Substance

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Editorial

Image captured on Nokia Lumia

The role of knowledge has evolved over time, making it the most important asset of the corporate world. Today, most processes, whether related to professional endeavours or personal decision-making, are primarily information-driven and human resources possessing the right “strategic knowledge” assume the highest degree of importance and responsibility in an organization.

Knowledge per se is not just awareness of relevant facts; rather it is a logical compendium of the requisite information, analytical approach, synthesis capabilities and sound judgement to arrive at a logical solution to a question or an issue. Going by the importance of ‘knowledge’ in modern socioeconomic systems, Grandeur, The Knowledge Cell of Shaheed Sukhdev College of Business Studies, University of Delhi, was formed with an objective of nurturing the aforementioned qualities among students. Our activities have primarily been concerned with the establishment of the right systems to advance meaningful knowledge among students through live projects and workshops, and this magazine is another such initiative.

We at Grandeur firmly believe in the concept of working for and towards one’s own interests in life. We appreciate it when we question what’s happening around us. It is not about finding the solutions to problems and looking for answers to questions, it’s about developing that sense of inquisitiveness. If someone wants to be a management consultant or investment banker tomorrow, what kinds of activities, initiatives and experiences can one indulge their self in to have a better shot at it? We try to answer such questions, and introduce ourselves to mentors and projects in our field of choice.

“Substance”, as its name suggests, focuses on bringing out the essence of a plethora of events and activities taking place around you. Ranging from the link between football and human capital valuation, to the “Future of English Language”, the magazine aims to help you identify and understand the intricacies of a number of phenomenon that escape usual observation.

Also, the magazine is meant to disseminate “knowledge” in the manner as we just described: information, analysis, synthesis and judgement. We want our ideas to spread out among the youth; even those as young as 16 year olds, because that is when it all starts.

We hope that your reading experience turns out to be enriching in the way it is meant to be and that you start to question and discover.

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Riders of

The Storm

By Mihir Sinha

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he past few years have been quite volatile for the Indian aviation industry, what with the wildly fluctuating ticket prices and the Kingfisher saga (which hasn’t come to an end yet). But a major development during this period was that the most crucial service segment, that of low cost carriers, suddenly wasn’t so low cost as it was made to be. A lot of people felt that the aviation industry had reached a roadblock. It simply wasn’t possible to provide low cost air travel to the masses anymore, taking into account rising fuel prices and airport development fees. Some said the Indian aviation industry could no longer grow with such low margins, that this was it. That

this was the end of low cost air travel as we knew it. And the masses came to accept that fact as well. However, a certain Mr. Tony Fernandes thinks otherwise. This gentleman is the founder of an airline whose philosophy is ‘Now Everyone

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Can Fly’- AirAsia.

AirAsia – A brief introduction AirAsia was established in 1993 in Malaysia. It began operations in 1996 and was originally funded by a government owned conglomerate. In 2001, Tony Fernandes bought the heavily

indebted airline for a token sum of about 0.26 dollars, taking over the 11 million dollar worth of debts in its accounts. Within a year, he turned over the airline and made a profit.

By 2003, AirAsia started international operations. It now flies to 88 destinations around the world and has a fleet of 120 aircraft, helping them churn out an astounding annual revenue to the tune of 1.62 billion dollars and a net income of 0.61 billion dollars. AirAsia quite literally defied the odds and showed that money could be made by offering cheap air travel.

The world’s best low cost airline is now setting foot in the Indian aviation industry, in partnership with Tata Sons. This announcement was made soon after the Indian government

allowed up to 49% FDI in the aviation industry. Those who aren’t familiar with AirAsia might think that it’s extremely foolish of them to enter the Indian market at a time when airlines are struggling to fill their seats. However, AirAsia thrives on such situations. And they have their ways of making profits while ensuring that they offer the cheapest tickets around.

Method to the madness AirAsia uses a number of strategies to make the most of its existing resources and to maximise its turnover. Their primary strategy is that of a high aircraft utilization rate, which means that within 25 minutes of landing, an aircraft is ready to service another set

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of customers and is available to fly to another destination. Quite phenomenal, considering that the average turnaround time is 45-50 minutes! This can be attributed to the fact that AirAsia employees are known to be up to three times more efficient than the average employee in the aviation industry. In fact, AirAsia pilots are specifically trained to be fuel efficient while taking off, flying and landing, helping them reduce their fuel costs drastically.

For India, AirAsia has come up with its own unique strategy- It has decided to stick to servicing cities in South India and will not focus on traffic intensive routes like Delhi-Mumbai, MumbaiBangalore and the likes. In fact, the only metros it will service will be that of the cities of

Chennai and Bangalore. The rationale behind this is that there is less competition on the routes servicing smaller towns and airports (hence providing AirAsia with the opportunity of cornering the market share on these routes) and that most South Indians still use the railway network for inter-city and inter-state travel.

Also, traffic intensive routes are usually expensive and saturated, making it a tougher market to crack and make a profit on. An added benefit of flying to smaller airports is the lower charges of operating from these airports (as compared to the ridiculously high terminal costs of airports such as Delhi and Mumbai), thus helping AirAsia maintain lower fares as compared to those of its competitors.

The most pivotal factor to AirAsia’s strategy is its ability to keep it’s per seat cost low. At Rs. 1.25 per available seat per kilometre, it has the

lowest flying cost in the world, thus enabling it to offer free one way tickets to customers and other promotions such as token amount tickets, without incurring a loss.

