Volume II Issue II
September 2011
Strategizing for India’s energy security
Talking Point
Jargon Buster
Strategizing for India’s Energy Security
Enterprise Risk Management
Internship
Debate
FDI in Indian Retail Sector Boon or Bain
Global eProcure 1
From the Editor’s Desk Contents
Greetings from Team Strategos
Strategizing for India’s Energy Security We are glad to unveil the latest edition of IIFT’s quarterly 4 consulting magazine. Our featured article presents a straRajagopalan S & Nishant Shekhar tegic perspective on securing resources to meet India’s (Batch 2011-13) growing energy demand. The Jargon Buster section gives insights into the world of Risk Management. This edition’s Jargon Buster Risk Management 10 debate is on the opening up of the Indian Retail Sector to Mary Brinda Foreign Direct Investment . (Batch 2010-12)
Debate FDI in Indian Retail Boon or Bain
14 Pulkit Khare & Sachit Arora (Batch 2011-13)
Executive Q&A brings a contribution by Cognizant Business Consulting, an industry perspective from Mark Greenlaw, the company’s Chief Sustainability officer. Another industry insight comes in the internship iexperience section on Global eProcure.
Internship Insights Global eProcure 21 We hope you enjoy reading our magazine. By Sudeep Deb (Batch 2010-12)
Oojwal Manglik
Editor in Chief Executive Q&A CIO as chief sustain- Strategos ability officer 25 Socrates Club Roundup
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Editorial Team
Nishant Shekhar
Swati Khurana
Socrates Coordinators Abhinav Varshney Umang Chittlangia Sudeep Deb
socrates@iift.ac.in 2
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Strategizing for India’s Energy Security Efficient, reliable and competitively priced energy supplies are prerequisites for sustaining and accelerating the economy. For any developing country, the strategy for energy development is an integral part of the overall economic strategy. Realization of high economic growth aspirations by the country in the coming decades calls for rapid development of the energy market. The energy resources available indigenously are limited and may not be sufficient in the long run to sustain the process of economic development translating into increased energy import dependence. This overdependence has made the country very vulnerable to any supply side shocks, which is reflected by the huge subsidy bills when crude prices rise. In recent times the race for acquisition of overseas assets has also increased with China making steady inroads into the Oil & Gas sector of resource rich African nations. Hence from a geopolitical as well as an economic point of view it is necessary to develop strategies to meet the growing energy needs of the nation at the same time reducing dependence on external sources.
quandary and is slowly moving forward on the path to recovery. India has had an impressive track record over the last few quarters, and the International Monetary Fund (IMF) has forecasted a growth rate of 8.2 per cent for 2011. A growing economy coupled with a wide fluctuation in crude prices on the positive side in recent years has further increased our energy bill. India is expected to be the secondlargest contributor to the increase in global energy demand by 2035, accounting for 18% of the rise in global energy consumption. In the present day scenario, India is largely dependent on imports to serve its requirements – as much as 75 per cent of its needs come from overseas. This dependency will only become stronger as India moves to become the third largest importer of hydrocarbons by 2025 as projected by International Energy Agency (IEA). That‘s indeed a scary situation, and growth cannot be sustained in the long term without continually boosting
The economic crisis of 2008-09 adversely affected India‘s export of software and services to the developed countries, thereby denting the growth. Since then, India is striving hard to emerge out of the
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the country‘s energy supply.
pliers and Bahrain and Yemen both border Saudi Arabia on the peninsula that produces much of the world's oil. The graph below shows the impact of oil supply disruptions in the Middle East of the crude oil prices.
Existing state of affairs The current situation of the energy sector in India doesn‘t paint a rosy image. Because of the over-dependence on imports, energy security is in a state of jeopardy as the overseas market is highly unstable. Global supply disruptions and price volatility due to the Middle East crisis, floods in Australia and other such events cast a gloomy shadow over the situation. Libya is one of Africa's largest holders of crude oil reserves, Algeria and Iran are major sup-
It is evident from the chart that crude prices remained extremely volatile and are affected by the geopolitical factors. It is clear that such supply side shocks can have a grievous effect on the import budget. Imports of crude oil and petroleum products As can be seen from the graph on the next page, there has been a disproportionate rise in the crude oil consumption especially in the decade after the economic reforms. In such a scenario it is critical to diversify our crude baskets to minimize impact of production failures in the case of a single producer. A case in
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point is Iran; any dent in the relationship India has with Iran, which caters to 12 per cent of India‘s crude oil requirements, may result in stoppage of supplies. News has been pouring in stating that the Indian government succumbed to U.S. pressure to curtail its trading and commercial links with Iran, by not clearing payments to Iran for crude. India owes around $5 billion (approx Rs 25,000 crore) to the Iranian oil companies. The faster the situation is sorted out, the better it would be for India‘s future .
tional Oil Companies (NOCs) bear the burden. Although the Government has resorted to a combination of all above these options in the past, each of these options has its own drawbacks. The problems for India are not only external in nature, but come from within too. The power supply is constantly plagued by shortages and unreliability issues. Top producers of coal, natural gas and oil have recently announced that their output will grow little in the coming years – not what the country wants to hear at a time when its thirst for fuel shows no sign of abating.
