Finance Glossary

Letter of Credit: A letter from a bank authorizing a person to draw money from another bank.


Pro forma Invoice: An invoice or request for payment sent in advance of goods supplied.


Waybill: List of goods and shipping instructions; bill of lading.


Bill of Lading: List of goods and shipping instructions.


c. & f. - cost & freight: includes shipping to named port but not insurance

Fabindia finding difficult to balance social, business interests

As William Bissell prepares Fabindia for an IPO sometime in the future, he will have to wrestle with the task of reconciling the interests of two diverse sets of shareholders - poor artisans on the one hand and a global luxury brand on the other.

Artisans from 212 districts supply all the ethnic garments and other similar merchandise stocked in 162 Fabindia stores across the country.

They artisans have helped Fabindia become one of the most profitable retailers in the country with revenues of about Rs 500 core and net margins of around 8-10%. Other retailers average half of that. Today, 17 companies in which artisans own at least 26% equity are the exclusive suppliers to Fabindia. They are not shareholders in Fabindia yet, but Bissell says artisans will be a 'large shareholder constituency' when the company eventually goes public.

L Capital, the private equity arm of LVMH - Moet Hennessy Louis Vuitton - the word's largest luxury goods group, will soon be another shareholder. L Capital is waiting for FIPB nod to invest 120-crore in Fabindia for an 8% stake - the deal will value the company at Rs 1,400-crore.

The two are as incompatible as roti and caviar. And yet, Bissell believes Fabindia, a 'social enterprise' founded by his father John Bissell in 1960, can meet the diverse aspirations of both shareholders equally well.

He sees L Captial's entry as a "source of strength" for rapid future expansion. The PE investor will not undermine artisans, but help create more value for them in the long run. This deal, he adds, will help benchmark the value of the company, helping it raise money to finance growth. "L Capital respects our long term view," Bissell says.

"It may be a question of perception management. People don't understand that an investor or shareholder doesn't necessarily run a business."

Fabindia's unique model that blends commercial interest with a social objective is what attracted L Capital, according to Ravi Thakran, managing partner, L Capital. "It has a potential to become a global leader and we'll be glad if we could help it scale to that level," he told ET in an earlier interview.

Others aren't so sure the two can tango. If Fabindia has managed to strike a balance between social objective and profitability, that's because dominant shareholders Bissell and family are fully aligned to the company's social mission. But some fear that PE investors - Azim Premji Invest also picked up 7% stake in the company this March - may come in with their own set of demands, diluting Fabindia's social agenda. After all PE funds work on the single objective of value creation.

Surprisingly, Vijay Mahajan, founder & chairman of Basix, pioneer in Indian microfinance, isn't one of them. "Most PE investors are sensible people who carefully evaluate a business and the entrepreneur and will do little to disturb their natural tendencies," he says.

"There is no way PE can dilute Fabindia's values or social objectives unless William would like to change those."

India's health sector facing many challenges, says Apollo chairman Dr Prathap Reddy

Observing that the country's healthcare sector faces many challenges, a top Indian corporate leader has emphasised on the need of greater co-operation between India and the US in this area to transform healthcare delivery through Information Technology.

"The three biggest challenges India faces in the healthcare sector are: the paucity of hospital beds for people (1 bed for 1050 people, as against 1 bed for 250 people in the US); the lack of skilled health human resources; and the rise in both infectious and non-communicable diseases," Dr Prathap Reddy, chairman of the Apollo Group of Hospitals said.

Speaking at an interactive session, 'US and India: Innovating Health Care' organised jointly by the Confederation of Indian Industry (CII) and the Center for Strategic and International Studies (CSIS), Reddy pointed out that India is facing alarming numbers of cases of heart disease, cancer and diabetes.

For example, the number of diabetes cases in India, earlier projected at 36 million by 2020, has already surpassed 75 million. Soon, one out of every 5 diabetic patient in the world will be Indian, he said.

For cancer, in particular, Reddy mentioned expansion of screening services as an area in need of great attention. Referring to the Apollo group's own efforts in providing healthcare, he highlighted that the hospitals are being able to perform coronary bypass surgeries at a cost of USD 3000 for middle and lower income patients, and maintain the cost over the past 20 years.

Pointing to the huge cost differential, he stressed that comparable surgeries in India cost one-tenth of the price in the US. High quality healthcare and cost benefit is hence a major priority area, he said.

The Apollo chief acknowledged the tremendous contributions made by research organisations in the US in diagnosis, methodology, innovation, research and technology in the healthcare sector and called for greater collaboration between India and the US.

