DoMination October 2012

DOMINATION
NEWSLETTER FROM DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
VOLUME-III ISSUE-05
OCTOBER 2012
Editorial
Dear Readers, Marking the end of summer and the onset of winter, Halloween is celebrated with feasting, bonfires and trick-ortreats. Following in the same spirit, we would like to treat you to thought-provoking and interesting articles brought forth by investigative minds. This edition of Domination features three entries from the article-writing contest Abhivyakti, organized by the team. Edible Oils- Procurement Strategies in India compiled by Aashwi Ahmedabad, Verma, details PGPIndias Agribusiness Management, IIM journey towards being selfsufficient in production of oil. It discusses with the readers the price scenario in the sector and how its burden is eventually passed on to the end customer. A similarly stimulating article The Fourth World, authored by Siddharth Jaiswal, IMT Hyderabad, questions the incidence and acceptance of globalization in the vast tract of lawlessness that many a markets are facing. While identifying the most isolated and disconnected markets and describing the tedious journey towards growth, the writer still manages to leave you with a vision of light at the end of the tunnel. Walking you through the evolution of consumerism, The Powershift from IRMA, outlines the conquering and losing of the power over consumer choices by various market participants. Analyzing the two sides of the coin, Social Media: A double-edged Sharad sword, by Srivastava, presents Group and Managing Director of Pantaloons Retail. Treading through innumerable struggles and squashing all obstacles in the path to success, he truly has been rewriting the rules. CRR: A Necessary Evil, co-authored by Abhay Kumar and Sharad Srivastava, takes a sneak peek into the controversy currently broiling over the bearing of CRR for liquidity management by RBI. The authors propose a cautious approach towards deciding the fate of CRR as a regulatory tool. Sharing his experiences as the Executive (HR), BHEL Haridwar, Mr. Varun Goel, emphasizes communication, positive outlook and openmindedness for success in any professional undertaking. With the motto of Work Hard, Party Harder and a beautifully written poem Happinessat Last by Karun Sethi, we hope the edition infuses your day with fun and knowledge in equal measure. Happy Reading !!
both the views and the counter -views surrounding the utility and need of Social media. It takes into account the rise and fall of social networking giants and identifies the general trend followed. This editions Success Story illustrates the business acumen of the entrepreneur and visionary, Mr. Kishore Biyani, the Group CEO of Future
s Regard nation i m DoM Tea

02 | DOMINATION, OCTOBER 2012 DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE
Contents
Editor
Anurag Agrawal
08 04
Team DoMination
Abhay Kumar Aditi Joshi Ankit Katiyar Arun George Ashish Agarwal Gundeep Singh Kapoor Manav Kaushik Manoj Kumar Nilaya Mitash Shanker Pawan Upadhyay Priyank Singhal Rohan Krishnan Ruchi Gupta Saumya Dani Saumya Verma Saurabh Paul Sharad Srivastava Shibi Singh
Happiness..At Last.. The Fourth World Edible Oil: Procurement Strategies A Double Edged Sword Cash Reserve Ratio
28
15
The Powershift
20
12
Designing Team
Ritesh Kumar Sabhariswaran P Saurabh Patel
DEPARTMENT OF MANAGEMENT STUDIES INDIAN INSTITUTE OF TECHNOLOGY ROORKEE
Qutopia
21
26
23
Success Story
Roorkee - 247 667, India Tel: +91-1332-285014, 285617 Fax: +91-1332-285565 Email: domination.doms.iitr@gmail.com
DoMS da Evince
Cover Story
Social Media
The trend is clear. The world is moving and that too at a fast pace!! Much of it has to be attributed to the technological advancements. Among them, Internet and web based technologies are the recent and most significant ones. The internet has not only altered the manner by which people gather knowledge, communicate, entertain themselves, it has also affected how they interact in this socially connected world. Social media, the new buzz word, is one invention which allows individuals, teams, communities, companies, organizations, governother activity on the Internet, according to Nielsen.The Bar graph below depicts the increase in users of various social networking sites in India. According to the data, Facebook is the undisputed market leader in India. Interestingly Orkut which is assumed to have become dormant a lont time ago, is still alive and occupies second position. LinkedIn and
ments, and parliamentarians to reach large masses. No wonder popularity of social media is increasing leaps and bounds. The growth of the social media is really impressive. The basic purpose of social media is to connect people and it has been quite successful in achieving that. Today Facebook is estimated to have more than 900 million registered people. In India too, social media usage is on rise. With 50+ million active social media users, Indians spend more time on social media than on any
Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez Ieconomie