Tony Fernandes has already announced his intention to offer such promotions in India on a regular basis. AirAsia also boasts of a break-even load factor of 52%. This means that even if it flies with just 52% of its seats occupied, they will still not incur a loss. The industry average for the same is 70-80%, a staggering difference. One that, quite literally, makes all the difference.

female flight attendants. The reason for doing so? Females weigh 15-20 kilograms less than their male counterparts. And this alone is expected to yield an annual benefit of 500,000 dollars in terms of fuel savings.

Expect other market players to come up with similar strategies to cut their costs and pass on the benefit to the customer.

You might think that this will just lead to a price war, and as we have witnessed in the past, price wars in the aviation industry are short lived. However, this time things are very different. And this most definitely won’t be a price war. In fact, it isn’t a price war, but more of a battle of Now everyone can fly costs. The airline that manages Going by these signals of intent, to cut its costs the most will be AirAsia looks like it is taking able to offer cheaper fares and India very seriously and doesn’t win a greater pie of the market. just want a piece of the market, This time around, it’s a battle but wants to dominate it. Low of sustenance. As for AirAsia, cost carriers in India will have it is about delivering to its to retaliate to hold on to their philosophy. To make sure that existing market shares. GoAir ‘Now Everyone Can Fly’. recently decided to hire only

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Valuation of Human Capital in

Football

By Mihir Sinha

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aluation of human capital in monetary terms is something that has proven to be very difficult. It’s a complex process that involves attaching a value to a person’s skill and then trying to get the best deal. Even if a value has been attached, it is usually done arbitrarily and such a valuation would vary from person to person.

Human capital valuation is probably the most important factor in the sports industry. To understand the working of the valuation of human capital, we shall focus specifically on football.

I have focussed on football for 2 reasons. The

first is that there is a continuous movement and exchange of players between teams. These ‘transactions’ occur during specific time frames in a calendar year, called ‘transfer windows’. The second would be because football has a wellestablished and time tested framework within which these transactions take place.

The market for football players is like any other labour market. However, the explicit valuations of human capital, along with the amount of player statistics collected by analysts, journalists and clubs present a unique opportunity to delve into the determinants of transfer fees and the reasons behind the amounts paid by clubs for players.

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What is it all about?

To begin with, clubs assign an accounting value to every player they own. On a club’s balance sheets, players are considered to be intangible assets and are capitalized at acquisition cost. They are then depreciated over their ‘useful life’ (usually the player contract length). However, home grown players have no accounting value. This is because there has been no cost in acquiring them.

Similar rules apply for free transfers (players that are not attached to any club and with whom personal contracts are agreed with. No transfer fees are involved in such cases).

We’ll keep things simple and shall focus only on players that have been purchased from other clubs.

Usually, transfer fees are based on the predicted future performance of the player and the performance of the club purchasing the player.

The performance of a player could be analysed in terms of number of games played for the club, assists provided, goals scored etc.

The performance of the club purchasing the player would determine the bonus fees the purchasing club would pay the selling club. Let us take the example of Dutch club Ajax and Spanish club Real Madrid. In

2011, Ajax received a € 1 million bonus for Real Madrid reaching the Champions League quarter finals. It was part of the deal made by Ajax and Real Madrid when the latter bought Dutch striker Klass-Jan Huntelaar from Ajax. However, it is important to note that Real Madrid themselves had transferred out the concerned player in 2009.

Hence, the valuation model does have certain flaws.

Also taken into consideration while determining the transfer fee of a player is the ability of the player to draw in crowds to the stadium, attract viewers to television broadcasts and in contributing to merchandise sales. Lionel Messi is a good example of this. Though playing for probably the best team in the world, FC Barcelona, his individual abilities attract a lot of attention and has created a huge fan base around the world.

For FC Barcelona, this proves Transfer fees are also to be beneficial as it helps in determined by the selling club’s generating greater revenues for status. To put this simply, if we the club. have 2 players with the same Similarly, Shanghai Shenhua skill set and abilities but one purchased Didier Drogba and is from Mohun Bagan and the Nicolas Anelka, even though other is from Newcastle United, both were past their primes, the player from Newcaste purely for commercial reasons.

United would have a much higher value. This is because Valuation Determinants Newcastle would have a greater Player bargaining power than Mohun The main determinant of Bagan. player valuation is future player performance. Though there is 9

Proprietary evaluation methods used. To learn more about the same, please feel free to contact the author.

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still no established link between financial and sportive success, and whether a player has a significant media value impact, a footballer’s job, primarily, is to help his club win games.

A player’s innate abilities and investments in human capital (training the player) are believed to be the best determinants to predict future performance. Innate ability determines the potential performance of the player while investments in human capital determine the potential performance actually achieved by the player.

However, ultimately there are certain statistics which determine a player’s final value. We shall focus in forwards or strikers to understand some of the statistics used to value such players.

The most popular statistic while evaluating forwards is goal scoring record. This record is an establishment of the belief that scoring goals

equals good performance. However, this need not be true, as mediocre players could also score goals in a very good team or that the level of teams that the said player is playing against is lower than the ones he would face if he were purchased by a club at a higher level.

Though scoring goals increases the probability of the team winning, not scoring goals does not mean that the player can’t help the team to win.

For example, the roles of a defender may not include scoring goals. This doesn’t mean that they are not contributing to the team winning. In the case of defenders, their primary role would be to prevent the opposition from scoring, which makes the number of clean sheets (games where they haven’t conceded) and tackles or clearances made per game an important statistic.

Another measure used while evaluating forwards is the goal rate measure. This is basically the

minutes taken for a player to score a goal (Total Goals scored/Minutes on the Pitch). This shows how efficient the player is in terms of scoring goals and determines their contribution in helping their team win games.