Thought of the Day

“We are each our own devil,

and we make this world our hell”

L&T, Pipavav Defence form JV with Mazagon

Larsen and Toubro and Pipavav Defence on Saturday signed two separate deals with the country's biggest naval shipyard, Mazagon Dock, to produce equipment for the defence sector.

The deal with Larsen and Toubro comes nearly a year after L&T complained to the defence ministry, alleging foul play in the selection of Pipavav Defence as the sole joint venture partner, forcing the government to put the joint venture on hold.

According to the new joint venture signed, Mazagon will partner L&T to manufacture submarines for the navy while the venture with Pipavav will make frigates, destroyers and aircraft carriers.

"Mazagon will now look to execute much of the existing orders through these joint ventures," a senior official at Mazagon said on condition of anonymity. L&T Shipbuilding was not available for a comment.

India, which currently imports more than 75% of its naval defence requirement, had earlier made elaborate plans to step up the production of equipment and the defence ministry then allowed partnership with private companies for the manufacturing process.

Mazagon dock was the first among the public sector companies to invite a joint venture partner to undertake its order book which runs into more than 1 crore. When Mazagon decided to partner with Pipavav Defence, a host of private shipyards such as ABG, Bharati and L&T questioned the selection process and raised the issue with the defence ministry. The ministry then put the joint venture on hold until a new policy was established and, in February, the government issued new policy guidelines for defence sector PSUs.

"L&T has finally managed to have its say. They need defence orders to tide over their current situation. Pipavav and L&T Shipbuilding have been struggling in recent times to receive orders and the joint venture should help them with orders and more cash flow," said an analyst with a leading domestic brokerage firm.

DAVID DREMAN

(Chairman of Dreman Value Management,  

(Born 1936, Winnipeg, Manitoba, Canada)

_____________________________________________________________

David Dreman (born 1936) is a noted investor, who founded and is Chairman of Dreman Value Management, an investment company. The company focuses on the assets of mutual funds, pension, foundation, and endowment funds, as well as high net-worth individuals.

Dreman has published many scholarly articles and he has written four books. Dreman also writes a column for Forbes Magazine. Dreman is on the board of directors of the Institute of Behavioral Finance, publisher of the Journal of Behavioral Finance.

Previously, Dreman was Director of New York Research for Rauscher Pierce Refsnes Securities, Senior Investment Officer with J & W Seligman, and Senior Editor with the Value Line Investment Service.

Mr. Dreman is also the co-editor of the academic journal, The Journal of Psychology and Financial Markets, a Director of the IFREE Foundation, whose founder Vernon L. Smith was awarded the Nobel Prize in Economics, and President of the Dreman Foundation.

Dreman was awarded a Doctor of Laws Degree from the University of Manitoba in 1999 and is a member of the Board of Trustees of the university.

"I love to read about the heroes or villains in a story"

Gaurav Gandhi, COO, India Cast enjoys reading books. His two absolute favourites when it comes to books include 'Disney War' by James B Stewart and 'Plan of Attack' by Bob Woodward.

I enjoy reading books. Currently, I am reading two books, simultaneously. One is 'Jim Morrison' by Stephen Davis and the other book is 'Too Big To Fail' by Andrew Ross Sorkin.

'Jim Morrison' is a fascinating book for any 'Doors' fan. I love rock music and have always been intrigued about the band. The life and tales of the rock legend, his troubled youth, family issues, his road to stardom and his untimely death have been recorded beautifully by the author, Stephen Davis. The author is primarily a music journalist who began his career around the time when the band was gaining popularity among Doors fans. It portrays Jim Morrison's life in an unbiased manner - not from the perspective of a fan, but from the perspective of someone who shared the limelight with him.

'Too Big to Fail' is a book that gives an in-the-room account of the men and women who led some of the most powerful organisations in the US and how the Wall Street meltdown of 2008 affected their lives. Leading some of America's largest companies like Lehman Brothers, the Treasury Secretary and even members of AIG's top management, are the key prospects that the book focuses on. The book is written by Andrew Ross Sorkin, a news-breaking New York Times journalist. Given his source bank and ability to dig through facts, Sorkin provides insights into what went on behind-the-scenes.

I find it extremely interesting to read such books because it imparts immense knowledge about how to overcome tough situations and teaches you that even the smallest issue should be addressed before it escalates to a level that leads to a fiasco.

Thought of the Day

“If we don’t change,

we don’t grow. If we don’t grow,

we aren’t really living.”

Kirana stores dump big brands like Hindustan Unilever, Dabur and PepsiCo, stock high margin US brands

A few months ago, Dhananjay Jain, a grocery owner at Vidisha Road in Bhopal, decided to stock two alien brands - Right Buy and Members Mark - because they offered much higher margins than national brands and had lower price tags. Today, these floor cleaners, tea and cornflakes brands contribute nearly 20 per cent to his monthly sales.

