AccountSpeak

'Alliances can be useful in any industry'

2011-12-21T00:57:00.000-08:00

Alliances are a competitive necessity

In an increasingly global and competitive world, alliances have become a matter of competitive necessity, and in some industries, not having alliances can put you at a significant disadvantage, observes Nitin Pangarkar, Associate Professor, Department of Strategy and Policy, NUS Business School, National University of Singapore.

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Capital markets skills are rapidly improving in India

2011-12-02T02:06:00.001-08:00

Technology edge for financial institutions

As process efficiencies are fully squeezed out, financial institutions increasingly want to innovate to create a unique product for their clients, begins Bala Srinivasa, Managing Director-Strategy and Business Development, Amba Research (I) P Ltd, Bangalore.

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'Optimisation is not a one-off exercise'

2011-09-30T03:11:00.000-07:00

Smart opex management

If you are constantly challenged to reduce opex (operating expense) in your company, at a level more than what can be achieved by traditional approaches such as location and labour arbitrage, there are insights that Shiva Ramani, CEO of iOPEX technologies, US, can offer.

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'Most CAs come ingrained with a “historical” analysis perspective'

2011-09-19T03:09:00.001-07:00

CAs as investment analysts

We know the Chartered Accountants (CAs) as watchdogs and bloodhounds. Can they also play the role of investment analysts, adding value to global financial institutions? What does such a transformation demand? Posing these questions to Mr Bala Srinivasa, Managing Director - Strategy and Business Development, Amba Research (I) P Ltd, Bangalore (http://bit.ly/F4TBalaS), during a recent interaction in Business Line, I found him come up with some ready answers. We continued our conversation with an extended e-mail exchange. Excerpts from the interview.

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'Within every successful entrepreneur, there is a CFO hiding somewhere'

2011-09-13T03:21:00.000-07:00

Wear the CFO hat!

It is important for SMEs not to be insulated from the financial sophistication normally associated with larger enterprises, feels Mr Bastin Gerald, CEO, Apptivo, US (http://bit.ly/F4TBastinG). “I'd like to think ‘growth' is inevitable,” he avers, during a recent lunch-hour interaction with Business Line.

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'Trust is the single, most-important factor that determines the success of the joint venture'

2011-08-17T03:01:00.000-07:00

‘Trust can make or break a joint venture'

One of the few corporate presentations at the recent ‘India Strategy' conference in ISB, Hyderabad, was that of Mr Akhil Kumar, Managing Director and Chief Executive Officer, GS Caltex India Pvt Ltd, Mumbai (http://bit.ly/F4TAkhilK). As one with a vast experience in joint ventures, Mr Akhil emphasised the importance of trust. It is important to identify HR skills that are essential to operate the joint venture, he added, during a brief interaction with Business Line.

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'An annual report must be seen as a permanent milestone in the history of a company'

2011-08-12T03:19:00.001-07:00

‘Use annual reports to enhance trust'

Important communication tools often get deployed to just fulfillthe objectives of ‘information' and statutory compliance, rues Mr N. Chandramouli, CEO of Trust Research Advisory, Mumbai (http://bit.ly/F4TMouli). “And in most cases the annual report also suffers from the same problem,” he adds, during a recent interaction with Business Line.

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Most organisations tend to look at ROI primarily in terms of direct financial gain

2011-04-06T01:07:00.000-07:00

Extracting returns on ERP adoption

Despite spending significant amount on ERP (enterprise resource planning) deployments, many organisations feel they did not get the best ROI (return on investment) in terms of business enablement. Ask Mr Subu D. Subramanian, Chief Executive Officer of Chennai-based Defiance Technologies (http://bit.ly/F4TSubuD), what his views are about the malaise, he frets that most organisations view that their businesses are unique and their organisational culture is unique. Consequently, they tend to customise the ERP to suit their requirements rather than adoptthe best solutions provided in the ERP application, he adds, during the course of a recent e-mail interaction with Business Line.

Many companies see customer complaints as an annoyance

2011-02-16T00:48:00.000-08:00

When online deals go wrong…

Online dispute resolution, or ODR, is about getting customer problems resolved quickly and efficiently, so that the merchant can get back to business and the customer is completely satisfied, says Ms Chittu Nagarajan, Head - Community Courts, eBay & PayPal (http://bit.ly/F4TChittu), during the course of a recent interaction with Business Line.

In India, banks cannot disburse funds to companies where the purpose is to finance an acquisition

2011-01-25T02:27:00.000-08:00

Dissecting a complex deal

With Japanese companies looking to expand their footprint in Indian IT (information technology), there may be interesting times ahead for the industry in terms of M&A, foresees Mr Sujit Sircar, CFO, iGATE (http://bit.ly/F4TSujitSircar). Shortly after the company announced the Patni deal – valued at more than $1.2 billion and to be financed through a combination of cash, debt and equity – Mr Sircar interacted with Business Line over the e-mail, and expressed his anticipation of a lot more deals in the IT sphere, going forward, as a trend of consolidation in the IT industry.

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Projects can be completed on time in PSUs if the managements are inclined to do so

2011-01-05T01:02:00.000-08:00

Challenge of completing projects on time

With the liberalisation of the economy and the special status of ‘Navratna' and now ‘Maharatna,' and consequently greater freedom to the PSUs (public sector undertakings) in chartering their own growth plans, many mega projects are currently being implemented, or are in the offing, says Mr S. N. Choudhary, Executive Director (Projects), at the Panipat Refinery of Indian Oil Corporation Ltd (IOC).

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What are the hurdles to the implementation of IT-enabled energy management solutions, especially in scaled-up situations such as at country level?

2010-12-23T01:10:00.000-08:00

‘Get started with energy management'

It should be gratifying to learn from Mr Govi Rao, President and Chief Executive Officer, Noveda Technologies, US (http://bit.ly/F4TGoviRao) that energy is getting increasing attention in boardrooms, especially when it comes to the cost management aspect. But this is just the first phase, he says, during a recent interaction with Business Line. “I am quite sure these discussions will be followed by increased interest and dialogue about GHG (greenhouse gas) emissions from buildings and preventive measures that can be taken by us today.” We continue our conversation over the e-mail. Excerpts from the interview:

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In what ways can automated business management solutions help financial institutions?

2010-12-19T01:57:00.001-08:00

Automating compliance checks

Introduction of any new business solution is most often aimed at modernisation of the existing ones or transformation of how business processes are managed; generally, the goal is to improve the overall business outcome, reduce cost and increase the value delivered to customers. Thus begins Venki Muthanna, CEO, AppPoint Software Solutions Pvt Ltd, Bangalore ( http://bit.ly/F4TAppPoint), during a recent interaction with Business Line.

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Most of these portals are designed as financial content portals

2010-11-29T01:29:00.000-08:00

Data norms needed in personal finance space

Do we need policy and procedural changes at the institutional level to facilitate personal finance management? Pose this question to V. R. Govindarajan (Govi), Director, Perfios Software Solutions Pvt Ltd, Bangalore ( http://bit.ly/F4TPerfios), and the answer you get is a resounding ‘yes.'

Automated metering and the wealth of new data that comes with it are going to transform the industry.

2010-06-30T01:34:00.001-07:00

Revenue management tasks before telecom CFOs

With declining ARPU (average revenue per user), telecom operators are continuing to see significant margin depletion. In such a situation, how are CFOs measuring average margin per user (AMPU), and what strategies are being pursued to increase this metric? To this poser, Avi Basu, CEO, Connectiva Systems, Inc., New York ( http://bit.ly/F4TAviBasu) comes up with an interesting answer. Currently, profitability in most operators is measured at an aggregate level and not at an individual subscriber level, he explains during a recent interaction with Business Line.

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Success is in how we make dollar and cents of the things we know

2010-06-22T01:32:00.000-07:00

There are no stereotypes in the world of CFOs

Success is in how we make dollar and cents of the things we know, aligned with our aspirations and the value we demonstrate, not just in our academic qualifications, writes Kalyan Vaidya, Managing Consultant, Valinnova Services, Singapore, in one of the chapters of Not for $ Anymore.

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What are the taxation issues that come to the fore, in the wake of the IPL controversy?