Social Media
Twitter are relatively newer but they are hot on the heels of sites like Facebook in terms of users. Social media has found its acceptability in other fields too. Social networking sites such as LinkedIn is increasingly being used for professional purposes. Another social networking site Twitter is getting its foothold, particularly in India. Facebook and Twitter have also played an instrumental role in various political movements. Facebook is used by Anna movement activists to connect with masses. Likewise Twitter is cited as an important factor in Arab Spring movement. This is a significant omen as mainstream (conventional) media is either censored or it colludes with one party. Needless to say, social media has a profound impact on an individual and society. The most visible change we see is that it has brought people closer to each other. The central benefit of social media is to connect and communicate with people across the world. Social media provides a platform to share our life with whomsoever we want. By sharing our experiences through social media, we create empathy towards others. Someone else may have gone through a similar situation and they can make a suggestion which could help improve the situation. Social networking sites can also help us to find people you share interests with. Facebook, for example, provides an opportunity to list our views and thoughts and therefore may help us to establish common ground with others. This contributes towards building an open society. Some organizations are sensing this trend and started using social media as an apparatus to collect opinions to chart out their strategies. Recently, anti-corruption movements in India used social media to spread its vision and to communicate. Social media sometimes acts as a track 2 version of conventional media as well. It offers details and opinions which is not available in mainstream media. Admission processes of some of Indian business schools can be taken as an example. These sites provide information which is otherwise not available on mainstream media. In spite of all nice things about social media, not everything is alright. There are a lot of young people who wake up and the first thing they do is to check their Facebook account. There are cases where people have been online on Facebook for ages without even signing out. This obsession is driving frequent users to physical and psychological stress. This addiction makes one prioritize incorrectly and putting insignificant things over many more vital activities. It is observed that social media does only provide data and information but not the understanding or knowledge. Many times personal opinions are presented as data. And people believe it without realising that it is purposefully done. It has a ripple effect. Firstly, people who spend a lot of time on social networking sites are flooded with incorrect information and thus are led to incorrect conclusions. Since their perception is different from the reality, the actual result is often poles apart from what it is

Social Media
not accountable and virtual in nature. The second effect is more concerning. Those who spend a lot of their time on social networking sites, start living in their own world of perceptions. This poses a serious challenge to the analytical and intellectual capability of an individual. A recent riot in Mumbai is a glaring example of what such situation might lead to. It is said that factually incorrect data and morphed pictures were the main reason behind the violence. People believed whatever was supplied to them without any investigation. Despite all its social relevance, social media is definitely not a substitute for meeting in person or other such forms of social interactions. Social media lacks the warmth and affection when compared to conventional relations. In other words, social media is alleged to depression as well as aloofness. Facebook for example, is considered to be addictive in nature. Due to this very nature, an individual might talk too his far-away friends and relatives but he may avoid or overlook family members or close educated about the social media contents, its validity and relevance. As the old proverb says, all data is not Information, all information is not knowledge, all knowledge is not understanding, all understanding is not wisdom. Same applies to social media as well. An immature mind may perceive and interpret the sea of information in a wrong manner which might lead to disastrous consequences. People should also be informed that excessive use of social media hampers other dimension of personality development. A person, who spends a lot of time on social media, may fall short on outdoor activities which would restrict the overall personality development. There is a need for parents and elders to keep an eye on any behavioural changes such as impatience, aggression, depression etc. Parents should open all possible communication channels so that the young minds do not get carried away by the mirage of social media sites. There is a fine line here tough between monitoring and what youth would consider as friends. Social media is also believed to contribute to the development of self-centrism in an individual. Rather than keeping in touch and interacting with folks, millennial narcissists are more driven to acquire as many friends as possible and use their carefully crafted profiles to impress. This trend is observed more among young age group users. Like everything else, social media has its own virtues and vices. It is a resource which should be exploited carefully instead of being exploited by it. One should remember that social media is after all a virtual world. It should not be equated with actual read world. Equilibrium should be the key, with a sound understanding of the difference between the virtual and real world. Only this stability and a mature mindset can leverage the social media in a positive way. To start with, a sensitization program can be initiated with respect to social media usage. Including this into academic curriculum is also a considerable idea. One should be

Social Media
invasion of privacy. Parents need to understand this difference and handle the situation cautiously. Sometimes it is required to sit with the youth and make them see the reality behind the smokescreen. On the whole, social media sites are helpful if used with caution. It is only excessive usage which may lead to several problems. A little chit chat with an old friend not only refreshes but also fulfils social needs. Therefore an awareness program coupled with some initial mentorship is best possible way to get maximum advantage and would prove to be a win-win situation for user and society both. Finally it is important to remember that social media can be as effective and as disastrous as we allow it to be. The problems in todays world are not caused by social media but by people using social media.
Article By -
Sharad Srivastava DoMS, IIT Roorkee sharad.iitr@gmail.com

Perspective
Cash Reserve Ratio

Recently Pratip Chaudhuri, Chairman of Indias largest bank SBI, created a flutter by suggesting that Cash Reserve Ratio or CRR needs to be abolished as it is not sensible in modern times. He also called for paying interest on CRR funds till it is discontinued. Mr. Chaudhuri propagated these views at a conclave organised by the Federation of Indian Chambers of Commerce and Industry, FICCI. CRR or Cash Reserve Ratio is the proportion of deposits banks have to keep with RBI. Currently this proportion is 4.50% which means for every 100 rupees, banks would have to put 4.50 rupees with RBI. Furthermore, banks do not earn any interest which makes this amount as good as nonexistent for banks. An estimate says 0.25 reduction in CRR would result in an influx of 17000 crore rupees in the market. By this calculation, a mind boggling sum of rupees 3.06 lakh crores is with RBI (do the math!!). His reasons are simple. Banks have no control over this money which is dumped with reserve bank. If they were given an opportunity to utilise this money, this huge cash will be a growth engine for Indias economic developments. SBI chairman also argued that since this money does not yield any returns, it creates an unnecessary burden for rest of the amount. Daily commercial banks deposit Rs 3,14,000 crore with RBI. If RBI starts paying interest on this humungous amount at an interest rate of say 10%, then banking industry will get an amount of Rs 31,000 crore per year. Also total net profit of entire banking industry last year was nearly Rs. 70,000 crore.

