tapmi pratibimb february 2012

Pratibimb | February 2012 | 2

Mission

T.A. Pai Management Institute (TAPMI) is a premier management institute situated in

Manipal and is well known for its academic rigor & faculty-student interaction. The

Institute has been recently ranked amongst top 1 per cent of B-schools in India & 4th

in the South Zone by The Week Magazine.

Founded by the visionary, Late Shri. T. A. Pai, TAPMI’s mission is to provide much

needed impetus to the task of building professional management capability in the

country. In the process, it has also played a role in strengthening the existing

educational and health infrastructure of Manipal.

We are committed to excellence in post graduate management education, research

and practice by nurturing and developing global wealth creators and leaders. We

shall continually benchmark ourselves against the best-in-class institutions. We shall

foster continuous learning and reflection, achievement-orientation, creative

interdependence, and respect for diversity with a holistic concern for ethics,

environment and society.

About TAPMI

T. A. Pai Management Institute Manipal, Karnataka


About Pratibimb

Pratibimb – The TAPMI’s e-Magazine - is the conglomeration of the various spe-

cializations in MBA (Marketing, Finance, HR, Systems and Operations). It is pri-

marily intended to provide insights into the plethora of knowledge that relate to the

various departments of Management and to give an opportunity to the students of

TAPMI and the best brains across country to exhibit their creative cells. The maga-

zine also strives to bring expert inputs from industries, thereby bringing the aca-

demia and industry together.

Pratibimb the e-Magazine of TAPMI had its first issue in December 2010. The is-

sue comprised of an interview of denoted writer Ms. Rashmi Bansal along with a

series of articles by students and industry experts like MadhuSudan Rao (AVP-

Delivery, Mahindra Satyam) & Ed Cohen who is a global leader and chief learning

officer who led Booz Allen Hamilton & Satyam Computer Services to the first rank

globally for learning & development . It also included a hugely successful and en-

grossing game for finance geeks called ―Beat the Market‖ to bring out the applica-

tion based knowledge of students by providing them the platform where they were

expected to predict the stock prices of two selected stocks on a future date. The

magazine is primarily intended for the development of all around management

knowledge by providing unbiased critical insights into the modern developments.

TAPMI believes that learning is a continuous process and is not limited to the four

walls of the classroom. This viewpoint is further enhanced through Pratibimb

wherein students manage and contribute to create a refreshing learning environ-

ment outside the classrooms which eventually leads to a holistic development pro-

cess. The magazine provides a competitive platform and opportunity to the stu-

dents where they can compete with the best brains of the country. The magazine

also provides a platform for prominent industry stalwarts to communicate their

views and learning about and from the recent developments from their respective

fields of business which in turn helps to create a collaborative learning base for its

readers.

Pratibimb is committed in continuing this initiative by bringing in continuous im-

provement in the magazine by including quality articles related to various manage-

ment issues and eventually creating a more engaging relationship with its readers

by providing them a platform to showcase their talent.

We invite all the best brains across country to be part of this initiative and help us

take this to the next level.


It is always a pleasure to witness that certain efforts of the students are

sustained and carried forward; Pratibimb is one such. The oft-beaten track,

“We are here to learn,” ends up as a mere platitude when there are no visible

actions and documentation. Whereas there is no dearth of actions at TAPMI,

documentation is not something that many—other than scholars—choose to

engage in; it is normally viewed as uninteresting, drab and a drudgery.

TAPMIans have proved that they are equally capable of actions and of

documentation without losing the intellectual flavour of it.

Scholarship is too important a phenomenon to be left to scholars alone,

especially in the field of management. As future practicing managers who will

be engaged in rigorous action in different fields of business, TAPMIans have

manifested both the penchant to produce research works and also get their

counterparts in other leading business schools to contribute their thoughts to

this endeavor. In this regard, TAPMIans have truly demonstrated the evidence

for creative interdependence, an important aspect of TAPMI’s mission.

I sincerely appreciate the students and the faculty of TAPMI who have made

the edition of February 2012 a possibility through their scholarly works, co-

ordination efforts and support. I wish the Pratibimb team the very best.

Dr. R. C. Natrajan

Director, TAPMI.

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editor’s corner Rohit Kumar, Chief-Editor

Ramanuj Vidyanta, Editor-Branding

Sarvesh Joshi, Editor-Creative De-

signer

SUB-EDITORS

Abhishek Anupam

Abhishek Dubey

Divyanshu

Manish Mishra

Namrata Mahapatra

Sushmit Sinha

Vandana Soni

Faculty Advisors

Prof. Chowdari Prasad, Dean

(Planning & Development), TAPMI

Dr. Jaba M. Gupta, Professor and

Chairperson—eGPX, TAPMI

Dear Readers,

We thank all the participants and readers for their

valuable contributions. By making it monthly,

we present you a platform that will provide more

opportunities to share knowledge and showcase

your talent by competing with best minds in the

country.

Our latest issue has more to offer in the variety

of content. We have received contributions from

eminent B-schools of the country where the

articles range from the Wedding Planning

Industry in India to the effect of Financial

Derivatives. Two articles have covered the state

of the Indian Infra Market and the Housing

Finance Market. A very relevant and interesting

contribution has covered IndiGo Airlines and

their ad spaces which is a must read.

The articles have been selected by the Editorial

Team. We also thank all those who helped us in

improving Pratibimb through their feedbacks.

We would like to take this opportunity to extend

our gratitude to all faculties and students at

TAPMI for their continued support, guidance,

motivation and inspiration to take Pratibimb to

the next level.

Please continue to send in your valuable

suggestions/feedbacks at

[email protected] so that we can

make improvements in the coming issues.

Happy Reading!


contents Aligning HR with Business Strategy 7

Debojoyti Saha, IMI Delhi

Analysis of Indian Wedding Planning Industry 10

Rajesh Kumar, IIM Lucknow

Analytics and Beyond 16

Sayak Gupta, SIMSR Mumbai

Financial Derivatives – Blessing in Disguise or a Curse Camouflaged 19

Rohit Taneja, IIT Delhi

Housing Finance Market in India 22

Ankit Goel, IIM Bangalore

India Infrastructure: A boon or a bane? 27

Niraj Satnalika, IMT Ghaziabad

What keeps IndiGo Going 35

Rubayet Chakraborty | Ahana Chakraborty, NITIE Mumbai


Aligning HR with Business Strategy

Introduction:

The rapid changes in the business environment are

prompting organizations to look at human

resources as a unique asset that can provide

sustained competitive advantage. Management of

human resources should be in perfect fit with the

management of the organization as a whole and its

strategic plans. Once the business strategy has

been formulated the HR strategy can be

formulated which should be in alignment with the

business strategy. The personal competencies of

the employees become one of the key strategic

factors for the organization to maintain its

competitive advantage.

The HR-Business Strategy Alignment Model:

Now we look into the HR-Business Strategy

model which looks into the various processes for

aligning the HR Strategy with the Business

Strategy for maximum productivity and

performance.

The various business objectives of the

organization are illustrated below

Financial Growth

Market Expansion

Research and Development

New Technology Integration

Operational Excellence

Once the corporate strategy has been defined the

organization must then obtain a perfect fit between

the competitive strategy and the internal HR

strategy and a fit between the various elements of

the HR Strategy. The next stage is to identify

various job specific roles and competencies to

translate the business objectives.

The various Organization Structuring steps

identified in this process are as shown below

Job Design and Analysis

Role Creation

Role Definition

Competency Description

Team Structure Design

In this phase the various roles and positions are

identified and for those specific positions the job

responsibilities are defined in accordance with the

business strategy of the organization. The

competencies required for those positions are

clearly identified which will help the organization

attain its business objectives. Proper teams will be

designed and structured to meet the organizational

goals and strategies.

The next step is the talent identification process

where the knowledge, skill and abilities required

for the specific job roles are identified and the

amount of relevant experience a person may need

to complete the job responsibilities associated

with that role are also clearly laid out.

The various essential steps in the Talent

Identification process are as shown below:

by Debojoythi Saha, IMI Delhi


Knowledge Identification

Skill Requirement

Core Abilities

Relevant Experience

This is one of the critical processes in the system

because once the skill and the knowledge levels

are identified then only the organization can go

ahead arranging the resources with necessary

skills, knowledge and attitude.