2010-05-14T01:25:00.000-07:00

IPL: ‘Wide' accounting and wild valuations

Long after the last of the IPL matches has been played, K. Suryakanth Shenoy, a Chennai-based chartered accountant, has his head still buzzing with numbers. Not of wickets taken or runs scored, but of revenues and profits. For instance, after studying the cash flow pattern of franchisees, he notes that IPL is not a case of positive cash flows during at least IPL-1 and IPL-2. “The aggregate cash brought in for subscription towards share capital by the promoters of IPL franchisees (as per audited annual report FY March 2009) is Rs 72.3 crore, sums infused as share application money pending allotment Rs 51.6 crore, sums borrowed for infusion (by promoters or their holding companies) as loan funds Rs 28.1 crore.”

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Looking at incentives alone may be a narrow approach

2010-04-26T02:06:00.000-07:00

Incentive structures in insurance

The present incentive structure allows high front-loading of agent commissions, rues Sanjay Tugnait, Managing Partner, Accenture Financial Services. “An agent is paid as high as around 40 per cent of premium for the first year for certain products, 7.5 per cent for the second and third years and 5 per cent for the following years.

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The 5-day cricket strategy does not need ball-to-ball information, but innings to innin

2010-04-21T02:39:00.001-07:00

T20 scenarios in finance

As with every financial year closure, this is the time that reveals to managements an integrated view of financial outcomes resulting from a series of business decisions made during the year. But what would be of specific interest this year is for organisations to learn and understand the financial impact caused due to shortened time lines for business decision-making, says Uma Balakrishnan, CEO, Axcend Automation & Software Solutions Pvt Ltd, Bangalore ( www.axcend.com).

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Putting together a DR plan that works is similar to assembling a puzzle

2010-03-31T01:35:00.001-07:00

Do boardrooms crack the disaster recovery puzzle?

The top find for ‘disaster' in Google News, among the 50,755 results at the time of writing this, is the sombre observation by the Railways Minister Mamata Banerjee about the lack of disaster management system in Kolkata. Thankfully, the Railway disaster management team came in from Howrah and Sealdah to assist the trapped people at the Park Street building. Perhaps, the tragic blaze is one more grim reminder of the indispensability of disaster recovery (DR) readiness. The topic needs to get more boardroom attention and support, agrees Lakshman Narayanaswamy, Co-Founder and VP, Products, Sanovi Technologies, Bangalore ( www.sanovi.com).

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'Customers need to be convinced that the energy solution is not part of the problem itself'

2010-03-23T02:53:00.000-07:00

Put ‘energy' on your dashboards

Investment in building management systems and energy-efficient equipment is leading the energy management initiative in India, says Murali Ramalingam, CEO, ConnectM Technology Solutions Pvt Ltd, Bangalore ( www.connectm.com). “Companies are also investing in energy-efficient power sources such as solar, and wind-farms. However, the important trend that will have a sustainable impact on the energy intensity of the country's GDP is the increasing energy consciousness in the overall investment decision-making of the consumer — household or enterprise,” he adds, during the course of a recent interaction with Business Line.

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'International standard-setters have the concern of over-conservatism'

2010-03-16T02:38:00.000-07:00

Dissonance in IFRS convergence

Approaching IFRS (International Financial Reporting Standards) through a converged set of accounting standards, as announced by India, is a highly inconsistent but alternative line of thinking, observes T. P. Ghosh, Professor in the Institute of Management Technology, Dubai International Academic City, UAE ( www. imtdubai.ac.ae).

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The choice of technology is determined by factors other than marketing hype

2010-02-19T00:47:00.000-08:00

Managing communications cost

Is there an oft-ignored potential to effectively manage costs of communications in enterprises? This is one of the questions that came up during a recent interaction that Business Line had with Shivkumar Jagannath., CTO, Zylog Systems India Ltd ( www.wi5.in).
Nodding in response, Shivkumar observes that the people who decide the communications technology are not often the people who drive technology or innovation in enterprises. “This is the reason that no effort is being made to bring down costs of communications.” At times, the apathy is simply because communications costs form part of some other expense head, he adds.

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MFIs serve over 100 million people worldwide

2010-02-11T02:37:00.000-08:00

A silent entrepreneurial revolution

Sitting amidst the trees of Nagewara Rao park, Bala paints a vivid picture of supporting a tribal entrepreneur in Jharkhand. “Farida who stitches school uniforms needs a loan of Rs 8,000 to buy an additional sewing machine. She approaches a local MFI (microfinance institution) that asks her to join a local borrowing group with four other women, each of whom needs Rs 8,000,” begins Bhalchander Vishwanath, Founder & Chief Executive Officer, UnitedProsperity.org.

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The past few years have seen many buybacks by companies

2010-01-07T02:17:00.000-08:00

Revisiting SEBI Takeover Code

The single-most important regulation in India, governing the acquisition of shares or control in an Indian listed company is the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 1997, or the Takeover Code. In the backdrop of changing needs of a dynamic Indian economy surging at a growth rate of more than 7 per cent over the last few years, this code has been tested during many a corporate takeover battle in India, observes Girish Vanvari, Executive Director, M&A Tax Head and Member of the Tax Executive Committee, KPMG India, Mumbai.

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Are the Japanese cost management practices such as kaizen, TPM, etc. adopted in China?

2010-01-07T02:14:00.000-08:00

China's cost advantage

Predictably, my email to Raef Lawson on December 14 evening gets an ‘Out of Office Auto Reply' and the message reads: ‘I will be out of the country Dec 14 through Dec 21. I will reply to your message when I return. Happy holidays!' In a few hours, I knew, he would be heading to the airport, and Chennai will be a part of his itinerary, when the CII's Cost Congress 2009 will have the benefit of having him as the master speaker. Luckily, for the purpose of this interview, we make the connect through the IMA (Institute of Management Accountants, US) in which Raef is Professor-in-Residence, and Vice-President of Research.

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'The comma appears before secret and after process...'

2009-11-13T02:04:00.000-08:00

Taxman reaches for the sky

Sky that hangs above our heads, describes Shakespeare’s King John. “So foul a sky clears not without a storm,” he says, elsewhere in the play. And that could apply to transponders, too, as they get carried by satellites orbiting in space. For starters, the transponder is what facilitates the transmission of a signal (for example, a television signal) from a single point on the earth (the earth station) to a wide area (the footprint) so that it can be accessed and distributed to individual viewers. It amplifies the signal received from an earth station and retransmits it over a wide area, which is referred to as the footprint of the satellite, explains Amod Khare, a Partner in BMR Advisors, leading the Media and Entertainment practice in the firm.

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'There is very little incentive for the localisation of technology'

2009-10-22T03:18:00.000-07:00

Measuring healthcare delivery

Getting to speak to the Chairman and Chief Executive Officer of General Electric, Jeffrey Immelt, would have been the most ideal thing to do, to learn about GE’s recent decision to integrate all healthcare units with its Wipro joint venture. But he is “on Barack Obama’s speed dial, and a member of several of Obama’s ‘advisory boards,’” whispers a Sarah Palin fan’s blog that shows up in a Google news search. Be that as it may, I decide to touch-base with the President and CEO of GE Healthcare, South Asia, and Managing Director, Wipro GE Healthcare, V. Raja.

Technology will certainly reduce transaction costs.

2009-09-21T01:13:00.000-07:00

We need an Indian model of financial services

It is a crisp morning shortly after dawn, and the trees in Nageswara Rao Park, Mylapore, Chennai, seem to be swaying in tune with the Sunday concert that is on. Shravan is singing Tyagaraja’s ‘Sarasa saama daana’ to the accompaniment of Shyam on the violin and Kaushik on the mridangam. And, standing on the fringes of the circle of music aficionados is T. T. Srinivasaraghavan, MD, Sundaram Finance Ltd, and Chairman, FIDC (Finance Indust ry Development Council).

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When vulnerability is exploited by threat, it creates loss to an organisation

2009-09-03T01:39:00.000-07:00

The information security road to biz process maturity

If your recall of 27001 is an old telephone number or a truncated postal code, you perhaps don’t belong to the information security field. For, the number 27001 jumps off from the site http://www.iso27001security.com/ , as part of the ISO27k family of standards, which provide “guidance on designing, implementing and auditing Information Security Management Systems to protect the confidentiality, integrity and availability of the information assets on which we all depend.”