Many of his consumers may still have no idea where these brands priced 10-30 per cent less than those of Hindustan Unilever, Dabur and PepsiCo are sourced from. Well, they come from the world's largest retailer, Walmart. Jain gets these brands from a Best Price Modern Wholesale outlet - run by Walmart's joint venture with Bharti Enterprises - just two kilometres from his store.

Walmart is not allowed to sell directly to Indian consumers yet, but its brands across some three dozen categories have started sliding into Indian homes, as its cash-and-carry venture becomes a hit among grocery shop owners.

"The idea is that the reseller should make more profits by selling our brands than he does by selling national brands," said Arvind Mediratta, chief operating officer of Bharti Walmart. He said the firm's private labels adhere to all the quality norms despite their lower price tags.

Why FDI in retail will work

Evidently, there is no national consensus on allowing FDI in retail. Advocates tout it as the much-needed major policy push that could arrest the economic downturn, bring in not only foreign funds but advanced technology and expertise, create infrastructure, offer better prices to farmers, generate ancillary industries and create millions of jobs. 

However, sceptics present a doomsday scenario: it will wipe out small farmers and traders, result in job losses and open the floodgates for cheap goods from countries like China, adversely impacting Indian industry. 

While both arguments have some validity, the two sides err on the side of extremes. FDI in retail is not an unmitigated disaster as projected by some, nor a magic wand leading to instant economic growth. If allowed with professional circumspection and safeguards and viewed dispassionately, it is in the country's national interest to allow FDI in retail. 

Opening up the telecom sector to foreign investment worked by bringing a communication revolution that embraces everyone. Similarly, foreign investment in the automobile industry ended the long wait for outdated scooters and cars and led to leading global companies vying to sell the latest models in India. 

When Pizza Hut, Domino's, McDonald's, Wimpy, Burger King, KFC and other such international brands were allowed, there were orchestrated demonstration in many cities; they were painted as anti-people and anti-Indian enterprises. We were told Haldirams, Bikanerwalas, Nirulas, Nathus and their ilk will vanish. 

The problem with advertising agencies. In brief

In the current environment of network agencies ruled by quarterly results and global boards, suggesting any idea of investment in people and research is a sure fire way of committing career hara-kiri.

I was lucky to have joined advertising in the days when people in agencies actually discussed briefs (no, think again). I have spent hours discussing the nuances of the lines that will describe the problem the brand was facing. The exact line that will form "what's the one thing we want to communicate". That was the most important part of my job. Everyone in the agency believed this and all of servicing was judged on one's ability to distill the client's problems to the magical document called the brief.

Then, once we had rigorously finished each of the questions in the briefing document (after having survived the boss' sarcasm and multiple corrections), we had to get it approved by the client. We then briefed creative and more often than not good, sometimes brilliant, but never mediocre work happened.

I have been a client for close to five years. The agency has created great work for us. That has moved markets and won awards (amazing but true). Have I seen a single briefing document? Nope. All the campaign briefings have been done practically directly to the creative team and then work directly presented by the creative team.

So, what's the problem?

The problem is that most client CEOs haven't been agency servicing people. They come from various backgrounds: sales, finance, HR, marketing and today, a large portion of them are entrepreneurs. Making sense of what their business is, what are the key stumbling blocks, what is the role of communications in the business, and figuring out the communication mix before starting on creating an ad is critical. My guess is this is not happening very well.

I sense that more and more CEOs will be directly talking to creative. More and more creative people will feel (rightly) that they can do this on their own. More and more boutique agencies run by creative duos will spring up and walk away with big business. And, in most cases, bar a few exceptional creative people (who are great instinctive planners), start producing great looking totally off strategy work which will not move products. After the honeymoon period, the business of pitches will start and the downward spiral will continue.

Thought of the Day

“Life is really simple,

but we insist on making it complicated.”

A brief history of globalisation

Globalization involves the interplay of markets, technology and State, which are amongst the oldest and most distinctive human innovations. Exchange, the fundamental principle on which markets are organised, is known to exist in the most primitive human societies. Man is not the only living creature with the ability to store surpluses and live in complex societies controlled by chiefs — consider the industrious ants and bees — but he is unique in his ability to socially redistribute these surpluses through increasingly complex divisions of labour under the authority of the State. 

The saga of globalisation is that of an unbound Prometheus, with surges in productivity and growth unparalleled in history as markets, technology and states are progressively freed from local demand and supply constraints. Although the term 'globalisation' has gained currency only recently, the forces driving this trend can be traced back to the end of the Middle Ages in Europe. 