The next step is the Human Resources Planning

and Process Designing. The organization looks

into the competencies of its internal workforce

and determines the availability of the workforce.

If the internal resources are not sufficient to meet

the business needs then the organization goes into

hiring of employees from outside. It also involves

designing necessary performance metrics to

evaluate the performance of the employee.

Designing an effective compensation strategy is

also very much essential to keep the employees

motivated in their work. Another important HR

responsibility at this stage is to develop a proper

succession plan and maintain a talent pipeline so

that the organization is never devoid of key

resources to take up the various responsibilities.

The various essential steps involved in the

Human Resources Planning and Process

Designing phase are enumerated below:

Recruitment and Staffing

Employee Skill Enhancement

Training and Development

Performance Management

Compensation and Benefits

Succession Planning

This is the key operational phase in the business

strategy implementation process. The HR

Department has to play a very significant role in

this phase and has to take the main responsibility

of capacity building for implementation of the

business strategy.

Effective and successful implementation of a

business strategy depends on the successful

execution of the various phases involved in the

entire process. The various phases are clearly

interdependent on one another and the relative

success of a particular phase is clearly determined

by the successes of the various phases preceding

it.

Framework for Corporate Strategy Implementation Process


Challenges in the HR alignment process:

The HR Department faces various challenges in

the entire strategy design and implementation

process and has to take critical decisions in the

entire process to design an optimal strategy for

execution. The various challenges which involved

critical decision making from the point of view of

the HR are illustrated below.

Sourcing and Hiring

To what extent will the company go about

hiring resources from outside to meet

business demands?

To what extent will the investment be made

in the recruitment process?

How to integrate the outside talent into the

organization’s culture?

Rewarding and Retaining

To determine the extent to which the efforts

of the employees are contributing to the

success of the organization?

How to design a variable compensation

structure to distinguish between the high

and low performing employees?

Training and Development

What is the level of training that needs to be

provided to make the employees competent

enough to face the challenges of the

business environment?

What will be the acceptance level from the

employees regarding the training

proposals?

Succession Planning

How to retain the tacit knowledge of the

employees within the organization?

How to design an effective knowledge

transition process for the organization?

Conclusion:

The alignment of the HR Strategy with the

business strategy is very much essential for the

successful implementation of organizational goals.

The HR Department has to maintain proper

coordination with the strategy makers from other

departments to develop an effective HR strategy

which will be able to translate the business

objectives into action. In this age where we are

facing talent crunch the responsibilities of the HR

Department is assuming paramount importance.

The HR Department has to keep the employees

engaged to the organization for the HR Strategy to

be effective. Therefore he has to face various

challenges and take key decisions while deciding

the strategy


Analysis of Indian

Wedding Planning Industry

Introduction:

Overview of Wedding Industry

India is considered to be one of the most sought-

after wedding destinations around the world.

Weddings in India are fast gaining popularity

among global citizens who flock to the country to

solemnize their wedding vows. It is growing at a

CAGR of 25% owing to lavish spending.

Currently, cost of a wedding may range from INR

0.5 mn to INR 50 mn. With India becoming a

wedding destination, foreigners are aggressively

contributing to a growing market. Increasing

disposable income is expected to double the

strength of the market in the next 15 years. Theme

based weddings and destination weddings are

some of the major trends that the market has

observed. Characterized by social features,

wedding industry manages to be resilient even to

vagaries of inflation and recession.

Market Overview:

Overview of Wedding Planning Industry

As wedding industry shoots with burgeoning

demand for lavish events, wedding planning

industry gets a boost for demand of organized and

structured planning services. Wedding planning

industry in India is estimated to be growing at

20% per annum.

by Rajesh Kumar, IIM Lucknow

Fig. Wedding cost break-up

Fig. Wedding market size in INR

Fig. Wedding planning market size in INR

Source: myeducationtimes.com “The Wedding Planner” Sep 2011


Wedding Planning Process Management

Primary Cost Components

This industry is also driven by increasing afflu-

ence and rising aspirations among consumers to

make their wedding unique and memorable. Time

constraints among consumers towards planning

and organizing weddings have been largely re-

sponsible for the growth in planners. Wedding

planners are more often seen to indulge in special

theme based marriages to give it an edge so that it

may stand out from the other marriages.

A wedding planner has to look at several primary

expenses to be incurred during a wedding.

However, expenses would vary across different

weddings depending on the arrangements with the

venue being a major cost factor. Some of these

expenses have been given below:

Source: dare.co “Planning someone’s big day” Jan 2008


Growth Drivers:

Increase in Disposable Income

The primary enabler for this sector remains rising

disposable income of the growing upper middle

class group. Lifestyles fuelled by better salaries

have led to increased spending on weddings.

Indian weddings are ostentatious affairs with

people showcasing their wealth and economic

affluence. It also marks tendency towards upsurge

of newer methods like destination weddings,

theme based weddings. Earlier such ways

remained within the domain of the elite, but with

increasing disposable income even the middle

class can now afford such luxurious spending.

Even for those who do not have enough resource

to fund their extravagant wedding, many financial

institutions like GE Money India have come up

with ―auspicious‖ personal loan exclusively for

weddings.

Destination Wedding

Driven by an appetite for ‗something unique‘,

destination wedding is fast becoming a fad.

Increasing numbers of Indians are planning on

getting married at exotic locations abroad, such as

Istanbul, Florence, Bangkok and Monte Carlo.

Resorts and hotels also offer wedding packages as

weddings also offer a holiday flavor to the people

who move out to attend weddings at distant

locations. Destination weddings require organized

planning thereby resulting in an increased demand

for wedding planners and planning market.

Destination wedding can have both people going

out as well as flying into India.

India

Most popular destinations chosen in India

are Rajasthan, Jodhpur, and Goa

Royal wedding party in a fort or palace or

even out-of-town wedding is a common

trend these days

Abroad

Most popular destinations abroad range from

Bali, Malaysia, Mauritius to Thailand

Chief reasons for their popularity stems from

the advantage of ‗cost effectiveness‘

Air tickets to these places are affordable,

added to this is the availability of Indian

cuisine

Time constraint and convenience

Weddings have become a grand affair which calls

for detailing to intricate aspects to make it a

successful event. Present day lifestyle does not

permit people with busy work schedules to devote

as much time as required. Wedding preparations

require attention to minute details which requires

professional assistance. The various facets of a

wedding are as follows:

Wedding venue and caterer

Invitation card printing and distribution

Decor and ambience

Bridal make-up and care

Shopping for wedding jewellery and

clothing

Entertainment requirements (singer, actors,

orchestra, bands etc.)

Honeymoon related travel ticket

procurement and hotel reservation

Impediments/Challenges:

Government regulations

Government regulations imposed on this sector

have acted as an impediment to the growth of this

sector. Various impositions have acted as

deterrents for this sector to grow with latest being

Government planning to restrict lavish food

spreads in weddings in face of food inflation.

Unfavourable wedding seasons and dates

Association of marriage with astrology heralds

unfavourable non-wedding season affecting


wedding planning sector. For Hindus, marriage is

held in high value and a lot of emphasis is given

to astrology. Dates are considered that meet

‗nakshatra‘ ‗tithi‘ and other astrological

considerations. This demarcates the year into

wedding season and non-wedding season,

especially for Hindus. Further, ‗raashis‘ (moon

sign) of bride and groom are also considered to

find suitable and compatible dates.

Limitation of wedding in terms of astrological

perspective:

Planets: Unfavourable planetary positions

heralds ill effects in a married couple‘s life

which causes fear among most Indians

Horoscopes: Horoscopes of brides and

grooms are compared before deciding on

dates for wedding

If in case of unfavourable planetary position or

even unfavourable matching of horoscopes occurs,

either the wedding get postponed or simply called

off. Thus, unfavourable dates for wedding acts as

a barrier to growth of wedding planning sector.

Industry Trends:

Theme Wedding

Theme weddings are weddings arranged and

executed based on certain themes chosen both by

the bride and groom. Themes are used to make

Source: guardian.co.uk “Indian weddings too big, says government” Feb 2011


special moments unique. Earlier themes revolved

around options of colours, motifs and any

particular style, but with increasing disposable

income and aspiration to stand out from the rest,

extravagant lavish set-ups have evolved. These

weddings are popular in the West but fast

becoming a rage among the affluent class in India.