A Wikipedia page informs that ISO/IEC 27001, published in October 2005 by the International Organisation for Standardisation (ISO) and the International Electrotechnical Commission (IEC), has as its full name ‘Information technology – Security techniques – Information security management systems – Requirements’ though commonly known as ‘ISO 27001.’
This is a business process maturity standard, avers Govind Srinivasan, CEO, Paramount Dataware Pvt. Ltd., Chennai ( http://www.paramountworld.com/ ).

Women are counted as workers as they are involved in the economic work and contribute to GDP

2009-08-19T03:13:00.000-07:00

It costs Rs 6 to reach Re 1 to the poorest

While agricultural technology is scale-neutral, profitability favours those who have the capacity to hold the stocks and sell at high prices, reduce the cost of production and forge market tie-ups, probably in commercial crops. And mainly they contribute to agricultural growth. Thus observes Swarna S. Vepa, author of Bearing the Brunt: Impact of Rural Distress on Women (Sage), and Visiting Professor, Madras School of Economics, Chennai, during a recent lunch-hour interaction in Business Line. She rues that the debt burden of the poor is increasing.

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Areas where objectivity is normally compromised are revenue synergies, costs to capture and headcount-related synergies

2009-07-24T01:51:00.000-07:00

7 steps to synergise M&A success

Mergers and acquisitions (M&As) always make big news, though not the demise of most of them. “Let’s face it: M&As don’t always work,” acknowledges Mr Rajesh Sennik, who leads Accenture’s Strategy Practice in India, based in Delhi. Numbers about M&As tell a dismal story. Approximately 60 per cent of all mergers fail to create shareholder value, and less than a third create value that is noticeably higher than the industry average returns, Mr Sennik informs. “But when M&As succeed, they can lay the foundation for a company to be the leader in its sector.”

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Growth is about new market opportunities

2009-07-06T23:48:00.000-07:00

See acquisition as a growth platform

Indian firms tend to prefer organic growth when it comes to the Indian market, but have looked to acquisitions to enter international markets, observes Bala Chakravarthy, Shell Chair Professor of Sustainable Business Growth, IMD, Switzerland ( http://www.imd.ch/), and author Profit or growth? Why you don’t have to choose (Wharton). He cautions, however, that international acquisitions are expensive and can bring some nasty surprises.

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'On the ARPU front, Africa ranks better than India, at roughly $12 per subscriber as compared to $6 per subscriber in India'

2009-06-04T03:37:00.000-07:00

Does Bharti-MTN deal signal a recovery?

The first developing-nation foray into the ‘Big 5’ of the telecom world encompassing two fast-growing emerging wireless markets, India and Africa; consolidated post-deal financials, north of 200 million subscribers and revenues of $20 billion; one of India’s biggest cross-border deals, even relative to Tata-Corus or Hutch-Vodafone… These are some of the opening observations about the Bharti-MTN deal that Mr Vivek Gupta, Partner, M &A practice, BMR Advisors, New Delhi, shares with Business Line, during a quick email interaction shortly after the mega merger was in the news.

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Storage is basically putting information to work for you when you need it

2009-05-25T02:19:00.001-07:00

‘Virtualisation of storage, the ultimate step to maximise ROI’

Three sextillion, 892 quintillion, 179 quadrillion, 868 trillion, 480 billion, 350 million. That’s the number of new digital information bits created in 2008, says John Gantz, Chief Research Officer for IDC. “Contrary to popular belief, as the economy deteriorated in late 2008, the pace of digital information created and transmitted over the Internet, phone networks, and airwaves actually increased.”
A key finding of IDC is that while the pace of digital information increased in 2008, IT (information technology) budgets declined, thus creating an even larger divide between the amount of information generated and the amount of IT resources purchased and deployed to manage it. This dynamic further validates the demand for tools and techniques (e.g. virtualisation, de-duplication and other data reduction technologies) geared specifically to managing more with less, informs a recent communiqué from EMC Corporation, a global player in information infrastructure solutions.
You may wonder if there is the possibility of storage offerings on the pay-for-use model. That is the ultimate goal for every piece of IT today, affirms Mr Prakash Krishnamoorthy, Country Manager, Storage Works Division, Hewlett-Packard India Sales P Ltd, Chennai ( www.hp.com/in ).

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'Innovation is a buzzword in companies and has to be one in education'

2009-05-18T03:19:00.000-07:00

Economic crisis vs global strategies

A common question during situations of economic crisis, such as now, is whether companies should focus on their existing geographies (or even rationalise their current operations) rather than venture into expanding their global footprint. “International trade and investments are part of a complex machinery that acts and reacts upon economic fluctuations, management capacities, public policy issues, and many other factors,” observes Dr Gabriele Suder, Professor of International Business at CERAM Business School, France ( http://www.ceram.fr/ ). This creates opportunities and threats at any time, but more so in times of crises, she adds, during the course of a recent email interaction with Business Line.

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'India has found it easier to adopt the most recent technologies'

2009-05-14T02:17:00.000-07:00

Insurance, key game-changer in spread of healthcare

A healthy thought that Mr S. Nandakumar, CEO, Perfint Healthcare Pvt Ltd, Chennai ( http://www.perfinttech.com/) has top on his mind is that India offers valuable and well-documented examples to the rest of the world in healthcare services. Narayana Hrudayalaya, Arvind Eye Hospital, and Jaipur foot are popular successes, he cites, as sustainable models that have been tested for several decades, with the Indian market at it core.

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'The future of banking would be in cutting operational costs by automating branch banking'

2009-04-27T01:52:00.000-07:00

Will there be surprises in our bank balance sheets?

What’s common between cricket players and central bankers? They keep us on the edge of our seats, and can surprise us all the time. Tuesday was one such day, when the Reserve Bank of India (RBI) announced yet another round of rate cuts, sending a clear message to banks that they should follow suit by reducing their lending and deposit rates to support the return of the economy to a higher growth path.... Whilst the rate cuts are, at best, a signal from the RBI on its intent to see lower rates in the system, the RBI has stressed on developing a corporate bond market as well as rationalising the Government borrowing programme to keep interest rates lower, observed Mr Abizer Diwanji, Head of Financial Services, KPMG, interacting with Business Line by e-mail...

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'Do cost accounting standards find adoption?'

2009-04-09T02:57:00.001-07:00

Performance oversight dimension

The corporate sector in India has held, for too long a time, the role of cost and management accounting (CMA) as supplementary to the financial accounting domain, rues Mr A. N. Raman, Chairman of the Professional Accountants in Business Committee of the South Asian Federation of Accountants (SAFA), and a Central Council Member of the Institute of Cost and Works Accountants of India (ICWAI).

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'Any business will have to face both ups and downs in its long lifespan'

2009-03-25T02:02:00.000-07:00

Should accounting be driven by economic conditions?

Adding to the list of other ongoing conflicts is the recent spat between an industry body and the accounting regulator. The hot question is whether the Institute of Chartered Accountants of India (ICAI) should enforce its book-keeping standards relating to forex losses, especially when corporate performance is already bleeding due to the unfolding economic crisis.
Proposing that the norms be reviewed to allow accounting of foreign exchange revaluation gains/losses over the remaining tenor of the underlying items of borrowings or receivables, the Confederation of Indian Industry (CII) seems to ask the Institute, `Why rub salt into our wounds?' But the bean-counting bosses on Indraprastha Marg, New Delhi, are in no mood to revise their prescription of what they consider to be the right medicine.
To find more, Business Line interacted over the email with two experts in the field of accounting, and sought their views on the subject.
"I do believe the current accounting practice of requiring current assets and liabilities to be marked to market is a logical and reasonable practice," says Mr Shankar Jaganathan, Author, Corporate Disclosures:

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'Every year around 90,000 young, talented students are enrolling for the CA course'

2009-03-17T03:37:00.000-07:00

Will watchdogs turn bloodhounds?

Uppermost in the agenda of the new chief of the Institute of Chartered Accountants of India (ICAI), Mr Uttam Prakash Agarwal, is the Satyam problem. “Members should not lose heart but must act proactively to safeguard the interests of all stakeholders,” he calls out to CAs, from the pages of The Chartered Accountant journal, March 2009.