Exceptionally high crude oil prices in the international market and an almost stagnant domestic crude oil production has caused a drain on the country‘s foreign exchange reserves. Persistence of high oil prices and dependence on imported oil leaves India with some difficult choices to make. The choice is between (a) passing on the price increase to the consumer; (b) rationalising taxes and other levies on petroleum products; and (c) making the Na-
Solutions on the anvil Indian strategists are led to believe that nuclear energy would go a long way in solving India‘s power problems. Nuclear power is the fourth-largest source of electricity in India. With about 20 nuclear reactors in six operational power plants, India is well positioned to leverage the ad-
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deficit, economic advantages of the pipeline may outweigh political obstacles. In order to lessen the impact of supply shocks in the short term, the government is also constructing strategic crude oil storages. Many countries have in the past used strategic storages for price stabilization, and India can also plan along the same lines to minimize impact of supply disruptions. vantage. Also, the historical Indo-U.S. nuclear deal provides a framework within which the nuclear energy demands can be catered to.
In the face of an imminent energy resource crunch the world nations are vigorously scouting for alternative sources of energy. Globally, the focus is on renewable energy sources, and India has also made impressive progress in this field. With conventional sources being high on pollution aspects, and limited in nature, sources like wind energy, solar energy, biomass and hydro power are being exploited on a grand scale. These forms offer a green solution to the energy crisis – exactly what the world needs at this moment.
India is a late entrant in the field of acquisition of energy assets abroad, with China – a superpower in the making - leading the race. Government would play a major role in acquiring the oil assets, so that highlights the importance of diplomacy and the nation‘s relations with other countries. Projects in the pipeline is another development that can help boost the country‘s supplies. Pipelines also offer opportunities for relationship development between countries. The Trans-Afghanistan Pipeline (TAPI) is a pipeline for natural gas supply originating from the oil fields of Turkmenistan, and can offer India a good solution for the supplies in the future. The Iran– Pakistan–India (IPI) gas pipeline is a proposed pipeline to deliver natural gas from Iran to India and Pakistan. But India withdrew from this in 2008 due to pricing and political issues. But with growing energy
With the population at 1.2 billion and continuously growing, Indian government needs to ensure energy security for all in the coming years. With a majority lying below the poverty line, the cost effectiveness also comes into the equation. Energy efficiency offers a powerful and costeffective tool for achieving a sustainable energy future. Actively promoted by IEA, energy efficiency strives to reduce the amount of energy required for commercial purposes. It is a largely untapped area, and IEA predicts that improved energy ef-
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ficiency could reduce the world's energy needs in 2050 by one third, and help control global emissions of greenhouse gases. Energy efficiency and renewable energy are said to be the ―twin pillars‖ of a sustainable energy policy. To develop a ―green‖ world, concentrated and dedicated efforts should be put in this direction, and that would go a long way in securing the future of billions.
Contributed By Rajagopalan S MBA (IB) 2011-13 IIFT, Kolkata Nishant Shekhar MBA (IB) 2011-13 IIFT, Delhi
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Risk Management An Insight Introduction
required a $3.7 billion for restructuring was the last straw. All these incidences contributed to risk management becoming a core aspect of financial services and banking business. The fraudulent financial reporting of the 1970s triggered the need of risk management in the corporate world.
Risk is the exposure to the possibility of loss, injury, or other adverse or unwelcome circumstance; a chance or situation involving such a possibility. Risk management is an essential tool for the success of a business. Today‘s managers face a variety of complexities in addressing the dynamic business needs. The risk associated with business is also changing. Risk is defined as the probability of an unforeseen incident and its penalty. It becomes important for a company to understand the risks involved in business. An effective risk management strategy is essential to safeguard and increase the profitability of a business.
Enterprise Risk Management Enterprise risk management is the strategic forward looking processes that drive the risk/reward consideration in decisionmaking to help meet objectives. ERM enables the management to use this risk/ reward understanding to effectively manage the company‘s risk portfolio and allocate resources successfully. Enterprises operate in environments where factors such as globalization, technology, regula-
History of Risk Management The birth of formal risk management can be traced back to 1974 when Bankhaus Herstatt, the West German commercial bank failed. This resulted in huge losses to the banks from other countries on foreign exchange contracts in which Bankhaus Herstatt was the counterparty. The periods of 80s and 90s saw some of the most remarkable blow-outs. The black Wednesday of October 1987 saw the global markets collapse. This was followed in quick succession by the Mexican crisis, Asian crisis and the Russian default. The LTCM hedge fund fiasco which
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tion, restructurings, changing markets and competition create uncertainty. ERM involves analyzing these uncertainties and helping the top management take proactive steps against risk by providing them with the overview of the risks .
