. He has At a tender 26, Lakshmi Mittal was he needed a more central base for now upped that to around 40mt and dispatched to Indonesia to oversee his growing empire and shifted to admits that he might double that the family’s mill now called Ispat In- London. There he set the tone that once again. do. He parted ways with his father other Indian industrialists have But as the industry consolidates, it in 1995. watched enviously. His neighbours in looks certain that Lakshmi Mittal will In the late 1980s, Mittal moved in- Bishop's Avenue, Hampstead in- be out there in front stoking up blast to the acquisition mode and bought clude the Sultan of Brunei. furnaces around the world.

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Edge 37

Involves the recognition of opportunities (needs, wants, problems and challenges) and the use of resources to implement innovative ideas for new, thoughtfully planned ventures.

Mvp.cfee.org/en/glossary.html An individual's willingness to take advantage of business opportunities and to assume the risk involved by establishing and operating a business. Page 56.

www.ucs.mun.ca/-rsexty/business1000/glossary/E.htm Here are some of my favourite quotes on entrepreneurship, inspiration, and success: There will come a time when big opportunities will be presented to you, and you've got to be in a position to take advantage of them — Sam Walton, founder of Wal-Mart Inc There is only one way to make a great deal of money and that is in a business of your own — J Paul Getty, Former oil tycoon and once the richest man in America Change is the law of life. And those who look only to the past or the present are certain to miss the future — John F Kennedy, former US president A man's worth is no greater than the worth of his ambitions — Marcus Aurelius Antoninus, former Roman Emperor Those who enter to buy, support me.

Those who come to flatter, please me.

Those who complain, teach me how I may please others so that more will come. Only those hurt me who are displeased but do not complain. They refuse me permission to correct my errors — Marshall Field, entrepreneur The

38 Edge

I studied the lives of great men and famous women and found that men and women who got to the top were those who did the jobs they had in hand, with everything they had of energy and enthusiasm and hard work — Harry Truman, former US President

QUOTE UNQUOTE If you think you are beaten, you are. If you think you dare not, you don't! If you want to win, but think you can't, It's almost a cinch you won't. If you think you'll lose, you're lost; for out in the world we find success begins with a fellow's will; It's all in the state of the mind. Life's battles don't always go to the stronger and faster man, but sooner or later the man who wins is the man who thinks he can — Walter D Wintle

The only place where success comes before work is in the dictionary — Vidal Sassoon, entrepreneur A successful person makes a habit of doing what the failing person doesn't do — Thomas Edison, inventor and scientist One can get anything if he is willing to help enough others get what they want — Zig Ziglar, salesman Sow a thought, reap an action; sow an action, reap a habit; sow a habit, reap a character; sow a character, reap a destiny — Chinese proverb Failure defeats losers, failure inspires winners — Robert T. Kiyosaki, author, entrepreneur, investor Learn from the best and never stop learning. Learn actively and know how to learn independently. The brain is one's biggest investment. You are responsible for your education — Ryan P Allis, entrepreneur Life is but a game, however, in this game the rules are not revealed until well into

the game; and then, to only those courageous enough to seek them — Ryan P. Allis, entrepreneur Find a want, you've found a market. Find a market, then fill the want. Fill the want, you'll fill your wallet — Ryan P. Allis, entrepreneur The abilities to adapt to change and learn quickly are two of the most important skills a modern human can have — Ryan P. Allis, entrepreneur Not a single person whose name is worth remembering lived a life of ease — Ryan P. Allis, entrepreneur

Small people remain small because they think small, act small, or don't act at all.

85% of success in life is due to the ability to communicate and get along with people.

The magic combination for business success is: planning + intelligence + hard work + contacts + follow through.

"The world is filled with opportunities just waiting to be found by the energetic and intelligent person who is seeking.

The

Edge 39

READING MATERIAL

How globalisation flattened the globe

T

HE WORLD IS FLAT is a must read for globalisation watchers. The author, a Pulitzer Prize winner and an internationally acclaimed columnist, shows his mastery over dissection — be it of economics, finance, diplomacy or politics.

He starts with a quotation about Christopher Columbus’ 1492 voyage wherein he could not find India but returned with an equally momentous find — that the world is round.

Likening his trip Columbus’, author Thomas Friedman air-marches towards the East and lands in Bangalore, only to find that the world is flat!

He writes: “When I set sail... I assumed the world was round, but what I encountered in India shook my faith in that notion.... Columbus reported to his king that the world was round and went down in history as the man who first made this discovery. I returned home and shared my discovery only with my wife and in a whisper. ‘Honey’, I confided, ‘I think the world is flat’.”

What does Friedman mean by suggesting that the world is flat? He explains the process chapter after chapter, including the fall of the Berlin Wall as a symptom of a fast changing world pregnant with an imminent flattening.

Friedman came to his amazing conclusion after visiting the Infosys office at Bangalore and meeting its its CEO Nandan Nilekeni.

He describes, Infosys' global conferencing centre as ground zero The

40 Edge

Dina Nath Mishra of the Indian outsourcing industry.

"It was a cavernous wood-paneled room that looked like a tiered classroom from an Ivy League law school. On one end was a massive wall-size screen and overhead there were cameras in the ceiling for teleconferencing. ‘This is our conference room, probably the largest screen in Asia... this is 40 digital screens [put together],’ Nilekeni explained proudly, pointing to the biggest flatscreen TV I had ever seen.

Infosys, he said, can hold a virtual meeting of key players from its entire global

BOOK REVIEW THE WORLD IS FLAT A BRIEF HISTORY OF THE GLOBALISED WORLD IN THE 21ST CENTURY

By Thomas Friedman PENGUIN Price-Rs 711

supply chain for any project at any time on that supersize screen. So, their American designers could be on the screen speaking with their Indian software writers and their Asian manufacturers all at once....

‘That’s globalisation,’ said Nilekeni.

“Above the screen there were eight clocks that summed up the Infosys workday: 24/7/365. The clocks were labelled US West, US East, GMT, India, Singapore, Hong Kong, Japan, Australia.

“When all these things suddenly came together around 2000, added Nilekeni, they ‘created a platform where intellectual work could be delivered, disaggregated,

distributed, produced and put back together again from anywhere. This gave a whole new degree of freedom to the way we do work, especially intellectual work....’ What Nandan is saying, I thought, is that the playing field is being flattened. My God, he's telling me the world is flat!

"Here I was in Bangalore, more than 500 years after Columbus said the world was round sailed over the horizon, and one of India's smartest engineers, was telling me that the world was flat. And he was citing this development as a milestone in human progress."

The writer dwells on 10 processes that flattened the world, including work flow, software, open sourcing, off-sourcing, outsourcing, insourcing, informing and supply chaining. He also dwells on triple conversions, developing world, America and free trade, brewing crisis in America, companies and the flat world. The spotlight then falls on the theory of conflict prevention, the geo-politics of the flat world.

Of special mention is the writer’s awesome mention of the working of Wal Mart. "I had never seen what a supply chain looked like in action until I visited the Wal-Mart headquarters in Bentonville....

Twenty-four hours a day, seven days a week, the suppliers' trucks feed the 12 miles of conveyor streams and the conveyor streams feed into a huge Wal-Mart river of boxed products. No sooner does your arm lift a product off the local Wal-Mart’s shelf than another mechanical arm starts making another one somewhere in the world. Call it the Wal-Mart Symphony. It just plays over and over 24/7/365: delivery, sorting, packing, distribution, buying, manufacturing, reordering, delivery, sorting, packing.”

It is to Friedman’s credit that he squeezes the entire Wal-Mart operation which could have consumed volumes if attempted by others, in just 368 words.

Indeed, an educational read.

Enhancing Investment Speed and Accuracy

T

he academic discipline of finance was developed in the US between the forties and sixties with pioneering works by Nobel Laureates Tobin, Markowitz, Modigliani, Miller, Sharpe and others.

Subsequently, a whole new range of ideas and models were developed in the theory of investments — the Markowitz model, Capital Asset Pricing Model (CAPM), Arbitrage Pricing Theory (APT), Binomial Lattice Model and the Black-Scholes Model are among the major works. Relying on such theories and models, trillions of dollars are invested globally. Information Technology has developed over the years and disseminated across the business and investment community.

This book on advanced modelling in finance should be viewed as a complement to traditional and emerging research models in Finance.

These models are implemented in Excel spreadsheets and complemented with functions written in the VBA language within Excel. This combination of IT with finance provides a clutch of programmes which enhance investment speed and accuracy. This provides managers working on fixed income securities, equity and their derivatives, an added leverage.

The authors of this book seek to capture the exciting strength of numerical methods in finance by giving due prominence to and explanation of the use of VBA, short for the programming language

Rajat Sethi Visual Basic for Applications. The book logically follows in four parts.

The first part gives a conceptual understanding by illustrating the advanced modelling features in Excel and introducing VBA. The second part, introduces the one of the most used i n v e s t m e n t alternative: Equities.

Chapter 8 covers p e r f o r m a n c e measurement — from single-parameter to the multi-index model.

The authors have contributed in showing the way confidence intervals can be determined for assets weights from style analysis.

BOOK REVIEW ADVANCED MODELLING IN FINANCE USING EXCEL AND VBA

By Mary Jackson and Mike Staunton John Wiley & Sons Ltd PRICE: $95

The third part covers the options on equities. Chapter 9 introduces the Black-Scholes Formula and details the hedge portfolio to include riskfree interest. Here, the authors illustrate three different parameters for binomial trees, including the little-known Leisen and Reimer tree that has vastly superior convergence and accuracy properties as compared to standard parameter choices.