Pre-modern societies, however, were above all else defined by localism and decentralisation. Most people remained at their place of birth right through their lives. Migration was a one-way street to resettle in virgin territory in response to conquest, calamity or local demographic pressure. Religious experience was mostly limited to the local parish, with wider pilgrimages limited to a select few. Empires meant mostly march of armies over land, and were never transcontinental, with the notable exception of North Africa adjoining the Mediterranean. State power was a coalition of local power elites owing allegiance to a monarch who never had access to centralised administrative machinery. 

HUL to target Ujala with Rin Perfect Shine?

The recent launch of Rin Perfect Shine (RPS) fabric whitener by HUL is likely a case of proactive targeting of potential competition (Ujala of JYL which accounts for 80% of its profits) as most of JYL-Henkel brands compete head-on with HUL, says a Kotak securities report. 

RPS has a seemingly superior packaging in a shrink-sleeve versus mould-based packaging of Ujala, it said. The biggest potential worry for JYL is product sampling by HUL, i.e. if RPS is bundled free with Rin detergent powder. 

Higher ad spends for JYL is likely and JYL needs to surmount the RPS challenge. 

While it appears as a 'normal' new launch by HUL, it is much more than that. HUL comments that this is just another 'category-adjacency' launch (that Rin detergent's proposition is brightness/whiteness and hence it is logical for the brand extension into fabric whitener category). 

In our view, the biggest surprise is that HUL has ventured into a greenfield launch in a category which is relatively small in size (Rs 3 bn) and growing at low single digits. 

We understand the thought process of the 'new HUL' of targeting entries into various small categories which collectively can provide it the tailwind of growth (essentially categories which are deemed as 'categories of tomorrow' with high growth prospects). Launch of RPS appears to be an exception to this thought process"" the report stated. 

Havells: Flowery proposal

Havells' new television campaign is based on the idea of demonstrating the advantages of a product, in this case the newly launched mixer-grinder.

Product demonstration always stands a better chance of leaving a mark. The new campaign from Havells India, which promotes the newly launched mixer-grinder, showcases the advantages of the machine in a typically Havells way.

The television commercial (TVC) shows a housewife steaming idlis (rice cakes) - one of the most preferred breakfast dishes in South India. The idlis are then carried by a small boy and to everyone's surprise, the idlis are used by the family members as a substitute for flowers, to decorate the entire house for an auspicious occasion.

A Vijay Narayanan, vice-president, Havells India, says, "Basically, the idea was to promote the newly introduced mixer-grinder, which has a powerful motor along with a tougher grinder. As 70 per cent of the mixer-grinder market is dominated by South India, the TVC mainly targets women down South. Idli is a very popular dish there and hence we further toyed with the idea."

Sriram Iyer, creative head, Delhi, Lowe Lintas & Partners, explains, "The thumb rule for all Havells advertisement is to talk about the product benefit. In this case, it was the mixer-grinder that the company wanted to promote. Being a South Indian has some benefits, especially in case of knowing the food of the state. In Tamil Nadu, people want very soft idlis, so much so that there is an expression, 'Maligapoo Madiri', used to describe idlis which are as soft as jasmine flowers. And for such soft idlis, the batter has to be very finely ground. For this, one needs a mixer-grinder. It is here that the mixer-grinder from Havells plays a very pertinent role."

A Look at the Advertising Campaign That Has Its Finger on the Pulse of India- Amul Butter

A blue haired moppet in a polka dotted dress, who hasn’t grown even by a day ever since she graced a billboard for the first time in 1967, is at the core of India’s longest running print ad campaign.  The Utterly Butterly girl has held the attention of the Indian public for over four decades now. 

Here is a closer look at an advertising campaign that has evinced the interest of Indian audiences for its unique blend of humor, satire, great illustrations and the ability to draw everyone’s attention to the dark side of current events with a funny twist….

In the Beginning:

The Amul advertising campaign story as we know it today began in 1966 when Sylvester daCunha, then the Managing Director of the advertising agency ASP, clinched the account for Amul butter. He and Eustace Fernandez, in a serious bid to do away with the dull, boring image of butter created this little girl.

Few know that the Amul moppet was created to counter the then iconic Paulson girl.  The strategy?  A chubby, almost angelic girl who has all her fun and never ages pitted against the very glamorous Paulson girl. A strategy that worked and how!

An Icon Was Born

The “Utterly Butterly Delicious!’ humming thumb-sized girl, dressed in a polka-dotted frock soon evolved in to a ‘pun’ loving star, who with her bold tongue-in-cheek topicals, made way directly into the hearts of millions.

Thought of the Day

“The only people with whom you should try to get even
are those who have helped you.”