1. 2. 3. 4.
Governance and Reporting Structure Emerging Risk Identification Risk Appetite Scenario Analysis and Economic Capital models 5. Risk Awareness Culture Governance and Reporting Structure
ERM-Best Practice Model
ERM begins when a company commits to doing risk management for all of its important risks. ERM groups work towards rationalizing their risk limits and loss tolerances across the different risks. The Enterprise Risk Management team should proactively work in tandem with the other teams to mitigate the risk. The senior management should show an active interest in the functions of the team. The Chief Risk Officer of the company will be directly involved in the functioning of the team and regular updates have to be given to the CFOs and CEOs.
The Best Practice Model given by McKinsey describes five parameters to determine efficient functioning of ERM. The first stage is the identification of Key Risk Indicators which gives an insight into the magnitude and effect of interconnected risks. The second stage involves the identification of the risk appetite of the company. The appetite for risk should be assessed only after risk capacity is established to avoid ―negative surprise effects‖ such as reputational damage, rating downgrades, insolvency, or eventual bankruptcy as a result of an erroneous risk evaluation. The third stage of the model involves understanding the risks associated with the business process. The operational level risk has to be identified and steps to reduce the impact of operational risks have to be taken. The last two stages (4 and 5) are concentrated respectively on allocating sufficient risk management resources and ensuring the existing risk culture gaps are addressed and understood clearly by all individuals. The survey conducted by KPMG, ―Enterprise Risk Management: From Theory to Practice‖ elaborates the most commonly followed ERM practices across companies. The Key Findings of the survey are:
Emerging Risk Identification:
The aftermath of the financial crisis of 2008 has led companies to direct their efforts towards identifying emerging risks. Companies appear to be taking steps to identify emerging risks and trying to determine whether to create a new process or
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add it into current risk identification methods. Emerging risks are being identified in two buckets—internal and external. Internal risks are being monitored through customer touch points, surveys, discussions with business unit leadership, and assessing ―near-miss‖ events. The other is external emerging risks being driven by events over which the company does not have full control and may need to react to and comply with.
as short-term decision making. The survey results suggest that ECM is being used in a variety of instances to support risk management, but financial services companies are using it more than non-financial services companies. Risk Awareness Culture Companies are trying to increase risk awareness at all levels of the organization. An increase in employee awareness of risk will help in making better riskbased decisions. Training programs are conducted by companies to ensure that the risk mitigation practices are known to all the members of the organization.
Risk Appetite As already mentioned in the Best Practice Model given by McKinsey, it becomes vital for a company to determine its own risk appetite. Risk appetite is the total impact of risk an organization is prepared to accept to achieve its strategic objectives. Considerations in defining risk appetite may include how an organization wishes to be perceived by key stakeholders: shareholders, employees, regulators, rating agencies and customers. The Risk Appetite serves as a guideline for linking the corporate strategy with how much risk they can afford to take.
Conclusion Over the last decade Enterprise Risk Management initiative became one of the core strategic efforts for achieving business objectives and improving overall organizational performance. With increasing complexity of global markets, the implementation of efficient ERM programme is essential to strengthen organizational effectiveness. Alignment of ERM programme with the core business strategy is essential for an organization to respond to market changes.
Scenario Analysis and Economic Capital models Most companies perform scenario analysis/stress testing. This process gives an insight into the possible effect of unexpected changes. The economic capital is the best estimate of the required capital that a company requires to manage risk. The outputs of ECM are used for medium to long-term risk-based planning as well
Contributed By Mary Brinda MBA(IB) 2010-12 IIFT, Kolkata
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FDI in Indian Retail A risky proposition It has time and again been said about India that it has "One foot grounded in timehonored traditions and the other fervently striding into the entrepreneurial e-age". Widespread organized retail is seen as one such feature that truly announces the coming of this e-age.
the economy, be it agriculture or manufacturing. In the absence of opportunities laborers' become street hawkers, farmers supply milk and the educated unemployed start supplying newspapers, However when opportunities return in the native sector, these people return to their respective employments. This way, the retail sector plays a vital role in reducing discontent and providing temporary means of sustenance. This absorption of labor from other sectors results in widespread under employment in the retail sector. Supporters of FDI like to underplay the unemployment caused, however it must be noted that the unemployment manifests itself in the form of underemployment and even though the retailers displaced by organized retail might not show up as an increase in visible unemployment but the adverse effects would still exist in the form of widespread underemployment.