Currently, following themes are most popular in

the Indian wedding industry:

Arabian theme

Royal theme

Romantic theme

Fairytale/fantasy theme

Online classified players diversifying into

wedding planning

There has been an upsurge of online matrimonial

sites that have begun providing additional services

other than match-making on the lines of wedding

planning services. Another trend speaks of online

matrimony sites having tie-ups with wedding

planners wherein such names get listed in their

directories.

Tie-ups of wedding planners with online marriage

classified players usher a symbiotic relationship

wherein both parties gain towards providing a

complete package of match-making and wedding

to customers. Therefore, players are increasingly

looking towards maximizing their coverage in this

sector:

Shaadi.com

It lists wedding planning services as a wing

under its service umbrella

Through ‗ShaadiPages.com‘, an online

wedding directory, it provides listing of

different caterers, florists, make-up artists,

decorators, musicians, DJ‘s and many more

Through Shaaditimes, a wedding portal, it

delves into ways to plan one‘s wedding

Bharat Matrimony

It goes beyond matchmaking services to

provide other related services like wedding

planning and honeymoon planning

‗Matrimony Directory‘ includes all such

services wherein it gives the listing of

wedding planners, contractors and

decorators

Wedding planning online software

Planning a wedding is a cumbersome affair which

wedding planners undertake. Software tools are

being developed that bridges the gap between

Wedding and the IT industry. An organized and

effective tool to manage the process is now in the

offering which merges wedding planning with

software tools. An effective method of making

wedding planning smooth, these tools are

spreading both in metropolitan and smaller towns.

This software allows customers to enjoy the

wedding by managing the entire event through its

customized solutions.

Shaadi-e-khas

Web-based wedding management software

that provides unique solutions towards

making the tedious planning process easier

It is available on every Smartphone and

offers 3 packages - Package includes a 30-

day free trial, silver (costing INR 2,500) and

gold (INR 5,000)

Application provides assistance to manage

guest lists, send invites, create checklists,

manage vendors and expenses, manage

RSVPs, develop images and video libraries,

print reports and many more management

features

Also, it has varied options including classic

and royal wedding themes at affordable

prices for customers

3-D Presentations

Wedding planners are now permeating innovative

ideas through technological advancements. 3-D is

now being used to deliver presentations in order to

give a more life-like feel of the event. Earlier what


used to be communicated through pen and paper

drafts has now transpired into 3-D formatted

delivery structure. This format primarily renders a

more lifelike picture of designs and décor of the

venue thereby giving more clarity to the idea

presented to the clients.

Key Players:

The competitive landscape of the Indian wedding

planning industry has following major players:

Exotic Indian Weddings

India Wedding Planner

Marry Me

Mystical Moments

Shaadi Online

Wedent Group

These players provide complete end to end event

management solution to their customers. This

allows the customers to focus on their core

business at the same time planners manage their

event. They not only cater to the rich but also

provide services for low budget wedding

affordable by middle class customers.

Recommendations:

Based on the in-depth analysis of the industry, one

can come up with the following recommendations

for the players of this industry:

They can look towards categorizing business

into different levels like premium, gold and

silver to focus on various customers

Maintain transparency by passing lists of

vendors and suppliers of resources to clients

so that they can view their work portfolio

Try to get testimonials and brochures printed

as word-of-mouth forms an effective means

of advertising

Look towards getting featured in ‗wedding

fairs‘ to increase visibility

Players should provide some discounts on

their services to early birds during wedding

season as a means of promotion

References:

Articles:

The Economic Times – ―New‐age wedding

celebrations catching the fancy of gen next‖ Mar

2011

www.retail.franchiseindia.com – ―The Flourishing

Indian Wedding Industry‖, Jun 2010

www.rediff.com – ―Destination dos replace the

Big Fat Indian Wedding‖ Feb 2011

Books:

McKinsey Global Institute – ―Rise of India‘s

consumer market‖, May 2007

Websites:

www.bigindianwedding.com


Executive Summary:

Business Analytics is the process of exploration of

an organization‘s data with the help of statistical

analysis. Analytics convert a huge amount of data

into highly valuable asset of an organization.

Today analytics is not just a support function

within a company; it has become a key framework

to understand significant pattern which help them

in complex decision making and taking insightful

action for future growth. The volumes of data

generated by the companies are increasing

exponentially. The volume itself has become a

major problem.

Executives worldwide are facing the same

problem of not getting the proper data when

needed. The data that can make a difference are

buried somewhere. Moreover business struggle to

gather real time information even though it‘s a

must as the companies have shorter time to react

to changes. The availability of quality analytics

help the organizations to react in real time. Hence

we see that with the increase in complexity of the

business, data analysis should be done on a regular

basis to improve business performance.

With the increasing need of incorporating

analytics into the business, the analytics

techniques have become more sophisticated. To

manage the huge volume of data, usage of

advanced statistical model is necessary to detect

relationships and trends. Today, companies also

use predictive analytics extensively. The term

refers to the process of successfully predicting

future events using statistics and data mining. It

enables corporations to identify opportunities and

risk of a business based on historical data.

Analytics is not too technical to master. It is a

group of approaches targeted at the business users

rather than IT people. These approaches are used

in combination of several tools to gather

information, analyze them and finally present the

findings.

The field of business analytics has shown a great

improvement over the past few years. Business

users are now able to get better insights from data

stored in transactional system. An example could

be e-Commerce application which has made data

mining a very effective analytical process.

Analytics application and business intelligence are

now better integrated with transactional system

than before. A close loop between operation and

analysis has been created. Mined information is

now available to be used by a large set of audience

which helps to take the advantage of analytics in

everyday activity.

Analytics can be used in the following activities:

Credit and Market risk in banks

Fraud detection and Financial crimes in

banks

Text fraud in public sector

Demand forecasting in manufacturing

Data Warehousing

Optimization of various activities in Retail

sector

Analytics and Beyond

by Sayak Gupta, SIMSR Mumbai


Core Performance Areas:

Core performance areas of Analytics are:

Economic: Use of analytics can optimize revenue

by predicting future trends. Non value added

services or products can be removed. This is

especially applicable in challenging economic

conditions.

Strategic: In future there may be changes in

business model, customer requirements, regulation

requirements, external environment etc. With the

application of analytics companies can analyze

their position with respect to these changes and

can take corrective actions if needed.

Operational: Companies can understand whether

they are using proper operational business model

for customers, vendors, regulators and vendors.

This will help to optimize the operational

efficiency.

Organizational: Analytics can also help to

achieve best management practices. Companies

can analyze employee satisfaction level,

usefulness of their compensation and reward

system, the corporate social responsibility the

company is undertaking. This will bring more

sustainability to the organization.

BI vs BA:

The focus of Business Intelligence (BI) is

improvement of data capture and information

delivery. It mainly concentrates on the distribution

of known facts. For example BI can say how many

transactions took place through credit card on a

given day. But it cannot say how many of those

transactions are likely to be fraudulent. BA, on the

other hand can provide answer to such questions.

It provides insight into almost all aspects of a

corporation‘s value chain by driving innovation.

Thus with the help of BA an organization will be

able to respond to the market more quickly and

hence it can insulate itself from environmental

changes.

There are basically two types of data: Structured

data and unstructured data. Structured data tells us

what customer did. They exist in database. BI is

useful for analyzing structured data. Unstructured

refers to the data that doesn‘t exist in database.

Unstructured data have significant business value

as it can tell us the reason behind a specific

customer action. Today most of the business is

carried out on unstructured data. But businesses

are unable to derive the right answer because of

inadequate technologies. BA can analyze the

unstructured data and transform it into actionable

intelligence.

Methodology:

Data are becoming more and more complex. There

are various types of data – Behavioural, Textual,

Geospatial, Graphical, Social etc.

The analytics model is base on 4 steps:

Structured and unstructured data management

throughout the lifecycle of the business

Transformation of the data into a consistent

source of information

Use of simple and advanced technique to gain

extra insight into the behaviour of the data

Making the result of the analysis available to

the process

The business analytics revolves around statistical

methods and for this reason it starts with

information logic designed for statistical data

processing. The complexity lies in the

representation of the objects to be considered for

data modelling. This is mainly because of the huge

volume of data available today. For this reason

there is a gap between desired information and the

outcome we‘re trying to see. The following issues

need to be taken care of in order to reduce this

gap:

The overall cycle time of collection of data,

analysis of data and the presentation of the finding

must be reduced.