Capturing interest with action-based Captchas

Branded Captcha player NLPCaptcha takes its offering to the next level, introducing Captchas that require no typing on the part of the user but plays on the principle of action.

Ever found those verification procedures wherein you are required to type a set of distorted letters that appear on your screen, irritating and distracting? Captchas, as they are commonly known, are tests - a spam verification tool used to ensure that the user is a person.

NLPCaptcha, a Captcha-based advertising platform by Noida-based Simpli5d Technologies launched earlier this year, attempts to monetise the tool, incorporating brand messages in Captchas, rather than offering the traditional type-in model for advertisers and publishers.

Besides the above mentioned opportunity, NLPCaptcha has pushed the envelope, introducing its new line of action-based Captchas - 'N-Gage'. The new format attempts to turn the tool that is often seen as a security nuisance into a fun activity for the user.

The N-Gage line of Captchas follows a different format for spam verification. Rather than a traditional type-in Captcha, wherein a user has to first interpret the tricky, distorted alphabets and then type them in for verification, N-Gage plays on the principle of action. The user will see an interactive graphic/video in the Captcha. The user is then required to perform a specific action - click on something in the Captcha or drag the cursor. This action completes the verification process and the user gets a chance to experience product communication, which the advertiser wants to convey.

Storyboard of Pizza Hut

Agency-: JWT

The TVC opens at a Pizza Hut dine-in, with a group of friends. Tempting pasta is served on the table.

Before eating, a boy says, "Do you know, how Italians eat their pasta? They kiss the pasta".

 Another boy says, "Do you know how the Chinese eat their pasta?". He does some kung-fu and takes out chopsticks

 One of them points towards a lady with his eyes and says, "Ab dekho, how Indians eat their pasta".

Thought of the Day

“Without vision, the people will perish,
and without courage and inspiration, dreams will die,
the dream of freedom and peace.”

Business Quiz

Q 1. What is the popular name for the UN conference on development and sustainability being held in Rio De Janeiro called ?

Q 2. What is a John Doe order in the context of Internet piracy ?

 

Q3. Why have the top 11 cement makers been imposed a huge penalty by Competition commission ?

Q4. Which industrialist MP tops the list of LPG consumers in New Delhi as per a recent report launched by Oil marketing cos. ?

Q5. Who is the new CEO and MD of Tata Global Beverages ltd ?

Q6. What is the new brand name of Yves Saint Laurent ?

Q7. In which country they have a vending machine activated by a Tweet that dispenses a cup of  ice tea ?

Q8. Name the luxury division of Nokia which has been sold off recently to generate cash for the beleaguered company.

Q9. What is the name of the Tablet announced by Microsoft ?

Creativa India wins social media account of Pan Macmillan India

The agency's mandate is to establish Pan Macmillan India among Indian audiences by introducing fans to its world known authors and newest arrivals using social media platforms.

The Indian arm of UK-based publishing group Pan Macmillan has awarded the social media duties to Creativa India. No formal pitch was held for this account. The social media activities for the brand were being handled in-house.

Creativa India had earlier handled the online promotion for Jaal by Sangeeta Bahadur, published by Pan Macmillan India.

Confirming the news of the win to afaqs!, Himanshu Bhalla, founder, Creativa India, says, "We will handle the entire Facebook, Twitter and YouTube promotion for Pan Macmillan India. We have already started our association with it with the online promotion of the book Jaal and its launch and look forward to working with it on its other titles."

The agency's mandate is to establish Pan Macmillan India among Indian audiences by introducing fans to its world known authors and newest arrivals. The agency will also handle Twitter management for the group.

"The online promotion for Jaal drew a very good response and we will now move on to plan the promotion of Pan Macmillan India's entire list. We're also pleased to be associated with it for its online media planning," says Dinesh Juneja, co-founder, Creativa India.




Source-: afaqs.com

Special Television - Time to Change

Digitisation and TRAI regulations are all set to hit the television business soon. How will it affect broadcasters and advertisers?

The Indian television space, if not exactly in turbulence, is certainly facing an upheaval. Digitisation of cable television - which has just been postponed - is only a few months away. A TRAI (Telecom Regulatory Authority of India) ruling some time back laid out a cap on ads shown on a channel to 10+2 minutes (10 minutes for ads and 2 for own promos) in an hour. Though this has been stayed by TDSAT - Telecom Disputes Settlement & Appellate Tribunal - the debate continues to rage.

Despite being postponed once (stakeholders reacted differently - see Points of View after Cover Story), it is almost certain that the digitisation in the metros will happen by November 1. The rest of the country can expect to be digitised by 2014. In what ways is this going to impact the business?