The last in this part, Chapter 13, moves away from the assumption of strict normality of asset log returns and shows how such deviations lead to a volatility smile in the market

prices of options.

The fourth part has focuses on bond options. The authors present how short-term interest rate can be modelled in a binomial tree as a means of valuing zero-coupon bond cash flows.

The book can be used by both in academics or in security market. It adequately explains complex concepts by generic illustrations.

From an industry perspective, the models provided by the authors can be readily used for pricing of assets.

Securities analysts can work on Excel’s user defined functions even without having a knowledge of macros/functions behind calculations. However, a system of imputing real-time data into Excel and implementing the models dynamically would have added value for practitioners.

The other books on modelling are Financial Modelling by Simon Benninga, Financial Modelling Using Excel and VBA by Chandan Sengupta and Spreadsheet Modelling in Corporate Finance by Craig W. Holden. The users who like to supplement these texts with investment and finance models may look into: Investment Valuation: Tools and Techniques for Determining the Value of Any Asset

by Aswath Damodaran, Valuation: Measuring and Managing the Value of Companies by McKinsey & Company Inc. and Corporate Finance: A Valuation Approach by Simon Z Benninga.

The only drawback in this otherwise informative book is the fact that content does not include swaps, future and forwards. Bond portfolio immunisation has also been left out.

The language, though, is simple.

Authors assume the reader is already a proficient Excel user. The book comes with a supplement: A CD of VBA code for models.

A good linking pin between finance courses and problems of real-world business.

The

Edge 41

A fair share of statistics and comparisons

I

n the current wave of gender studies, there is ample literature on various aspects of women.

Different authors have highlighted different dimensions related to women. There are qualitative studies conducted by various social science departments and NGOs, which focus on sociocultural and economic issues, primarily related to rights and welfare. There are micro quantitative studies too, which try to quantify the information gained through qualitative studies.

But, there is dearth of literature on the empirical, baseline and quantitative data giving an overall demographic profile of women in India, crosssectionally. To fill in this gap, the work entitled, State Gender Development Report (GDR) 2005, based on studies conducted by the National Productivity Council on women across India, plays a significant role.

Gender studies have gained pace in the past few years, taking into account various factors. It is also true that women are not a homogeneous group.

Hence, criteria becomes an important aspect.

UNDP’s Gender Development Index (GDI) is the pioneering step of measuring and comparing levels of gender development.

The present study takes an advantage over UNDP because it takes into account 52 gender development criteria indicators, classified into eight factor The

42 Edge

Dr Anima Sharma indicators. The main objective of this study is to measure the outcomes of policies for women and their implementation in 15 major Indian states. Herein lies the book’s cutting edge over earlier studies in this field.

There have been several surveys and studies on women in different parts of the world indicating that though change is happening but at a very low pace. I found this study academically enriching.

Whereas other studies focus on the multidimensional change in the status of women in India,

BOOK REVIEW STATE GENDER DEVELOPMENT REPORT 2005

By National Productivity Council PUBLISHERS: National Productivity Council

this one provides quantitative data on various factor indicators including, demography, education, health, drudgery, social status, labour participation, economic status and leadership role, across the country.

The comparative data from various states is stunning as it shows that despite rigorous planning and methodologies adopted for implementation, desired results have not yet been achieved. Kerala gets best ranking in the overall gender index with 0.899 STD value while Bihar has the lowest rank with -0.573

STD value. It particularly gains highest ranking in fields of demography, education, drudgery and health. The women of Punjab have better social status as compared to women in other states.

The standard deviation (STD) values show highest participation of women in labour in Madhya Pradesh. Ironically, Uttar Pradesh has been understood as a state where most social groups are male-dominated and women have very low social status and decision making authority. Yet the figures show that UP’s women have the highest STD value in leadership.

In the Five-Year Plans, considerable emphasis has been put on women development. We started with the concept of welfare in the first Plan, which gave way to the concept of development and now we talk about Empowerment and Rights. But its distribution is neither equal nor equitable.

The report summarises that though India made significant progress in recent years in regards to women development, the achievements have not been uniform across the states. In general, southern states, including Maharashtra, presented better achievement records than their counterparts in the east and in the north excluding Punjab.

This study is good quantitative reference material for people working in social sector, NGOs, social thinkers/ scientists, planners, bureaucrats, students of demography and academicians.

However, the inclusion of qualitative data would have given a complete picture.

Gender development in Indian history of planning has changed from welfare to development to empowerment.

But, the present scenario shows the lacunae which provides food for thought for future planning and strategy of action at a micro level.

Taking it from the top B Bhattacharyya

A

ll of us would like to be paid. If without reference to our performance, so much the better.

This does not mean that we may deliberately under-perform. Just that there is no threat in case targets are missed or if the compensation package negotiated at the time of appointment seems to be devoid of reality.

This is admittedly CEO territory. The issue is on the frontburner for some years now, especially in the US. But, it is also being debated in the continent and the day is not far off when it will be brewing in India as well.

In a nutshell, the issue boils down to: Is the current corporate governance structure ineffective in disciplining the executives in self-determining what they should be paid? If so, which way should we go?

This book, rated as one of the best three management books of 2004 by The E c o n o m i s t , BOOK REVIEW convincingly shows PAY WITHOUT PERFORMANCE how pay practices — from option plans to THE UNFULFILLED PROMISE OF retirement benefits EXECUTIVE COMPENSATION. — have decoupled Lucian Bebchuk and Jesse Fried compensation from Harvard University Press performance and Price $24.25 camouflaged both the amount and performanceinsensitivity of pay'.

Consider this data. Between 1992 and 2000, the average real pay of CEOs of S&P 500 firms more than quadrupled, from $3.5 million to $14.7 million. In relative terms, an average large company CEO received 140 times the pay of an average worker in 1991. In 2003, the ratio rose to about 500:1 A wrong compensation package reduces shareholder value. It can cause inefficiencies if the linkage with

performance is not clearly established.

There is also a moral or a fairness issue.

Analysing the current governance structure, basically the working of the Board of Directors, the authors conclude that there is a need for reform. “Under the current arrangements, director's incentives to enhance shareholders value are not generally sufficient to outweigh the various factors that induce Boards to favour executives. Thus, the problems of executive compensation can be fully addressed only by adopting reforms that would confront boards with a different set of incentives as constraints."

The solution they suggest is not merely to make the Boards independent of executives, but, also to make the Boards more dependent on shareholders. This is, in fact, a radical departure from the conventional wisdom prevailing over the last many decades. The power of the Board as well as its insulation from the shareholders is mostly perceived as a logical corollary of a large corporate with widely dispersed ownership. Apart from the inevitability arising out of the economic process, this trend is also supplemented by the legal regime.

To my mind, this is a correct diagnosis but the solution seems difficult to implement, especially when shareholding is highly dispersed. Making Boards dependent on shareholders will require an enlightened and proactive shareholders community.

Apart from institutional investors who are mostly represented in the Board, the existence of such a sub-class of shareholders in developing countries can be taken for granted.

However, this will not take away the credit from the authors for their thorough analysis of one of the current burning issues of corporate governance and the prescriptions they had worked out to address the problem.

The

Edge 43

STUDENT CORNER WIN WITH PLANNING

‘BRAND’ NEW WORLD

With multinationals streaming into India, the need for entrepreneurs is rising. Today's knowledge-based economy provides fertile ground to Indian entrepreneurs. But, to script a success story, we need support services like investors, professional managers, legal firms and placement agencies, not to talk of infrastructure, connectivity and communication.

Vishal Goyal Entrepreneurs in India face two predicaments: Entrepreneurial (how to build a team, manage business risks, identify and get funding) and functional (product development know-how, marketing skills). That is why most MNCs get into a joint venture with an Indian company before entering the market.

Further, it is imperative to promote networking and exchange of information. One learns from experience - theirs and of others. India would benefit from a strong network of entrepreneurs and managers. For example, if IT giants like Infosys, Wipro and TCS could come together and share their experiences of world markets, they would not only benefit from each other but also help other entrepreneurs.

Another important feature of Indian entrepreneurship is family businesses. The Ambani feud brought out a lot of issues in the open such as division of business, competency of biological successor vs acumen of professional managers etc. Since these family businesses involve a lot of public money, the captain’s selection should be objective and suit business requirements. Such a method of appointment would send out the right signals to foreign investors and bring maturity to the market.

Off late, the Government has started supporting entrepreneurs. Recently, Union Minister of Communications & IT made a presentation on India's strengths in the telecom and IT sectors in the US. The result? The world's largest chip maker Intel evinced interest in setting up an advanced test manufacturing facility in India. Rapid globalisation gives tremendous opportunities to India which has an extraordinary talent pool with limitless entrepreneurial skills. Through planning and focus, we can aspire to create a pool of entrepreneurs which could make for world leaders.

It is not a matter of what is true that counts, but a matter of what is perceived to be true — Henry Kissinger.

Management gurus say customer is king. The single most important job in marketing is the job of creating and retaining customers. Studies have proven that the best way of creating and retaining customers is by building strong brands. But, what are Anasua Mitra Brands? You enter a supermarket to buy a packet of biscuits. But when you check out the rows and rows of biscuits with different names, flavours and different packages, you get confused. Choices, choices and more choices are available today, for the new generation consumers.