Cash Reserve Ratio
In addition to the above views, there are other reasons which are cited. The requirement of CRR is only for banks, not for Non-Banking Financial Corporations (NBFCs). Though they do not operate in same space often, it still does not make for a level playing field. That might be the reason why some people are supporting the theory of doing away with CRR. For example, Mr. V Jagan Mohan, MD of AP State Cooperative Bank Ltd. appreciated the SBI chairmans views. He questions the relevance of CRR in this information age where RBI can get any figures by just a click. Though the above views are interesting, not everybody is ready to accept them. RBI deputy governor K C Chakrabarty openly came out against SBI chairmans opinion.
He stressed that CRR is a part of monetary policy and banks should work in the established framework. He seems to imply that CRR is a crucial liquidity management tool which provides regulatory power to RBI. Below diagrams show the symbolic representation of how liquidity is affected by change in CRR. By eliminating CRR, RBI would lose its power to control or regulate the money supply. Very few people would want a central bank to dilute the influence. This has achieved more significance particularly in the wake of worldwide economic crisis. There are other reasons too which are more technical in nature. If banks are exempted from CRR then banks would stand as a more risky option. Adhering to Basel norms, the
change in CRR would also alter Capital Adequacy Ratio, a ratio of banks capital to its risk. Basically banks may have to set aside even a larger quantity of cash (though not with RBI) for risk management which would prove counterproductive in the long run. No wonder ICICI bank chairman K V Kamath joined RBI for continuing with the current structure. Lastly with a surging inflation rate, CRR can be a necessity for handling the money flow. Indias GDP growth was at 5.5 percent in the second quarter which is lowest in the two decades; it is expected to be near or less than 5.5 percent in 2012-13 as well. On the other hand, inflation is near 8% and it is persistently hovering in double digits for the last 2 years. For any government, controlling inflation is prime objective

Cash Reserve Ratio
we have to do trade-off between GDP growth and Inflation, However one must keep in mind that CRR can only control inflation up to a certain extent. Overall, it does not look a viable choice to remove CRR altogether. RBI has already
slashed cash reserve rates from 11% (in 1998) to 4.50% (in 2012). Similarly paying interest on CRR defeats the very purpose CRR is created for. There is a need for discussion among all stakeholders for such a proposal. Trading some part of CRR with an equivalent magni-
tude of another tool SLR (statutory liquidity ratio) can be the first step to begin with. The result should be carefully studied and evaluated in all aspects. This is the time for reforms 2.0 but with a security system.
Article By - Abhay Kumar Sharad Srivastava DoMS, IIT Roorkee

Perspective
The Fourth World

We along with many analysts and economists seem to think this convergence force of globalization is real and universal, and that all the emerging markets will continue to grow rapidly, catching up with income levels in the west. A closer look shows that globalization did not, in fact, resonate equally in all developing nations. There is a broad array of countries that are not fully connected to global flows of trade and money. These nations comprise a chaotic Fourth World of frontier markets in which political leaders have yet to buy fully into the global market consensus, and the economic expansion is still more erratic than the norm. The frontier nations occupy a world where insider trading can run rampant because its officially tolerated, where financial data is unreliable as authorities dont really demand clarity from businesses, research here is often less about number crunching than about pressing ones ear to the walls for the latest rumors. The state of semi-lawlessness makes them volatile, with economic growth from a high of 20 percent in Ghana to a low of 2 percent in Serbia compared to big emerging markets like China and South Africa with 9 and 3 percent respectively. The macro mania that seized observers of emerging markets over the last decade, as they rose and fell in unison, this phenomena did not extend to the fourth world where every market tends to follow its own peculiar rhythms often at the whim of local leaders. Combodia opened its stock exchange in July 2011 and there were no companies ready to list, making it the only stock exchange in the world with zero trading and another instance is that of Ukraines forced listing in 2008 when the government forced big companies and banks to sell stock to the public which resulted in companies


selling a tiny portion to comply with the rule which triggered lesser free float leading to less commitment a company has to the basic values of a public enterprise i.e return to stakeholders, not surprising outsiders see the Ukraine market as something of a joke. Frontier markets of the fourth world often fail the basic task of the market, which in theory is to match buyers and sellers in an open forum that allows them to agree upon a fair price. When rumors pass as information and rules make no sense, neither do prices. There is no doubt about the huge potential these nations hold, but they need to capitalize on this potential by opening up to the outside world and work towards proper governance. They are home to more than one sixth of the world population, but account for just 5 percent of global GDP and attract only 0.5 percent of global investment. An at most universal assumption holds that this gap will close over time and the fourth world is the place where the world will witness most explosive growth in the coming decades. Disconnected in Middle: The most isolated region from the global market and its trend is the Middle East, Iran and Iraq. The key frontier markets in the Middle East are the petro-monarchies of the gulf region, and the largest among these by far is Saudi Arabia which is the only country which is open for investors, but only from within the gulf. This resulted in a spectacular stock market bubble in 2005, with Saudi Arabias stock market becoming the biggest among the developing world, larger than that of China and India, solely based on oil-rich locals and neighbors. The quantum of this bubble was a good deal crazier than the dotcom insanity that gripped the United States at the turn of the millennium, and it pooped soon enough. But when a bubble pops in the gulf it does not make any sound as no one pays much attention as foreigners are not allowed in. Hence, it would be good idea for the middle east to open the gates to its economy and gear up for a diversified growth model. Promising Road: Few among the Fourth world nations have already started showing ability to grow and grow quick. They are in line to be called the next emerging markets of the world. Few of such economies are Sri Lanka, Vietnam etc which could prove to be the next growth miracle. Sri Lankas Peace Dividend: n the 1960s Sri Lanka was billed as the next Asian growth miracle, only to be stymied by tryst with socialism that played a direct role in igniting the civil war which derailed Sri Lankas development for 30 years. Today after the civil war, it seems that Sri Lankas time has finally come. Though the growth dipped sharply during the war, the economy continued to grow at an average pace of 5 percent. The only reason for this was the young educated population situated in the western province that produced strong growth in service industry. The north and east province that account for 30 percent of land and 15 percent population was mostly war zone. With the nation whole again, achieving 7 to
The Fourth World