Indian government, for a long time, has been contemplating a potentially landmark legislation that allows liberalization of FDI regulations in our retail sector. Currently, foreign companies are strictly barred from having front-end retail presence. This is where a tremendous amount of opportunities lie for American and European retailers who have seen growth stagnate due to saturation in their home markets. FDI in retail has been a very sensitive issue in India. A lot of debate has ensued and sides have been taken. The foremost point opponents of FDI bring up is that of its adverse impact on employment. When a sector employees 40 Million people, even a slight impact can cause severe repercussions all across the society. For a government that claims public welfare to be its top priority, the situation becomes a tightrope tread.
Despite FDI restrictions in multi brand retail, the government has a liberal policy towards wholesale trade, franchising and direct marketing. Even in the case of Cash & Carry it has been seen that though they are allowed to make only bulk sales to wholesale distributors, in practice these stores have found ways of getting around the restrictions. Also, major retailers such as Wal-Mart and Tesco have already es-
The retail sector acts as a shock absorber for our present social system; it absorbs unemployment from various sectors of
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tablished procurement centers in India and for large scale procurement process, it would be necessary for them to invest significantly to create an efficient supply chain. That is precisely why multinationals are interested in entering India and are compelling the government to pass legislations that cater to their own needs rather than the society as a whole.
This cost cutting is ultimately borne by the workers in the form of lower wages, deteriorating work conditions, safety compromises and longer work hours. The sweatshops of China manufacturing electronic gadgets are classic examples of the phenomena‘s manifestation. FDI in retail would therefore affect not just the domestic retailers but the primary and the secondary sectors as well. Though the retailers use India as a sourcing hub for handicrafts etc,these Items are usually produced by the cottage industry- A sector India is competitive in. However for other products whose production advantage lies in countries such as Bangladesh or China, the retailers conveniently source them and thereby affect the Indian Manufacturing sector as well. Adding the secondary sector unemployment numbers to those of the retail sector – the predicament becomes severe.
Lately, there has been ample amount of criticism against the Agricultural Produce Marketing Committees; it appears that the retailers are in no way a better substitute. Proponents of FDI claim that organized retail would improve incomes of small producers by doing away with middlemen who corner a significant portion of the final retail price. On the contrary a lot of American studies have shown that the retail chains are in no way less exploitative than the middlemen themselves. It has been seen that even for products that are produced in Asia and then sold by MNC‘s in developed countries; the producer margins are equally thin. Globalization has vastly increased the procurement choices of organized retailers. Trade liberalization and transport technologies now allow retailers to source from almost anywhere in the world; this in turn has resulted in shifting tremendous negotiating clout in the hands of the retailer. It is now the producers who are vying to tie up with the retailers rather than the other way round. Retailers thus enjoy a position where they can easily exploit the suppliers by further lowering of prices.
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To prevent the government from bringing about any kind of course correction once the retailers settle down and their malpractices start kicking in, they‘re trying their level best to tie the government‘s hands by ensuring irreversible entry. It is seen that before investing in the emerging economies, the retailers demand concrete and specific commitments on unlimited freedom of operation from the host countries. They expect all such commitments to be made under GATS framework so that once any commitment is made; the host government loses the option of retracting from it in future. Case in point is that of FTA (Foreign trade association) – It is an association of global retailers that is trying to push for an agreement under the aegis of World Trade Organization to safeguard their investments. Safeguards asked for include Post-Investment protection, Non-discriminatory treatment, Dispute settling mechanisms and a blanket ban against any new barriers on investment.
country on the whole, leaving us wonder what kind of benefits were actually 'retailed'.
Contributed By Sachit Arora MBA (IB) 2011-13 IIFT, Delhi
Keeping in mind the direct and indirect consequences , millions of livelihoods at stake and yet the government's inclination to bring about FDI reforms, a top level collusion between organized retailers and the government seems inevitable. The retailers are using their economic and political clout to pursue their ulterior motives. What the government needs to do is to sit up, take notice and prevent it from happening. Otherwise the entire situation can very soon turn on its head and affect the economy, polity and society of our
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FDI in Indian Retail The way ahead Retail trading (except under single-brand product retailing — FDI up to 51 per cent, under the Government route) is prohibited in India, as per the current regulations. Being a signatory to World Trade Organisation‘s General Agreement on Trade in Services, which includes wholesale and retailing services, India had to open up the retail trade sector to foreign investment.
chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc. The Indian retail sector is highly fragmented with 97 per cent of its business being run by the unorganized retailers. The organized retail however is at a very nascent stage. The sector is the largest source of employment after agriculture, and has deep penetration into rural India generating more than 10 per cent of India‘s GDP.