Earlier, the most common questions were: What to buy? How to Buy? From where to Buy ? While the latter two may present limited options, "what to buy" engulfs us in a wide array of options. In the past, people had very little to choose from, a situation economists describes as sellers' market. Today, it’s buyers' market, i.e. consumers can chose from a large number of generic products. All companies compete with each other to attract the customers' attention and capture maximum market share. So how does a "Brand" help a company to achieve this? The Dictionary of Business and Management defines Brands as, "A name, sign or symbol to identify items or services of seller(s) and to differentiate them from the goods of the competitors." A Brand is not restricted to mere signs and symbols; it is a collection of perceptions in the mind of the consumer. It is the amalgam of a physical product and the notional images that go with it. Thus, a Brand can be explained with the help of a simple equation: BRAND = PRODUCT + IMAGE When we recall a brand, we not only recall the physicality of the product, but also the images it conjures up. Hence, when we see Nike product we recall the white tick mark that represents its logo, athletes running, images of famous international sports figures etc. So, why do companies consider brand building an important strategy?

Marketing managers, all over the world, understand the need of brand building because customers today are not just buying a product or service; they want to be a part of a brand!

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COMMUNICATING LINK

WHO DARES, WINS

The summer Internship programme has been one of the most exciting semesters of the IILM curriculum. It has not only enriched me with learning new processes and getting exposure to the fashion industry but has also boosted a new self-confidence in me.

I worked as a management trainee at Jessie Fashions, an export house of high fashion silk and beaded garShweta Berry ments. While the IILM faculty had been instrumental in preparing me to handle myriad job responsibilities, my mentors at the workplace — Mr. Shyam Kumar Bagga and Mr. Shiv Kumar Bagga — were a constant source of inspiration and information. Understanding nuances of business communication at an export house is enriching.

While communicating means passing on information, or receiving it from somebody else, business communication includes all communication that occurs in a business context.

Knowledge of business communication presupposes an understanding of both business and communication.

The communication department's basic function is to keep a smooth flow of communication with suppliers, dealers, buyers and buying houses through e-mails, maintain records of transactions at each stage of garment production, generate yearly reports on stock and orders, along with the preparation of shipping documentation.

The first task assigned to me was handling of email communication. This included managing MS Outlook Express and learning filing work. The second task was mission cleaning.

All files till June 2004 were packed in cartons and put into store after proper labelling.

The third assignment was to start communicating with the buyers and reply to their mails with precise information. Mr. Shyam Bagga mentored me initially and soon I started composing both regular and business mails to our clients. I also worked on improving the company profile document and this initiative was appreciated by the management.

My learning from working with the communications department is that in today's fast-paced business environment, poor communication is expensive. Success depends on the ability to communicate.

In this day and age everyone wants to be successful, be it their personal life or professional. But is becoming successful that easy? Success which is so eagerly sought is not a matter of luck or genius. Life is what you make of it. To win in a competitive world, you must acquire knowledge and personality. Your tomorrow depends on what you do today. ConVarun sharma fidence will lead to success. If you take reasonable risks and are enterprising, nothing is impossible. A person who knows his strengths and can conquer his weaknesses can achieve anything. If people like Amitabh Bachchan and Shah Rukh Khan can become superstars and Dhirubhai can achieve great heights then so can you.

Success has no boundaries. It starts with ones knowledge, enthusiasm and hard work and grows along. Our glory is not in never falling but rising every time we fall. Nothing that comes too easily is worth having. All things worth having can be had only with some effort and at some cost and sacrifice. Success depends upon hard work, dedication, minor setbacks and circumstances. In order to achieve it one must resist temptations and distractions. Time management and organisational abilities always help a person aiming for higher goals. If you have passion, nothing can stop you from achieving your goals.

Failure is not defeat, it is a landmark in the journey to success. The ability to profit from it contributes to lasting success. It is a necessary learning process. To err is human. Making mistakes is not a crime but repeating them is. If one can manage to rectify mistakes, there is no height you can’t achieve.

All the miraculous feats which we look with awe are instances of hard work, dedication and perseverance.

Nothing is impossible. Everything is possible to him who believes in self. Look at the career graph of L N Mittal, one of the richest men in UK with a fortune of £ 12 billion. Born in a Sadalpur, a village in Rajasthan, Mittal was dispatched to Indonesia at 26 to oversee the family's mill now called Ispat Indo. It was the dogged pursuit of his favourite steel business that added up the biggest steel conglomerate in the world.

An essential ingredient of success is positive thinking. Try, try and try again till you win.

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STUDENT CORNER THE ONUS IS ON YOU

SMALL WONDER

Have you ever thought who is responsible for your situation? Opinions vary. Some say it is fate, others say lack of sufficient hard work and the rest blame it on circumstances. It's true to a certain extent that one's destiny depends on the kind of family in which one is born and the influence of people around him. But the real difference in two Prasad Joshi situations is created by your mind.

Yes, you are what you think. Swami Vivekananda has rightly said if you think you are strong, strong you will be. If you think you are weak so will you be!

A person's entire life is decided by a series of thoughts that flow in one's mind. He who achieves a noble character does so not because of luck but because of persistent thinking in the right direction.

A majority might disagree and say that they have no control over the circumstances, but a person is only pinned down by circumstances till the time he believes that he cannot do anything about them. The moment he realises he has the ability to take on the challenges, he emerges victorious.

A management student is exposed to all kind of situations during his curriculum. It is here where he is confronted with harsh realities through case studies. Some students never bother to think differently. They simply copy the solution from others and move ahead. Are you one of them? If yes, then think what will happen to you when you sit for an interview and are asked the questions which you might not be able to answer because you never thought on those lines.

People give up easily once they start to lag. They surrender their weapons which could have won them the battle.

During campus placements these people are the ones who find it difficult to pass the interviews. What is the reason for their failure? They failed themselves because they stopped thinking. Had they applied their minds and taken proactive steps they would have sailed through.

So, the time is reaping to think afresh, think fast and be proactive .Think about it. After all, I am responsible for myself…and only to myself!

Imagine a world where: Ø Planes can be assembled within a fraction of a second, that too with diamonds! Ø Garbage can be disassembled and turned into beefsteak! Ø People can be operated by cellsized robots!

I am talking about that emerging technology which has become inAshish Dixit tegral to our life — Nanotechnology. In 1986, MIT researcher K Eric Drexler foresaw the advent of everything that exists in this world on a molecular level. He published a book Engines of Creation, in which he outlined the possibilities in nanotechnology.

As envisioned by Drexler, this would lead to nanocomputers no bigger than bacteria and nanomachines called nanities (as shown in Star Trek: The Next Generation), which could be used as molecular assemblers to build, repair or tear down physical objects, including human beings.

And here’s the nano wonder world: 1. Medical and Pharmaceuticals: With nanobots (small robots), we could directly treat diseases like cancer by programming them to find and destroy cancer cells. We could better monitor life signs of a patient or use nanomachines to make microscopic repairs in hard-to-operate-on areas.

2. Environment: Nanomachines can be used to clean toxins or oil spills, recycle garbage and eliminate landfills.

3. Manufacturing: Nanomachines could change the concept of self assembly, i.e. creating copies of itself.

It may all look like science fiction but with the ability to move the individual atom we are approaching the technological ability to fabricate productive machines that can manipulate things at the atomic level. Car airbags are an example.

Potential Dangers: There’s always a possibility of assemblers being used to create destructive weapons. Other, less invasive, but equally perilous uses of nanotechnology would be electronics surveillance. Armies could develop dissemblers to attack physical structures or even biological organism at the molecular level.

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TRACKING THE ERROR

THE SUCCESS STORY

Among equity investments, nothing can come close to simplicity of index fund. The idea is to hold a portfolio that mirrors the stock composition of a popular index, thus tying its value to market fortunes. With the BSE sensex and S&P CNX Nifty touching new highs, index fund holders ought to be overjoyed.

However, they have one worry: Abhijit Ghosh Tracking Error. This is an average measure of how much the return on a particular index fund varies from that of the underlying index. The computation procedure is as follows: If the return generated by an index fund is 5 per cent and that by the index is 5.13 per cent, the fund's tracking error for that day would be 0.13 per cent. These daily errors are squared and added up for one year; the square root of this sum is then the tracking error value for the year.

The major causes responsible for these errors are: Expenses: These include asset management fees, agent commissions, brokerage and sundry expenses.

Dividends: These are not factored in by indices, but funds do earn them. The dividend yield of the sensex is 1.88 per cent; it plays an important role in beating the sensex.

Cash components: Cash needs to be kept by open-ended funds for pay-outs. An index fund with 4 per cent corpus would find that an index rise of 5 per cent gives it an NAV boost of only 4.8 per cent.

Trading activities: These occur throughout the day, while index calculations are made on the closing price data.

Market lots: Trading is done by rounding off investments, making it hard for any fund to mirror the index precisely. There will be some scope for rough edges.

Market liquidity: This makes a difference because even index shares may not be easily available. This makes it difficult to fine-tune the portfolio to match the index precisely.

The tracking error of some major index funds based on sensex like Prudential ICICI Index Fund, LIC MF Index Fund, HDFC Index Fund etc range between 4.04 to 5.77 while the tracking errors based on Nifty like ING Vysya Nifty Plus Fund - Growth, HDFC Index Fund - Nifty Plan, Franklin India Index Fund - NSE Nifty Plan - Growth etc. hover between 2.8 to 3.75.

Often, we speak of success. But what is the true meaning of success? Does it mean continuously updating your skills, achieving material comfort, venturing the depths of oceans, touching mountain peaks or creating a new dimension with nuclear power?

In the so-called success oriented world, people fight, humanity is losAparajita Biswas ing face, concepts of compassion and brotherhood have become a misnomer. Terror has struck down building landmarks, children and innocent people. We have seen thousands dying in blasts at public places in London, Spain, Iraq and other countries. We have seen deaths across the Kashmir Valley for years — all in the name of some superficial cause.

Today, success has become synonymous with power. Several countries due to their sheer wealth and military power regard themselves as "superpowers" and are bent on taking control of the world economy.