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'Mostly decision or predictive analytics are delivered in a customer-specific model'

2009-03-06T02:12:00.000-08:00

Add DA edge to financial metrics

Does DA or ‘decision analytics’ have the potential to play a key role in deal-making? Yes, avers Mr Phani Nagarjuna, Chairman and CEO of Nuevora ( http://www.nuevora.com/ ), a customer analytics firm headquartered in the US. “There is significant relevance of DA in M&A (mergers and acquisitions),” he continues, during a luncheon interaction at Business Line, on March 3. “As an example, the most important asset an organisation has is its customer base. More often than not, we value companies based on revenue projections and profitability independent of customer value.”

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'Economic fraud is spread across all economies...'

2009-03-06T02:08:00.000-08:00

Analysis of corporate fraud

Mired in intrigue, Maytas the mirror-image of Satyam, is now under direct government glare, even as the investigations of the Raju revelations continue. Meanwhile, one wonders if the recent developments indicate that the corporate world needs more regulation. Inevitably, such instances raise demands of more regulation to deal with these particular types of fraud but the fact is there are enough existing laws in almost all countries which make it clear that a person should not maintain fake accounting books or that old investors cannot be paid with money from new investors without earning money through a legitimate business, or that a business should have real clients and real employees and that money trails must be transparent, observes Ms Kshama Venkataramiah Kaushik, a New Delhi-based chartered accountant and co-author of Corporate Governance: Myth to Reality ( http://www.lexisnexis.co.in/ ).

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'The size of the crisis is largely determined by the psychology of the moment'

2009-02-23T02:41:00.000-08:00

Hard-edged diagnostic of business critical in downturn

Costs and prices always decline. Competitive position determines options. Customers and profit pools don’t stand still. Simplicity gets results. These are the four laws that Breakthrough Imperative — How the Best Managers achieve outstanding results discusses in detail. A mastery of these apparently simple-sounding laws can be the foundation on which to build your management strategy, advises Mark A. Gottfredson, a co-autho r of the book, and Partner, Bain & Company, Inc., US.

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'Focus on fair value and liquidity measures'

2009-02-13T01:07:00.000-08:00

Tasks ahead for audit committees

Foremost in the list of ‘ten to-dos for audit committees in 2009’ that Mr Sammy Medora, Chairman of KPMG’s Audit Committee Institute, draws up is this imperative: “Closely monitor the impact of the economic crisis on the company; focus on financial forecasts and early-warning indicators.” Understand the crisis’ impact on the company’s earnings, cash flow, liquidity and compliance with debt covenants, and monitor key indicators of trouble, he explains, during the course of a recent email interaction with Business Line.

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'Larger corporations are investing considerably in risk management technologies...'

2009-02-09T00:32:00.000-08:00

Seven best practices in risk management

Process and oversight to drive implementation of robust risk management procedures is the responsibility of the board, and a significant trend around the globe is of independent directors playing an active role in overseeing the risk management functions of corporations, says Mr Neville M. Dumasia, Head of Governance, Risk and Compliance Services, KPMG.

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'Do not allow the CEO to also hold the position of chairman of the board'

2009-01-30T01:43:00.000-08:00

Inflated cash and bank balances, most shocking in Satyam

Could analysts have unearthed the malaise in the reported statements of Satyam? Or, at least, what lessons can they take away from this episode and apply to other statements? Pose these questions to Mr Siva Nathan, Associate Professor, School of Accountancy, Robinson College of Business, Georgia State University, Atlanta, US, and this is what he has as answer: “I have looked at the Satyam financial statements carefully after the scandal broke. Looking at the same in hindsight I have made the following observations: Satyam reported operating margin of 24 per cent of revenues. Satyam generally quotes lower rates than competitors.”

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'Traditional wisdom says frauds are like cockroaches'

2009-01-23T01:56:00.000-08:00

A defined audit process cannot be a defence against frauds

The Big Four accounting firms are reputed to have strong process controls. How then could one such firm have failed to detect such a multi-year scam as is getting unravelled in Satyam? "There is a co-relation between the size of audit firms and the size of companies, and hence all large corporate frauds involve big audit firms," answers Mr Shankar Jaganathan, author of Corporate Disclosures 1553-2007: The Origin of Financial and Business Reporting (Routledge).

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'Every crisis and fraud presents some opportunity to learn from mistakes'

2009-01-09T00:39:00.000-08:00

When a management is intent on committing fraud…

The Satyam episode is all over the place. Who are responsible for this largest ever corporate scam reported in the Indian context? “Obviously, the primary responsibility to report ‘true and fair’ representation of the company’s state of affairs rests with the CEO of the company, along with the CFO. In this specific instance, they seem to be perpetrators of the scam,” says Mr N. Muthuraman, former Director-Ratings, CRISIL Ltd ., and now a Co-founder of the Chennai-based RiverBridge Investment Advisors Pvt. Ltd., in the course of an email interaction with Business Line soon after the letter of the Satyam Chairman B. Ramalinga Raju was on the BSE site.

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'We need to understand whether India will adopt IFRS or converge to IFRS'

2009-01-01T02:59:00.000-08:00

IFRS transition should be in a phased manner

A common myth about IFRS (International Financial Reporting Standards) is that transition is swift and painless, observes Mr N. Venkatram, IFRS Country Leader, India, and Partner in Deloitte Haskins & Sells, Mumbai. There is a belief that since India has adopted accounting standards which are based on the international standards, conversion for most companies would entail passing a few more journal entries, in order to transform accounts as per Indian GAAP (generally accepted accounting principles) into IFRS financial statements, he explains.

Low-cost financing was a key driver of the growth in auto sales over the last 2-3 years

2008-12-19T02:44:00.001-08:00

Two imperatives for automakers

Defend the business, and manage the evolving scenario. These are the two key areas that Indian automotive companies have to focus on, says Mr Rakesh Batra, Partner and National Leader - Automotive Practice, Ernst & Young. "This situation is without precedent and requires an immediate response to ensure survival," he observers.

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How successful has power trading been?

2008-12-11T02:19:00.001-08:00

The power pricing puzzle

Time, in The Winter’s Tale, speaks of ‘that wide gap, since it is in my power.’ Perhaps, in current times, we are experiencing a wider gap in power, between demand and supply. A solution may yet be in sight. “The development of the power trading market will have a major impact on the expected capacity additions and future power tariffs in particular,” hopes Ms Chaula Desai, Associate Director, Ernst & Young.

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'Finance is the constraint particularly in this regime of cash crunch'

2008-12-05T00:45:00.000-08:00

Critical factors for pruning costs

Volatility is inherent in the present global financial system and it is going to stay, observes Mr Siddhartha Sen, a Kolkata-based cost accountant who was formerly the Senior Director (Research & Journal) of the ICWAI (Institute of Cost and Works Accountants of India).
You cannot just wish away an unwelcome guest staying too long, you have to learn to live with him, explains Mr Sen, through an analogy. "Marginalise impact of his stay and make him uncomfortable till he is bored enough to leave you!"

'Money being supplied to the banks is not being lent through'

2008-12-02T00:42:00.000-08:00

De-leveraging demystified

Crafting newer solutions almost on a daily basis, the global leaders and market regulators are grappling with a meltdown that refuses to be contained, much like a rogue elephant on the rampage despite tranquiliser shots. So, where are we now in the current financial crisis?
Pose this question to Mr Satyajit Das, the author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives (2006, FT-Prentice Hall), and he observes, "The financial crisis has some way to go. I can do no better than refer you to Winston Churchill's famous statement: `this is not the end. It is not even the beginning of the end.it is perhaps the end of the beginning.'"

'The recession, itself, is likely to be neither short nor shallow'

2008-11-13T01:05:00.001-08:00

The financial crisis will hit our aging agenda hard

Financial fire-fighting has become a daily occurrence at almost every level. While at the household point awry budgets seem to find solution in shrunken menus on the dinner table, the macro scene has the central bankers manning every conceivable checkpoint of the economy, be it in the form of interest rates or liquidity gates.
Alas, the worst to suffer may be the aging. "No financial crisis is benign or comes cheap. The global financial crisis of 2008, and what promises to be the worst global recession since the 1930s, are particularly dangerous and unpleasant," observes Mr George Magnus, author of The Age of Aging: How demographics are changing the global economy and our world (www.wiley.com).