Within this cycle, the time required to analyze

data should be reduced.


Business goals should be clearly defined.

Unclear goals and metrics can misguide the effort.

Quantitative findings should properly be translated

into language so that it can be distributed to a

broader range of business users.

Analytic Platform

Older technologies find it difficult to keep pace

with analytic advancements. Data warehousing

technologies are very slow. Sometime it takes

days to getting data. Cost of deployment and

maintenance is also very high. Data appliances

resolve these problems to some extent but it still is

unable to support advanced analytics. Data

appliance is useful as long as data is flat and the

workload is small. Analytic DB also can‘t run

complex workloads and advanced analytic

functions well. Hence a platform environment is

the need of the hour. A proper Analytic platform

should be able to integrate multiple data types, run

complex workloads and advanced analytic

functions. The platform should also be able to

empower users to perform various functionalities.

In short, the role of Analytic platform should be as

follows:

It should take less time to display the result

Increase the accuracy of the result

Reduce the operational cost to give a better

ROI

Offer new levels of innovation

Future of Analytics

In the upcoming years it is expected to have more

business investments in the field of analytics.

There are so many things to be done about

Analytics. By now it‘s clear how an ideal analytic

platform should be. But all the objectives are not

completed yet. We can expect more open source

platforms for advanced analytics and

implementation of predictive analytics into core

products. At the same time it might become

cheaper and as the vendor offerings will mature.

Most importantly analytics will diversify the

career options as it will become a distinctive field

in its own right. Hence, Analytics is surely going

to be a hot cake of this decade.

References:

Websites:

http://iianalytics.com/

http://www.information-management.com/

http://www.wikipedia.org/


Financial Derivatives, as the name itself suggests

are the nodes of the tree of financial tools. These

derivatives are some of the most mystique

concepts around in the financial world today as not

only are they quite misunderstood aspects, they

also have the ability to take a person into

unchartered waters if undertaken without any prior

knowledge. Their impact on society is a mingled

one as well, considering that in the past, they have

led to both unperceivable gains as well as

disastrous results.

However that does not mean that we should not

use these interesting tools. After all, human beings

have always learnt to bend around the rules of the

riskiest games and play with innovative strategies.

The same goes for these tools, albeit the

realization that the level of intelligence and

foreboding required might be on a higher note in

this case. If the planning and risk management

team takes into account the maximum perceivable

potential risks involved, then definitely financial

derivatives can go a long way to make the

organization or the individual pretty much on the

higher side. Here, I discuss some of my thought

out as well as improvised techniques to counter-

balance the involved impediments.

The Market in the world today is complicated

enough to give goosebumps to any freshman when

he enters the financial structure. Be it as a part of

an organization or an individual, nevertheless, we

realise the significance of innovative strategies to

improve upon the financial front yet somehow

some implicit policies lead us into dilemmas.

Discussing financial derivatives is no different.

Let us discuss the blessing these have bestowed

upon our society and also the impediments they

pose in front of us.

The most significant notion that comes up first of

all is the underlying assumptions behind these

tools. It is quite critical to understand them

explicitly as many of them might not seem so

direct at first when observed. One of them is that

the Market at present is frictionless taken for one

of the very obvious reasons that is - simplicity of

working. Hence, the derivatives don't take into

account various upheavals that might occur on

daily routines on account of the rivalries and

enmities in the corporate world. They do however

take into consideration some of the consequences,

like the variation of exchange rates and the arrival

of liquidity. There are further two assumptions that

keep us on the edge. They are - the interest rates

are fixed and that trading is possible at all times.

One of the most basic mistakes of the beginners is

that they don't register the criticality of these

assumptions. For example, hoping for a last

minute change in interest rates while

simultaneously operating under the forwards

contracts or any other such derivative is a major

pitfall of the undertaker.

Let us consider an economic model in which an

enterprise wishes to undertake a forwards contract

or a future contract. The primary pertinent

realisation that should come without fail is the

relation between risk, exposure and the financial

position in the deals involved. Regardless of the

type of stakeholder in question, this hidden aspect

that is sometimes treated as 'miniature and

insignificant' can actually lead to unexpected

turnovers. After this, comes a step of compromise

Financial Derivatives – Blessing in

Disguise or a Curse Camouflaged by Vikash Kumar, IMI New Delhi


in certain cases; one example can be swapping the

interest rates with banks for mortgage while losing

out on the possibility of windfalls due to lowering

of interest rates. In fact, compromises can be

avoided if we keep close watch on particular

figures arising from international trade and capital

flows leading to the extreme volatility in exchange

rates. Hence this inadvertently calls upon a need

for surveying the financial position in a

coordinated manner i.e. having a dedicated group

of people involved in this department for the

regularisation and accountability of the

organisation. To avoid too much delegation of

work into insignificant amounts and perceiving

that derivatives are quite easily replicable, I feel

that this department should protect against the

duplications of derivatives as well.

At the same time comes the point of Market

efficiency, which is elevated to a completely new

level by these financial tools besides simplifying

the information flow from the source to the end

user. Hence, one of the major concerns is to keep

the underlying terms as simplistic as possible so as

to avoid all the implicit losses that occur due to the

complexity of execution. Not only do we need to

reduce the interest rate exposure but also diminish

the foreign exposure and stock return volatility at

the same time, considering that around 20% - 30%

of portion of the annual turnover of some major

enterprises comes from stock returns. The work of

the common regularisation department can also be

extended to ease out the valuation of derivatives in

illiquid markets. This point becomes pretty much

significant as in this highly competitive world;

coping with long-term maturities is decently

difficult and this is one of the consequences of

incomprehensible derivatives or inability to

evaluate them. However, that does not mean

spending our time on those aspects that don't

generate measurable returns like the concept of

'Disclosure Requirements'.

Let us discuss some more guidelines that I feel

should aid a lot in battling the financial blues.

Primarily, terminologies should not bug anyone

down; one of the critical examples of this can be

that derivative trading is not the same as 'cash

investment'. The latter is much more simplified in

terms of the expected outcomes and returns, hence

calls upon for a pretty cautious approach while

dealing with the former. Another help towards the

cautious approach would be estimating the

potential risks from the previous years' derivative

portfolios as well as the liquidity risk

approximation. This comes as a late realisation

sometimes to the organisations when they are on

the verge of liquidation or closure from another

perspective. This has been the outcome of various

case studies as well. On the same lines, our stand

with respect to the banks should be lucid as well

as the Market does not always have enough

flexibility to accommodate the sales from all

banks or in other words, enough liquidity. In fact,

efficiency would result from utilising the various

types of stays provided by banks to avoid

problems on defaults and liquidity.

For those types of stakeholders who are thinking

of maintaining long positions on bonds, be aware

that hedging these against short interest risks

creates long-term difficulties even though the

results might not be visible in the immediate

moments. Hence what is required is a constant

evaluation of the company portfolio. This would

also be a backup in terms of managing the assets

in such a way so as to prevent losses due to sudden

liquidity. Some might ask that even though they

have such a sub-body in place within their

organisation and the risk - management has been

outlined as their major function, yet they suffer

some hidden losses. What I feel is that the sub-

body that they are talking about should be as

independent and should possess as much authority

and corporate stature as possible for it to give the

most effective suggestions and to remove all its

impedances while reporting possible risks and

defaults. In fact, the practice of structuring a risk

measurement function is a crucial step forward for

long terms stability. Not only this, quite many

corporations outline their returns in a risk adjusted

fashion so that the time and money for


backtracking and such other measures is kept at a

minimum. We can take a lesson from some

organisations like HUL that maintaing portfolios

of instruments or goods in collections is better in

many ways than maintaining the same for

individual goods.

Hence, we observe that we can easily reduce

quite many unsystematic risks by taking note of

some these active suggestions in an efficient

manner. What is needed is a collaborative

approach within the organisation so as to counter-

act all types of impediments and possible losses

from these financial tools termed 'derivatives'.

These tools can be effective means to serve the

society in a better way.