More niches will appear

In the analog world, when a viewer switches on his TV set, she has to invariably surf through channels to reach the final destination, which is why the channels race to occupy a place among the first few. But the bandwidth for prime and color bands (these enjoy extremely good reception quality) is limited to 11 channels. Of these, Doordarshan (DD) takes up three. The rest are taken by the biggies. For a new channel, the next option is the S-Band or UHF band, to enter which a channel has to pay an additional premium, also referred to as the "displacement premium".

Generally, a broadcaster may have to shell out Rs. 65-70 crore (source: Chrome Data Analytics & Media) for launching a new channel with a 100 per cent HSM presence on S-band. If the new entrant wants to be on prime band, it could have to shell out 50 per cent more. Says LV Krishnan, CEO, TAM Media Research, "GECs find pride of place on prime bands because of the content pull they enjoy. A viewer often scrolls through many channels before reaching the final destination. This results in audience wastage." Digitisation will reduce this substantially.

Carriage costs will fall

For now, the real pain for many channels is not the lack of revenue from advertising but the huge cost of distribution that has killed business models. Once the analog network starts to fade and is replaced by digital, this ‘killer' cost will disappear. As digitisation takes over, carriage costs (money paid to cable operators) could come down by as much as 50 per cent. This is because quality of reception will be equally good across channels, irrespective of whether it is at No 9 or No 99.

According to Chrome, the cost per contact (CPC) paid by a channel to reach out to its customer is, say, Rs. 20. With digitisation, the bandwidth capacity will rise to 500 channels, which means the CPC comes down to one-fifth or Rs. 4. As a result, the premium paid by broadcasters will also fall.

Viewers' choices increase

Specialised channels exist even today. But they do not get their due because of lack of transparency and representation in viewership (owing to sampling constraints). They are at a disadvantage in an analog scenario where they are mostly placed on lower bands with poor reception capacity.

"Post digitisation, customers can choose and pay for the channel they want to watch. This transparency will result in focused channels getting the economic benefit which was missing," says Pankaj Krishna, founder, Chrome Data Analytics and Media. The sampling constraints will also become less stressful for advertiser as well as broadcaster.

Consumer behaviour is already showing signs of change in the semi-digitised world. In Mumbai or Delhi, where 25 per cent of the market is digitised, TAM witnessed new patterns. For instance, more viewers are glued to genres of their choice and landing straight on their favourite stations, while time spent on specific genres is increasing too. TAM is now doubling its metro samples to 60 per cent. This will help broadcasters and advertisers to not only understand content consumption patterns but also target their programming and brand communication well. Does this also mean that the importance of GECs will come down?

Not really. According to experts, GECs will continue to remain the bread and butter for established networks. This is because the main contributors to GEC viewership are women and they will continue to watch. In fact, with an increase in the revenue pie (through reduced carriage fee and increased subscription), the network will begin to spend more on its GEC content. The dogfight, if any, of the digitised future will be between second-rung GECs and other channels.

Additionally, a channel might be in preferable packs on some operators' menus and not-so-popular packs on others. "In the latter case, the channel will have to micro-market in that operator's constituency to ensure that viewers still buy the channel on the not-so-popular pack or buy that channel a-la-carte," says Atul Phadnis, Founder-CEO, What's-On-India.

Only the fit will survive

Interestingly, since there will be less audience wastage or duplication and more opportunities of sampling for other genres, the ratings of a GEC may eventually fall or stagnate. This could mean that it will not be able to increase its ad rates much.

So, for instance, if Star Plus, which clocks Rs. 800-1,000 crore, is unable to move beyond its average 275-300 GRP mark, it will fail to increase its ad rates substantially. Therefore, the network, which is heavily dependent on Star Plus' revenues, would have to take the horizontal growth route if it intends to shore up its overall income.

Result? There will be more opportunities to increase subscription revenue through specialised content and channels. Not to forget GECs will continue to enjoy their pre-eminent position since contribute 40-50 per cent of the total subscription revenues that their networks raise. There will be a better balance in subscription too - from 80:20 ratio in favour of advertising to a 65:35 ratio, which is also the global norm. "Survival will depend on how fit the channel is. All 800 channels will never be profitable together," says Vidhu Sagar, executive vice president, Carat Media India.

Channels will become brands

With the increase in the availability of more channels that work on a more focused domain, TV channels will eventually have to emerge as a brand, supported by a definitive proposition. This means that a Satyamev Jayate and a Star Plus will not be able to stand as two different products with individual propositions but rather, quite like an FMCG, as one singular entity with a broader unique offering. As channels emerge as brands, the methods of marketing will have to change. Marketing today ensures that the distribution, content, on-air promos, are in sync. Now, it will become more defined and grow on the costs saved on distribution. Which means that if there are 10-20 people in the distribution department of a channel, some could be shifted to marketing.