8 percent of growth in the next decade could be well within reach. With government keen on growth and the aim to raise the country from 102 position to 30
th nd
The Fourth World

complete surprise, leaving with huge losses. Conversely, markets are also quite week at recognizing the financial benefits from peace, well studied by agencies such as world bank and UN, the peace dividend is real and Sri Lanka is poised to be a big beneficiary Vietnams Port to Nowhere: Vietnam offers a classic case of a small country that had greatness thrust upon it. By middle of the last decade investors were not only hyping Vietnam as the next China but, also throwing more money at it than it could absorb. In 2007 the investment produced a net inflow of $17 billion in a $80 billion economy, a ratio four times than China ever achieved. The leadership simply lost control of the economy and in 2008 the bubble went bust. Vietnam always followed
the footsteps of China, but it lacked the volume and scale which China held as its biggest strength. Additionally the operating cost in China was much lesser than in Vietnam, it is very difficult to connect with international shipping ports as most of its 54 ports were built for river routes which increased the logistics cost. It has to get back to the basics of economics by building roads, communications and infrastructure to connect business. The leadership is investing into education at a high pace than China and focus on high skill labor development. Its a good time for the government to deep dive into fundamental issues and concerns of the economy and plan a path ahead, hence a huge potential to regain its charm as the next China.
in the world banks
rankings by business climate by 2014. But the path doesnt promise to be easy as the socialist experiment of 1970 had lead to high taxes and government debt which still equals to 80 percent of GDP. However, it is bringing the vast swaths of formerly rebel-held territory back into play and exploit the countrys long-standing strength of highly literate population and its geographical location between the two key shipping routes of India and China. Markets are especially bad at foreseeing the financial implications of war, the most famous example is World War 1, which took the investors by
Article by: Siddarth Jaiswal IMT Hyderabad sidharthjaiswal9@gmail.com

Perspective
The PowershiftThe Shopping Evaluation

Once upon a time, the storekeeper had power over the consumers purchasing choices. Then over the past century, this power was stripped from the merchant. It became prized territory and was fought over in the battle for market dominance. The trophy was wrested from the hands of the vanquished and held briefly by successive victors the consumer, the manufacturer, the brand, the retailer and now...? Since more than five decades now, the consumer habits and procurements have been modelled by environmental engineers. Cultural and physical environments have manipulated and been manipulated by evolving consumerism. The Generic Shopping List of the Fifties During the fifties, daily visits to corner mom and pop store were the order of the day. This frequent household chore was a matter of personal contact between the consumer and the storekeeper. The consumer would stand in front of the counter with his bag in his hand, while the grocer would preside over his domain behind the till. He would take your order and fetch every item for you. The shopping list would also have been a generic one sugar, flour, salt, spices, etc. With time, these generic descriptions became brand oriented. So the soap became Lux, toothpaste became Colgate and washing powder became Surf. But the power of making choices still remained with the grocer. It was he who collected the comestibles from the shelves and gave it you. Gradually, he came to know your purchase patterns as well as you knew them yourself!


Product Retailer Consumer
The Birth of Choice in Sixties and Seventies Now the grocers dominion began disappearing. The supermarkets had arrived and the world of shopping changed and the retailers power over consumer choices shifted to the consumers themselves. Now shopping became the domain of individual choice. Now the grocer did not decide what you wanted and what you did not. This was the first time that the consumer got an opportunity
Consumer
to establish a relationship with the FMCGs. The retail price maintenance systems also changed. Originally the retailer would charge a price different from the one recommended by the manufacturer, and this compromised the consumers perception of a brand and even risked diluting the brands value. The Maximum Retail Price (MRP) arose in this era. This practice guaranteed profit margins, forced retailers into obeisance and removed the prime
Brand
motivator in the consumers choice of one retailer over the other (apart from the geographic location). The price and selection in all stores now became uniform. Consumer loyalty to retailer dissolved and gave way to brand loyalty. Now it was up to the brands to keep promises not only of price, but of consistent quality and reliability. brands trust.
Retailer
In
this
process, on
built
platforms
which to establish consumer
The Branding Power of the Eighties Now the power of the brands and the weight of reputation they carried grew. Procter and Gamble, an emerging name then, paved the way for branding and fashioned the consumer experience. Consumer items began existing as icons and metaphors for their own functions. In the late eighties, the power of consumer choice shifted again. The retailers be-
gan creating their own brands. So, the retailers own products began to compete with the other brands, leading to lot many established brands losing out on significant sales volumes and revenue. The Rise of the Retail Power in the Ninties The retailers began realizing that they accounted for a sizeable portion of a manufacturers business. Brands were then forced to create points of
differentiation that were based on client-store needs. This turned the tables on the consumers prime loyalty to the brand and resurrected consumer loyalty towards the retailer. Retailers increasingly began coming up with their own private labels the way the Future Group has Golden Harvest, Tata Group has Star, etc. These sub-brands sold at lower or competitive prices and marketed under the umbrella of the

