Survey on global gender relations throws up a few surprises

f the number of anniversaries were to be directly proportional to progress in the fight for equal rights and a levelplaying field, women have little reason to cheer as the 101st International Women's Day approaches. For, as a survey by Britain's Independent on Sunday reveals, while a large number of countries have seen improved conditions for women, a lot still is lacking. But the survey also offers up some surprises. Taking into account factors like health, politics and education, Iceland emerges as the best place to be a woman. But the question is moot whether, say, the matron from Karol Bagh in New Delhi would be amenable to shifting to Iceland. The best place to be a female politician, apparently, is Rwanda (they have lots of female parliamentarians). Which again sounds a bit dodgy. Africa, actually, offers quite a lot of the surprises. Lesotho, for example, with its high female literacy rate, is the place to be if you want to read and write. And Burundi, which ordinarily might present a 'spot-it' cartographical challenge, is almost 100% perfect if you are female, keen on trade unionism and labour force participation and that sort of thing. The big surprises start to happen when you get closer home, in Asia. Apparently, the most with-it locale to go to university is Qatar (with a six-to-one ratio for women in tertiary education compared to men). Then again, Saudi Arabia, where women are still not deemed fit enough to even drive, forget the vote or even walking alone, then it might take the sheen off a bit from west Asia. The most amazing tidbit, relatedly, has to do with our own saddi Dilli. Which, we are told, is the best place in the whole wide world for women driving a car. Quite. And please do, right now, endeavour to pick your jaw up from the floor.

There is too much discrepancy in GDP data to take it at face value

The policy imperatives arising from slowing GDP numbers over the last year remain the same: contain the fiscal deficit, change the use to which borrowed funds are put from consumption to investment, stop drift and dither on decisions that guide private investment, show some courage to raise user charges so that sectors like power, petroleum, irrigation, etc, can be commercially viable. The big-ticket item here remains decontrolling diesel, kerosene and cooking gas prices while allowing parallel marketing by anyone interested in these segments, so that competition would eliminate assorted fictitious costs that pad prices today. For this, apart from permitting companies to enter independent retailing of fuels, the government would also need to put in place an open access policy on the infrastructure associated with petroleum retailing.

That said, the latest national accounts data shows an alarming level of inconsistency that calls for remedial action. Manufacturing is supposed to have grown just 0.4% in the third quarter and 3.4% in the first three quarters together. At the same time, electricity is supposed to have grown 9%. Where is power going, if not to drive manufacturing? Why did net tonne km of goods movement by the railways grow 5.3% in the same period, if there was no growth in manufacturing? Why were people flying around (12.9% growth in passengers handled by civil aviation) and staying in hotels (growth of 9%), instead of staying put at home, ruing stagnant production? How could finance, insurance, real estate and business services grow 9%, if the wheels of industry had stopped turning? Trade, as a proportion of GDP, touched 54.5% of GDP in the third quarter of the current fiscal, moving up from 50% of GDP in the corresponding period last fiscal. Yet, cargo handled by ports is supposed to have declined 4.8% while cargo that moved by air declined 2.8%. Did we get such violent growth in export of services that overall trade grew while merchandise trade declined? Our software exports did well but performed no pole vaults. Overall, CSO has come up with a string of numbers that just do not hang together.

Counting the clicks Lessons for marketers from India's youthful netizens
The demographic trends in Indian internet usage and the ways in which Indian e-commerce is developing suggest that it is on the cusp of an explosion that could, in the next three years, turn it into one of the largest markets in the world. India has already become a test market for e-commerce because it exhibits unusual patterns that could be replicated elsewhere. Indias netizens are young, highly social, unafraid to shop online and comfortable with mobile access. India has around 100-120 million or so regular internet users. According to Comscore, an online research firm, this is by far the youngest net population in the world, with over 75 per cent of users under 35 years of age. It is also growing fast, and is likely to cross the 300-million mark by 2014-15, while remaining an extremely young demographic, with over half the users being under 25 years. In terms of monetisation, the Indian e-commerce market is reckoned to be worth Rs 34,650 crore in 2011-12, with around Rs 29,700 crore of that being travel-related (hotel bookings and tickets). By 2014-15, given trend growth rates, the overall Indian e-commerce footprint could be Rs 1,98,000 crore. An unusually large proportion of that market will be cash-on-delivery or COD, due to the fact that credit card penetration is low. COD also reduces fraud. Uniquely, about 70 per cent of Indian non-travel e-commerce is COD. Consumer electronics, financial products, entertainment and apparel are currently the most popular non-travel spend categories. The Indian market is clearly heavily mobile in orientation and that access mode will grow exponentially. As of now, there are 30 million fixed broadband accounts versus 50 million mobile broadband users (using

laptops with USB dongles) and another 15 million on 3G mobiles. Some 5 million users never use a computer, surfing only on mobiles. Mobile handsets and tablets generate close to 10 per cent of Indias web traffic in terms of data use, and much more in terms of time. Smartphone penetration is rising at over 50 per cent per annum while tablet usage is expected to jump as telecom service providers roll out 3G and 4G plans bundled with cheap tablets. Meanwhile, Indian net users show a very high degree of social network penetration. Almost 95 per cent use at least one social network higher than the global average of 82 per cent. Most users perch on multiple social platforms. YouTube has over 23 million unique Indian users. This population by and large, sees email as a formal mode of communication and uses it only for work. Email use has declined by 22 per cent in the past year, mirroring worldwide trends. Online advertising is worth around Rs 990 crore in 2011-12 and growing at 40 per cent. Marketers and advertisers must ensure that they retain young Indians attention, who may be always online but hitting the net in short bursts on small screens. And it isnt just that spending is shifting online; research is, too, for this demographic profile. Opinions, good or bad, spread virally and woe betide the company that cant shift gears to match. The sheer scale of the Indian market, and its exaggeratedly youthful profile, promises that it will be an exciting environment. It could be a lead indicator for the rest of the world.