Although there were initial reservations towards opening up of retail sector arising from fear of job losses, procurement from international market, competition and loss of entrepreneurial opportunities. However, the government in a series of moves has opened up the retail sector slowly to Foreign Direct Investment (―FDI‖). In 1997, FDI in cash and carry (wholesale) with 100 percent ownership was allowed under the Government approval route. It was brought under the automatic route in 2006. 51 percent investment in a single brand retail outlet was also permitted in 2006.
The entry options for foreign players prior to FDI policy are: Franchise Agreements, Cash And Carry Wholesale Trading, Strategic Licensing Agreements and Manufacturing and Wholly Owned Subsidiaries. FDI can be a powerful tool to spur competition in the retail industry, due to the current scenario of low competition and poor productivity. Opening up multi-brand retail for up to 51 percent foreign direct investment would help curb inflationary pressure and modernise the sector, industries. The policy of single-brand retail was adopted to allow Indian consumers access to foreign brands. Since Indians
The retail industry is mainly divided into: 1) Organised and 2) Unorganised Retailing. Organised retailing refers to trading activities undertaken by licensed retailers, i.e. those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail
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spend a lot of money shopping abroad, this policy enables them to spend the same money on the same goods in India. FDI in single-brand retailing was permitted in 2006, up to 51 per cent of ownership. Between then and May 2010, a total of 94 proposals have been received. Of these, 57 proposals have been approved. An FDI inflow of US$196.46 million under the category of single brand retailing was received between April 2006 and September 2010, comprising 0.16 per cent of the total FDI inflows during the period. Retail stocks rose by as much as 5%. Shares of Pantaloon Retail (India) Ltd ended 4.84% up at Rs 441 on the Bombay Stock Exchange. Shares of Shopper‘s Stop Ltd rose 2.02% and Trent Ltd, 3.19%. The exchange‘s key index rose 173.04 points, or 0.99%, to 17,614.48. But this is very less as compared to what it would have been had FDI upto 100% been allowed in India for single brand.
flourish in terms of quality standards and consumer expectations, since the inflow of FDI in retail sector is bound to pull up the quality standards and costcompetitiveness of Indian producers in all the segments. It is therefore obvious that we should not only permit but encourage FDI in retail trade. Apart from this, the policy of allowing 100% FDI in single brand retail can benefit both the foreign retailer and the Indian partner – foreign players get local market knowledge, while Indian companies can access global best management practices, designs and technological knowhow. By partially opening this sector, the government was able to reduce the pressure from its trading partners in bilateral/ multilateral negotiations and could demonstrate India‘s intentions in liberalising this sector in a phased manner.
Permitting foreign investment in foodbased retailing is likely to ensure adequate flow of capital into the country & its productive use, in a manner likely to promote the welfare of all sections of society, particularly farmers and consumers. It would also help bring about improvements in farmer income & agricultural growth and assist in lowering consumer prices inflation. Getting foreign investment is one part, but the real benefit will be that it will help modernise the retail sector and control food inflation, which is a big problem at the moment. By allowing FDI in retail trade, India will significantly
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Lastly, it is to be noted that the Indian Council of Research in International Economic Relations (ICRIER), a premier economic think tank of the country, which was appointed to look into the impact of BIG capital in the retail sector, has projected the worth of Indian retail sector to reach $496 billion by 2011-12 and ICRIER has also come to conclusion that investment of ‗big‘ money (large corporates and FDI) in the retail sector would in the long run not harm interests of small, traditional, retailers.
of them agree with considering a cap of 49-51 per cent to start with. The international retail players such as Walmart, Carrefour, Metro, IKEA, and TESCO share the same view and insist on a clear path towards 100 per cent opening up in near future. Large multinational retailers such as US-based Walmart, Germany‘s Metro AG and Woolworths Ltd, the largest Australian retailer that operates in wholesale cash-and-carry ventures in India, have been demanding liberalisation of FDI rules on multi-brand retail for some time.
In light of the above, it can be safely concluded that allowing healthy FDI in the retail sector would not only lead to a substantial surge in the country‘s GDP and overall economic development, but would also help in the growth of Tier-I cities and would then extend its footprint to Tier-II and III towns. Prospects of job creation would increase with time, as more and more investment comes to the sector. Jobs are expected to be created across front-end and back-end operations, store operations, merchandising, logistics and distributions, marketing, procurement, purchase and corporate services. .
Thus, as a matter of fact FDI in the buzzing Indian retail sector should not just be freely allowed but per contra should be significantly encouraged. Allowing FDI in multi brand retail can bring about Supply Chain Improvement, Investment in Technology, Manpower and Skill development, Tourism Development, Greater Sourcing From India, Upgradation in Agriculture, Efficient Small and Medium Scale Industries, Growth in market size and Benefits to govemment through greater GDP, tax income and employment generation.