References:

Articles:

Parliamentary Research Service -―Derivatives:

Baring the Financial Risk‖ – (March 1995)

Linda Davies - ―Gambling on Derivatives‖ - Into

the fire

www.incinvest.com/insights-―Financial

Derivatives: Risk management and Trading

Efficiency‖

―The social functions of financial derivatives‖ –

RMCS Inc

Books:

Willem Thorbecke, George Mason University,

Department of Economics- ―Financial

Derivatives: Harnessing the Benefits and

Containing the Dangers‖


Housing Finance Market in India

by Ankit Goel, IIM Bangalore

Housing problems, particularly in developing, and

mostly, in developing and overpopulated countries

are very severe.

Most urban households cannot afford a decent

living space in a relatively well-connected

location. Consequently the results are:

1. Squeezing of households in highly dense

areas leading to security and hygiene issues

2. Living far from main cities into peripheral

areas / connected towns and wasting a lot of

economic resource in travel for employment

or other services

3. Renting space in slums or squatter

settlements

This is where the economic role of housing

finance comes in.

Provision of well-structured finance schemes for

the masses to enable affordability and deep

penetration is thus the major objective of Housing

finance.

Allied Objectives

1. Backward linked products: Housing finance

market is a very important contributor to the

production activity in any country because

its demand directly influences the demand

for its backward-linked products i.e. raw

materials (derived demand) like land

building materials, tools and labor.

2. Forward-linked products: These are the

financial markets. Often through

securitization, mortgage debts are offloaded

in the secondary market in the form of

securities, thereby increasing the efficiency

of domestic and international financial

markets. As proved in the recession of 2008,

housing markets are also a great leading

macroeconomic indicator of the financial

markets.

3. Developmental Impact: The developmental

impact includes provision of social

stabilityand promotion of economic

development which is directly affected by

level of maturity in housing finance markets.

Housing Finance Market Assessment for

developing countries – especially India:

From the micro economical point of view,

fluctuations in the housing finance market affects

the entire household since housing, in most cases,

is by value, the largest investment most people

make in their lifetime.

From the macro economical viewpoint too,

housing has a major impact on the economy as

was proved in the recent world economic crisis.

Also, it is a significant contributor to GDP in the

form of employment generation (direct and

indirect) and industrialization.

Strengths: Growing Economy

A lot has been written about India‘s growing

strength as an emerging nation. I would however,

still like to highlight the following points which

have been particularly conducive to the growth of

housing finance in India:

1. GDP growth rate averaging over 8% from

2003-2010

2. Rapid Urbanization, Rising middle Class

3. Increasing political stability with re-election

of last government

4. Forex Reserves over $250bn


5. 2nd Largest employment generated in

housing sector (after agriculture)

6. Fosters development of ancillary industries

via strong vertical linkages (forward &

backward)

7. US $110 bn market size

Although Housing finance in India, particularly, is

in a very nascent stage to be able to comment on

specific strengths driving its growth, I have

enumerated above some of the broad factors

responsible for the upcoming interest.

Opportunity: Demand & Supply of Housing:

With the growing GDP of most nations and

particularly India, the demand-supply gap of

housing has reached all-time

highs.

In most markets, the only

available financing resources to

the poor and middle-income

groups are:

a) Minor Savings

b) Sale of assets

c) Borrowing from relatives or employers

d) Inheritances

e) Loans and savings from money lenders

f) Microfinance Loans

Analyst Research has shown that around 10 to 20

percent of all microfinance loans taken for

business, education, agriculture and emergencies

are actually being diverted for housing purposes.

In some cases the figure is as high as 80 percent.

This is infact major evidence in support of the

growing demand for housing finance.

Currently, the only options available to the poor

for financing are micro credits which

unfortunately are inappropriate for housing

purposes since they are very short term in nature

and interest rates for this purpose are sky-

rocketing. Apart from this, the poor are also in

need of allied professional services like budgeting,

building and monitoring since they inevitably end

up either overspending or with much lower quality

houses.

Some housing finance products have currently hit

the market in India, However, since the market is

in its nascent stage many are missing achievement

of the right balance between providing an

adequate long term for repayment and installments

to be paid. Volumes, which we believe is a key to

success in the housing finance market (since the

default risk is fairly spread), will not be attainable

till the products incorporate the suggestions in this

paper, mainly the long term maturity needs.

Now, let us enumerate as to what can be the

requirements of a good housing finance market.

Table 3: Requisites for an attractive housing finance market

Thus, in my opinion, the South-East Asian, and

particularly the Indian and Chinese market, there

is a set base for the development and flourishment

of housing finance business. The market though is

still in its nascent stage, is still quite large, and is

only expected to ahead in upwards direction in the

future.

Indian Market: The major problem plaguing the

Indian housing industry is the consistent demand-

supply mismatch in housing as pointed out earlier.

The shortage was 23.3 million units in 1981,

22.90million in 1991, ~20mn in 2001 and so on.

Although a clear downward trend has been visible

the fact is that the rate of closure of this gap has


been decreasing over time. The recent figures in

this respect are worse.

Moreover, the growth rate in urban areas is clearly

above that in rural areas, signifying that

urbanization phase India is currently undergoing

with more and more people migrating from the

rural to urban areas.

Thus, there is a huge demand-supply disconnect

here.

We see that whereas a huge demand for housing

finance exists in India, the mortgage/GDP ratio,

which is a key indicator of Housing finance

penetration, is one of the lowest in the world.

This naturally is a great opportunity waiting to be

tapped

Weaknesses

My analysis and the information I collected

through my talk with the managers of HDFC and

Axis Bank has revealed 4 levels of challenges

faced by these companies:

A. EXTERNAL FACTORS

The major risks involved in case of housing

businesses is

a) Infrastructure Issues: Insufficient basic

infrastructure like lack of uninterrupted and

cheap supply of raw materials, labor and

space or lack of sanitation can spell doom

for the housing sector.

b) Government Attitudes: If the government

is favoring an indirect promotion of housing

among people, in this case it will extend

support to housing finance companies

through credit relaxation, reserve relaxation

and so on.

On the other hand, if government directly

participates in the housing finance market

through the issue of housing finance

products, there can be no greater bad news

for an already established housing finance

player.

B. INTERNAL FACTORS

a) Lack of capability: Lack of capability as

identified by me is multidimensional but

stems from a common cause of the housing

finance company not being able to judge the

required parameters properly. These are as

follows:

i) Difficulties in matching terms of

assets and liabilities : Since the

sources of deposits are mostly short

term in nature for commercial and

other banks whereas housing finance

products are mostly long-term in

nature

ii) Tools to provide for product

development and evolution: Various

tools like internal MIS data of

customers and their credit-worthiness,

product experts, leadership etc are a

prerequisite for product development

in housing finance.

Housing finance companies have a

major problem in the sense that they

might not have the required access or

the capability (as we move to more

and more complex housing products)

Estimated Housing Shortage in India (2007)

Rural 14.1 mn units

Urban 10.6 mn units

Table 4. Estimated Housing Storage in India

Figure 4: Risks and Challenges in Housing Finance


to maintain such a database.

b) Policy Constraints:

i) ForexRisk : Most HFC‘s turn to

foreign loans in order to refinance the

loan burden extended by them. This

exposes them to foreign currency risk.

ii) Default Risk: In most cases, farmers

and other lower income group people

fail to provide any sort of adequate

security. Also, in case of farmers we

notice that agricultural land can hardly

be mortgaged since in most rural areas

clear demarcation of land does not

exist.

Even if land was distinctly

demarcated, land transfer charges are a

big hindrance in acceptance of land as

security.

Threats: Competition in Housing Finance

Sector:

The following are providers of housing finance in

India, in one form or another:

1. Commercial Banks: is the largest mobiliser

of savings and also in respect of coverage.

Their role has traditionally been limited to

providing the working capital needs of

business, industry and commerce and hence,

they have not been very active participants

in the housing finance market. Another

reason for the same is that they are funded

by short-term resources which cannot be

profitably employed in long term lending.

Hence competition from Commercial banks

is very low especially because of their

inability and lack of specialization in

providing tailor-made financing needs for

various households.

2. Cooperative Banks: A lot of reluctance has

been noticed by these cooperative banks to

provide loans for housing finance. Our

analysis states the major reason for this is

the high risk and illiquidity in giving

housing loans from common corpus.

Hence, even cooperative banks do not offer

any significant competition in housing

finance.

3. Regional Rural Banks: Again, they have

not been very active in housing finance

sector because of the large amounts and low

creditworthiness involved in leading to

illiquidity and losses.