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'Transparency helps in building long-term relationships and reduces transaction cost'

2008-11-03T02:33:00.000-08:00

Accounting is like gymnastics

Can the present disclosure practices take credit for bringing to surface runaway credit crisis we currently witness? Or, were there gaps in reporting that allowed the problems to fester far too long? Would we therefore need better reporting practices, going forward? Pose these questions to Mr Shankar Jaganathan, and he comes up with an interesting analogy, by comparing the current financial crisis to a heart-attack, and the adequacy of disclosures to the effectiveness of health check-ups.
"Did the heart-attack occur after the patient was admitted during the quarterly health check-up or did it occur when the patient was going about his routine life?" asks Mr Jaganathan, the author of the recently-published book Corporate Disclosures 1553-2007: The Origin of Financial and Business Reporting (Routledge).
A chartered accountant and a law graduate, with two decades of experience in corporate, academic and social sectors, he was the Corporate Treasurer of Wipro from 1995 to 2003, and from 2003 he is a guest faculty in the Indian Institute of Science, Bangalore.

'Students do not get an economic perspective of accounting principles and practices'

2008-10-24T01:49:00.000-07:00

Good financial reporting cannot be achieved by box-ticking
We are currently talking of the IFRS (International Financial Reporting Standards) convergence by 2011. Are we just in time, or are we the Johnny-come-lately? "India is the last among the major countries to accept IFRS," observes Mr R. Narayanaswamy, Professor of Finance and Control at Indian Institute of Management, Bangalore. "Much of the world already follows IFRS or is committed to doing so. Australia and Canada punch above their economic weight in the international accounting arena. So we are eventually doing the right thing."

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'When the grant is measured at nominal amount, revenue is recognised only on actual sale of the CERs.'

2008-10-16T01:37:00.000-07:00

Accounting debates on carbon credits

While there can be no two opinions on whether carbon emissions should be reduced, there appears however to be a continuing debate among companies on how to appropriately account for carbon credits. "At present there is no authoritative literature under the generally accepted accounting principles (GAAP) in India or the US, or the International Financial Reporting Standards (IFRS) on CER (certified emission reduction) accounting," says Mr Rahul Chattopadhyay, Associate Director, PricewaterhouseCoopers, IFRS practice.

Sub-prime losses have been alarmingly ballooning!

2008-10-06T03:43:00.000-07:00

PE returns to realty financing

Already there were some signs of a slowdown in the realty price spiral; and now the Indian realty sector has begun witnessing the impact of the sub-prime crisis, says Mr Rajiv Sahni, Partner, Ernst & Young, New Delhi. "Recently one of the largest and high-profile IPOs had to be pulled out because of the market jitters," he reminds. "Overseas listings have been deferred due to similar factors."
Mr Sahni, a fellow member of the Institute of Chartered Accountants of India, heads Ernst & Young's Transaction Advisory Services with respect to the real estate and hospitality sector in India. He also heads the debt and corporate recovery practice.

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'The primary condition of revenue recognition is transfer of risk and reward from the seller to the buyer'

2008-09-26T02:10:00.000-07:00

‘Accounting guidance needed on revenue recognition in layaway sales’

Not only is the retail sector in India seeing a number of new entrants, but also new and interesting formats like home shopping via television channel and online portals (e-commerce).
Layaway sale — a popular concept in countries such as the US, the UK and Canada, with big retailers and small-time stores, alike, promoting such sales and attracting customers through this model — is gaining momentum in India and one is li kely to hear a lot more of this in the future, says Mr Rajiv Goyal, Director, Ernst & Young India Pvt. Ltd.

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'Economics in the university is dominated by mathematical modelling'

2008-09-18T04:08:00.000-07:00

Shut the revolving door between investment banks and Government

This is the time of greatest danger for ordinary people, cautions Ms Lila Rajiva. "Considering the way it has misled the public, the banking industry should be treated with the greatest scepticism," she adds, in an email interaction with Business Line, a day after Lehman Brothers went belly up.
Ms Rajiva is the author of The Language of Empire: Abu Ghraib and the American Media, (Monthly Review Press, December, 2005) and the co-author of Mobs, Messiahs and Markets: Surviving the Public Spectacle in Finance and Politics, (Wiley, September, 2007). "When the higher math and the greater greed come together, watch out below!" cautioned the latter book, "a light-hearted journey through history, politics and finance to show group think at work in an improbable array of instances, from medieval crusades to the architectural follies of hedge-fund managers."

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'Bankers are becoming choosy in their funding for M&A'

2008-09-11T02:49:00.000-07:00

Negotiations and due diligence are taking longer than usual

What is the outlook for cross-border deals in the coming 12-15 months? "There is likely to be a decline in cross-border deals," feels Mr Ranjan Biswas, National Director, Transaction Advisory Services, Ernst & Young. "Outbound deals (Indian firms acquiring overseas), which has so far been very strong for Indian companies, will be a challenge in the coming times, given the low business confidence and the rising cost of funding," he explains, during the course of a recent email interaction with Business Line.

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'IFRS conversion is a change in primary GAAP'

2008-08-22T01:30:00.000-07:00

IFRS calls for decisive shifts in strategic management

To the layperson, IFRS may sound like a cross between Indian foreign and revenue services, if not a flying rapid system. But to accountants, who are in the professional loop, the abbreviation stands for International Financial Reporting Standards, the global yardstick that will soon come into vogue, in the world of business numbers closer home. And, in pockets, the serious accountants are already at work, preparing the ground for the switchover.
To those who worry whether as a country we are focused in effectively dealing with the change, it should be comforting to hear that "we have made a good beginning," as opines Mr Kaushik Dutta, the leader of IFRS practice of PricewaterhouseCoopers. He draws our attention to the concept paper issued by the ICAI (Institute of Chartered Accountants of India) which clarifies a lot of doubts and gives a clear roadmap towards IFRS convergence.

'Acquirers are taking a much longer-term strategic view on investments'

2008-08-18T02:21:00.000-07:00

`Current metal prices represent a return to sustainable price levels'

According to a recent report by Ernst & Young, 2007 was a record year for M&A (merger and acquisition) transactions in the metal and mining sector. The value of M&A in this sector reached $210.8 billion in 2007, which represents an increase of 444 per cent from $38.8 billion in 2000.
"High commodity prices, resource security, economies of scale, infrastructure sharing and rising demand from emerging economies are driving local as well as crossborder M&A activities," says Mr Manoj Bothra, Associate Vice-President, Ernst & Young, in an email interaction with Business Line. He feels the ferrous segment in India, like iron ore and steel, is very fragmented and ripe for consolidation.

'Price adjustment, a common reason for disputes'

2008-07-31T03:05:00.000-07:00

Delay and dispute in M&A deals

Mergers and acquisitions (M&As) are slowly turning out to be painfully long, and most of the times burdened with disputes in one form or the other. Let's first take a local example: After negotiations stretching over 50 days, Reliance Communications and South Africa's MTN Group ended talks that could have seen a potential telecom powerhouse emerge. Even as the media and analysts try and discover the corporate `whodunit' behind it all, many are left to wonder what happened to the times of deals such as Ranbaxy-Daiichi or even Hindalco-Novelis, which sailed through in comparison...
What seems to be the problem in these potential deals? "Recent experiences in more mature M&A markets (mainly continental Europe and the US) show that transactions concluded in these geographies either go through a lengthy negotiation process or a formal dispute resolution process with respect to purchase price after the deal has been signed," says Mr Srikant Krishnan, Partner, Ernst & Young.

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'Many Indian companies are acquiring US assets'

2008-07-24T02:16:00.000-07:00

Skeletons in M&A cupboards

The Foreign Corrupt Practices Act (FCPA) is a US federal law mostly known for clamping down on bribery of foreign officials. If one would review FCPA enforcements over the last five 5 years, India finds a name mention in over 70 enforcements; and of the enforcements in 2007, more than half of them arose in the context of M&A (merger and acquisition) activity. "These are figures that India Inc. cannot ignore," says Ms Navita Srikant, Partner, Fraud Investigation & Dispute Services, Ernst & Young.