Contributed By
Industrial organisations such as CII, FICCI, US-India Business Council (USIBC), the American Chamber of Commerce in India, The Retail Association of India (RAI) and Shopping Centres Association of India (a 44 member association of Indian multibrand retailers and shopping malls) favour a phased approach toward liberalising FDI in multi-brand retailing, and most
Pulkit Khare MBA (IB) 2011-13 IIFT, Kolkata
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Global eProcure Internship Insights GEP is a procurement services firm dedicated to help enterprises reduce their costs and operate more efficiently by refining and perfecting their procurement and supply chain practices. GEP‘s clientele ranges from Global 2000 to Fortune 500 companies in a variety of industries, who call on them for procurement expertise in consumer packaged goods, travel and hospitality, pharmaceutical, chemicals, renewable energy, utilities, oil and gas, government, industrial manufacturing, insurance, and other verticals. GEP supports their clients with a blend of strategic consulting and implementation, outsourcing services, as well as commercial, off-the-shelf procurement tools and technology solutions. GEP has offices based in Clark, New Jersey, just outside of New York City, USA, with other offices in the US, UK, Czech Republic, Brazil, China and India.
three years in functions like Warehouse Management, Transportation Management and Order Management, I was looking forward for gaining insights in Procurement Services and more so in the field of Management Consulting. GEP has not disappointed me in this regard and the project I did is one of the most value addition to my career. The part of learning from one another is immense at GEP and a flat structure of work helps in that; we can even reach out to the Director at any time. There were a total of 10 interns this year with GEP, all of them from the best Bschools of India. All of us were handed different clients in different kinds of procurement verticals. My project was on Strategic Sourcing of Air Freight Services for a chip manufacturer, the project was in the Logistics domain. The first day went by introduction with the leadership team in India, New Jersey, and the Consulting team. The projects were allotted on the first day itself and work started straightaway. I was assigned a project under Mrs. Rashi Munshi who has been with GEP for the past three years and has worked on almost all kinds of procurement projects. From her vast pool of knowledge with various projects, her advices and suggestions were the guidance at different stages and helped in understanding the processes involved in the Air Freight Industry. The
In India GEP is based out of Mumbai and Hyderabad, the consulting interns are based out of Mumbai office which is located near to the Airoli Station in Navi Mumbai. The Internship The excitement of working for GEP goes back to the days when the summers process was carried out at IIFT. Being from an SCM background and having worked for
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project was to analyse the current logistics expenditure of the client and create lanes for their flow of material. These lanes were grouped depending on their operational area. Then an RFP was created for these lanes and circulated to various freight forwarders for their quotations. Once the quotations were received, then the quantitative and qualitative analysis of the submitted quotes was carried out. Then an online auction was carried to further get price cuts. The auction was set-up and conduct on the GEP‘s Suite – eAuction tool, the 3 hour experience of an online auction was exhilarating. Once the qualitative and quantitative scores were obtained, a weighted combination of two was decided to rank the forwarders for final allocation. The project also gave me an opportunity to look through the transportation agreements and issues in the industry.
ship have helped me a lot in my submissions and work after I joined the institute for the second year. Training Sessions: Sharing is the Best way GEP absolutely adheres to the statement above. As a part of the internship we were given training on Consulting Processes which GEP follows and on the sourcing model and the steps involved in it. We also had a session from the technical team explaining the Spend analysis product suite. The tool is very user friendly and provides a comprehensive snapshot of the company‘s spend. We even got to take the help of tool and implement solutions in our projects. As part of the employee training, session are held every week. For me as an intern it was great to know about the frameworks and how GEP goes about solving problems for their clients. The training was scheduled to cover the Sourcing Model – the different stages, expected deliverables, expected pitfalls to avoid and that was concluded with experience sharing from the Senior Consultants who had faced problems in such implementa-
At GEP a lot of freedom and responsibility is handed to the interns. All of us were attending client calls from the first week itself and working on deliverables that were to be sent to the clients for their use. The projects required interacting with stakeholders ranging from Japan to Malaysia to US. The learning and challenges from such a project is immense. The project required some extensive use of tools in Excel and I learned a lot about the capabilities of Excel. I developed an eye for detail in every document prepared and submitted. The skills which I acquired during my intern-
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Carom set-up. All of us got chance to test few
spins and pocket few queens. GEP also has an internal league consisting of eight teams and different games are conducted with which the winning team garner points and be the eventual champion. Some games played were throwing paper balls in dust-bins, balancing balloons, balancing cups and many more. This is a nice way to interact with many employees as they might be busy at other times and boost our teams and boo others. We also celebrates the 19th EPL Championship win of Manchester United and consoled the loss in hands of Barcelona at the Champions League Final, at a near by lounge. top
Contributed By Sudeep Deb MBA (IB) 2010-12 IIFT, Delhi
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The CIO as Chief Sustainability officer Q: Most CIOs wouldn‘t consider themselves eligible for the job you‘ve taken on. Why do you think otherwise?