At home, we see famous industrialists going against their own blood in the name of power. Once again I come back to my original question. What is success? Is money or power the only yardsticks of success?

There have been people like Vivekananda, Baba Amte, Mother Teresa and Nelson Mandela who devoted their life to the welfare of others. Weren't these people successful in life? What is it that these great men and women have in them that makes them immortal?

It is compassion for humanity, a word that has become confined to the dictionary. It's high time we looked into ourselves and discovered the meaning of compassion.

What if we could bring back the smile to the faces of children who lost their parents in WTO tragedy; what if we could inspire the victims of Tsunami to start their life afresh; what if we could make this world a better place to live in?

Won't it be the greatest achievement, the best success story of our lives?

If we can, only then we will be able to perceive success in the true sense of the word.

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STUDENT CORNER POWER OF WOMEN

MIND YOUR LANGUAGE

While God was working on a creation, an angel asked, "Why spend so much time on this?" God said: "I am creating an angel who has to be washable, has to have 100 movable parts and be able to run on leftovers, have a lap that can hold more than two children and should have a kiss that can cure anything from a broken knee to a heart.” He Kunal Malhan named this creation Woman.

In all developing countries, boys and girls are told they have different rights and roles. A son is preferred as he will continue the lineage, earn and look after parents.

The 19th century saw the emergence of spiritual leaders and social reformers who nurtured on rational thinking. Raja Ram Mohan Roy had Sati abolished. Efforts of I C Vidyasagar led to the formation of the Hindu Widow Remarriage Act in 1856. The 20th century saw the legitimate age for women to marry being raised to 18.

The number of women in public and social life is fast rising. India has had the distinction of having a woman Prime Minister for more than a decade. Women are everywhere — scientists, doctors, artists, legislators, pilots and also in armed forces, exploding the myth of being the weaker sex.

Take the case of Kiran Mazumdar Shaw, Chairperson of Biocon. She singlehandedly turned Biocon into a pharma giant with an annual income of approximate Rs 850 crore.

Not to forget NASA’s Kalpana Chawla who went for two space missions. Kiran Bedi was an Asian tennis champion, holds a law degree, a doctorate in drug abuse and domestic violence and has brought revolutionary changes at Tihar Jail. Then there is the Shri Mahila Griha Udyog Lijjat Papad in business for 40 years and on a work force comprising only women.

Truly, women are amazing. They have the strength to go through hard times with courage and evoke affection in others. They fight for what they believe is right. They applaud their children's' success and courage their husbands to move up in life. They know that their compassion can heal a broken heart and mend a shattered life. The heart of a woman is what makes the world revolve. Hats off to them!

Technology has changed modern language. Some languages die as people stop using them. Latin is now a dead language. But many words in living languages come from Latin.

All languages change gradually.

Foreign words have entered the English language, such as restaurant from French, and kindergarten SANGYA BAJPAI from German. Influences such as these have made English spelling much more different than that of other European languages.

English has never remained static but has discarded old words and expressions, absorbing new ones which are coined or taken into English from other languages to describe new technologies or fresh social or cultural developments. Very often such words start of their lives in English as slang or colloquial expressions. lt was during the post World-War I era that society gained new attitudes about slang. Because most people desire uniqueness, it stands to reason that slang has been in existence for as long as language has been in existence.

Hinglish, a mixture of Hindi and English widely spoken in lndia, may soon become the most common form of the Queen's language, according to a British expert. lndia's success in attracting business has produced a new verb.Those whose jobs are outsourced to India, are said to have been Banglored. Turn on any Indian television station and you are likely to hear things like "Hungry kya?" or "What your bahana is?"

The mix of Hindi and English is the language of the street and the college campus and it sets many parents' teeth on edge. lt’s also a bridge between two cultures that has become an island of its own.

English language has become less rigid and the distinction between the linguistically correct and linguistically incorrect has blurred. But we are not yet at the stage where anything goes; Let us hope we never reach it. The trouble is that it is difficult to establish such guidelines when the language is in a flux. But then, change is innovation, innovation is rejuvenation and changes must thus continue.

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LEND YOUR VOICE

TWO-WAY MOTIVATION

Life for a woman has always been a struggle, especially in a patriarchal society like ours. Her biggest concern today is increasing in sexual crimes.

In India, sexual harassment, molestation and rape is becoming alarmingly common. Most of these crimes are being committed by relatives and acquaintances of the vicTina Thomas tim. Thus, there is an immediate need to increase public awareness and speedily implement laws to curb this growing menace.

The most perverted and degrading form of this harassment is rape. It shakes the foundations of the victim's life.

It not only humiliates and makes a woman powerless, but leaves a permanent scar on her psyche. Her capacity for personal relationships gets impaired and she lives in constant fear. The recent cases which occurred in Delhi are scary. The rape of a Swiss diplomat, that of a north-east student and a slum dweller created ripples in the Capital city but nothing was done to curb such crimes.

The reported cases are just the tip of an iceberg. The reasons cited for low reporting of rape in India are many — familial pressure (especially when the head of the family or a close relative is involved); social pressure (when an important member of the society is involved); personal reasons like fear of stigma. Then there are cultural factors (where premarital sex is unaccepted); legal reasons (due to lack of faith in law-enforcing agencies or due to fear of being exploited) or judicial factors (judicial decisions take long to come by). Also, there’s the real fear of being further tortured by repeated and prolonged interrogation, especially in rape victims making to relive their trauma in court for evidential reasons.

The biggest question staring us is who is responsible for this mess. Lax law and order or society itself? We are all aware of the problem but are least interested in stemming it. We blame it on law and order, or on the victim’s negligence.

Truly, law plays an important role in curbing violence against women. It is crucial that we, as responsible and concerned citizens raise our voice against such atrocities.

Lamberatta in 1970's, bikes in 2000, aloo bhaji then, pizza's now; pathani suits then jeans now; knowledge description then, prescription now; personal management then human resource now.

With time, everything changes, the clothes we wear, the fashion we do, the food we eat, the trends that happen, everything. So, why not our Priyank Badola process? In the 70s, it was motivating the lower order staff but nowadays a new concept is emerging — Two Way Motion.

Motivation, according to the Oxford dictionary, is "the Reason or reasons behind ones action or behaviours". It was considered a one way process but if visualised closely, it’s always been a two-way interaction. Now, let’s learn how to achieve a two-way motivation.

Delegation of Power: Show your boss that you can be worth giving responsibility to as you know how to delegate.

If in team, distribute and organise work among the workers to reduce complaints and wastage. Manager will notice the interest of his/her team in the work.

Initiate: Manager will guide you but not every time. Once you are trained, only a few mistakes are allowed. If you need training, approach the manager before he figures it out.

Proactive nature will make him give you responsibilities while he/she enhances the work and rake more responsibility.

Be Innovative: The initiatives must be out of the box and insightful. New ideas will help bring better solutions. This brings in a result-oriented approach.

Offer solution: Key to a problem is solution. The more the ideas, the better is the performance. This is what the manager works for — to show results.

Complement but no flattering: Managers have a work appraisal system. We can create a system of appreciating his/her work rather than carrying all the applause by the shop floor.

Give a standing ovation to keep his/her spirits high. After all we are a team, flattering might fetch individual goals at time but not the objective of motivating manager.

Positive nature: Positive energy is the key to success. Preach them to bundle the strengths and suppress weakness.

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STUDENT CORNER INDIA, A GLOBAL KPO HUB

TAKE IT EASY

Knowledge Process Outsourcing (KPO) involves processes demanding advanced information search, analytical interpretation and technical skills for judgment and decision making. It involves business processes that require domain expertise and high-end talent such as MBA's, engineers, doctors, lawyers, accountants and other highly skilled Vibhuti Mall professionals. Clients today demand reduced lead-time, more customised and value based solutions. KPO entails execution of standardised processes and carrying out processes that demand advanced analytical, technical and decisive judgment.

According to a CII paper, global KPO is expected to reach $ 17 billion by 2010, of which $ 12 billion would be outsourced to India. KPO industry would grow 46% by 2010.

KPO has an edge over any kind of outsourcing. Employees need not work at odd hours required otherwise. It does not stagnate career growth. It applies minds of professionals in the right way and enhances their skills in the right way.

Companies providing Knowledge Process Outsourcing services include Russia, Ireland, Israel, China and India So what really differentiates a KPO with BPO? In a BPO there is a predefined way to solve a problem. In contrast, a KPO requires understanding of how a client works.

It requires business/domain expertise rather than process expertise. The KPO industry is mainly engaged in providing knowledge on R&D, Business Research, Market Research and Competitive Intelligence, Engineering Design Services, Animation and Simulation Services, Pharmaceuticals & Biotechnology, Medical Services, Data Analytics, IT Consulting, Training and Consultancy, Equity, Financial and Investment Research, Intellectual Property Rights India has a competitive edge over all other providers, and hence, will capture 70% of KPO sector by 2010 by employing 2,50,000 employees, predicts Evalueserve. According to Alok Aggarwal, Chairman of Evalueserve, destination such as India offers significant cost advantage (as much as 40-60%) in contract research and clinical trials. Also, the labour pool has technical competence and English speaking capabilities.

A fisherman was lying by the side of a lake smoking his cigar. A man had been observing him for some time.

He came to the fisherman and the following conversation took place.

Man: What are you doing?

Fisherman: I am resting?

Man: Why don't you catch fish?

Fisherman: What would I do then?

Man: You could buy a boat.

Varun Mahajan Fisherman: What then?

Man: You could then catch more fish and make money.

Fisherman: What then?

Man: You could have a house, a car and servants.