retailers name. This put the retailer in-charge of the consumer product choice once again. Loyalty was no more connected to FMCG brands but also to stores own private labels. But the resurgence of retailer power over consumer choice didnt stop there. The retailer and its brand suddenly became the small player in the big competition for consumer attention. Consumer loyalty followed the options it was offered and shifted from individual brands to retail identities. These retailers now offered warrantees, price reduction, handy locations and
often private label brands. This was the time when the DNA governing consumer behaviour was mapped. As a result, brands not only had to offer discounts but also pay extra fee to guarantee preferred shelf position. Eventually retailers conceived and introduced loyalty programs. And while the retailer was focussed on keeping the enemy, the brand, at bay; the internet crept up on the adversaries flanks. A powershift was about to occur, this time moving the power over consumer choice away from both brands and retailers to etailers.
The Story of the Millenium The advent of internet gave manufacturers an opportunity to bypass the stores, which was traditionally their link to the consumer. By using the consumer data acquired from research companies, from the loyalty programs; the companies could interact directly with the consumers and promote their brands through direct marketing campaigns. The manufacturer thus regained some control over the consumers choice and also to control consumer flow in a low profile fashion. The internet thwarted the retailers ability to inter-


Brand Wholesaler Retailer Consumer
cept consumers as they previously used to. The dialogue now became one-to-one basis. The internet prevented competitors from obtaining the full picture of what went on between the competition brands and their consumers. The manufacturer now acts as a retailer. The internet turned the battle for power over consumer choice upside down one
more time, creating a new and unexpected retailer enemy. Internet shopping and marketing offered what retail had failed to offer no queues, no geographic barriers, low prices and unlimited selection. A consumer dream world had appeared. This way the world has changed from the fifties to now. Today, e-tailers like flip-
kart, myntra, fashionandyou, indiatimes, eBay, Amazon, etc. have established themselves. Everything from groceries to home appliances, apparel to books, everything can be bought online and delivered home in no time. And the powershift keeps going...
Article by Bhavi Patel IRMA brazenberry@gmail.com


Its wise to learn, its GOD like to create
Chlorophyll
Happiness At Last
A smile may dwell on my face for a moment or more, I may appear to be in the high skies, waiting to soar, I may be radiating with the joy of someones presence, But what I feel from inside is all that makes sense. My heart is wailing with the pain of the unknown, It seems to have hardened into nothing but stone. The spark in my life seems to have faded, All ethics and morals seem to have degraded, Even inspiring stuff now seems nothing but words, The eye-filling thoughts are flying away like birds. The joy, the splendour - everything is missing, All the inner turmoils seem to be shouting and hissing, All hopes appear bleak and out of sight, A warm, sunny day looks like a pitch black night. To cut it short, I dont feel happy anymore, Every cramped passage leads to a closed door. But, its at this moment that I remember God, The saviour of my life - guarding me with a sword. I know Hes watching, knowing I can withstand, Throwing subtle hints about a world that is grand, Failures will haunt us on every step we take, Problems will surface, but remember they are fake. This is the time to enjoy and to rejoice. Building our destiny is a matter of our choice. Life is not only about miseries and pains, To see rainbows, we have to go through the rains. And this feeling brings the smile back on my face. My world seems to be filled once more with grace. So theres happinessat last, in the recesses of my mind. A panorama of emotions which are soothing and kind. I may not get someone, but love never dies. Maybe God has chosen someone else for me guys. So I will always remain cool and thats a promise, Because I have learnt one thing which goes like this, Life is really beautiful, beyond any measure, And living it fully is the ultimate treasure. Poem By Karun Sethi DoMS, IIT Roorkee karunsethi.iitr@gmail.com

Qutopia
Its Exquizite, Kills your Quriosity and adds to your Quizdom. Need we say more? Qutopia A Utopia of the 31st October, 2012. The winner will have their names published in the next issue. Also, person getting the
best Biz Quiz Tidbits to wreck your brains! Rush in your answers to domination.doms.iitr@gmail.com before
highest score in the current quarter (Jul-Dec 2012) will get a gift voucher. Answers in the next issue of DoMi-
nation.
Section A
(1 Point for each correct answer)
1) The Titanic, with 2,200 people on board, departed from which of the following British ports on 10 April 1912, for its fateful voyage from Europe to the US? 2) 'Mini Countryman' is a SUV car launched by _________. 3) Which of the following countries is Indias second largest supplier of crude oil - against which western countries have imposed sanctions? 4) First African woman to win a Nobel prize? 5) Who are Bretton Woods Sisters? 6) PictureWhat is the event that is described?