Executive Q&A
Greenlaw: CIOs work with almost all the functions of the business, so they have a unique understanding of how companies work from end to end — everything from the supply chain, to how you hire people, to real estate and buildings and travel.
Most CIOs don’t think of themselves as leaders in the battle against climate change. Yet given IT’s role in driving efficiencies of all kinds, the CIO is in many ways well-suited for the job. He/she has the landscape view of the IT organization itself a vast consumer of energy and leads people who are accustomed to solving complicated puzzles. Greening is just another solvable puzzle.
The IT team has a very forward-thinking, cross-functional view of the company. Because of that, we are able to identify pockets of inefficiency. Change management is another skill set that crosses over nicely. On a daily basis, the CIO has to handle significant change that‘s part of all large IT projects. In my CIO organization, I had a small cadre of organizational change management experts who do training and education and awareness. We built that team to do a large global ERP implementation, so they‘re adept at cultural change programs, behavioral change and process adoption. We tapped the same team to do the cultural change around our ―Go Green‖ program.
Mark Greenlaw exemplifies this new model .Until recently, Greenlaw was our CIO, overseeing a staff of more than 1,000 professionals. He was recently appointed the company’s first Chief Sustainability Officer .His transition signals our commitment to reducing our carbon footprint and our desire to help clients reduce theirs, largely through measures related to technology. In this conversation, Greenlaw discusses our methodical efforts to find, measure and reduce carbon across an enterprise that spans the globe; how we are developing our first-ever annual environmental report; and why the CIO is an ideal candidate for the job of chief sustainability officer.
I have a report from Boston College Center for Corporate Citizenship. They confirm that the best people for corporate citizenship/sustainability roles actually have many of the same traits as a CIO. At Dow Chemical, the CIO actually does both
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jobs.
than others in terms of their energy consumption and, therefore, their carbon output.
Q: What are the environmental challenges at a knowledge-based company like Cognizant?
Q: What accounts for the wide gap?
Greenlaw: Our carbon footprint and environmental impact is primarily around providing offices for our 85,000 employees — office space, data centers, employee business travel. You would compare us to sectors such as financial services or pharmaceuticals.
Greenlaw: A mix of things. The quality of the facility — how airtight it is, insulation, glass, etc.; the building management systems and whether they are fully implemented and tuned; and making sure the temperature is right and uniform across the building. Another degree difference in cooling makes a huge difference. Elevators are tremendous energy consumers, so if you can reduce the frequency by turning off elevators in low travel times, there are tremendous energy savings there.
Q: What has Cognizant done so far? Greenlaw: We first started measuring our carbon foot print with our first carbon inventory last May, for the year 2008, and then we did it again this year and reported that publicly, as part of the Carbon Disclosure Project [an independent notfor-profit organization holding the largest database of primary corporate climate change information in the world].
The other obvious low-hanging fruit that many large companies have looked into is PC power management. We have over 65,000 desktop computers in India. If all those stay on all night long, it‘s a huge draw of electricity, so that was one of our larger initial projects. We implemented PC power management controls and have saved $2.5 million annually in energy and about 22,000 metric tons of carbon.
We uncovered a lot of surprises in terms of how big our footprint is, where it is and what‘s driving it. Some of our facilities are quite large — they house 14,000 to 16,000 employees. Most are in a hot climate, so you‘re talking about heavy air conditioning. Surprisingly, we found that two facilities in the same city could show vast differences in how much energy they consume
Q: Where do you go after lucrative lowhanging fruit like PC power management has been picked? Greenlaw: We are looking deeper. This includes installing sub-meters to see where power is being used — air conditioning vs. data center vs. PC vs. lighting. We‘ve also built dashboards to sit on top
Once we had the base data, we were able to benchmark one facility vs. another, and we found that some facilities were operating two to three times more efficiently
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of that. Rather than someone crunching all these numbers, we are working toward real-time reporting, or near-real-time reporting, of our energy consumption and carbon emissions. That way, we can see when a new trend emerges. When something starts to go wrong, we can do preventative maintenance.