Total number of games played is probably the most important of statistics for players of any position. A player that plays more games is deemed to be important to the team’s chances of winning. It also is a good measure of the player’s fitness levels, as a player who is fit would feature in more games than one who is struggling with fitness problems.

Player age is also a major factor that comes into play when deciding a player’s transfer fee. It is believed that a player’s performance increases with his age (due to experience), but at a decreasing rate. After a certain point of time, this performance starts decreasing. This is very much the same principle as observed in the law of diminishing marginal utility.

Players that are young (18-23) and talented tend to have high transfer fees coupled with performance based bonuses for the selling club.

Players reaching their peak tend to command higher salaries and transfer fees.

Sometimes, even playing for their country (international caps) can play a part in determining the value of a player. However, th is is not used all the time as in certain cases, an under-performing player from a talent scarce country could have more caps than a good player from a country that has a strong football pedigree.

power.

A team that has a good performance record would be able to attract a higher bid for one of its players as their performance on the pitch has contributed to their success.

Also, a financially sound team would be willing to spend more on a player and also offer higher wages than one that is struggling to survive financially, in which case, they may need to sell a player and forgo a decision to purchase a player. English club Manchester City FC, a team with massive financial backing, and Spanish club Valencia CF, a team that had to off load some of its star players to tide over financial difficulties, are 2 contrasting cases that show the influence of financial position in the bargaining power of a club.

Club performance too can cause a change in the value of players. Teams that perform exceedingly well tend to try and out-price other teams from buying their star players, while teams that are struggling or are even facing the threat of relegation are sometimes forced to sell their players at cut prices as their players wish to play in better teams.

In some extreme cases, players may even demand a move from the club which they are playing for. This may happen if the player is unhappy by the lack of opportunities to play, change in managers, conflicts with manager or team mates etc. Usually in such cases, a player tends to have a greater say in the transfer and the team may have to sell the player for a lower rate than they would have managed to have gotten otherwise.

There is a lot more to the valuation of a football player but to understand the whole topic would probably need a thesis to be published! It’s really interesting considering that similar procedures are used to evaluate the value of an employee in an organisation. Who said sports was all fun and games? It’s a business like no other!

Club Now, there are certain qualities about the clubs that are involved in the transfer that also affect the final transfer fee paid.

The first would be the bargaining power of the 2 clubs involved. The financial position as well as the club’s past performance influence bargaining

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To a Colorful Life

In a country like India, where social stigmas had created linear demarcations between true and false, right and wrong, black and white, where there was no room for any greys, Hira stood apart. There were no clear lines to him—he was a shade of every colour he knew, and proud of it.

his kind, was an ode to irony. For they were the ones everyone looked for on every auspicious occasion. A new house, a new bride, a newborn baby—every happiness requited them. The cursed came to bless. Invited respectfully in celebration, then trampled unceremoniously all the time. All this, everything, Nobody else around him, had to be taken without so however, deemed him fit to be much as flinching. The smile even called human, let alone be was never to leave the face. given his place in the society.

His place was this now, on the Sighing deeply, he wiped streets. His job was this. He was off his tears and stood up— expected to clap and be crass the cars had stopped at the and look decked up, go window traffic signal—but he couldn’t. to window, and ask, beg, plead. He was expected to be everything he didn’t want to be. Every day, each of us encounters a Hira. Every day, each of us Hira’s life, like that of others of treats them with a sneer, a leer,

By Vrinda Dube

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itting by the roadside, Hira intently watched cars speed by. Tears welled up in his eyes—he would do this often, and it would make him break down every time.

Hira was abandoned as a child, unwanted and kicked out of his own parents’ lives. Left to fend for himself in a garbage dump, he was discovered by a group of people—people just like him, who slowly, gradually, taught He could’ve been in one of those big cars. He him about the norms of the cruel world. could’ve made it big. He could’ve studied hard and married and had beautiful children of his The world was a sad place for Hira. Because the own. He could have. Had God not decided world didn’t look at him for what he had tried to play around with him. Had his father not to make of himself—a breadwinner, a diligent taken offence and thrown Hira and his mother worker, a good person, no. The world looked out of his little house. Had his mother, his own at him for what HE had had no control over, for mother, not have left him in a dump yard to die. what God had made him to be—a transgender.

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a contemptuous glance, or often, not even that. Not one of us, however, stops to wonder what they’ve done to beget our indifference. Today in a country like India where we have voices of concern rising for all sections in the society—the rich, the poor, the men, the women, every caste, every religion, even animals—its a shame there isn’t any for them. Nobody for them.

A Hira isn’t created out of choice. God has made them beautiful in their own way. God gave them a life of their own.

A life to live as they wish to. A life of dignity, of pride and of self-esteem. And we’re nobody, nobody, to deny them that.

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Rat Race?

Are you too part of the

By Harshita Bhasin

D

o you ever recall those childhood days when it was so easy to dream? You saw yourself walk on the moon, become the most amazing doctor or be the next Michael Jackson. You had those dreams night after night and never did you wake up believing them to be less true. Unfortunately for most of us, eventually, that morning does come when we realize those dreams were just that – Dreams. We realize life isn’t as simple as dreaming and willing things to be true. In fact, there is a crazy rat race right out there. A race, where everyone is running to be the winner of what is a crowd’s perception of success. A race, we all are a part of.