Fisherman: What then?

Man: You could then just sit and enjoy life.

Fisherman: So what do you think am I doing now?

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This account is inspiring. No one in this universe has ever lived with total satisfaction. Discontent at one place would not necessarily lead to happiness in another. It only calls upon you to de-link your inner state of mind with factors like satisfaction and dissatisfaction. It depends on the individual how he deals with the circumstances. While one may succumb to sorrow, the other might stand up to confront them. If you bring your internal strength into action, it will hit at your enemy — dissatisfaction. Dissatisfaction prompts most MBA graduates to change their jobs. In IIMs, just 9-13 per cent students were happy with what they were getting. 33-67 per cent non-IIMs felt they were underpaid. Research into the job scenario threw up interesting statistics. Only 38 per cent rated their current job great and more than 70 per cent felt their compensation was lower than the batch average. Relocation, job challenge, industrial crises and unsuited culture may be reasons for job switches, but only in small measure.

Is success measured by the bucks you pocket? No, you may feel satisfied if you found an identity in your profession. Very often, we convince ourselves that our life will get better after something happens — after we get that job or that contract or that relationship. But that does not 'fix' our happiness.

One always wants more until one realises there's no way to happiness. Happiness is the way.

SPACE ON WORLDSPACE

KOTLER’S 4Ps CHALLENGED

Think of all those times you were travelling in your car, tuned in to your favourite radio station, breezing through the highway, humming the music … and, all of a sudden, the signal breaks up and fades into static!

Now, imagine a radio station that can broadcast it's signal from more than 35,000 km away and then come through on your car radio with comParijat Priyadarshini plete clarity. You could drive from New Delhi to New Jalpaiguri without ever having to change the radio station! And no static, ever! Welcome to the world of satellite radio!! It's hot, it's cool and it's undoubtedly, the best.

WHAT IS SATELLITE RADIO? Satellite radio is a digital radio which receives signals broadcast by communications satellites. This allows the listener to follow a single channel no matter where he or she is because the signal's reach is not limited by station power.

WORLDSPACE and HOW IT WORKS To understand the concept of satellite radio better and to look at it as a business model, let us take the example of WorldSpace, the pioneer in satellite radio. From an Indian perspective, WorldSpace will give competition to RadioCity, Radio Mirchi and the like.

WorldSpace is the leader in satellite radio industry. It put two of its three satellites, AfriStar and AsiaStar, in geostationary orbit before any of the contemporary satellite radios. AfriStar and AsiaStar were launched in October 1998 and March 2000, respectively. Each satellite transmits three signal beams, carrying more than 40 channels of programming, to three overlapping coverage areas of about 14 million square km each.

INDIAN OPERATIONS OF WORLDSPACE The consumer audio business of WS in India started in 2000 and went through its share of downs. Recently, they re-launched their services in Bangalore. They’ll be covering four metros by September. First, Chennai, only then Delhi and Mumbai. Working on Rs 13 crore budget, they are reworking on spends.

Earlier they used to call themselves WorldSpace Digital Audio Services Company. But it was too complicated for the consumer.

They finally decided to convey the business in simple terms — and now they just call themselves WorldSpace Satellite Radio.

What? Where? How? and By whom? Philip Kotler, the guru of marketing, brought forth these 4 Ps — Product, Price, Place and Promotion — as the step towards holistic marketing.

Kotler's logic has been challenged

by Prof. Jagdish Seth, who has brought forward the 4 As (Affordability, Acceptability, Accessibility R.Gopal and Awareness) instead. Kotler disagrees, and says that his Ps are a useful framework for the focusing of the companies offerings. The starting is always segmentation, targeting & positioning. Then these Ps are converted into the 4Cs - customer value, customer costs, customer convenience and customer communication. Kotler emphasises on the use of guerrilla marketing strategies for the companies to make a name amongst the consumers.

Seth, on the other hand, in his book The 4A's of Marketing, uses a simple formula: Market value average = Affordability x Acceptability x Accessibility x Awareness.

This directly correlates to market place success. According to Seth, marketing has more to do with what customers actually require rather than the product-centric world that companies think they require.

In the present scenario, Indian companies needed to ascend the value scale. Citing the example of the IT sector in India, he points out that the combined strength of the top Indian IT companies was minuscule compared to that of giants like IBM and Microsoft. His 4As focus on what has to happen at the customer end for marketing to succeed, rather than simply identify the levers at marketing disposal. The Ps focus directly on the 'means', while As bring in the 'ends'.

So what are the future strategies of marketing managers?

Will there be a change brought? Customer focus is always important. If customers are happy and satisfied, then so are the manufacturers. But will this work at the end of the day, is all that matters. If changes are taking place, who is answerable to all these changes?

It is high time management students understand what is right and wrong. Practical application is what is required rather than believing theoretical concepts like Kotler’s.

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CAMPUS CAMPUSCAM

NEWS NEWS NEWS NEWS NEWS NEWS NEW

IILM

LODHI ROAD

PARENT'S DAY IILM hosted its first Parents' Day Programme on April 2, 2005. The day started with lighting of the lamp by Chairperson Malvika Rai, the Guest of honour Swami Jitatmanandaji and Director, Graduate School of Business Professor B Bhattacharya, followed by Saraswati Vandana performed by Ms Sagri Negi, a student of UG-II. Swami Jitatmananda addressed the august gathering on “India's traditional culture for success in today's global com petition .” He gave wonderful in-

By IILUMINATI IN the third trimester, ILLUMINATI challenged students to the debate titled "Hard Talk" . The topic for this in-house debate was The baton of business is best “T within the family”. Among the esteemed panel of judges were Dr. Nair, Director; Mr. D. Kumar, Placement Committee; Prof.

Bhattacharya, Marketing Dept. and Dr. K.G. Ray, HOD- Finance Department. The event was introduced by student coordinators Gunjan Gupta and Raj Kumar Singh.

Six teams entered the final round to fight it out for the coveted first position. Each team had

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Swami Jitatmanandaji lighting the lamp

sight and advice to enhance the quality of life and how to lead a life full of physical, intellectual and spiritual power. He also graced the occasion by taking a meaningful session on medita-

HARD TALK two speakers. While one spoke for the motion the other spoke against it. The teams were judged on the contents, facts, convincing power, presentation skills and ability to handle interjections from the participants, judges and audiences. Numerous examples were sighted to strengthen their arguments. Reliance, TATA group, Birla Group etc were discussed by various participants. As the event reached its finale point, our esteemed judges addressed the audience dis-

tion highly appreciated by all.

The programme concluded with an interactive session between parents and faculty members over a sumptuous spread for lunch.

cussing the topic alongside giving useful tips to the participants detailing the nuances of debating as well as appreciating their efforts.

Finally, the much awaited results were announced and prizes were given away by Dr. D. Kumar. The first position was bagged by Team C — Amborish Barua and Sudipto Sengupta — winning a prize of Rs 1500. The second position was taken by Team E — Tina Vaul and Manish Kumar — carrying a prize of Rs.1000.

The experience was enriching and IILM family look forward to many such experiences.

MPUS CAMPUS CAMPUS

WS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS

ORIENTATION PROGRAMME AT UNDERGRADUATE BUSINESS SCHOOL THE IILM undergraduate business school organised a workshop from 11th to 15th July, 05, for faculty.

The key objectives of the programme were: ◆ To facilitate self-exploration and self- analysis of faculty members ◆ To create a roadmap for the improvement in academics The workshop started with an introduction to the University of Bradford, its curricula and pedagogy by Director-Under Graduate Business School, Ms. Sandhya Prakash. This was followed by an introduction of the new courses apart by Dean Academics-UBS, Mr. Rahul K Mishra.

Prof. B. Bhattacharya, Director Graduate Business School, Professor Saiyadain Mirza, Prof.

I. A. Rizvi & Dr.Tripti Pande Desai shared their teaching ideas and experiences with faculty

Faculty members during “brainstorming sessions”

members.

It was an interesting workshop with plenty of brainstorming sessions to arrive at the Best Known Methods of teaching to maximise

learning. The programme was concluded with an address by Chairperson Malvika Rai where she voiced her expectations from faculty members.

Faculty development programmes IILM is making extra efforts to assist its faculty to develop skills in research and training.

Since June 2004 with the help of best in academia from IIMs, XLRI and EDII, a number of faculty development programmes have been conducted.

During this quarter FDPs on Policy and Strategy was taken up

by Prof. Ajit Prashad, International Management Institution (IMI) and Prof. Krishna Kumar, Indian Institute of Management (IIM) Kozikode. Various aspects in strategy formulation and its

implementation were appraised during this course.

Further, a 5 day FDP on various issues was conducted from May 23 to May 27 2005. The first was Social Sector Management which was undertaken by Prof. Ashish Bose, a well known personality on demography.

Prof. B. Bhattacharya, Director, IILM and also a well known economist emphasized the participants about the Current Economic Scenario. It was followed

by Current Financial Scenario by Prof. V.K.Bhalla, Dean. FMS.

Delhi University. Prof. E.M.Rao from XLRI covered various important aspects in Industrial Relations and Labour Relations.

Lastly, a very well known personality on OB/HR and Ex.Director of IIMA. Prof. Pradip Khandwala, Issues and Research in OB/HR area in India.

The last in this phase was the FDP on Entrepreneurship by Prof. Dwijendra Tripathi Distinguished Fellow, Entrepreneurship Development Institute of India and ex-IIMA professor.

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MDP on Costing Pricing The IILM in collaboration with PHD Chambers of Commerce organized a two-day Management Development Programme on Costing and Pricing for Exports on 11 - 12 April 2005 at Indore for the executives or entrepreneurs who are in export business or are planning to get into exports.