invested. In fact, once we started communicating more about green initiatives, our employees responded and got excited. Q: What about paper? Greenlaw: We also benchmarked our paper consumption, and it has dropped significantly, which reduces cost. The larger savings are in the consumables associated with printing, like toner cartridges. Citi Group did a study years ago and found that for every ream of paper that you print, there‘s an additional $32 in other costs, including energy and toner.3
Q: Dashboards are said to create a sense of momentum within organizations that attain this level of measurement. Is that true for Cognizant? Greenlaw: Yes. We have a very competitive culture, so when one facility saw they were operating at 2.8 kilowatts per square foot and the other one was 1.8 kilowatts — one showing up green on the dashboard and the other red — there was suddenly competition within those organizations. Facility managers can make a major difference. These are the guys who are running the electrical plants and the technologies that control or conserve energy. After that, it‘s an education process. We educate all our employees about simple things, like flipping off your PC when you‘re away from your desk for more than 15 minutes. We talk about sharing elevators and turning lights off. That‘s where the dashboards and the reporting are paying off. You make it visible and transparent to the company. We have a lot of 18to 32-year-olds in our population millennials. Those people tend to really care about these issues; they feel personally
Q: Are you applying green IT to the Cognizant supply chain? Greenlaw: That too. We‘re a people-based business, so our supply chain is basically the facilities to house our people and IT equipment and provide Internet access and wide-area networks and servers. Those are the main elements we focus on our supply chain. We are frequently asked by our customers if we are reporting our carbon emissions and have lately been encountering requests to state our environmental position in RFPs from customers. Soon, we‘ll also start encouraging our suppliers to report their emissions. In some cases, suppliers like IBM and Dell already have very good stories; they are the leaders. But some of the smaller suppliers, not so much. In our evaluation of equipment, we are now insisting on PC Energy Star compliance. And
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we realize that real estate is an aspect of our supply chain, so we‘ve begun building greener buildings, paying attention to LEED certification to reduce our environmental impact . Q: Would you call Cognizant a green leader? Greenlaw: Certainly our goal is to be a leader. A lot of the reporting you see out there is marketing fluff. The vital thing is to be authentic in what we do and not overstate our accomplishments. Whatever we can do first ourselves builds credibility around sustainability. When a service company creates a new offering, it always need to find that first customer. In effect, we are the first customer Now, with green IT, we are doing it well ourselves and starting to do it for other companies. The opportunities are immense.
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Socrates Updates Cognizant‘s First at the Prestigious ―Views From the Top‖ Lecture Series!
Mr. Ramji Mani, Director, Cognizant Business Consulting kicked off the lecture series 'Views from the Top' at IIFT on 29th July 2011. The lecture series is an initiative of 'Socrates' - The Consulting and Strategy Club at IIFT to provide the students with an insight into the current challenges and issues facing the industry.
Rise of Millennia‘s & Cloud technologies. The speaker talked about how these forces are affecting business and forcing organizations to rethink how, where and by who work should be conducted. The compelling and differentiated concept integrates thinking about emerging technologies, leveraging cost ad-vantages, social media, globalization and the millennial worker. The speaker by quoting various instances ensured that students remain engaged and understand the intricacies and nuances associated with the concept.
The underlying theme of the lecture was on the concept of ‗Future of Work‘. Future of work concept revolves around the four irreversible and interconnected forces namely Globalization, Virtualization, the
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Alumnus from E&Y Rocks IIFT with charming insights from the
Soumyadeep Ganguly an alumnus of IIFT, Delhi of the batch of 2009 is a true Rock Star. He, very willingly agreed to an informal chit chat with the student community at IIFT on 30th of July 2011. Having worked at NTPC and DCM Shriram Industries Limited he joined E&Y in January 2011.
sion was very interactive with the students chipping in with questions at regular intervals. He talked about his roles and responsibilities in his present company and also the structure of the organisation. He also gave a brief about the major players in the industry and the relative positioning of E&Y. In the end, he shared a sample presentation and answered questions pertaining to the preparation of a consultant‘s deck.
He had no formal presentation and started off by talking about the consulting industry in India. The ses-
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Avalon Consulting makes its presence felt at the IIFT campus !
Avalon Consulting AVP Mr. Subhabrata Sengupta on the 5th of August 2011 made an impressive presentation on the topic of ―Group Purchasing Organizations, a Low Risk but a High Value Proposition‖. The speaker with his simplicity but tremendous insights presented the young leaders of tomorrow an opportunity to understand the complexity of group purchasing.
―Centralized and De- Centralized Procurement‖ processes. His insights on topics such as ―Economies of Scale‖ and ―Vendor Management‖ were eye openers since these aspects of business are rarely touch open by speakers at IIFT. The speaker with his innate ability to hold the attention of the students was able to deliver one of the most effective presentations on campus. We at IIFT wish to have a lot of more such lectures lined up!
He spoke on topics such as ―Procurement‖, ―Supply Chain Strategy‖, ―Corporate Strategy‖,
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