As we grow up, the society paints before us a picture of an ideal state of affairs. As a child you ‘should’ score well and take at least one hobby class, all at once; as a teenager you ‘should’ be pursuing a much sought after career from a reputed institution while being cool and popular; and as an adult you ‘should’ be a white collar professional driving a sedan and having his kids study in the city’s top school as they also pursue at least one hobby class. We all strive to achieve this ideal state of affairs all our lives by doing what society expects and accepts. But do

we wonder what if that kid hates that abacus class, if that teenager feels lost in that reputed college and if that adult is perpetually twitchy and anxious? We all do; often, much later in life when we look back at those childhood dreams and wonder about ‘the road not taken’. We seek to achieve the society’s ideal state of affairs in the pursuit of gaining social acceptance. Ironically, we all actually end up accepting the society’s state of affairs.

So, even though we don’t like it and we may altogether deny it, but, we all are following some or the other kind of rat race in our lives. Here are some factors which according to me make us follow one:

General perceptions

When I took up humanities in my school despite excelling in my academics, my friends actually came up to ask me, “Have you gone mad? Why are you ruining your life?” Similar strong perceptions are prevalent for every career stream or, for that matter, anything in life.

It has been generally accepted that an intelligent and capable student will take up science or commerce in school and later pursue engineering, CA or some other ‘good’ career

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option. He will also study in a ‘good’ college i.e. a college with a sky high cutoff. When one does not meet that cutoff, one takes up any course in that ‘good’ college. It is another matter that in the process of following an ideal career path we murder our own desires and goals.

Peer pressure

Are you the one who plans to take up MBA coaching because all your friends are doing the same? If yes, then you are prey to this factor.

India has an obsession with MBA, wherein irrespective of the subjects a student studies in his graduation, a large majority follow it up with an MBA degree. Is it because the over demanding corporate world is so attractive or the salaries so lucrative?

I think it’s neither of the two. It is about something else all-together: our tendency to leave everything else and follow our peers. And hence results the rat race. What the majority does must be right, right?

Parental pressure

How many of us can go to our parents and say, “Mom and dad, I have planned to play guitar for the rest of my life.” Out of the ones who will say this, how many expect from

their parents a loving hug back?

Few, indeed. Most parents want their students to pursue conventional careers that promise a secure life.

While parents are understandable in their over-caring ways, their hopes influence our decisions and drive us towards choosing what is more

socially acceptable.

The fear factor

This is the biggest reason why people don’t follow their dreams. We all have this nagging fear of failure whenever we think of following our

freewill against all social norms. What if you weren’t able to become that RJ, singer or chef you always wanted to be? Why pursue lonely passages when there are crowded roads all around? It’s because those roads don’t take us to OUR destination. But we just don’t realize that.

So, are you also someone who is just conforming to his friends’, parent’s and society’s expectations? Are you too a part of the rat race? Take the following exercise to find out:

QUESTIONNAIRE Please answer the following questions with a ‘Yes or No’.

Below is a list of the symptoms that you can check for yourself. These symptoms will tell you whether you are driving your life or you are being driven by circumstances and situations. If you happen to relate to a few of these symptoms, it is high time you take some action and try to define the mission of your life. Another word of caution before you scan through this list. There is nothing wrong if you happen to be displaying these symptoms. This is just to make you more aware of the reality of life so that you can take appropriate actions to correct the course.

1.

Do you feel run down and drained of physical or emotional energy?

2.

Do you feel you are sleep deprived and catch up on most of your sleep on weekends?

3.

Do you feel demotivated at work?

4.

Are you worn out complaining about the number of hours you have to work?

5.

Do you find yourself complaining about how far behind you are on all of your projects?

6.

Do you find that you are always rushing to meet deadlines?

7.

Do you feel hollow sometimes of the so called “achievements” till date in life?

8.

Do you frequently start various personal initiatives and hobbies like joining a guitar

class, exercising, cycling, walking, jogging, gym etc. only to leave them in between?

9.

Do you feel that what you are doing is pointless and it has no real meaning?

10. Does it feel like creativity is not required, valued, or even tolerated and that doing

specific tasks in a set manner is appreciated?

11. Do you find yourself striving every day in the workplace to maintain or improve your

position, your rewards, your benefits, and your titles?

12. Do you find that you are prone to negative thinking about your job?

13. Do you feel that you are not getting what you want out of your job?

14. Do you feel that there is more work to do than you practically have the ability to do?

15. Do you feel that you do not have time to do many of the things that are important to

doing a good quality job?

For an expert’s insight, please visit http://bit.ly/ratraceinsight

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HERO ELECTRIC A Pioneer in the Electric Vehicle Industry

ELECTRICITY THE FUEL OF THE FUTURE Fuel Prices in India have, in the recent past, gone through the roof. As cities becoming increasingly crowded and the demand for traditional fuel driven vehicles increasing rapidly, our road systems are not able to match this alarming growth. There is a need for a better solution; something more sustainable. Interestingly, this upshot has given a great prospect to Electric Vehicle sector to stand and speak about the benefits they bring. Electric vehicles are the real solution to the smart and customized style of transportation with no worries of skyrocketing fuel prices and pollution. The Electric Vehicle segment has gained importance in India, as the nation is looking into unconventional options of energy proficient transportation solutions. This segment has gained importance because it is an environment friendly, non-polluting means of transport. In addition, there is hardly any maintenance cost for EV’s and spare parts are reasonably priced and therefore affordable..

HERO ELECTRIC is a leading player in the Electric two-Wheeler category in India.