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'We are likely to see more Indian mining companies in quest for natural resource outside India'

2008-07-17T04:10:00.000-07:00

Why PE has taken little interest in the Indian mining sector

The mining sector is experiencing tremendous demand, and prices of raw material are at an all-time high. Naturally, mining projects, both domestic and abroad, have become more viable than ever before, according to experts.
While new business models have evolved due to higher levels of liquidity and greater degree of participation from project financing companies, private equities and financial institutions, is financing easy? “Bringing new assets to stream remains replete with challenges and risks,” says Mr Kameswara Rao, PricewaterhouseCoopers’ India Energy, Utilities and Mining leader.

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Portrait - July 3

2008-07-03T20:47:00.000-07:00

Sanjay_Mehta, MAIA - Illustration by Rajesh

'The unabated growth in consumption of fuels is not healthy for the economy'

2008-06-26T00:48:00.000-07:00

Has easing of price control made oil boil?

The task of pricing fuel in India would be equivalent to accomplishing the great Indian rope trick without a blemish. On one side are consumers (also the voters) and, on the other, are companies such as refiners, fuel marketers, etc. Can price control help?
At an OPEC meet organised in Saudi Arabia recently, the Finance Minister, Mr P. Chidambaram, suggested crude oil price be regulated by means of fixing a price band. While suggestions such as these may be borne out of sheer desperation for a country fighting with inflation at a 13-year high, experts see solid reason behind such a step, if implemented.
For one, volatility would be taken away and so would be the daily oil shock of the commodity surpassing one record after the other. "Oil producers or OPEC do not ostensibly exercise any price control. Slackening of control has actually commoditised crude even further," says Mr Deepak Mahurkar, Associate Director, PricewaterhouseCoopers, Gurgaon.

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'M&A activity will continue in the NBFC sector as more and more foreign players enter the market'

2008-06-19T01:59:00.000-07:00

‘Banks now have greater ability to absorb credit losses’

Incomes have risen and so have lending rates. This has affected the borrower’s repayment capacity and today many banks are ‘less’ inclined to dole out consumer loans as quickly as they did earlier. Are banks facing the heat? “Customer leverage has also gone up in both the retail and corporate segments, and there is increasing vulnerability to further rises in interest rates given the inflationary situation and the pressure on margins,” says Ms Sonali Sinha, Associate Director, Transaction Advisory Services, Ernst & Young.

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'The single biggest cost item for an IPL club is its annual licence fee to the BCCI'

2008-06-12T01:38:00.000-07:00

‘IPL franchisees may have better margins than Arsenal, Man U’

Fans maketh the sport, as many marketeers say. Even as people wait for the next edition of IPL, there are signs that this tournament would have to be accommodated as a permanent fixture in International Cricket Council (ICC) calendar. What makes it so compelling? Pure business logic, says Mr Dushyant Singh, Associate Director, Strategic and Commercial Intelligence, Transaction Services of KPMG India.

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'A successful investment banker is one who manages the three Es well —egos, emotions and expectations'

2008-05-29T00:43:00.001-07:00

In investment banking, you either score a century or a duck

Starting with an M&A deal for MaFoi Consultants in May 2004, the list of ‘representative transactions’ in http://www.vedacorp.com/ shows the Landmark-Trent deal concluded last month, as the latest. Having closed transactions aggregating over $500 million in value across industries, Veda, a Chennai-based boutique investment bank, continues ‘to manage marquee transactions& #8217; in venture capital (VC), private equity (PE) and mergers and acquisitions (M&A) for emerging corporates and established groups in the manufacturing, technology, consumer products and services domains.
“We started as a boutique firm. Today, we are close to a 20 member team and no longer a boutique in the strict sense,” says Mr C. Venkat Subramanyam, Founder Director, Veda Corporate Advisors Pvt. Ltd, during a recent lunch-hour interaction in Business Line.

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'The challenges are in terms of raising funds at a reasonable cost and keeping the operations cost down'

2008-05-15T01:58:00.000-07:00

How much does it cost to deliver and collect one rupee of microfinance?

The next big players in the economy, especially at the bottom of the pyramid, could well be the microfinance organisations. Reason: They provide the last-mile financial connectivity for people, and are equipped with the granular data about the beneficiaries.
“We are looking at launching a few additional products such as educational loan (seasonal) and loan for the purchase of gold,” says Mr P. N. Vasudevan, promoter and Managing Director, Equitas Micro Finance Company India (P) Ltd, Chennai, talking recently to Business Line, during a lunch-hour interaction, about his plans on the anvil.

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'The application of fair valuation principles in a consistent manner is easier said than done'

2008-05-08T03:29:00.000-07:00

Currency derivatives: The happening scare in the accounting world

The next scary movie from Manoj Night Shyamalan is going to be The Happening, starring Mark Wahlberg as an ordinary school teacher on the run from a natural disaster of global proportions. But something scarier has been happening for sometime now in the corporate and financial circles, with ordinary accountants and bankers on the run from a disaster, again, of global proportions, but entirely manmade: currency derivatives.
“The recent trend of losses is definitely part of India Inc.’s learning curve on handling these kinds of instruments,” observes Mr Sai Venkateshwaran, Partner, Assurance, Grant Thornton, Mumbai.

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'Independence is more a state of mind than anything else'

2008-04-25T03:36:00.001-07:00

Good governance can be as strong a differentiator as good strategy

Living as we do in the post-Enron era, it doesn’t look like too long ago when the global energy giant went belly up, causing tsunamis in the accounting profession and the regulatory mechanisms. While Enron and WorldCom were watershed events caused by large-scale failure of business ethics, the ongoing sub-prime crisis seems to be a master class in failure of risk management, feels Mr Ramesh Venkataraman, Managing Director, Asia-Pacific, CurAlea ( http://www.curalea.com/ ), an international management consulting firm specialising in the areas of corporate governance, business ethics and risk management.
“How would you explain large global banks and investment firms not having anticipated the risks, when they should have been aware that mortgage lenders were chasing borrowers with lending practices that were too aggressive to be sustainable?” he asks during a recent lunch-hour interaction at Business Line.

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'Corporate profit outlook in the US is bleak'

2008-04-17T01:33:00.000-07:00

How much will US recession cost India?

The question is no longer about whether the US financial woes will impact Indian companies. The anxiety is to know the extent to which our economy is vulnerable when the US sneezes.
But wait. Are we talking about a ‘fear’ of US recession? We were, but now the fears have been ‘borne out,’ says Dr Shanto Ghosh, Principal Economist, Deloitte Haskins & Sells, Bangalore.
“The International Monetary Fund (IMF) recently released its World Economic Outlook, which is widely regarded as the most authoritative report on the world economy,” he adds, during a recent e-mail interaction with Business Line.

'Risk is inherent in all business activities and operations'

2008-04-11T01:56:00.000-07:00

Do our companies understand financial risk?

India Inc. is going global. They are acquiring much larger competitors, aggressively entering new markets and exploring various financial tools. But the moot question is whether they can manage the risks that emanate from such moves.
Intense global competition and rapid growth are forcing Indian firms to examine corporate enterprise risk management (ERM) elsewhere, especially in Europe, Australia and North America, where the process is more mature, concludes a report by The Conference Board ( http://www.conference-board.org/ ), a non-partisan and not-for-profit business membership and research organisation.

'Maintaining and renewing a young fleet of aircraft is the first thing we do to trim costs'

2008-04-07T02:20:00.001-07:00

Today the airline pricing system is a black box to the passenger

Singapore Airlines (SIA) is one of the vital cogs of the Singapore economy, says Mr Bharath Mahadevan, Manager Southern India, SIA, Chennai. “Being a country with no natural resources, Singapore had to position itself as a regional hub to survive,” he recounts.
Today, Singapore is a regional financial hub as well as one of the biggest aviation hubs in the region, and the Singapore port handles a large volume of container movements every day. Tourism is also one of the main contributors to the Singapore GDP (gross domestic product). “Singapore needed an airline that could turn this hub vision into a reality,” reasons Mr Mahadevan, in a recent e-mail interaction with Business Line.