Marketing for the brand will also become more important because of a TRAI clause. According to the Authority, all channels will be available at an a la carte price which will be much lower than before. Marketing will have to become profile-led and centered on focused geographies, than being GRP-heavy. In analog, second rung channels could push themselves by paying off the cable operator. In the changed circumstances, these channels can get in only if the household wants them in or go free to air. So the brand becomes critical, its familiarity becomes critical and its image and reputation become critical. "Brand managers will have to take the driver's seat. Consumers will be studied, understood and content built around them. Today, content is created first and then promoted across the targeted audience group," says Paritosh Joshi, ex-CEO, Star CJ.

Ad rates will be affected

The biggest hurdle facing advertisers is the proposed 12-minutes-in-an-hour cap on ads. This will push up ad rates because there are few shows or channels that command high ratings. So earlier, if a channel was selling 100 spots for Rs. 10 each and made Rs. 1,000, it would now have to sell 50 spots at Rs. 20 to match that. The viewer is happy too. Not everyone agrees it is so simple.

"If there is near perfect competition then it will be difficult even for a GEC to increase rates as someone else will blink. But if there is a relative gap between players, then the top channels will be able to hike rates at the expense of smaller channels," says L S Krishnan, thought leader, Amagi.

Meanwhile, the frequencies could also even out the process. If, for example, an advertiser is operating on a 60:8 reach and frequency ratio (wherein the brand is reaching out to 60 per cent of the audience with each viewer getting exposed to the brand's ad eight times in that period), market forces could force the channel to reduce the exposure to four or even less.

A hike in ad rates could eliminate the non-serious advertiser - there are Hindi national news channels that operate at an effective rate of Rs. 250 for a 10-second spot. But many believe that local brands such as pan masalas, cement or innerwear having ‘tasted blood' will continue to stay, even if rates go up.

Advertisers will Innovate

The changed circumstances will force advertisers to innovate. Ad creatives could also undergo change in more ways than one. Most of the ads that come out range from a 1 minute version to 30 seconds or 20 seconds. The mandate could change to a 30, 20, 10 and even a 5. But here is the dig. TRAI regulations suggest that ads have to be full screen. Part-screen and drop down ad will not be permitted. So, innovations will also be under pressure.

Indian advertisers could do an Apple here. When the iPad hit stores in April 2010, it was heavily marketed. Just three days before D-day, iPad was the star of the 19th episode of ABC TV's Modern Family. It was a key part of the plot as the family tried to buy the father an iPad for his birthday, which coincided with the device's launch day.

Digitisation will bring in value-added services such as VOD and broadband. Experts foresee that television will, over time, be less sold in slots and more as a part of programming, across media. Content properties will also have footprints across TV, YouTube, Facebook and other media such as radio. Convergence will become the route to sell. It will now be TV+digital+mobile+social media.

Says Mahesh Murthy, CEO, Pinstorm, "MTV Roadies manages a TVR of 0.4 or less. That means it's seen, at its peak, in 4.5 lakh homes. Assuming one teenager a home, that's a peak viewership of less than five lakh. But the same show has 10 times the fan base on its FB page. On the revenue front though, it's 99 per cent TV and 1 per cent online. This dichotomy will make less sense for advertiser and consumer in the years ahead."

Coming back to the beginning, the tremors that are about to hit television in India could do more good than bad. Watch this space.

Source-: afaqs.com

Thought of the Day

“Life is a great big canvas,
and you should throw all the paint on it you can.”

Thought of the Day

“Most miss opportunity

because it shows up in overalls 

and looks a lot like work” 

Samsung Puts New Twist on Innovation With Stickers

Samsung has a new sticker that can tell a phone what to do. They’re called TecTiles. Here’s what they do: If you’ve got one of the latest Samsung smart phones including the Galaxy S II, Nexus, Nexus S 4G, Nexus S Blaze 4G or the upcoming S III, you can turn the sticker into a little communication station.
Using the TecTile Android app, which is available in the Google Play Store, users can customize what the TecTile does. A restaurant can program a TechTile to automatically check someone in if they wave a phone over the sticker. Stick it on a business card and people you meet can automatically download your contact info.
The technology it uses is called Near Field Communication (NFC). NFC is a wireless technology that lets two devices swap data when they’re close together. Only in this case, one of the “devices” is enclosed in a sticker.

Microsoft to buy Yammer for more than $1 bln - WSJ

(Reuters) - Business Software Company Yammer Inc has agreed to sell itself to Microsoft Corp for more than $1 billion, the Wall Street Journal reported, citing a person familiar with the matter. It was not certain when the deal would be completed and formally announced, the Journal said.