In 2007, HERO Electric started manufacturing a wide range of electric bikes at its state-of-the-art manufacturing facility in Ludhiana with manufacturing lines for both Low Speed and High Speed Electric Two-Wheelers. Currently, the plant rolls out the High Range E-Bikes “Maxi , Zion, Optima Plus, Cruz Wave Dx,” and High Speed E-Bike “E-Sprint” from its Ludhiana facility.

1. A trusted brand and a pioneer in the Indian Electric Vehicle Industry with a background of extensive research in the EV segment 2. Market leader in the Indian Electric Two-Wheeler category and with one of the largest range of E2Ws in the world 3. State-of-the-art manufacturing facility in Ludhiana , State of Punjab - India 4. The only Electric Vehicles Manufacturer in India to launch the unique concept of “Charging Stations” for “Anywhere, Everywhere Charging” with in-house design and development 5. Only Electric Vehicle Manufacturer to launch first-of-its kind Electric Bike Door Step Service branded as Electric Bike Assistance (EBA) for Electric 2-Wheelers for “ Anywhere, Everywhere Service” 6. Took the initiative to constitute the Society of Manufacturers of Electric Vehicles (SMEV), the global representative body of Indian EV Industry comprising of members from the Electric Four/ Three/ Two-Wheeler and Auto Components Industry 7. With an in-house research and design center for development and invention of New Greener & Innovative Technologies, HERO Electric has introduced first of its kind innovative technologies like the Range Extender, Personal Charger, Charging Stations, Easy Wheels etc.

To support the cause of saving the

by the increasing focus on Electric

Industry in India and globally. It

environment and reduce dependency

vehicles. It’s evident that the color

comprises of 34 members from

on fossil fuels, HERO Electric is

of the future is Green. In order to

Electric

honestly promoting Electric Two-

conquer the hitch of ever rising fuel

Wheelers,

Wheelers as a renewable and an

prices and a solution for depleting

Auto Components Industry and is

energy efficient alternative to fossil

fossil fuels is to push sales of

working towards the advancement

fuel driven vehicle. HERO Electric Bikes

Electric Two-Wheelers , The central

and development of the interests

are 60% cheaper than the equivalent

Government has given a boost to the

of Electric Vehicle Manufacturers

petrol bikes. As compared to petrol

industry through subsidies and policy

and other key stakeholders in India.

driven vehicles, HERO Electric Bikes

measures and has further initiated

SMEV played an instrumental role in

are considered to be 97% cleaner

steps to thrust the electric drive

the framing and roll-out of National

producing no tail pipe emissions and

but still more efforts are required.

Electric Mobility Mission Plan 2020

with the average savings works out

Supplementary incentives from the

(NEMMP) by the Union Government

to be more than Rs.16, 000/- per year.

state Government will facilitate and

to helping India to emerge as a leader

It’s been now years of uninterrupted

encourage the society at large to

in the EV market in the world by 2020.

efforts that HERO Electric is moving

switch

ahead in strengthening its mark in

HERO Electric founded the SOCIETY

Recognition

Electric Vehicle industry globally

of MANUFACTURERS of ELECTRIC

among the public will not only

and

has

sustain

VEHICLES (SMEV) with Mr. Naveen

help in dropping the environmental

the

leadership

Two-

Munjal, Managing Director –HERO

pollution but also help the Govt. in

wheelers due to reasons like strong

Electric, as the President of the

saving the cost on oil consumption.

product line, wide and uniform

Society and Mr. Sohinder Gill, Chief

So other than being the leading

spread

Executive

of

its

able in

to

Electric

dealer

network

Electric

Wheelers,

Two-Wheelers

Threeand

Two-Wheelers. of

Electric

Vehicles

Officer-HERO

Electric,

producer & marketer of the Electric

Director-Corporate

Affairs.

Two-Wheelers in India, HERO Electric

Go Green is the motto for all leading

SMEV is the only representative

is taking forward the initiative of

economies of the world, as reflected

body of the Indian Electric Vehicle

Greener India and pollution free future.

and

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been

to

Four

customer

centric

approach.

as

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Moneyball in

IPL

By Arjun Pratap Sindhu

T

he 2002 MLB season changed the way baseball was played. This was due to the strategy of the Oakland Athletics under Billy Beane to buy and sell players on the basis of sabermetrics.

Sabermetrics is defined as the search for objective knowledge about baseball using statistics.

Using this strategy the Oakland A’s, with a salary budget of

USD 41 million, were able to compete with the New York Yankees who had a salary budget of USD 125 million.

The reason why the Oakland A’s were able to compete was because they purchased undervalued players instead of buying players with big reputations and hefty price tags.

Now let’s shift our focus to cricket and mainly to the IPL. 22

Can a statistics revolution come about to the most valued T20 tournament of the cricketing calendar?

What if the Royal Challengers Bangalore get two ordinary batsman to replace Chris Gayle and still manage to score 60 runs of 40 balls or the Delhi Daredevils get two average bowlers in place of Morne Morkel and are able to

restrict the batting side? If the eventual goal is to score the 150+ runs to win the game, does it really matter who scores the runs? Instead of depending on one player to score 70+ runs, why not have 2-3 players scoring 30 odd runs?

This not how people think when it comes to cricket. That’s also not how people used to think when it came to baseball until Billy Beane applied radical thinking to baseball.

But bringing such thinking to cricket and especially the IPL may turn out to be beneficial to the franchises. The IPL has already had fairly unknown players making an impact in the past seasons. Be it Paul Valthaty for Kings XI Punjab, or Ambati Rayudu for the Mumbai Indians or even Rahul Sharma for the Pune Warriors India, they all made a sizeable contribution to their team’s success. And all these players came at a maximum price of Rs 30 lakhs, since they have not played for the Indian team.