'The 2010 target'

2008-04-02T03:22:00.000-07:00

Ideas are like pizza dough

Ask Yogi Berra about pizza, and he’d tell you better cut the pizza in four pieces because he’s ‘not hungry enough to eat six.’ If you have appetite for more quotes about pizza, here is Anna Quindlen’s — that ideas are like pizza dough, made to be tossed around. And, this, from Kevin James: “There’s no better feeling in the world than a warm pizza box on your lap.”

'Fraud is a real threat and organisations need to be fighting it proactively rather than keeping a blind eye to it.'

2008-03-20T01:51:00.000-07:00

Kickback is the most prevalent form of fraud

Inducement, backhander, enticement, carrot, sweetener, and kickback are all among the synonyms that Microsoft Word suggests for `bribe.' The word gets rarely uttered, even when the `demand' is tall, nor does one find tariff cards mentioning the going rates, possibly because speed money is part of our ecosystem.
Therefore, it may not come as a rude shock to most of us that a majority of a survey's "respondents quite candidly stated that coporates in India pay bribes or facilitation payments to conduct business," as Mr Deepankar Sanwalka, Executive Director and Head of Forensic, KPMG observes.

'Companies with global ambitions are turning to the major international markets'

2008-02-24T22:47:00.001-08:00

Equity, popular at the right price

How are the Indian companies performing in the London market? The answer is, “Not bad,” according to Tom Troubridge, head of the Capital Markets Group of the PricewaterhouseCoopers, UK.
“Despite market turmoil in January, Vedanta Resources, the FTSE 100-listed Indian mining company has performed strongly in line with the mining sector,” he substantiates, during the course of an e-mail interaction with Busine ss Line last week, while on a visit to India. “Recent AIM (Alternative Investment Market) flotations such as Greenco and DQ Entertainment are trading above their issue price.”

Information could be an input in both manufacturing and service processes

2008-02-18T03:04:00.000-08:00

‘Lean’ is more than a cost-cutting tool

Lean, you may be happy to learn, is hep in factories. “Lean manufacturing is the production of goods using less of everything: less material, less time, less energy, less human effort, less manufacturing space,” defines G.V. Dasarathi in a January 14-dated article on http://inhome.rediff.com. “The Nano is lean. It uses less steel, less plastic, less space and less energy to run.”
And you can make a fat folder with ‘lean’ news such as: Cisco speaking of how its customers realise the benefits of lean supply chain initiatives across a myriad of industries ( http://www.automation.com/ ); General Cable reporting better price realisation, and cost improvements from ‘lean’ initiatives ( http://www.earthtimes.org/ ); and the need to adapt lean-production programs to China’s ‘tradition of mass mobilisation,’ as ‘Operation China: From Strategy to Execution,’ a management guide by two McKinsey & Co. consultants, Jimmy Hexter and Jonathan Woetzel, which James Pressley reviews in http://www.bloomberg.com/ .

'Business discipline drives growth!'

2008-02-11T00:55:00.000-08:00

Risks that control systems face from `creative responses'

Despite the widespread attention given to risk management, we get jolted by one major business failure or the other, almost routinely, with news reports that speak of bigger frauds (as in the case of SocGen), and massive losses, as for example of CitiGroup and Merrill Lynch. Are we learning newer lessons in risk management in the process? Is the risk appetite of businesses soaring dangerously and unsustainably?

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Revenue growth should be tied closely to drivers that impact revenue — such as price, volume, and customer satisfaction

2008-02-04T01:55:00.001-08:00

A management-reporting framework beyond the balanced scorecard

Can management reporting be based on common information architecture? “Yes,” says Jeby Cherian, Head, Global Business Solution Centre, IBM India, Bangalore. The infrastructure modifications that most organisations have adopted in the last decade provide an opportunity to improve current management reporting, he explains.

With common information architecture, organisations will be able to “integrate the underlying transaction engine with a data warehouse and decision support engine that enable analytics, and deliver the information through a portal to specific roles.”

Adopting a standardised approach is much less demanding than the internal ratings-based approach

2008-01-28T01:46:00.000-08:00

Seven issues that will keep banks busy on the Basel front

Basel II may sound like the name of a movie sequel. In banking circles, however, the phrase evokes a big shift that is fast approaching.

For starters, ‘Basel II Framework’ refers to a document titled ‘International Convergence of Capital Measurement and Capital Standards: A Revised Framework,’ released by the Basel Committee on Banking Supervision (BCBS) on June 26, 2004, and supplemented in November 2005 by an update of the ‘Market Risk Amendment.’

The Indian economy may be capable of self-sustaining growth but only in the longer term

2008-01-21T02:20:00.000-08:00

Current credit crunch is more than bursting of ‘bubble’

If you find the web of international economies and money incomprehensible, take heart. You are not alone. That is how it is: “beyond comprehension,” says Satyajit Das. He is the author of Traders, Guns & Money, a book that talks about the known and the unknown in ‘the dazzling world of derivatives.’

It is ‘part thriller, part expose,’ describes Das, talking to Business Line, over the phone from Mumbai. “The whole point was to make it a fun read and teach something about the business and how these markets work in a non-technical way. It’s also satiric, irreverent and black in its humour — is that too many adjectives?”

Accounting of costs is less important than upstream management of costs

2008-01-17T00:19:00.001-08:00

A four-step cost-competitiveness roadmap for Indian manufacturers

Local demographics and the economy may be acting against Japanese automobile sales, pushing the latest tally to a 35-year low, yet their business abroad is brisk. And, the leading industry players in the Land of the Rising Sun continue to bring out innovative and environment-friendly models at continually lower costs.

One may wonder if Japanese automakers, well known to have already achieved high cost efficiencies, still see a role for cost management. Can any incremental gain from cost management be too insignificant to pursue?

“Cost efficiency is very necessary for Japanese automakers, because global competitors are getting more competitive,” argues Mr Hiroshi Okano, professor in Graduate School of Business, Osaka City University, Japan.

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Every country has its unique culture, especially business culture

2008-01-04T01:01:00.000-08:00

Convergence of accounting standards entails significant costs

A survey of accounting industry leaders from around the world has found overwhelming support for convergence of accounting standards, as a recent story in http://www.webcpa.com/ informs.

“According to a survey of 143 leaders from 91 countries, conducted by the International Federation of Accountants, 89 per cent indicated that convergence to International Financial Reporting Standards (IFRS) was ‘very important’ or ‘important’ for economic growth in their countries. Nine per cent said it was ‘somewhat important,’ while only 1 per cent said it was not important,” states the December 4-dated article.

CMA Canada has worked to build a strong, professional relationship with the Government of Canada

2007-12-31T02:37:00.000-08:00

Cost management in the most complex organisation: the government

The largest and the most complex organisation in Canada is the Government of Canada, says Mr Richard Monk, Chairman, CMA (Certified Management Accountants) Canada. “It makes over $200 billion in expenditures annually, manages a workforce of some 4,50,000 people, and provides some 1,600 different programs and services across Canada and around the globe.”
Such sheer size and complexity create significant challenges to comptrollership, financial management and accountability, he adds, during the course of a recent e-mail interaction with Business Line.

CMA has ‘more than 37,000 CMAs and 10,000 CMA students,’ as http://www.cma-canada.org/ informs. And as the new chief of the body, when Mr Monk spoke of his priorities in the latest issue of http://www.managementmag.com/ , first came the aligning of ‘major governance initiatives,’ and second, continuing ‘to cultivate relationships with international associations with similar values and services to those of CMA Canada.’

Accounting and reporting regimes have become more complex

2007-12-23T01:59:00.001-08:00

Gaping gap in insurance reporting

Your insurance company might be eager to know a lot about you before offering you cover, which you may not want to share, much to the chagrin of the insurance companies. But a new survey has found that analysts tracking the insurance companies are in a much bigger dilemma, as they are unable to gather relevant data about how the companies go about their business.

This is partly to be blamed on a gaping information gap, said a report titled Insurance reporting at the crossroads: What do Analysts think prepared by one of the world’s largest professional services companies, PricewaterhouseCoopers (PwC).