Qutopia
Section B
(2 Point for each correct answer)
ID the Logos A) B)
C)
D)
Answers to Aug12 Qutopia Section A: 1. Videocon 2. Jet 3. Gujarat Section C: 1. Solar-powered lamp/Danish(Iceland origin)/Olafaur Eliasson 2. Partha Chatterjee/Maruti Suzuki/RC Bhargava
Section B: 1. Mr. Sushil Kumar shinde/Mr. pranab Mukherjee 2. Royal Artillery Barracks/1716 Section D: 1. Advertising Standards council of India/HUL/ Kwality Walls/Amul. 2. Pakistan/Bangladesh/Srilanka/2007
Winner of Qutopia (August 2012) 1. Sowmiya VSDM IMD, Mysore 2. Varun Sharma DoMS, IIT Roorkee

DoMS-da-Evince
Varun Goel is 2011 batch pass out of DoMS, IIt Roorkee and presently working as Executive (HR) at BHEL, Haridwar
1. What are your roles and responsibilities with BHEL? I am working in HR department as Executive (HR). Within HR department, there are different sections like Recruitment, Policy, Industrial Relations, and Establishment etc. There are two establishments here in BHEL Haridwar Executive Establishment and Non-Executive Establishment. I am in Executive Establishment where I take care of the requirements of the employees in officer cadre from the time they join till the time they retire. Our team in Executive Establishment takes care of the annual appraisals, promotions, transfer requests, pay fixation/anomalies, disciplinary cases, absorption of trainees, probation clearance etc. Apart from these, there are some routine activities like issuing medical cards, giving reply to RTI Queries, getting
the different nomination forms filled up by employees etc. 2. How was your experience working with INFOSYS and how it is different from BHEL? First of all, there is a lot of difference in working pattern of a PSU and that of a private MNC. Second, industries are totally different. While in IT industry everybody is at least an Engineer, where people work in a multicultural environment round the clock; in manufacturing set-up, people come with different educational backgrounds ranging from Engineer to simple graduates to just 10th pass with I.T.I. working in strict shift patterns. Then, my profile is completely different. The work in Infosys was pure technical (sitting all day and coding totally complex related algorithms) to HR whereas in BHEL, the work is (Interacting with people, e-
mailing, preparing reports, Organising meetings). At Infosys, we were pampered a lot, were given a lot of training before going to production. At BHEL, a lot more maturity is expected from us. It is expected that we the youngsters will lead the team from the front solving all the problems that might come in our way. We had an induction programme of just 15 days after which we were allotted our sections. However, the training provided by Infosys is being put in use from the day one in BHEL. It helped me in picking up the local legacy system quickly and contributing in implementation of SAP - HR in BHEL Haridwar. 3. What has been the most challenging role in your career so far? It is tough to answer that. Definitely there are times when you don't know how to go


when you don't know how to go about things coming in your way but that happens for a short time as I believe every problem has a solution. You take help of your colleagues and seniors, learn from the past experiences, even do some new experiments but come out of the problem. I also believe that I am yet to face a situation in which I feel completely helpless. Few essentials that I would mention here that will help in dealing with challenges: - A positive never-say-die attitude. - Communication - communicate, communicate, communicate!!! upwards, downwards and within your team. - Accurate, Brief and Clear (the ABC - Open Mindedness. - Keep patience. 4. How has DoMS, IIT Roorkee contributed to your success? It has helped me in every way. I am a much better person now. Apart from immensely contributing to my knowledge from the respected teachers and friends, it has also helped me in developing my soft skills. Extracurricular activities made sure that we did everything to become a good manager. Apart from that, I have made friends for life. 5. Any message for the readers, especially the current Believe in Work Hard, Part Hard. Cheers !!! batches of DoMS? Utilize the most of your time while you are there. Keep on improving, be it in what-ever field. Interact with your peers, seniors, juniors, professors, PhD students, B.Tech students, M.Tech students. (Remember Rancho of 3 idiots!). There is lot to know and learn in this world. Take part in extracurricular activities. This will make sure you are corporate ready when you passout and join some company. Go on trips. Some of you may never get chance to be in uttarakhand for so long.
DoMS-da-Evince

Success Story
Kishore Biyani
CEO of Future Group & MD of Pantaloon Retail
true
Indian
retail
czar,
port and export of garments, studied advertisements, attended marketing seminars and did a course in marketing. Biyani started his first business enter selling stonewash fabric to small shops in Mumbai. Famous for his unconventional style of running the business he was initially written off by the media. His stores were referred as 'dirty and he was never called for any trade body meetings or investors conference. Biyani defied the status quo and challenged the conventional mindset by significantly thinking big. He tried his hands in various other businesses, some failed, some were moderately successful contributing to his greater understanding of customers and the foundation of organization. A staunch believer in the
groups
corporate
credo,
Kishore Biyani is the Group CEO of Future Group and Managing Director of Pantaloon Retail. The man who triggered the concept of retail supermarkets in India like Big Bazaar, Pantaloon, Mega Mart and Bangalore Central is popularly known as KB. With his sheer guts and instincts he created Future Group, a USD 1 billion enterprise and spearheaded the emergence of Pantaloon Retail as the leading retailer in the country. Born on August 9, 1961 into a small trading family, right from childhood, he was rational and insisted on logical explainations to his questions. He strongly believed in himself and never gave up. He did his college in Mumbai and did a commerce degree. He did a course in im-
Rewrite Rules, Retain Values, Biyani considers indianness as the core value driving the group. He registered his brand name with a American name John Miller with a tagline A shirt Inspired by America. He was the first person to introduce exchange offers. Led by its flagship enterprise Pantaloon Retail, today operates around 16 million square feet of retail space in over 85 cities and towns and 65 rural locations across India. Headquartered in Mumbai it employs around 35,000 people and is listed on the Indian stock exchanges. Manufacturing apparels at their own factories and utilizing Economies of scale has helped in providing low priced goods. Biyani designed his outlets to