I am not of the opinion to rely solely on the hidden talents.

Players with big reputations are needed as much. They serve dual purposes as both cricketers and faces for advertisements and marketing events. A mix of both will help the franchise. Having 3-4 marquee players and spending the rest on the high impact low

cost players, as determined by an objective and rigorous statistical tool so that there is high return on investment, will be a more prudent decision than spending all the available resources on marquee players.

Cricket in comparison to baseball has lesser scope for the use of statistics. In baseball each ball is a discrete event with a finite set of possibilities: ball, strike, foul, hit, out. Each possibility has a distinct impact on that batter’s outcome.

But in cricket, if Virat Kohli hits a cover drive straight to a fielder it won’t affect his chances of being dismissed.

What is possible in cricket is what Andy Flower (Former Zimbabwean cricketer and current coach of the England national team) has done along with a mathematician from Oxford. Together they’ve used HawkEye to log every ball bowled in Test Cricket over the past 5 years. This database of balls bowled is supposedly the reason behind how the English were able to get the wicket of Sachin Tendulkar during the 2011 India tour of England.

Many people feel that there is no need for a Moneyball-like revolution in the IPL as each team has the same budget which it can spend on paying the salaries. But I have another point of view. Why not apply some, if not all, of the concepts 23

pioneered by Billy Beane as GM of the Oakland A’s? There could be a fairly sizable firstmover advantage to the first team that employs this. Since it is compulsory for each IPL team to have a certain number of domestic players as a part of its squad, statistics can be effectively be used to fish out those high impactlow cost players who can be potential match winners.

Moneyball worked for Billy Beane in part because every franchise plays hundreds of games per season and the vast majority isn’t watched by the other coaches and teams. Test matches are much rarer things, and are more closely observed.

Of course, IPL games are not as rare. And there is significant financial advantage to finding a hidden gem. Predicting a Valthaty is worth a boatload of money. This is what Billy Beane did for years with the always cash-poor Oakland A’s in Major League Baseball.

A Moneyball-like revolution is an eventuality; the team owners will realize that significant financial gains are to be made on finding the undervalued but talented players. Sabermetrics can be employed usefully to achieve the same. We may even see a Moneyball in IPL this time around, who can tell?

The Importance of

Savings

By Narottam Garg

F

inance is omnipresent in the sense that monetary issues form a crucial aspect of our life. A business organization needs to make decisions about the sources of the money it needs to operate and choose from among a number of alternative investment avenues available for its finances. The government collects huge quantum of receipts in the form of taxes and has to expend the same for a number of commercial and welfare purposes. But is it all? Does the finance story end with organizations and governments?

Apparently, the answer is no. In fact the tale of finance begins from the grass roots- The common man. It is this application of finance at the individual leveli.e. what a common man does with the money he has for the fulfilment of his objectives-that is studied under personal finance. We might be successful, earn handsome money, and be gifted with a comfortable life but for us to do so continuously, it is imperative for us to understand certain basic principles of personal finance.

Let’s embark on this journey to discover the right way to

manage our personal funds.

dividends) and hence your money works for you. Lastly savings help you create contingency fundsmoney that can be used in cases of emergencies. It is difficult to appreciate the basic principle I just talked of by mere reading and comprehending. Let us go about the story of two Friends, Nikhil and Ramit, who graduated from the Indian Institute of Management back in 2000. Nikhil got placed with Lehman brothers as a financial analyst while Ramit decided to become a financial consultant with McKinsey and Company.

Nikhil had an in-hand salary of ₹ 1,50,000/month while Ramit enjoyed ₹ 1,00,000/month. Our dear Ramit decided to move on with the principle I just talked

of- He decided to save ₹ 40,000 per month and make decisions of consumption thereafter. Contrary to this, Nikhil made decisions about his consumption first and if any money was left thereafter, he would save it. But that, never happened. As Nikhil had to move on to Mumbai for his job, he borrowed an amount of ₹ 40 Lakhs to buy an apartment and a car for him at 12% fixed rate of interest. He had to pay an equated monthly instalment of ₹ 65,000 for 8 years to repay the loan. What did he do? He violated the first principle-He spent an amount on buying a car and a house which is equivalent to his 2 years’ salary. After making payments for travelling expenses, taxes, food, electricity and other miscellaneous expenses (like money spent on

Before I continue, I must inform you that almost all literature on personal finance boils down to three basic principles-they are easy to understand but difficult to apply in life. Hence just learning them is half the battle won; Practicing and developing them as a habit is equally important.

What are they? In simple words they are summarized as: “Spend less than you earn”, “Make the money you have work for you” and “Be prepared for the unexpected”.

One of the old wise sayings, which sums all these principles in a single sentence is, “Savings should be your first consumption”. When you save a part of your money and then consume the other part, it ensures that you spend less than what you earn. Your savings (Savings here doesn’t necessarily apply putting your money into a bank account; it could mean investing money in safe securities such as bonds too) ensure that your money makes more money in the form of interest (or 24

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outings with friends), he was left with absolutely nothing i.e. His savings were zero. By doing this, he violated the other two principles too; He didn’t earn any money by way of interest and neither did he save for contingencies. Of-course he enjoyed increments in his payHe earned ₹ 2,20,000 a month in 2004. But even then he couldn’t save as his expenses increased due to inflation, larger tax payments, and yes-He married in 2001 and was blessed with a child the next year; he had to spend on the child’s education and health too.