22 participants drawn from large and medium enterprises attended the programme.

The programme was inaugurated by an introductory speech by Prof.B.Bhattacharya, the programme Director followed by four sessions.

On the first day, the first session was taken by Ms. Pooja Talwar, Faculty accounting and Finance, IILM. The session dealt with the Basic Costing Concepts and Principles. The main focus was on the techniques of costing to be adopted by manufacturing concerns in diverse business situations.

Global debate participation A batch of PG students participated in the Global Debate on Poverty and the Role of International Community at the British Council on April 23 through videoconferencing. The participating Institutes were Oxford University, University of Texas, Indiana University, St. Stephen’s College, Delhi, and IILM. Our students made quite a mark in the conference which was also noted and appreciated by Edmund Marsden Director, British Council, India, and Ms. Kamal Singh, Head of Governance and Social Justice, India.

Faculty participants were Mr.

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Prof. B. Bhattacharyya at the MDP

The second session was taken by Prof. B. Bhattacharya, Distinguished professor and Director Graduate School of Management, IILM. The session dealt with the Strategies to be followed for pricing of exports followed by a discussion on the application of the pricing principles.

The highlight of the second day was a session taken by Dr. N.L.

Rahul Mishra and Prof. Raj Aggarwal who moderated the debate at the Delhi interface.

Industrial visit to Maruti Udyog Limited ON April 15, 2005, Post-Graduate students of IILM, Lodhi Road, went for an industrial visit to Maruti Udyog Ltd., Gurgaon. The visit to the state-of-art Maruti plant and production facility, sprawling in 297 acres with three fully-integrated production facilities, was overwhelming. The visit exposed the students to processes like blanking of steel coils into various

Ahuja, Professor Accounting and Finance, IILM. His session dealt with Management of Foreign Exchange Risk for exporters. The discussion focused on the objective of Forex Risk Management, hedging techniques and strategies for minimizing and eliminating risk.

The programme concluded with an open house discussion with the participants.

shapes and sizes and proceeded to see the blanks pressed into various panels.

The students also visited the welding section where several welding robots did their work perfectly and impressively. This was followed by painting, which, the students could see through a glass window. At the assembling section various components like glasses, instrument panel, suspension, engine, wheels, seats were assembled in the painted body to make a complete vehicle.

The students also visited the machining section where various raw materials for engine components were machined using automatic machining centres.

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ACADEMIC LAURELS ASHITA AGGARWAL ❙❘❘❘ Presented a paper titled "Emerging Challenges to Management Education" at the Second International Conference on Managing in Global Economy: Challenges to Management Profession organized by Association of Indian Management Scholars and Indian Institute of Management, Calcutta on Dec 28-31, 2004.

The paper was co-authored with Dr. Irfan A. Rizvi

PROF. B. BHATTACHARYYA ❙❘❘❘ Prof. Bhattacharyya's study on "Security Dimenssions of International Trade from Indian Perspective" was released in an International Conference titled Development through Trade, organised by World Trade Centres Association in Mumbai during 3 April-6 April 2005.

He also addressed the conference on the same topic.

MS. GUNJAN M. SANJEEV

Ms. Gunjan receiving the best paper award

❙❘❘❘ Best paper award for the research paper titled "Technical efficiency of banks operating in India: An application of Data envelopment analysis (DEA)", accepted for presentation in the conference on Research in Finance and Accounting in March 2005 at Indian Institute of Management, Lucknow. ❙❘❘❘ Research paper titled "The Determinants of Country Risk Ratings And Their Policy Implications" accepted for presentation at the forthcoming World Risk and Insurance Economics Congress (WRIEC), organized by the Asia-Pacific Risk and Insurance Association (APRIA) in August, 2005 at Salt Lake City, US.

❙❘❘❘ Research paper titled "A survey of banker's perception on E-Banking" accepted for presentation in the forthcoming The International Telecommunications Society's Africa-Asia-Australasia Regional Conference ICT Networks-Building Blocks for Economic Development, Perth in August , 2005.

DR. KAMAL GHOSH RAY ❙❘❘ Visiting professor of Finance of 'Groupe ESC Dijon Bourgogne' (Burgundy School of Business, established in 1900), Dijon, France in February-March, 2005. Taught "Financial Strategy and Operations" to MBA students from various countries in Europe, North and South America and China. ❙❘❘❘ Presented a paper jointly with Ms.Vineeta Duttaroy on "Corporate Concern for Environment: A Tool for Enhancing Stake Holders' Value" in May, 2005 at the Annual Convention of Strategic Management Forum, organized by Indian Institute of Forest Management, Bhopal. ❙❘❘❘ Presented a paper jointly with Mr. Harsh Sharma on "Governance Initiatives in NGOs:Ensuring Effective Delivery of Services" in May, 2005 at the Annual Convention of Strategic Management Forum, organized by Indian Institute of Forest Management, Bhopal. ❙❘❘❘ Chaired the Technical Session on "Curriculum Design of Strategic Management Courses in B-Schools" in May, 2005 in the Annual Convention of Strategic Management Forum, organized by Indian Institute of Forest Management, Bhopal. ❙❘❘❘ Presented paper on "Risk Management in Financial Intermediation Process" in June, 2005 at the International Conference on "India Inc.-Towards Global Benchmarking" jointly organized by PricewaterhouseCoopers and Foundation of Indian Industry & Economists in New Delhi at Hotel Le-Meridien. ❙❘❘❘ Presented paper on "Strategies for Sourcing Funds via Capital Markets" in June, 2005 at the International Conference on "India Inc.Towards Global Benchmarking" jointly organized by PricewaterhouseCoopers and Foundation of Indian Industry & Economists in New Delhi at Hotel Le-Meridien.

❙❘❘ Published article "The Forgotten History of Indian Corporate Governance", in June, 2005 in the web magazine of IndiaInfoline.com

MEENA BHATIA ❙❘❘❘ Published article "Strategic Management Accounting: An interface between management accounting and marketing" in June , 2005 in the web magazine IndiaInfoline.com

RAJAT SETHI ❙❘❘❘ Paper titled "Building Global Managers Proactively: Avoiding Decision Traps" to be presented at Sixth International Conference on Operations and Quantitative Management (ICOQM-VI) hosted by Indian Institute of Management (IIM), Indore, India and organized

by AIMS International — The Association of Indian Management Scholars during August 9-11, 2005

VINEETA DUTTA ROY ❙❘❘❘ Presented a paper jointly with Dr. Kamal Ghish Ray on "Corporate Concern for Environment: A Tool for Enhancing Stake Holders' Value" in May, 2005 at the Annual Convention of Strategic Management Forum, organized by Indian Institute of Forest Management, Bhopal.

DR. MURLI MOHAN ❙❘❘ Presented a paper titled "Roles and Strategies of NIIT to meet development challenges facing IT education" in the 8th Annual Conference of Strategic Management Forum, held at Indian Institute of Forest Management (IIFM), Bhopal in May 2005.

DR. MADHUSREE MAZUMDAR ❙❘❘❘ The Hong Kong American Center (HKAC) and the Center for Urban planning and Environmental Managment (CUPEM) jointly organized a seminar at the Hong Kong University from May 31 to June 3, 2005 to exchange ideas from the West and East.

Prof. was Management of Urban Infrastructure invited from Indian as a fulbright alumni by the American Culture Division.

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PG CONVOCATION

Chief guest Dr. C. Rangarajan lighting the lamp

ON August 2, 2005, IILM bid farewell to its 2003-05 batch by hosting the grand convocation ceremony. The occasion was elated by the presence of Chief Guest C. Rangarajan, Chairman of Economic Advisory to the Prime Minister, Head of Departments and all the faculty members under whose guidance the batch had journeyed two fulfilling years.

Excitement and nostalgia filled the air since morning as students poured in for celebrating the rewards of their hard work. It was a day to be written down in memory books. Many were meeting after a long time and some flew to Delhi only to meet their batch mates. There was anticipation in the air, sweet memories coming back of the days spent in college with friends.

The function began at 4 pm with the academic procession of esteemed faculty members who went up the stage robed in red.

The procession also included Mr. Rangarajan, Ms. Malvika Rai, Mr.

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K.R. Nair, Prof B Bhattacharya, and Ms Sapna Popli, robed in Maroon, Mr Dipanker Mukerjee, Dr K.G. Ray, Ms Madhumita Mukerjee, Dr. Malrizzvi, Mr. Raj Aggarwal, Mr. Pradip Chakravorty, Ms Sandhya, Dr Sunita Gupta, Dr. Irfan Rizvi, Prof. K.M Mittal, Prof C.N Ahuja, and Dr Murli Mohan.

The event proceeded further with the lightening of the lamp by

chief guest Mr. C. Rangarajan, Ms Malvika Rai and Mr. Nair, accompanied by recital of a shloka recital by students of the Banyan Tree School followed by a Saraswati vandana.

The podium was then taken by Prof Bhattacharya, who declared the convocation ceremony open.

He introduced Mr Rangarajan who had a stint of 10 years in the financial sector and went on to become the Governor of Andhra Pradesh for five years; followed by being appointed chairman of 12th Financial Commission.

He was honoured with the Padma Vibhusan in 2002. He congratulated the graduates and appreciated those who had received special awards. Calling it an end of an important stage in their lives, he addressed the students and the faculty. Dr. C. Rangarajan welcomed the students as the next generation of managers and leaders and underlined their role in shaping the future of the country.

Wishing good luck to the graduating class in the concluding part of his address, he valued the con-

Chief guest Dr. C. Rangarajan delivering his speech at the convocation ceremony

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WS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS NEWS tribution of IILM, as an institute of excellence, in strengthening the management education culture in the country.