Success Story
suit the need of Indian customer, who were most important to him. Future Groups retail arm follows a multi-format retail strategy and some of its leading formats include Big Bazaar, Central Food Bazaar, Pantaloons, Ezone, Home Town and Planet Sports. It also operates popular shopping portal, futurebazaar.com and rural retail chain, Aadhar. Future Groups other businesses include financial services, insurance, brand development and logistics. Biyani faced many complaint from investors for rolling out retail stores which ate more money than it could generate. But he always thought in terms of Mass Customers and what would fire their imagination. he was a firm believer in reaching out to the public and making emotional connection with them. He had lots of passion and values like simplicity, humility and willingness to learn. He had the leadership qualities of a keen observer in choosing right location and ideal people, own vision of delivering everything, everywhere to every customers in most profitable manner. Biyani has been following the ideals of Sam Walton and Dhirubhai Ambani since his late teens. He has never met them, but would read about them, their books and follow them pretty closely. They have helped him hone his leadership skills on how to dream big, how to build a business and how to create an organisation that is able to scale up. Two of his favourite quotes from Sam Walton are, Capital isnt scarce; vision is. And There is only one boss, the customer. And he can fire everybody in the company from the chairman down, simply by spending his money somewhere else. The 49-year-old maverick received the Ernst & Young Entrepreneur of the Year Awards. In year 2006 he was awarded The First Generation Entrepreneur of the Year by CNBC Indian Business Leaders. The same year he was awarded the Young Business Leader conferred by the IIM Lucknow National Leadership. He recently authored the book, It Happened In India. which traces his struggle, failures, restlessness, and sheer grit. The book has sold some 100,000 copies, more than any other business book published in India so far. Often been called the Sam Walton of India, Biyanis success is a classic example of how deep insights can create an impregnable differentiator among your competition which are purely led by observations and theoretical market research reports. Though most of KBs deep understanding is attributed to his marwari trading family upbringings and his interest in observing people and understanding their behaviour he jokes as a child he has always been a big source of irritation for his family as he used to question every damn thing in the world. Though he would never consider collaborating with Wal-Mart he asserts, We are investing a lot in food through future ventures in food processing centres, FMCG products and so on. In the next three to four years we want to be the largest food and FMCG Company in the country. What makes our innovations different is that we try

Success Story
to sell by people and not to people. We can learn from him simplicity in ideas, speed in the essence of everything, learning while execution and liking thrift. His belief in himself and the customers he served along with the core values of Indianness has made him an optimist leader among all. He also showed us the importance of building and nurturing relationships while rewriting rules and most importantly retaining values.
Article by: Priya Adhikary DoMS, IIT Roorkee priyaswit@gmail.com

Regardez Ieconomie Edible Oil-Procurement Strategy in India
The edible oil sector in India is huge. It forms a large part of consumption of Indian consumers in households either directly as a cooking medium or indirectly in the form of foodstuffs or cosmetics. India produces less than 50% of its domestic oil consumption and meets the rest of its demand by imports. It is the largest importer of oils in the world. Total edible oil consumption in the year 2010-11 was approximately 16 million tons and only 7 million tons was produced domestically. India imported around 9 million tons of oil out
of which 80% was Palm Oil. Palm Oil is mixed with other oils and used in the food industry on a large scale due to its low cost. Soybean Oil, Rapeseed Oil and Groundnut Oil are few of the other major oils used in India. The oilseed production in India was enhanced by Technology Mission on Oilseeds (TMO), an initiative of Ministry of Agriculture in 1986. This was started to make India selfsufficient in oil production. Even though the Oilseed production in India has increased with time owing to high Mini-
mum Support Price (MSP) provided by the Government, India is unable to meet the growing demand of its consumers. The increase in demand is mainly attributed to increasing population of the country as well as changing investment patterns and improving living standards. Edible oils category mainly consists of 8 major Oils: Palm Oil, Soybean Oil, Rapeseed Oil, Groundnut Oil, Sunflower seed Oil, Palm kernel Oil, Cottonseed Oil and Coconut Oil. The consumption of all the oils is region specific. The major factor responsible for