But then, he did realize that he needed to save for his child’s future- his education, marriage, insurance etc. but then was there no way he could save money for these crucial expenses? He had one of-course- he could sell his

house, repay the loan, move to a rented apartment and reduce his consumption expenditure significantly.

This way he would have sufficient savings for his family’s future. But then certain obvious questions came to his mind- “what would my friends and relatives think of me when they come to know that I have sold my house, and travel by public transport now? How would I ever tell my wife that we can’t dine at hotels anymore, that we can’t go outstation for vacations, that there is no money with me to buy her the piece of ornament she needs?” In other words he is suffering from what is known as Ratchet effect- an instance of the restrained ability of human processes to be reversed once a specific thing has happened; He is not in a situation to reverse his consumption patterns. Unable to take bold steps suggested by the only possible legitimate solution to his problem, he decided to continue as it was. The current situation was good enough- he led a comfortable life, and enjoyed a high level of satisfaction owing to his consumption pattern.

But what was going to happen when his child grew 20 years old and wanted to study abroad? How would he have sufficient money to fund his marriage? Even before that, there was no insurance for his family’s protection in case he were to die! Before we could even think of such situations materializing, an event occurred which shocked the entire world. The Sub-prime mortgage crisis- Dreaded as the period during which a large number of layoffs took place. Our dear Nikhil lost his job too, back in January 2008, even before he had repaid his loan completely. I will unravel the last part of his story later. Let’s us first find out what Ramit did with his earnings.

As mentioned earlier, Ramit’s salary in hand was much lower than Nikhil’s. He had learned his lessons in personal finance well, as a result of which he decided to put a fixed amount out of his income in savings.

He couldn’t buy a house or a car, not because he didn’t want them but because he couldn’t afford them with his income. He rented a small apartment- He

paid ₹12,000/month as rent and ₹8,000 per month in insurance; he expended the rest of his income across essential goods (and services) like food and electricity.

Of-course he couldn’t enjoy a lavish lifestyle with such a cautious financial strategy-Like Nikhil, he couldn’t afford to eat in 5 star hotels or use his own car for conveyance. Other things were quite similar. Ramit married in 2002 and was blessed with a child in 2003.

He enjoyed 3 pay-increments by 2003; his salary in hand was ₹1, 50,000 /month then. He immediately decided to save ₹ 15,000/month; at 9% interest this would amount to ₹60 lakhs after 15 years which he believed would be sufficient to fund expenses related to his daughter. (Education, marriage etc.) Again, despite increased salary, he had to keep his consumption to bare minimum needs and hardly enjoyed any luxuries.

Just like Nikhil, even he lost his job back in November 2007. You can clearly figure out what Ramit has been doing. He has been following the three principles I talked of in the beginning well. Isn’t he?

Now that we know about them, let us find out how the only dissimilarity between them-One enjoying a lavish lifestyle and ignoring savings, the other having a careful attitude towards his money and enjoying a satisfactory lifestyle-created all the difference for the rest of their lives.

Nikhil lost his job in January 2008. He still had to pay 5 instalments of ₹65,000 each to repay his loan completely. However, he had no money whatsoever to make this mandatory payment, let alone make payments for his autonomous consumption expenses like food and his child’s education. He approached the bank to request for an extension of the period for repayment of the loan, but the bank already facing financial slump refused to do so; the terms of the loan agreement allowed the bank to do this.

The only option now was to sell out the mortgaged property- his house. Nikhil received ₹60 lakhs from the bank after the settlement of the loan. He had to sell his car, because he could no longer use it; he

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couldn’t fund travelling expenses by personal transport. Thereafter, He took a small apartment on rent (rent being ₹ 30,000/month).

Though he managed to find a job after 6 months, yet his standard of living fell drastically. He had to shift his son to a government school, reduce his expenditure to the bare minimum and he still doesn’t have an insurance policy.

On the other hand, Ramit’s savings grew to ₹40 Lakhs in 2006, which he used to buy a house for himself.

Seeing his savings fall, he saved ₹1, 20,000/month for the next 2 years before he lost his job. Thus when he lost his job, he had close to ₹30 lakhs in his bank account, a house which he owned, besides a deposit account having sufficient money to fund the necessary expenses for

his daughter and 2 life insurance policies. Even he managed to find a job after 5 months, but then he could enjoy a comfortable lifestyle.

He no longer needed to pay any rent and could easily spend requisite money for quality education of his daughter.

I would just conclude the story by a brief comparison of the two persons.

At the end of the day, Ramit is secure and enjoys a better lifestyle than Nikhil despite both of them getting a similar job after the crisis. He has his own house, a fund to comfortably finance his child’s expenses, insurance policies to his name.

But Nikhil lives in an apartment on rent and has to use a part of the amount in his bank to fully finance his consumption expenditure; his salary of ₹50,000 is not sufficient to do so. Clearly he is insecure, has

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no source of money whatsoever to fund his child’s education and related expenses, and neither does he have any fund for contingencies.

In retrospect the morale of the story is simple: No matter how good a company we get placed with or how handsome our paycheques are, it is imperative for us to put sufficient funds in savings. We might just do as well without savings, but then there are always chances for contingencies-We might lose our job, or our house might catch a fire and get all destroyed. Thus putting a part of income in savings and forgoing a part of unnecessary expenditure can always help us be in a better financial position-As was the case with Ramit.

ENGLISH LANGUAGE

By Narottam Garg

English Language: Where is it headed?