4. Agricultural and Rural Development

Banks: The major function of these banks

again is not the provision of housing

finance. Consequently, there is low threat

from these too.

5. Housing Finance Companies: These are

companies with principal objective of

lending for housing finance. However, the

noticeable aspect my research has revealed is

that there are only about 20 companies

accounting for greater than 90% of total

housing loans provided.

Hence the industry is very fragmented and

given the high demand for housing credit,

there is very little fight for market share with

these.

6. Cooperative housing finance societies:

These are specialized institutions established

and subsidized by NHB to cater to the

housing needs of the masses. They are

established at the State (Apex) Level and

retail level.

These institutions do not have adequate

technical expertise to be able to design the

right product for the right target. However,

the state subsidy is a major factor in their

favour.

Thus, the housing finance market competition in

India can be summarized as follows:

Organizations providing Threat Commercial Banks Medium Cooperative Banks Low

Regional Rural Banks Low Agricultural and Rural Devel-

opment Banks Low

Housing Finance Companies High Cooperative housing finance

societies High


Summary:

Clearly, from the above analysis we can

understand that Indian housing finance market is

in its nascent stage of development. Since this is

a new formed market for a hitherto unaddressed

product, there will be huge first mover

advantages. The drawbacks stem only from the

event of unfavorable policy changes or uneven

competition from state. Both the drawbacks are

relatively unlikely on the basis of government‘s

current policy trends.

Hence, we conclude that the Housing Finance

market in India is very attractive and forms a

good case for investment.

From the above, we can now draw an Industry Analysis Map as follows:


INFRASTRUCTURE: THE ROOTS OF GROWTH FOR

EMERGING MARKETS:

“When you don't invest in infrastructure, you are

going to pay sooner or later"

Mike Parker

“Infrastructure, in general, defined as the set of

interconnected structural elements that provide

framework supporting an entire structure of

development”

A well-knit and coordinated system of transport

plays an important role in the sustained economic

growth of a country. It also helps a nation develop

a stature in today‘s world where globalization is

the buzzword. Evidence also suggests that creation

of infrastructure, through its direct and indirect

effects, has a significant impact on poverty

reduction.

Now when the need of infrastructure is defined, its

working is a mandate to be discussed. To

accelerate the pace of infrastructure development

Government has taken the initiative and has

started a host of projects and schemes with the

sole motive to upgrade physical infrastructure in

all crucial sectors.

In the Indian context, though there has been some

improvement in infrastructure development in

transport, communication and energy sectors in

recent years, there are still significant gaps that

need to be bridged. The current economic

slowdown provides an opportunity for countries

like India that have a substantial degree of unmet

infrastructure requirements. This is reinforced by

the understanding that spending on infrastructure

has large multiplier effects.

INDIAN ECONOMY:

Post Independence Era (1947-1975):

Indian Economy was known to be an agrarian

economy wherein the major part of the revenue, to

an extent of 70%, was generated from the

agriculture sector. The main objective of planning

in India at this stage was to initiate a process of

development which will raise living for a richer,

more varied life. The sole problem of

development of an under developed economy is

one of utilizing the potential resources available to

the community effectively. An underdeveloped

economy is characterized by the co-existence of

unutilized or underutilized manpower on the one

hand and of unexploited natural resources on the

other.

Indian economy, post independence, was

somewhat more focused towards increasing the

investment the reason being accounted to the fact

that being a fresh, new economy freed from the

British Raj it was necessary for the government to

stabilize itself so as to control its economy in

future. A somewhat low rate of capital formation

India Infrastructure: A boon

or a bane?

by Niraj Satnalika, IMT Ghaziabad

http://www.1-famous-quotes.com/quote/371449

http://www.1-famous-quotes.com/quote/371449


might have been adequate for countries like the

U.K. and the U.S.A., wherein the modern

industrialization took root early. On the other side

the under developed countries which make a late

start have to aim at comparable development

within a briefer period.

The First Five Year Plan involves an outlay on

development by public authorities of around `

2069 Crores over the period of 1951—56. The

main considerations that have been taken into

account are:

1. Need for initiating a process of development

that will form the basis of the much larger

effort needed in the future

2. Total resources likely to be available to the

country for the purpose of development

3. The close relationship between the rates of

development and the requirements of

resources in the public and in the private

sectors

4. The necessity of completing the schemes of

development initiated by the Central and

State Governments prior to the

commencement of the Plan ; and

5. The need to correct the maladjustments in

the economy caused by the war and the

partition.

Following the budgetary plan formulated by the

Planning Commission, since its inception in the

year 1950, for the year 1951-1956 which is the

First Five Year Plan of and for the Indian

Economy. It is seen from the chart that a major

portion of the plan was focused on areas like

agriculture and irrigation.

Thus we can see that Indian economy was not

focused into infrastructure development rather the

development of the economy so as to ensure

utmost utilization of the resources.

During the period of 1947-1965, the rate of growth

of the Indian economy in the first three decades

after independence was derisively referred to as

the Hindu rate of growth by economists, because

of the unfavorable growth rate. Since 1965, after

the number of revolution in the agricultural sector

like the Green Revolution, Yellow Revolution or

the White Revolution which enhanced the use

Sector Amount

Agriculture 360 Irrigation 561 Transport and Communica-tions 497 Industry 173 Social Services 339 Rehabilitation 85 Miscellaneous 51 Total 2066

Table 1: Sector wise Plan for 1st Five Year Plan

Chart 1: Sector wise Plan for 1st Five year Plan (% wise)

http://en.wikipedia.org/wiki/Hindu_rate_of_growth


of high-yielding varieties of seeds,

increased fertilizers and

improved irrigation facilities collectively

contributed to the improved condition of

agriculture by increasing crop productivity, crop

patterns and strengthening forward and backward

linkages between agriculture and industry.

Liberalization of Economy (1991):

Liberalization Period- Is it liberalized or

Paralyzed?

The major breakthrough in the economy came

during the year 1991, when Dr. Manmohan Singh

served as the Finance Minister and incorporated

the Policy of Liberalization, Privatization and

Globalization. In 1991, after India faced a balance

of payments crisis, it had to pledge 67 tons of gold

to Union Bank of Switzerland and Bank of

England as part of a bailout deal with

the International Monetary Fund (IMF). In

addition to the bailout, IMF required Indian

government to undertake a series of structural

economic reforms. As a result of which, the

government of P. V. Narasimha Rao and

finance minister Manmohan Singh started

breakthrough reforms.

The new neo-liberal policies included

Opening for international trade and

investment,

Deregulation,

Initiation of privatization,

Tax reforms, and

Inflation-controlling measures

The main objective of the government was to

transform the economic system from socialism to

capitalism so that a high economic growth is

achieved and industrialization can be seen in the

nation which was, at the end of the day, intended

for the well-being of Indian citizens. Today India

is mainly characterized as a market economy.

Following is the chart of trend of gross domestic

product.

Figure 1 Timeline of Development of Indian Economy

Comparison Year GDP w.r.t year 1975 w.r.t year 1990 1975 8,42,210 1 0.151949 1980 13,80,334 1.638943 0.249036 1985 27,29,350 3.2407 0.492422

1990 55,42,706 6.581145 1 1995 1,15,71,882 13.7399 2.087768

2000 2,07,91,898 24.68731 3.751218

Table 2: India’s GDP

http://en.wikipedia.org/wiki/Hybrid_seed

http://en.wikipedia.org/wiki/Fertilisers

http://en.wikipedia.org/wiki/Irrigation

http://en.wikipedia.org/wiki/P._V._Narasimha_Rao

http://en.wikipedia.org/wiki/Manmohan_Singh

http://en.wikipedia.org/wiki/Neoliberalism

http://en.wikipedia.org/wiki/Deregulation

http://en.wikipedia.org/wiki/Privatization

http://en.wikipedia.org/wiki/Economic_system

http://en.wikipedia.org/wiki/Socialist_economics

http://en.wikipedia.org/wiki/Market_economy


The figures itself shows how the GDP of the

economy in 2000 grew by more than 24 times

than that of the GDP in the year 1975. Thus the

trio policy of LPG came out to be a boon for the

nation where in the infrastructure was also taken

care of in the second generation reforms. The In-

dian economy which generated around 70% of its

revenue from the agriculture sector has now

turned the scenario with the services sector taking

the lead with 57%.