The students were then invited on stage to receive their diplomas from the Chief Guest and Ms Rai. After the distribution of the diplomas, Prof B. Bhattarcharya declared the diplomas awarded to deserving candidates. He also awarded the diploma in absentia to students unable to join the ceremony.

The evening recognized industrious students by awarding the Kulwant Rai Gold and Silver Medals. Ms Akanksha Soni, Mr Gaurav Kumar and Ms Priya Gogia were awarded the silver medal for Finance, Marketing and Human Resources, respectively while Mr. Alok Kumar reed the Gold medal for co-curricular activities.

As the sun set, the entire campus came to life with high tea.

This was the time for reunion and

I am happy to be back at Institute and meet my old friends and teachers. One thing that MBA has helped me with is improvement of my communication skills. I am quite satisfied with my job and looking forward to more challenges and change — Sangeet Jain, ABM Amro Bank I took up Marketing as a major.

The MBA degree instilled in me the confidence and professionalism to face everyday work pressures. These attributes have also made me effective and efficient at work. I am feeling nice to be back at a place where I have spent life’s two precious years.

— Ujwal Barnwal Quick Advertising

Students in rapt attention at the PG covocation ceremony

fun. The IILM lawns witnessed the departure of the 10th batch from its premises as night fell and birds started their journey back to their nests. This was the time

ALUMNI SPEAK PGDBM (2003-05) batch on convocation day What I liked most about IILM was the co-operative faculty and the infrastructure. MBA exposed me to new areas and new concepts, which helped me broaden my horizons.

— Shivani Dhingra Dhingra Motors Private Ltd. The institute has helped me become a better professional. The guest lectures and interaction with industry experts has contributed a great deal in learning.

when tears filled the eyes of departing students who said sayonara with the hope that another day, at the same place, they shall be together again.

My 2nd year was very rigorous and taught me time management skills. Even today, I could only manage to take time out of the busy schedule for convocation because of this skill. The infrastructure facilities have improved over the years and the library is still the best place in IILM. — C.R. Krishnan IDEA Mobile Communication Coming from a small town, IILM changed me 100 per cent. The MBA degree groomed me to take on the challenges of the corporate world. I walked out of the institute as a completely different person and for this, I will always remain thankful to the faculty fraternity at IILM. — Neeraj Kumar Nicholas Piramal India Ltd.

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KHARKHODA — An IILM initiative AS SOCIETY increasingly progresses with technological breakthroughs, there is a danger that underprivileged individuals will be left behind and further distanced from their aspirations.

The IILM has a pool of expertise in its fraternity and students who can play a pivotal role in helping society benefit from technology and ensure that they do not get left out of modern innovation.

The IILM has established a new global partnership with CommuniTech, a unique community service initiative running as a non-profit student organization that seeks to "bridge" the digital divide both locally and globally.

CommuniTech is one of the most active student-driven community outreach groups, which energetically and intelligently tackles the challenges of bridging the digital divide. Projects have been in the areas of software and hardware including computer lab installations, refurbishment of machines, websites, and databases.

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In New Delhi, the University of Pennsylvania has teamed up with IILM and students from both the institutions are working on a project at Navprabhanam School (under Foresight) in Kharkhoda, Sonepat, Haryana. The IILM team comprised Ms. Shweta Berry, Nisha Mary John, Anjan Sharma, Tina Thomas and Robin Chadha, Dr. Anima Sharma, CommuniTech Project Coordinator (Delhi) and Dr. Srilata Gangulee, Faculty Advisor to CommuniTech(Pennsylvania), Amna Khawar, Luke Iseman, Anahita Arora, Stevenson, and Preeti from the University of Pennsylvania.

The aim of the Project is to provide students in the rural areas access to IT and integrate technology into their lives. It also involves regular monitoring and evaluation of the use of computers at the site; for which CommuniTech's local country partner-IILM team is exclusively responsible.

IILM CommuniTech team is delighted to share that the first and

IILM team at the Kharkhoda Project

most crucial phase of the project has been successfully completed.

A field visit was organized by IILM on May 27, 2005. IILM team along with Mr. Amit Srivastava, IT incharge, Mr. Jaswant, two representatives of the NGO 'Foresight' and UPenn team started from Delhi 8.45 am and reached the rural site Navprabhanam at Kharkhoda in Sonepat, Haryana at 11 am. Right from unpacking to assembling the PCs to installing the software, the team co-ordinated and completed installations well in time. All the technical problems like network not being detected and non-functioning of hubs was taken care of by the two teams.

The team also had a long interactive session with the office staff and local students of Navprabhanam.

The computers and the educational software provided will aid these students in education in school and teach them basic skills.

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Clips from the IILM International Office IN a major breakthrough, the IILM International Office estab lished an academic partnership with Summer School Offices of the University of California, Berkeley, US & The London School of Eco nomics, UK. Known for academic excellence, exciting cultural events and pleasant weather, the University of California, Berkeley, was a perfect choice for an institutional partnership for IILM. As an institutional partner, IILM is able to contract for all services and programmes in advance with guaranteed space in courses and campus housing for its students.

The students recommended by IILM are given priority with regard to issuance of I-20 forms, choice of courses and accommodation facilities at Berkeley.

Summer sessions at the University of California, Berkeley, offers a collection of affordable study abroad programmes that give students a chance to combine international travel with academic achievement. As international visitors, students are provided with all benefits of a term abroad during the summer breaks. The beautiful and lively Berkeley campus and San Francisco Bay area offers a stimulating environment for experiencing American culture first hand and making friends from around the world.

The London School of Economics (LSE) is the leading social science institution in the world.

The School’s reputation as a global leader has been built over the hundred years since it was founded due to its atmosphere of vigorous intellectual argument and informed debate.

Ms. Gunjan

The LSE Summer School brings the opportunity for IILM students to share their tradition of excellence. The extensive range of courses cover the breadth of social science expertise available at the LSE. Courses range from traditional core Economics and Finance subjects to contemporary politics and management practice.

Studying with a diverse mix of participants in a world-class teaching environment, academically challenging and intellectually stimulating, is a lifetime learning experience for the students.

Twentytwo students who went to the summer sessions at Berkeley and LSE this year returned with memorable learning experiences.

Continuing with its endeavour to bring global exposure to its students to make them world class managers, select PG II students

were sent to Grenoble Graduate School of Business, France, for six months as part of the Student Exchange Programme to pursue Masters in International Business.

The same has immensely helped them and the students have also managed to get themselves job offers in France.

The IILM also hosted students from Grenoble Graduate School of Business, France & College of Applied Sciences, University of Lueneberg, Germany, as part of the exchange agreements with these Universities. The students who studied from a variety of choices from both UG & PG courses went back very happy with their experience at IILM and look forward to visiting again.

Experiences of an exchange student at Grenoble Graduate School of Business,France : FRANCE: A country of Wine, Cheese and Culture. We have all read about the French Revolution

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in History books in school but it all feels real only once you are there. It starts with a shock, the shock of being different in so many ways — language, behaviour, culture, looks, the feeling of being alone in a new World away from home, family and friends. No one knows you here.

No one is there to help you. You don't know whether to go droit (right) or gauche (left) and whether to look haut (up) or bas (down).You are ON YOUR OWN. That's what you feel and experience when you reach a new country. It is an eerie feeling.

Studying at Grenoble was like attending a UN meeting in World Trade Organization with representatives from all over the world.

During our study at Grenoble, in the class you name a country and a student from that country would raise his hand to counter question the professor. The best thing about this course is that students from 23 different nationalities come together and co ordinate with each other to work together. Along with international exposure to different countries, there is tremendous learning about varied trade practices, their culture, their speculations and their

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❙❘❘ TAKING the tradition of exemplary academic performance by IILM students, Mr. P. Deepak B.Tech, Semeter IV student received an invitation to attend a programme at Rashtrapati Bhawan by National Bal Bhawan, Kotla Road, New Delhi, from April 20 to 22, 2005. IILM is proud of Mr. P. Deepak.

INDUSING INTERFACE ❙❘❘ Mr. Rakesh Gupta, Dy G.M. In-

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Other International news ❙❘❘ In the current academic year, IILM

will host a number of visiting faculty from the international academic community in the areas of Marketing, IT, International Business and HR. This will expose students not only to a global view of the subject but also develop a cross cultural learning environment at IILM. ❙❘❘ Ms. Gunjan Dupt. Director International office represented IILM at the annual meeting and conference organized the AACSB at San Francisco , US in April, 2005.

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consumer behaviour.

With plenty of social activities, many Indian restaurants and many friends from the international community, we had the time of our life, six months passed off almost like a dream. Go as soon as you can, a wonderful place is waiting just for you!!

Bonjour! (Have a nice Day!) A Gaurav & M Varun

derprastha Power Corporation Ltd. (Govt. of Delhi) visited the campus and interacted with the students of engineering and MBA. IILM,Greater Noida, also arranged an educational tour to NDMC power sub-station, Rajghat for its B.Tech III Yr electrical students.

SEMINARS ORGANISED ❙❘❘ A seminar on Bio-TechnologyThe Future challenges was organized on April 7, 2005 which was graced by Honorable Vice-

Chancellor Prof. D.S.Chauhan in the chair and Ms. Malvika Rai, chairperson, IILM, as chief guest. ❙❘❘ Special lectures were arranged on transgenic plants, golden rice and stem cell research by Dr. K.C. Bansal, Centre for Plant Biotechnology, IARI, New Delhi. ❙❘❘ Cell research by Prof. Aftab Alam, lab training programme "Genotech"; molecular signaling & Cloning of signaling gene in plants by Prof. D.P.S. Verma, Di-

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rector BioTech Centre, OHIO State University, Columbus, Ohio, US.