It finds that there exists a significant gap between analysts’ rating of the potential ‘usefulness’ and current ‘adequacy’ of financial statements like balance-sheet, income statement and cash-flow statement, etc.

Indian companies are beginning to realise the benefits of risk management

2007-12-14T02:14:00.000-08:00

Internal auditors should learn new skills

Recently, PricewaterhouseCoopers LLP (PwC) brought out a survey titled ‘Internal Audit 2012’, and followed it up with an Asia-Pacific (Apac) supplement. These reports found that internal audit should follow an audit plan that isclearly linked to an enterprise-wide risk assessment and the company’s strategic objectives, says Ms Satyavati Berera, leader, internal audit services, PwC.

“We also found that internal auditors should aggressively obtain new skills and use new tools and techniques to optimise the use of technology. And that they need to be more proactive to ensure they provide real value to their companies,” she adds, during the course of an e-mail interaction with Business Line:

Excerpts from the interview:

Marketing in domestic formulations has become a competitive function.

2007-12-10T02:30:00.000-08:00

M&A the main driver for value unlocking in Indian pharma

‘Generics’ is the old story in the great Indian pharmaceutical space. The new kids on the block are ‘contract research and manufacturing services’ (CRAMS) providers.

The emphasis is on future leaders rather than established captains, and the rapid expansion plans charted by these emerging breeds make them a perfect fit for private equity players, who are hot on heels to get their slice of the growing pie.

Naturally, funding is less of an issue for these smaller companies, says Mr Navroz Mahudawala, Associate Director, Transaction Advisory Service of Ernst & Young (E&Y).
In an exclusive interaction with Business Line, over the e-mail, he also talks about the change in strategies of pharma MNCs (multinational corporations) present in India and why Europe is where all the M&A (mergers and acquisitions) action could be for Indian drug makers.

'Analysts have to be careful in valuing a brand'

2007-11-30T02:23:00.000-08:00

Comparative brand valuation across industries

“A brand valuation exercise in India is typically a more subjective exercise compared to a business valuation exercise in India,” says Mr Sanjiv Agrawal, Partner and National Director, Valuation & Business Modelling services, Ernst & Young. “This is primarily due to the limited availability of data required to apply the usual methods of brand valuation,” he reasons, during the course of a recent e-mail interaction with Business Line.

Mr Agrawal has through his 20-year career conducted valuations for/of companies across various sectors, including metals, consumer goods and retailing, media and entertainment, software, telecom, and financial services.

Excerpts from the interview:

Microcredit in India is attracting not only large donations, but also investments

2007-11-09T01:06:00.000-08:00

Microcredit is effective for women in self-employment

When working on poverty eradication, the first message that we must communicate is that poverty is not hopeless, says Mr Eric Thurman, co-author of ‘A Billion Bootstraps’ ( http://www.tatamcgrawhill.com/).
“People should not be trapped in horrible lives of deprivation. Microcredit can help. Currently more than 100 million families around the world are improving their lives thanks to microcredit. That number needs to be many times larger. The number is growing, but the acceleration can and should be much faster.”
Think about the poverty at its most basic level, he urges. “Economic poverty has only two root causes, a lack of income or a lack of assets. Some people are so poor that they lack both. Poverty diminishes as incomes or assets rise.”
The essential of ‘how to combat deep poverty’, therefore, is to help people increase their incomes and assets, explains Mr Thurman, during the course of an e-mail interaction with Business Line.

Financial entities should know the ‘character’ of their client

2007-10-25T02:52:00.000-07:00

All you wanted to know about PNs

A search for PN on http://www.abbreviations.com/ yields 37 results, beginning with ‘pain’ (physiology). The rest include part number, Pitcairn Island, planetary nebulae, pseudo noise, peripheral neuropathy, practical nurse, proton neutron, portable network, primitive notion, and project nothing.

“Participatory note or PN was a fairly unknown term to most people, including those who invested in the stock market,” observes Mr Sunil Rongala , a PhD in economics, in a discussion with Business Line on the currently hot topic.

It has been about a week since the market regulator SEBI (Securities and Exchange Board of India) decided to crack down on PNs. And suddenly we realised the power that PNs have over the Indian stock market. “They (the holders of PNs) decided to go in for a mass sell-off after SEBI decided to impose sanctions on them,” recounts Mr Rongala.

Excerpts from an e-mail interview, in which he dwells upon what it is about PNs that has inspired so much fear and loathing.

The two causes of market crisis

2007-10-18T01:44:00.000-07:00

Market crises have a life of their own, separate from value

“While it is not strictly true that I caused the two great financial crises of the late twentieth century — the 1987 stock market crash and the Long-Term Capital Management (LTCM) hedge fund debacle 11 years later — let’s just say I was in the vicinity.”
With these solemn lines begins A Demon of Our Own Design – Markets, Hedge Funds and the Perils of Financial Innovation (Wiley, 2007), by Mr Richard Bookstaber.
“If Wall Street is the economy’s powerhouse, I was definitely one of the guys fiddling with the controls. My actions seemed insignificant at the time, and certainly the consequences were unintended…”
Arguing that market crises — like what the US has seen with the subprime mess — are an inevitable result of the market’s penchant for leverage and its abuse of derivatives and other innovative securities, the Demon created a stir on Wall Street

Important ways to invest in Brazil

2007-10-12T01:40:00.000-07:00

On how to set up business in Brazil

With qualified professional advice, a well-prepared market plann and a good tax strategy, investments in Brazil can be rewarding, say Mr Gilberto Ayres Moreira and Mr Fabio Appendino , Partner and Associate attorney-at-law, respectively, in Gaia, Silva, Rolim & Associados ( http://www.gaiasilvarolim.com.br/), a law firm based in Brazil.

The firm is active in several areas of corporate legal services, “such as environmental protection, restraint of trade, mining, shipping, aviation, oil and gas, finance, insurance, communications and telecommunications regulations.” Apart from a team of more than one hundred professionals, in key Brazilian cities like São Paulo, Rio de Janeiro, Belo Horizonte, Curitiba and Brasília, the firm also draws on the support of correspondents in many foreign countries.

Most of our real estate companies are still closely held or family run

2007-10-04T02:16:00.001-07:00

Real estate developers looking at newer financing options

Big residential townships, SEZs (special economic zones) and mega retail malls are prominent among the recent trends in the real estate landscape. To cope with these mega developments, the developers are looking at various options of financing, says Mr R. Venkatesh, Regional Director, Transaction Advisory Services, Ernst & Young, Chennai.

"While debt funding, private equity (PE), IPO (initial public offer) route shall continue to happen, though at realistic and reasonable valuations, new avenues such as listing of REITs (real estate investment trusts) at overseas exchanges are expected to attract developers' attention to plan their fund raising exercise," he adds, during an email interaction with Business Line.

The key to growth is to have a strong core foundation

2007-09-27T01:38:00.001-07:00

Three signs of imminent fall

Only one in four acquisitions succeed in creating shareholder value, says Mr Chris Zook, author of Unstoppable (Harvard Business School Press, May 2007), citing a seven-year study conducted by Bain & Company, a global business and strategy consulting firm.

He gives, as examples, large, "big bang" transforming acquisitions like the one between AOL and Time Warner, and the one by Daimler Benz of Chrysler, which had an exceptionally bad track record, with a success ratio of much less than 10 per cent.

"Certainly, bold deals give a company a sense of power and confidence at the moment of acquisition," adds Mr Zook, in a recent interaction with Business Line over the email. "But the record of eroded balance sheets or tarnished careers is not conducive to either. This is like playing the lottery and calling it your growth strategy."

Maintain positive margins and carry minimum inventory

2007-09-06T01:48:00.000-07:00

Hedging to manage price risks

The RBI decision to allow consumers to hedge non-ferrous metals and fuel oil on international exchanges has opened a window of opportunity to several Indian companies that consume them on a large scale, as they can now realign pricing, procurement and inventory strategies and address price risk management, according to Mr Hemal Shah, Associate Director, Risk Advisory Services (RAS), Ernst & Young.

Speaking to Business Line on the dynamics of hedging and how companies can strategise and manage risk more proactively, he said: “The increased volatility in the non-ferrous metal markets in the last few years has clearly illu strated the need for effective pricing mechanisms and hedging tools within the industry.”