Edible OilProcurement Strategy in India
the region-specific consumption trend in oils is the production of different oilseeds in different areas of India. For example, Groundnut Oil is majorly used as a cooking medium in Western and Southern India
due to large scale groundnut production in Gujarat, parts of Andhra Pradesh, Tamil Nadu and Karnataka. All the edible oils are also utilized by FMCG industry as ingredients in different products along with
their use as a cooking medium. The price of the Oils also varies region-wise but it is usually close to the price at which it is traded on a commodity exchange. The category (oils) has experienced high volatility in
prices since past few years. In the past one year, prices have increased by double digits. Whenever the price of any oil increases, the price burden doesnt stay limited to the oil manufacturer or FMCG Company that is using it as a raw material. But it is also passed on to consumers who buy the end products from the market.
From the graph, we can notice that these Oils operate at a certain premium to each other. Also, we observe that Groundnut Oil has always been the most expensive and Palm Oil has been the cheapest in the Edible oils category. The graph also tells us that the Oil market moves together i.e. the whole basket of edible oils
shows the same price trend at one point of time. There are various reasons for fluctuation in prices. The most important factor is the Supply-Demand mismatch. Apart from that, other factors are: Exchange rate fluctuation, availability and price of respective oilseed, proportion of oilseeds crushed to produce oil,

price of other oils as well as overall economy. Major Players: The major players in the industry are companies like Adani Wilmar (largest producer of edible oils in India), Marico, Cargill India and Ruchi Soya which have edible oil as their major business and other FMCG companies like Hindustan Unilever, Proctor and Gamble, PepsiCo, ITC, Kraft foods, Heinz, etc which use these edible oils in manufacturing various products. Oil manufacturers: Edible Oil suppliers can be categorized as: Millers are manufacturers who crush oilseeds to expel oil or use solvent extraction methods to extract oil. The oil that is obtained by crushing of oilseeds is known as Expelled Oil whereas the oil that is obtained by solvent extraction technique is
known as Solvent-extracted Oil. These millers not only sell the Oil after it is obtained from the oilseed but also sell the Oil cake i.e. the by-product of crushing. Oil cakes obtained from different oilseeds are traded on Bombay Commodity Exchange. These oil cakes are majorly used as cattle feed because of their high protein content. Refiners are manufacturers who chemically refine the oil to purify it and remove all contaminants and impurities if any. Many oil companies obtain expelled oil, refine it and supply to their clients or sell in the market. There are also manufacturers who do both milling and refining. Suppliers are also categorized as Traders or Brokers who act as a third party and help the FMCG companies meet the vendors and assure
the companies of a regular supply. Commodity Exchange Oils are traded on Commodity exchanges either in the form of Spot trading or Future contracts. Spot trading is buying and selling of commodities on the spot i.e. at the current price whereas Future contract involves a contract made at the current price but the delivery and payment is made at a later stage. There are a number of risks associated with the commodities. So as to mitigate the risks, Hedging is done. Hedging is making an investment to mitigate the risk associated with price fluctuations. Two concerned parties i.e. buyer and seller decide to exchange a certain quantity of commodity at a future date at the price decided today. This is done by involving a third party i.e. a futures exchange. In this way,


both the parties hedge against the risk. Procurement of Edible Oils: FMCG companies have various business verticals: Marketing, Human Resource, Finance, IT, Sales and Distribution and Supply Chain. All the business verticals are important but a robust upstream definitely gives the company an edge over others. It is very important to have an efficient Supply chain as it has a direct impact on finished products quality as well as price. Both the parameters are very important for any FMCG company. High quality and Low priced products are what the consumers demand. In order to deliver high quality finished products, the company needs to procure high quality raw materials. Procuring these raw materials is a function of the Procurement division of Supply Chain. Also, it is expected from the procurement team to procure these high quality raw materials at minimum possible prices. This can be done by tracking price of commodity on an exchange or in the local market and then negotiating the price with vendors so that it is procured at least possible price. Apart from price and quality, the team is also held responsible of the timely delivery of the raw materials at the manufacturing plant i.e. Availability. Generally, the vendor/ supplier should be located in the region close to the plant for timely delivery of oils as well as low freight charges. Therefore, the procurement team must ensure quality, price and availability of raw materials. In order to ensure the above, the procurement team forms various purchasing strategies like developing vendors in the region close to their plant, in regions where the availability of raw material is high or inplaces where there is a competitive market i.e. where manufacturers are concentrated. Other strategies include tracking commodity exchanges to Article by Aashwi Verma PGP-Agribusiness Management, IIM Ahemdabad a11aashwiv@iimahd.ernet.in negotiate prices and developing other cost cutting models. For example, recently Groundnut Oil prices were very high as compared to other commodities. This was mainly due to diminishing availability of the oil in Indian market. Due to the reduced availability and high prices, procurement teams of all the companies that use Groundnut Oil as an ingredient would have developed a strategy to mitigate these issues. The strategy could have included getting into long term contracts for groundnut oil, buying oil at spot price and storing it for a long period of time, buying and storing groundnuts and processing
nuts when required, backward integration or in extreme cases switching to a different oil altogether. Surprisingly many companies in India did use the last option and switched to other oils such as Rice bran oil, Cottonseed oil and Soybean Oil!

Department of Management Studies, IIT Roorkee Roorkee - 247667, INDIA Comment/Feedback Mail to : - domination.doms.iitr@gmail.com Contacts: Anurag Agrawal (+917579072360), Shibi Singh (+918958055603) Follow us :Blog Page- http://domsiitroorkee.blogspot.com/ Twitter Page- http://twitter.com/#!/doms_iitroorkee Facebook Page- https://www.facebook.com/pages/DoMS-IIT-Roorkee/156383884413349

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DOMINATION

NEWSLETTER FROM DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

s Regard nation i m DoM Tea

03 | DOMINATION, OCTOBER 2012 DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

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Edible OilProcurement Strategy in India

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