San Francisco-based Yammer declined to comment, while Microsoft could not be reached for comment outside regular U.S. business hours. Yammer, which began in 2008 and provides enterprise social networking services, has raised more than $142 million in venture capital funding. It says it counts more than 80 percent of Fortune 500 companies as clients, and is backed by PayPal co-founder Peter Thiel, who also invested in Facebook.

Need a Charger on the Go? There's an Umbrella for That

Every year at this time 'Summer tech' features pop up all over the internet. Unfortunately, in case you haven't noticed, we haven't had all that much sun in the UK recently. Luckily, some clever chaps have just unveiled a new high-tech umbrella which could make wet weather just as interesting tech-wise as warmer days.
The 'Booster Brolly', co-developed by and University College London, has been designed to keep you dry while also boosting your mobile phone signal thanks to a micro antenna in the canopy.
It also features an LED torch, a hands-free smart phone cradle and a set of flexible solar panels which - when the weather is nice and bright - can charge your devices too. The developers claim the Booster Brolly can charge a phone battery in under three hours. The skeleton is made of durable carbon fiber - and it's also windproof.
Dr Kenneth Tong PhD, lecturer in electrical and electronic engineering at UCL said: "The custom canopy has been fitted with 12 lightweight amorphous silicon triple junction solar cells that have the ability to convert light into electricity, through a series of highly sensitive photovoltaic semiconductors.

"The current generated is then transferred, via a voltage regulator, to the handle of the umbrella where it is stored safely in high capacity rechargeable batteries, or used to directly charge a mobile device through a USB port."

Thought of the Day

“In order for you to succeed, your desire for success should be greater than your fear of failure.”

Women still face a glass ceiling

Most women aspiring to senior management positions believe the glass ceiling to career progression still exists, according to a report by a leading UK management organization.

The survey of 3,000 members of the Institute of Leadership and Management (ILM) found 73% of female respondents felt barriers still existed for women seeking senior management and board-level positions in the UK. In contrast, just 38% of men believed there is a glass ceiling.

The report, Ambition and Gender at Work, suggests women's managerial career aspirations lag behind men's at every stage of their working lives, and that they have less clarity over traditional career direction than men.

At the start of their careers, 52% of male managers had a fair or clear idea that they wanted to work in a particular role, compared with 45% of women managers. Only half of women said they expected to become managers, versus two-thirds of men. Even among the under-30s, gender aspirations remained entrenched, with 45% of men and 30% of women expecting to become managers or leaders.

The findings, which came from an even sample of men and women with an average age of 43, also revealed that 24% of women under 30 expected to start their own businesses within 10 years, compared with 20% of men.

It's not that women are risk-averse; younger women in particular are incredibly ambitious around entrepreneurial activity. Yet we can see that a promotion path within a large organization is almost seen as riskier for them, on a personal basis, than going out and setting up their own venture.

Companies have to think about how they can nurture that ambition. The only way is to hold chairmen and chief executives responsible. Good governance is good governance and it shouldn't be gender-specific.

A separate recent report by the London School of Economics for cosmetics company Avon predicted a doubling in young female entrepreneurs over the next decade, with 72% of the 2,000 16-24-year-old women questioned saying the idea of being their own boss appealed to them.

Women are not an end in themselves, and must be part of a package of measures designed to create a more representative and successful business norm – for example there must also be wider awareness of incidental discrimination, and action to tackle it. But one only has to look at the success enjoyed by those countries that have embraced quotas to see it makes business sense.

Source: Graham Snowdon , The Guardian, Monday 21 February 2011

K V Kamath@ ICICI Bank

Yet another state run leviathan that was just on the verge of being labeled a corporate dinosaur. These are the words which perhaps best summarize the status that ICICI Bank had in 1996. A development banking corporation that lent to large enterprises and was a term lender with little or no people, process and pace to serve the Indian economy which had opened up in the early 1990s. In walked a technocrat armed with a BS in mechanical engineering from REC Surathkal, Karnataka, an MBA from IIM Ahmedabad and the method to madness of a scientist.who turned things around for ICICI Bank with a magic wand.

    What did the turnaround taste so good? Today ICICI Bank is India’s largest private sector bank with assets worth more than $60billion, more than 700 branches and 4000 ATMs. Following was the recipe of the turnaround- 

       1)  “No Mainframes” – While Mckinsey stresses so much on the structure Kamath actually did the reverse by deleting it from his dictionary. He said no to rigidity in thought processes. The ship was about to sink and so the captain tried steering it to safety shores. With his back against the wall he encouraged every employee to take risk, ideate, incubate in team meetings and finally execute the plans. So the message was clear innovate or perish!