CULTURAL EXTRAVAGANZA Centre for Management Studies(CMS) of IILM-AHL organized 'Vavad Vivad, an intermanagement institute debate competition in March 2005.

The topic of the debate was Increasing FDI will lead to another East India Company.

The participants were: 1. Birla Institute of Management Technology 2. GNIIT 3. Havard Institute of Management & 4. IILM (CMS) In the captivating duel of words, the Birla Institute of Management Technology emerged the winner.

The best speaker prize went to Vivek (BIM Tech), followed by Shruti Andhari of IILM, CMS. The eminent judges for the event were : ❙❘❘ Mr. T.R. Malakar (Former Director General DoorDarshan) ❙❘❘ Mr. Sunil Gupta (Former President J Walter Thomson) ❙❘❘ Dr. Umesh Sharma (VP, Bhilwara group) Taking a break from academics, students also organized an intra-college festival Talash (Talent Search) in April within the institute where students participated in all sorts of competition such as singing, dancing mimicry, antakhshri, drama, dumb charade etc.

The Chief Guest for the event was Mr. Vivek Agarwal (CEO Liqvid) & Mr. Amitabh Jindal (Former Director (HR) Asia Pacific ( Rikket Benkisor)

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MANAGEMENT FEST — AAGAZ '05 A two day management-cum-cultural fest — was organized by IILM Academy of Higher Learning on April 29 and 30.

The fest was inaugurated by Mr. Govind Pandey, Zonal Manager, HDFC Bank, Mr. P.C. Sharma and Dr Sayeed Zafar with the ceremonial lighting of the lamp.

The two-day festival had a unique blend of educational and cultural programs and activities such as debate, extempore, management quiz on one hand and antakshri, solo singing, group dance, dumb charades and Sham-e-Awadh on the other.

Various distinguished people from the academia, corporate, media and entertainment industry were invited as esteemed judges.

The event was a perfect reflection of the students' initiative and creativity and involved participation by students of various B-schools in Lucknow like Amity Business School, ICFAI National College, Sherwood College of Management and others.

After the inaugural ceremony the first event was a debate with the burning topic of Value Added Tax which was won by the ICFAI National College. The winners for 'Solo Singing' and Antakshri' were none other than IILM, AHL. The most awaited event of the first day was Sham-e-Awadh' (a self composed ghazal competition), the brain child of Mohsin Khan, IILM student.

On the second day, the first event was management quiz, participated by Amity, Sherwood and others but the winners were clearly IILM-

AHL and dumb charades was also taken away by IILM-AHL. After the beautiful dance presented

by IILM students, the grand finale was the fashion show with three rounds — Ethnic, Western and Bridal. Best male model, best team and best pair awards were bagged by the glamorous IILM students while the best female model went to ICFAI National College.

The two-day event was extensively covered by The Indian Express, Sahara Samay and ETV and our leading sponsors were Reliance Infocomm, ICICI Bank, Indian Express, Pepsi, Excess and many others.

AAGAZ - 05 is a success story of the integrated efforts of students and faculty, under the leadership of Dr. Sayeed Zafar who had guided, encouraged and supported the students all along.

GUEST LECTURES A series of guest lectures was organized by IILM-AHL, Lucknow, to initiate an industry interface for students. In April, Mr. Sanjay Agarwal, M.D. UPSRTC, spoke about Restructuring UPSRTC. On May 16, Mr. V.N. Garg, Housing Commissioner, visited the campus to share his experiences of 'Re-inventing U.P. Housing Board' and Col. Imitiaz took a lecture on 'Performance Appraisal'.

OTHER ACTIVITIES A three-match Cricket series was played by the IILM Academy of Higher Learning against Electronic Media Association at the K.D. Singh Babu Stadium. IILM won by 3-0. Performance by Dr Sayeed, Umesh Shukla Amit and Tahsin Zahid helped the team win the series.

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Knowledge Sharing Conference on Health & Human Development style and thinking. Despite the cultural diversity, we share common problems though there are no common solutions.

Prof. K.B. Kothari, former Chief of Planning & Regional Deputy Director, UNICEF, Bangkok laid emphasis on four developmental goals in Rajasthan - Primary Health Care, Education For All, Mid-day Meal Scheme and Anganbari Programmes.

Students of IILM Academy of Higher Learning, Jaipur with Pratibha Patil, Governor of Rajasthan

IILM Academy of Higher Learning organized a Knowledge Sharing Conference on "Health & Human Development in Rajasthan" (With reference to UNDP's HDR-2004 on "Cultural Liberty in Today's Diverse World") March 12-14, 2005, Jaisalmer (Rajasthan) BELOW IS AN EXCERPT FROM THE BIANNUAL BULLETIN OF IILM JAIPUR : UNDP's Human Development Reports (HDRs) have come of age, by now. Eagerly awaited for its quality of contents, each report generates and attracts widespread critical analysis. Read as ReportCard for the participating nations, it dwells at length on a theme, which is invariably new, and more often prone to conflicting perceptions. The topic chosen

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for the two-day in-depth deliberations was "Health and Human Development in Rajashtan" for the health indicators for Rajasthan, and particularly Jaisalmer, are distressing and disturbing. Spread over five business sessions in two days, there were rich discussions with participation from academics, NGOs, civil society, and the administration (national, state and the local). The conference was presided over by Smt.Pratibha Patil, Governor of Rajasthan.

The keynote address was delivered by Prof. Yogesh Atal, a Social Scientist & Former Director, UNESCO, Paris. He said that there may not be a direct relationship between culture and health but it is true that our cultural practices do affect our life

SOME OF THE OTHER PROMINENT SPEAKERS AT THE CONFERENCE WERE : ◆ Ms. Surekha Subarwal, Assistant Resident Representative, Communications & Advocacy and Chief, UN Inter Agency Support Unit, UNDP ◆ Prof. Ashish Bose, Distinguished Professor, IILM, Delhi & Honorary Professor, Institute of Economic Growth, Delhi ◆ Dr. Pavitra Mohan, Programme Officer, UNICEF Rajasthan. ◆ Col. P.K. Dutta, Professor of Health Care Management, IILM Delhi ◆ Dr. Pushpanjali Swain, Senior Faculty, National Institute of Health and Family Welfare, New Delhi ◆ Prof. Faujdar Ram, Indian Institute of Population Sciences (IIPS), Mumbai ◆ Dr. Bansi Singh Chouhan from the Desert Medicine Research Centre (DMRC), Jodhpur & ◆ Prof. B. Mungekar, Member, Planning Commission.

Corporate lingo list: COMPETITIVE SALARY: We remain competitive by paying less than our competitors.

JOIN OUR FAST-PACED COMPANY: We have no time to train you CASUAL WORK ATMOSPHERE: We don't pay enough to expect that you'll dress up-well, a couple of the real daring guys wear earrings.

MUST BE DEADLINE ORIENTED: You'll be six months behind schedule on your first day.

SOME OVERTIME REQUIRED: Some time each night and some time each weekend.

DUTIES WILL VARY: Anyone in the office can boss you around.

MUST HAVE AN EYE FOR DETAIL: We have no quality control.

CAREER-MINDED: Female applicants must be childless (and remain that way).

APPLY IN PERSON: If you're old, fat or ugly you'll be told the position has been filled.

NO PHONE CALLS PLEASE: We've filled the job, our call for resumes is just a legal formality.

SEEKING CANDIDATES WITH A WIDE VARIETY OF EXPERIENCE: You'll need it to replace three people who just left.

PROBLEM-SOLVING SKILLS A MUST: You're walking into a company in perpetual chaos.

REQUIRES TEAM LEADERSHIP SKILLS: You'll have the responsibilities of a manager, without the pay or respect.

GOOD COMMUNICATION SKILLS: Management communicates, you, figure out what they want and do.

I'M EXTREMELY ADEPT AT ALL MANNER OF OFFICE ORGANISATION: I've used Microsoft Office.

I'M HONEST, HARD-WORKING AND DEPENDABLE: I pilfer office supplies.

MY PERTINENT WORK EXPERIENCE INCLUDES: I hope you don't ask me about all the McJobs I've

had.

I TAKE PRIDE IN MY WORK: I blame others for my mistakes.

I'M PERSONABLE: I give lots of unsolicited personal advice to co- workers.

I'M EXTREMELY PROFESSIONAL: I carry a Day-Timer.

I AM ADAPTABLE: I've changed jobs a lot.

I AM ON THE GO: I'm never at my desk.

Prof sting A professor was giving a big test one day to his students. He handed out all of the papers and went back to his desk to wait. Once the test was over, the students handed the paper back to him. The professor noticed that one of them had attached a $100 bill to his answersheet, saying, “a dollar per point.” In the next session the professor gave back all the answersheets. This student got back his paper and $56 change!

The Laughter show Boss’ version

So, you want the day off?

Let's take a look at what your boss can say: There are 365 days a year available for work. There are 52 weeks a year in which you already get two days off a week, leaving 261 days available for work. Since you spend 16 hours every day away from work, you have used up 170 days, leaving 1 day available. You spend 30 minutes a day on a coffee break. That accounts for 23 days each year, leaving only 68 days available. With one Hour for lunch period each day you use up another 46 days, leaving only 22 days available to work. You normally spend 2 days a year for sick leave. This leaves you only 20 days available for work. We are off for 5 holidays per year, so your available working time is down to 15 days.

We generously give you 2 weeks off for vacation per year. This only leaves 1 day available for work.

And I'll be darned if you're going to take that day off!!

Source: Internet