The English Language is undoubtedly a global superpower; a casual reading of the Wikipedia article on English Language would be sufficient to warrant this opinion. Over a billion people speak English (Well yes, that’s close to 15% of the world population), and it is the official language of 54 countries (which is approximately 22% of all countries in the world). If that’s not enough, it is also recognized as the global business language and is the most frequently used one in academic papers and World Wide Web communications. (blogs, e-mails etc.)

Linguistic roots are tied closely to political scenarios across the world. Before English, Latin was the dominant world language. Consider this: The world’s most powerful political entity at the time Latin ruled the world was the Roman Empire, thereafter, with the rise of the British and American Empires; English became the global literary currency. Language experts are thus of the view that the literary might of a language depends on the political, cultural, economic, technological and military might of its native speakers.

Which brings us to the pertinent question I try to

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answer: If shifts in International language settings do happen, then what is the future of English Language? Would it continue to dominate the world or would it be termed as “Latin II”, sometime in the future?

Prediction by economists may provide a hint: It is a widely held belief that China will overpower the United States as the world’s global economic superpower. The materialization of this prediction combined with the stagnation of the European countries and the continued growth of Mandarin speakers bodes well for the rise of Chinese language to the helm of the world linguistic system.

However this is just one of the many possible scenarios and the very idea of your children learning Chinese as their second language instead of English does sound weird. Well, yes it does, but it is not necessarily implausible.

There is another fact about a language that is often overlooked: It keeps changing. A research website quotes, “English has changed greatly, albeit imperceptibly, so that an English speaker of 1300 would not have understood the English of 500 nor the English of today.” Meanings of words, expansion of vocabulary base, Grammatical

Constructions and sounds (Phonetics) continue to change overtime mainly due to dialectical influences and changes in preferences of the speakers. Thus, as centuries pass, it is possible that the language undergoes change to an extent that it no longer appears as the English Language spoken today.

After all, language is just a tool in the hands of the speaker; he can always mould it to convey his message in a better way. If Shakespeare were to be alive today, he would have dismissed the use of “how are you” instead of “How art thou” and would have definitely opined that the modern day English is actually not “English”. Who knows, probably 100 years from now, a new language emerges, well at least it would sound new to you!

When was the last time you used “u” instead of “you” or “g2g” instead of “got to go”? Not long ago, I bet. Even if English retains its form, it is possible that SMS language finds its way into formal English.

As I argued before, a language undergoes change as per the needs of its users. The desire to save time and efforts on communication might one day result in Oxford replacing “am” with “m” and “not” with “nt”.

There are more than 100 Dialects of English Language, which are categorized as European and American Dialects. I am sure you have noticed the following two verities of English Language everywhere: English (U.S.) and English (U.K.). The differences between these two sub-forms are too minor to notice. However, it would not surprise me, if over a period of time the dialects forming these two versions of the language undergo gradual yet major changes resulting in noticeable differences between the two forms. Thus, another possibility is that the language might itself demerge into two or more language forms.

These are just some yet the most reasonable opinions on the direction of the language. It is even possible, that the language undergoes no change at all. But to say that, is to say that a dynamic process stagnates. Whatever the case be, my predictions are as accurate as the prediction of the outcome of a cricket match between India and Pakistan. All I know with certainty is that we live in an ever changing world, and language being a part and parcel of it, is no different.

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N

o matter how lucrative the plan sounds, the grassroots reality will always surprise.

At least all Indians today will bear testimony to this fact. The recent incident in Bihar, where 22 children lost their lives at the hands of the contaminated food they consumed at their school, has not only given the Bihar government, but also all those people who have been singing praises of India’s development and growth trajectory, a reality check. The sad death of these children has brought the appalling truth on our face- India’s Education System is degrading fast.

It is not just about nutrition, but a plethora of problems continue to plague our education system, which once had a glorious past. Some stark facts that will highlight the cruel reality: ● 1 in 3 children drop out by 5th grade ● 1 in 2 children drop out by 8th grade ● 44 million don’t go to school ● 50% of schools don’t have toilets for girls.

The sad plight of our rural and sometimes even urban schools demands increasing concerted efforts from the country’s corporate houses- the top honchos who are born with the Midas touch.

One such brilliant effort comes in the form of the “Support My School” Campaign- an initiative by Coca-Cola and NDTV, supported by companies like Pearson Foundation, TATA Teleservices Ltd., CAF India etc.

With a noble vision of creating a holistic environment for children in schools so that they remain in schools, the campaign, apart from grabbing media eyeballs with a largest ever reach of over 50 million people, has garnered support from International celebrities like Jackie Chan and Robert Swan. Back home, we have ‘The God of Cricket’- Sachin Tendulkar as the Campaign’s Community Ambassador. The campaign seeks to achieve this objective by building partnerships, tapping digital media, employee participation, creating awareness through international platforms( Singapore International Water Week) and youth awareness, the campaign seeks to improve the basic facilities in schools like sanitation, wa-

back inside oover

ter, sports etc. and developing an environment where students can actually grow in a healthy way.

And the results are already showing! With an array of global partners and both corporate and individual donors, the campaign has successfully impacted the lives of about 43,000 children with over 1, 00,000 more to benefit. The enrollment rate has shown an upward trend with girls coming back to schools and increasingly happier and healthier children who just don’t want to be absent from schools. Well, that is surely a piece of India that our great leaders wanted to build!

Certainly as the campaign’s success shows, the corporates are more than willing to help. It is only we, the mango people, who have to show our eagerness in supporting this noble cause.

Though we Indians are slow in learning, I hope the support for this campaign will not be slow in coming… So, JOIN HANDS… Help keep children where they belong… in schools…

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