Corporate deals: A wide-angle view

The Vedanta Group's consolidation efforts point to the need for a qualitative framework to analyse such decisions. The Sterlite-Sesa Goa deal makes strategic sense even if cash flows don't. Not since the announcement of a merger between Reliance Industries and Reliance Petroleum, first in 2002 and then again in 2009 (the period in between saw the birth of another Reliance Petroleum!) has the corporate sector seen a merger announcement rivalling it in size and scope, as the one involving the Indian affiliates of the London-listed Vedanta Resources, made last week. The promoters (Vedanta) are calling it an exercise in consolidation and simplification of the Group's operations. That may be. But the proposed new arrangement is not lacking in complexity either. The business is currently structured under three layers with Vedanta Resources at the top, Balco, Hindustan Zinc, and so on, at the bottom, and Sterlite Industries or Sesa Goa making up the middle rung. The new arrangement too would have three rungs of ownership. Adding to the complexity is the issue of some portions of the debt being offloaded to the new structure and the rest being held by the London parent of the Group.
Opinion divided

Not surprisingly, the proposal has left the investment community bewildered. Brokerage research reports put out in the aftermath of the announcement present a conflicting picture. While most of them describe the new arrangement as beneficial to the shareholders of the promoter company Vedanta Resources opinion is divided as to the class of shareholders of the merging entities who stand to benefit or are hard done in by the new arrangement. If those whose job it is to analyse, for a living, the consequences of strategic decisions of

companies do not seem to have a common view, the plight of the lay investors who have to vote on these proposals can easily be imagined. We must accept that issues of corporate strategy, by their very nature, do not readily lend themselves to a rigorous and objective analysis. Yet, the investment community insists on inputting some numbers and running it through an Excel' spread-sheet. As the inputs vary, so too must the assessment of their outcome. It does not also help that companies are often vague in explaining their rationale for a particular course of strategic action. More often than not, companies must, of necessity, obfuscate the issue for fear that it offends the sensitivities of those who are in a position to thwart a move that is inherently in the interests of the community of stakeholders.
The way forward

The moral of the story is this: We need a completely different framework for analysis of strategic choices that companies make. A model that looks at qualitative factors surrounding a decision which, while being logical, is something that does not render itself readily to number crunching is perhaps the way to go. How does Vedanta's latest decision on the operations of its Indian affiliates fit into this new qualitative framework of analysis? Here, dear readers, is my take on the deal. Take it for what it is worth. Till as late as September 2011, Vedanta couldn't complete its acquisition of stake in Cairn India. There was a lot of back and forth movement between the Group and the Government over the royalty issue and the deduction of tax on the profits of the Cairn's UK parent company which was selling the stake to Vedanta. Between September and December, all formalities were completed. If Vedanta wanted to offload the Cairn India stake to Sesa Sterlite (the merged entity), the earliest it could have begun action was in the current quarter, that is January-March. If Vedanta had transferred the stake in the shares of its 100 per cent subsidiary that owned Cairn India shares, there was the possibility of a capital gains tax. But the Supreme Court in the Vodafone case has said that if the subject matter of a transaction of sale is a capital asset that is held abroad, the gains, if any, would not be subject to tax under the Indian tax laws. This may well be reversed by a larger Bench of the Supreme Court. But that is in the realm of the distant future. For a transfer effected today, the transferee making the payment is under no obligations to deduct tax. That is the effect of the judgment. In other words, if a wholly-owned subsidiary of Sesa Sterlite is going to buy the shares of a 100 per cent-owned Vedanta subsidiary that controls, in turn, the stake in Cairn India, it is not obliged to deduct tax at source. It is a transaction involving a foreign asset, no matter that there is an underlying Indian asset (Cairn India shares). Could the Government make a change in the law of the existing Income-Tax Act while presenting the Budget, 2012? Possibly, it can. But, then, it would be some months before it becomes law. Enough time to complete the transaction between the two companies. A failure to deduct tax argument of the kind that Vodafone faced, cannot be invoked in this case. In any case, the Government would rather wait till the review petition before the SC is disposed of, than try to undo the judicial effect of an order of the Supreme Court in a dispute in which the Chief Justice of that Court itself was a member hearing it and ruling on it.

Structuring the deal

Vedanta presenting the deal as one involving just Cairn India shares is also not a strategically wise move. It would unnecessarily draw attention to the deal as one undertaken to beat the tax obligation and all those messy issues of tax avoidance' versus tax planning' debate that must ensue. It must be presented as a part of a larger restructuring in which other assets/companies of the Group were involved. This is where the deal, as structured, makes even better strategic sense. Vedanta Aluminium is locked up in a huge controversy over environmental degradation and tribal resettlement issues. Vedanta Resources, as a London-based promoter putting up the project and fighting it out in the public arena, suffers from certain obvious constraints, given its foreign origin. But as a unit controlled by Sesa Sterlite, a company with a huge domestic shareholder base, it suffers from none of those difficulties. There is still no guarantee that it will overcome environmental hurdles. But, at least, it removes one obvious handicap in the battle. The inclusion of captive power plant facilities in the deal and carving them out as a stand-alone entity in power generation too has obvious strategic merits. Many groups are doing this to position themselves as power producers in their own right. Every industrialist of some standing wants to have a presence in that one industry where there is no dearth of demand but a huge supply shortfall a throwback to the old licence-permit raj of the pre-1990s. Throw in all these factors, the Sterlite-Sesa Goa deal and involving a host of associate companies makes eminent strategic sense, even though DCF cash flow calculations may not quite capture that.