Sector Contribution (%) Agriculture 14.9 Services 56.6 Manufacturing 28.5

Total 100

Sector Workforce Agriculture 52 Services 34 Manufacturing 14

Total 100

Table 3: Sector wise contribution to GDP

Chart 3: Sector wise contribution to GDP (Percentage)

Table 4: Sector wise workforce distribution

Chart 4: Sector wise workforce distribution

In the past, development of infrastructure was

completely in the hands of the public sector which

was characterized by:

Slow Progress,

Poor Quality, and

Inefficiency

Infrastructure deals with the availability of power,

construction, transportation, telecommunication or

real estate etc.; it was seen that India's low

spending on these categories at $31 billion or 6%

of GDP in 2002 had prevented India from

sustaining higher growth rates. With changing

policy and reforms, certain minimal infrastructure

was required in order to sustain the pace of

development. This has prompted the government

to partially open up infrastructure to the private

sector allowing foreign investment, and most

public infrastructure, barring railways, is today

constructed and maintained by private contractors,

in exchange for tax and other concessions from the

government.

Electricity: As of 2006-07 the electricity

generation capacity was at 652.2 kWh,

against an installed capacity of 128400 MW.

In 2007, electricity demand exceeded supply

by 15%. Major notable lacks of

infrastructure in electricity dimension can be

Some 600 million Indians have no


electricity at all

80% of Indian villages have at least an

electricity line, wherein just 44% of

rural households have access to

electricity

The stolen electricity amounts to 1.5%

of GDP

The reforms brought about by the Electricity Act

of 2003 caused the separation of generation,

transmission and distribution aspects of electricity,

abolishing licensing requirements in generation

and opening up the sector to private players,

thereby paving the way for creating a competitive

market-based electricity sector.

Water Supply: Notable improvements in

water supply infrastructure, both in urban

and rural areas, have taken place over the

past decade. The proportion of the

population having access to safe drinking

water has risen

considerably as

shown below:

However, quality and availability of water supply

remains a major problem even in urban India, with

most cities getting water for only a few hours

during the day.

Transport: India has the world's third

largest road network, covering about

3.3 million kilometres and carrying 65% of

freight and 80% of passenger traffic. In

terms of road length, India has one of the

largest road networks in the world. The

national highways account for less than 2%

of the total road network but carry 40% of

the movement of goods and passengers.

Telecommunication: India has a

national teledensity rate of 67.67% with

806.1 million telephone subscribers, two-

thirds of them in urban areas, but Internet

use is rare—there were only 10.29 million

broadband lines in India in September 2010.

Thus we can see that India after getting liberalised

has developed to a great extent in terms of

infrastructure wherein the country which didn‘t

had metalled roads is now having one of the

largest and dense transport system including all

the roadways, railways, airways and yes not to

forget the waterways.

Approach to 12th Year Plan:

The Indian economy which is now on the verge of

releasing the Twelfth Five Year Plan for the

period of 2012-2017, which can be characterized

by strong macro i.e., the overall fundamentals and

is also characterized by a successful and good

performance over the ongoing Eleventh Plan

period. At the same time looking at the other side

of the coin the economy can be seen clouded by

some slowdown in growth in the current year

which can be accounted to the fact of continuously

growing concern about inflation and a sudden

increase in uncertainty about the global economy.

Plan of Action:

The twelfth year plan commencing April 1, 2012

projects a total investment of Rs 41 trillion (at

2006-07 prices) in infrastructure. This would

account to approximately 10% of India‘s GDP

Table 5: Change in Water Supply

Year Rural Urban

1991 66%

82%

2001 91% 98%

http://en.wikipedia.org/wiki/Electricity_Act_(2003)

http://en.wikipedia.org/wiki/Electricity_Act_(2003)

http://en.wikipedia.org/wiki/List_of_countries_by_road_network_size

http://en.wikipedia.org/wiki/List_of_countries_by_road_network_size

http://en.wikipedia.org/wiki/Indian_Road_Network

http://en.wiktionary.org/wiki/teledensity_rate


during the period and is twice the targeted levels

during the eleventh five year plan. Following is

the brief intended plan of financing of

Infrastructure projects during the plan. The

Sources of Financing is categorically divided into

the Equity and Debt Financing.

Sources of Equity Finance Corporates' internal accruals 329 IPOs 93 Private Equities 65 FDI 74 QIP 17 Shortfall 135 Total available sources 578 Total requirement 713

Table 6: Source of Equity finance

Chart 6: Source of Equity finance Percentage)

All figures in ` ‘000 Crore

The equity financing includes IPO‘s, private

equities, Foreign Direct Investment or the QIP

(Qualified Institutional Placement). The equity

finance, as per the Planning Commission

projection, is expected to raise around 29% of the

total amount chart projected for financing

inclusive of both debt and equity.

Key Challenges:

There are several other external challenges arising

from the fact that the current stature of the global

economic environment is less favorable than it

was at the start of the Eleventh Plan. The global

slowdown and the European Crisis along with the

fear of the double dip recession have added fuel to

the fire. Apart from this, the downgrading of US

economy from it‘s ever since AAA to AA+ by the

Standard & Poor‘s have done the remaining icing.

These global challenges call for renewed efforts

on multiple fronts.

Performance and Key areas:

As far as the Indian economy performance is

considered it has performed well on the growth

front which is 8.2 percent as seen in the first four

years where as the growth in the final year of the

Eleventh Plan saw a growth of 8.5 percent in

Sources of Debt Finance Commercial banks 931 NBFCs 168 Insurance/pensions 116 ECB 179 Private Placements 158 Shortfall 230 Total available resources 1552 Total requirements 1782

Chart 7: Source of Debt finance (Percentage)

Table 7: Source of Debt finance


contrast to the projected 9 percent.

This slight underperformance can be owed to the

strong rebound from the crisis thus the actual

growth in 2011‐12 is likely to be around 8.0

percent which would lead to achieve an average

GDP growth of around 8.2 percent over the

Eleventh Plan period, lower than the targeted 9.0

percent, but better than the 7.8 percent growth as

seen in the Tenth Plan.

This increase accounted for an increase of nearly

35 percent in per‐capita GDP. The slowdown in

2011‐12 is a matter of concern, but can be

reversed if the investment climate is turned around

and if fiscal policy is strengthen alongside.

One of the major shortcomings of 11th Plan was

inadequate infrastructure which resulted as a

major constraint on rapid growth of the economy.

The Plan had, therefore, emphasized the need for a

massive expansion in investment in infrastructure

based on a combination of public and private

investment, the latter through various forms of

public‐private‐partnerships. The total

investment in infrastructure which includes roads,

railways, ports, airports, electricity,

telecommunications, oil gas pipelines and

irrigation is estimated to have increased from 5.7

percent of GDP in the base year of the Eleventh

Plan to around 8.0 percent in the last year of the

Plan. A large number of PPP projects have taken

off, and many of them are currently operational in

both the Centre and the States.

As far as Urbanization is concerned as compared

to other developing countries, India has been slow

to urbanize, but the pace of urbanization is

expected to accelerate over the next two decades.

According to the 2011 Census an increase was

seen in the urban population from 27.8 percent in

2001 to 31.2 percent in 2011, and is likely to

exceed 40 percent by 2030. This would generate a

heavy demand for better quality infrastructure in

urban areas, especially water, sewerage, public

transport and low cost housing. Since it takes time

to create urban infrastructure, we must introduce a

sufficiently long term focus on urban planning in

the Twelfth Plan.

Public Private Partnerships (PPP) in

Infrastructure

With the government spending or investment

becoming a constraint, the Public Private

Partnerships (PPPs) are increasingly becoming the

preferred mode for construction of infrastructure

projects, both in developed and developing

countries. The adoption of standardized

documents such as model concession agreements

and bidding documents for award of PPP projects

have streamlined and accelerated decision‐

making by agencies in a manner that is fair,

transparent and competitive.

How PPP has affected?

India currently has 1,017 PPP projects

accounting for an investment of Rs. 486,603

Crore. According to the Private Participation in

Infrastructure (PPI) database of the World Bank,

India is second only to China in terms of number

of PPP projects and in terms of investments, it is

second to Brazil.

Few PPP Projects:

Major PPP projects undertaken thus far are: Delhi,

Mumbai, Hyderabad and Bangalore airports; 4

ultra‐mega power projects at Sasan (Madhya


Pradesh), Mundra (Gujarat), Krishnapatnam

(Andhra Pradesh) and Tilaiya (Jharkhand);

container terminals at Mumbai, Chennai and

Tuticorin ports; 15 concessions for operation of

container trains; Jhajjar power transmission

project in Haryana and 298 national and state

highway projects.

There have been 758 PPP projects in main sectors

of focus where a contract has been awarded and

projects are underway – in the sense that they are

either operational, have reached construction

stage, or at least construction/implementation is

imminent. The total project cost is estimated to be

about Rs. 383,332.06 Crore.

Conclusion:

Thus we can see that there is a drastic change in

the Indian Economy since Independence and a lot

has been done towards the development of the

Nations‘ Infrastructure but still a lot more needs to

be done. According to the report published by the

standards and poor‘s, it is said that lack of

infrastructure on the face of Transport and lack of

funding is a hindrance to the growth of Indian

Economy. The report says that the inadequate

infrastructure is a major roadblock for the

country‘s economic development and if the same

condition prevails the forecasted economic growth

for the coming twelfth five-year plan would be

impossible to achieve.

S E C T O R W I S E F I G U R E S Sector Total Num-

ber of Pro-

jects

Based on

100 Crore

Between 100 to

250 Crore

Between 251 to

500 Crore

More than

500 Crore

Value of

Contracts

Airports 5 - - 303.0 18,808.0 19,111.0 Education 17 424.2 365.5 460.0 600.0 1,849.7 Energy 56 337.6 934.0 3,083.0 62,890.0 67,244.6 Health Care 8 315.0 343.0 275.0 900.0 1,833.0 Ports 61 86.0 1,745.3 4,304.8 74,902.1 81,038.2 Railways 4 - 102.2 873.0 594.3 1,569.6 Roads 405 4,364.6 11,696.5 38,520.5 122,143.3 176,724.9 Tourism 50 1,132.6 1,503.5 800.0 1,050.0 4,486.1 Urban De-

velopment

152 2,812.0 3,136.9 6,688.2 16,838.0 29,475.0

Total 758 9,471.9 19,826.9 55,307.5 298,725.8 383,332.1

Source: Planning Commission


What keeps IndiGo Going

By Rubayet Chakraborty | Ahana Chakraborty, NITIE Mumbai

Simple. Crisp.

It will put a smile on your face.

IndiGo has

consistently

maintained its image

as a friendly, hip

airline. Everything

starting from its logo

to its banner

advertisements tells

us something that

makes us smile. The

vehicles it uses to

carry luggage are

labelled ―CarGo‖, in

sync with the name

―IndiGo‖. The air-

sickness bag says

―Get Well Soon‖.

Instead of an in-flight

magazine, it has a

shopping catalogue with interesting

IndiGo branded curios. The picture on

the left shows a USB drive with a

disclaimer: ―This item can cause

jealousy‖! IndiGo‘s on-your-face

communication has effectively broken

clutter and grabbed the attention of all.

In today‘s turbulent airline industry

this is perhaps what has kept IndiGo

soaring high.

The airlines industry of India has been

in the limelight for quite some time

now – though for the wrong reasons. Rising fuel

prices and interests have caused most airlines to

run into deep financial trouble. The industry has

accumulated losses of nearly Rs 15,000 crore in

2010-11. Leading the

pack is the national

carrier Air India,

followed by private

sector Kingfisher

Airlines. The only airline

that has managed to

make profits during

these tough times is

IndiGo. It has managed

to increase its market

share to almost 20%,

securing the position of

the largest low-cost

airline in India. Owned

by InterGlobe Aviation

Pvt. Ltd, in fact, IndiGo

has announced a buy

order for 180 aircraft

worth $15.6 billion from


the European manufacturer Airbus.

So what is it that IndiGo does to keep its books

green? Rigorous cost control in the form of paid-

for meals, high aircraft utilization and tightly

framed maintenance contracts have been some

methods. However, what has really caught the eye

of customers is its branding. IndiGo is a brand that

talks – to its crew members and passengers alike.

In its communication about new flights and

services, IndiGo has been very imaginative.

Advertisements such as these grab eyeballs. The

benefit of extra leg-room was effectively

conveyed through the image of the comfort a

leggy supermodel would enjoy.

New flights to smaller destinations were promoted

through witty print-ads. IndiGo‘s regional

advertising was the feather on the cap.

Late last year, IndiGo launched a fresh campaign

to communicate its new international operations.

The TV Commercial is like a runway musical, set

in the Broadway Style. The lines ―Our service is

so popular, we're flying international‖ and ―we

will remind ourselves for one more time with each

and every single flight, we're here to be the model

of a modern global airline" truly captures the cool

quotient of the airline.

Figure 1: Source DGCA Report


At a time when the airline industry has been

facing a severe shortage of pilots and crew,

IndiGo has managed to attract applicants through

sheer humor. One of its advertisements for hiring

pilots looked like this:

IndiGo has also very successfully positioned its

cabin-crew profile by associating a glamour

quotient with it. Advertisements seeking new crew

members communicate the message that the crew

are not merely plain air-hostesses, but are as

glamorous as supermodels. This creates an

aspirational value in the minds of job applicants.

The ―Miss IndiGo‖ badges sported by the air-

hostesses assure passengers time and again that

the crew serving them is indeed special.

IndiGo‘s has not spared its rivals. Capitalizing on

Kingfisher‘s financial distress it announced that it

continued to exceed consumer expectations in

terms of service quality and pricing both in "good

times and bad". The cheeky advertisement was

captioned ―Let the bad times roll‖, which was a

direct attack on Kingfisher airlines and its tagline

―Fly the Good Times‖.

Charred by IndiGo‘s innovative communication,

Kingfisher has answered back.

Needless to say, we just love to wait, watch and

laugh.

References:

Images: google.com/images


Introduction

`Does the stock market overreact?' De Bondt and Thaler in 1985 gave start to a new wave of thinking

known as behavioural finance. Weak form inefficiency of the stock market was discovered by them after

analysing how people are systematically overreacting to unexpected and dramatic news events which were

surprising and profound. The Efficient Market Hypothesis as proposed by Fama (1970) asserts that the

stock prices reflect the relevant information. The asset prices follow a random walk path i.e. they are

merely random numbers. The study conducted by Caginalp G. and H. Laurent (1998) by the predictive

power of price patterns finds patterns and confirms that they are statistically significant even in out-of-

sample testing and report.

The pattern of the stock index might help in predicting some of the effects of the various events. The

calendar anomalies tends to exist which goes against the efficient market hypothesis. The researchers have

used Gregorian calendar to investigate the calendar anomalies. There are various countries and societies

which follow their own calendar on the basis of their religion. For example, the Hebrew calendar is

followed by the Jewish society, which is strictly based on luni-solar, the Christian society follows the

Gregorian, which is based on solar, and similarly Hindu and Chinese follow their own.

The Hindu calendar is called ―Panchanga” and it is based on both movements of the sun and the moon.

The festival of ―Diwali‖ is typically occurs at the end of October and beginning of November.

The special ritual called ―Mahurat Trading‖ can be observed on major stock exchanges like NSE, BSE,

NCDEX to name a few lasts for about an hour. It is performed as a symbolic ritual since many years. It

marks a link with the rich past and brokers look at it on a positive note. It marks an auspicious beginning to

the Hindu New Year. The investors place token orders and buy stocks for their children, which are

sometimes never sold and intraday profits are booked, however small they may be. Thus, it is widely

believed that trading on this day will bring wealth and prosperity throughout the year.

It is interesting to observe the behaviour of trading activities during the period preceding and succeeding

Mahurat Trading. The purpose of this study is to know the effect of the festival prior and post diwali on the

the returns.

Econometric methodology

I have measured stock return as the continuously compounded daily percentage change in the share price

index (S&P CNX NIFTY) as shown below:

Rt = (lnPt – lnPt-1) x 100 …………………… (1)

Where, Rt = return at time t

Pt, Pt-1 = closing value of the stock price index at time t, t-1.

I have used S&P CNX Nifty as it has got the most liquid stocks in its portfolio. Further, the National

Stock Exchange is largest in terms of Market capitalisation and Volume. I have used the data of the

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