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An effort by Stockyard in association with Mantra Consultancy Group
Crossing Boundaries 1st August 2008 Issue 8

A Business Magazine by Business Managers

From Editor’s Desk
Good morning Friends!

….and you believe that your very coming on this blue planet has a very special
purpose to be served…….there
are opportunities who are seeking
opportunities to meet you…so that you can transform those mere
opportunities and chances…

You could be reading our 8th Issue in the Or probably all of them, put together……there is
morning, day-time, evening or even in night, so a divide deep within YOU, deep within
you could ask…why is this Good Morning? ME….deep inside all of US…..And probably this
divide gets reflected in whatever we do,
It is because the message of our issue and our whatever we say and however we act.
dedication this fortnight is to all bright, strong
and blooming forces those bring about a It is the biggest boundary of human mindset,
change…..a big change. From tamaso maa jyotir that we are talking about……a divide that has not
gamayah. towards…light from darkness. just existed through ages…but also has got
supremely strong deep within our psyche.
Dreams …are the only things, we have been
talking in our past 7 issues…not only those 7 This is the boundary of Thought, Conscience and
small, tiny steps but also our all endeavors have of our belief in our own-self. Do we believe
been solely motivated by those childish ourselves, our abilities, our truth and most
dreams. important, do we feel, we are not just living
beings but manifestation of supreme power and
But we believe…it is in childhood, that most of most-sacred entities in the universe?
the creativities and inventions born…..those
were kids, who actually brought revolutions so It doesn’t end here…..Wait a minute….why
many times on this planet and could create am I saying this?
,whatever beautiful ,we see around. Elders,
It is because ,in the same world, there are few
grown-ups and Knowledge-bearers, often or
people, handful of us….who are creating a big
almost always miss the chance.
difference not just in their lives but in the lives of
As you can guess from our cover-page…our many others, just by recognizing the truth that
dedication in this issue has been to they are THE STRONGEST FORCE TO RECKON
“crossing boundaries”
And why I am saying all this, is just because
What are these boundaries? there is a boundary between YOU & YOU,ME &
ME,US & US…….and it is the self who has to cross
It’s not just those political, social and digital
the ocean…..a true sense of ASATO MAA SAT
boundaries, it is also not the boundaries
between haves and have-nots, neither is this
boundary between intelligentsias’ nor of silly,
stupid cultural taboo.
It is not about a spiritual discourse, for what I silently….to change the way this country thinks
am saying is implying to something purely and works….and we are seeing the difference
mechanical and material. There have been and those two individuals could create.
there are still few people, who could
understand this divide and crossed the There are number of examples…number of
boundary of self to transform there own as well exemplary individuals…from Mother Teresa to
Gandhi to Subhash, Bhagat Singh…to Budhha…to
as society’s life.
Abraham Lincoln….to….Mohammad Yunus…to
Again to bring my point more explicit…. many many more people…whose name,
probably we do not remember……
There has always been a way to do business in
India…a society which runs on scarcity…in the What is more important is their extremely
quota-licence raj of 80s.Here comes a petrol- humble beginning, their sheer passion and
pump attendant from some unknown village in conviction, their focus and their zeal …and they
Gujarat, travelling all the way from Yaman to could scale what was definitely impossible to
India, to set up a small business in a most achieve.
unfriendly and hostile environment……..He was
the one who crossed the boundary…. Why am I saying this to you?

Here comes an Electrical Engineer from Only because ,I see a possibility in each one
somewhere in developed USA to work in a of you…and this is a very bright omen….a
company along with his few colleagues in their mere push to the other side of boundary and
20s or 30s.They left their 000s rupees job to here we get one more shining star in this
take the most impossible task of setting an IT little more cloudy sky.
Empire, when a handful would be knowing,
what Computers are. Believe in you & you believe in God, who has
created you…and you believe in your parents
Here comes a young Punjabi Boy of 23 years (or
who have been the most beautiful things in
so..) with Rs 20,000 in his wallet to set up a
telecom empire which after 20 years would your life…believe in you and you believe in
become $ 50 billion company. eternity….and you believe that your very
coming on this blue planet has a very special
Here comes, an unsuccessful steel merchant purpose to be served…….there are
from Calcutta, running a rotten business of
opportunities who are seeking
worth, may be some lakhs…to venture into
opportunities to meet you…so that you can
most hostile environments of Far –east
transform those mere opportunities and
countries, just 20 years before to set up one of
the most valued companies in the chances…those subtle possibilities in real
world(Fortune 50) commanding more than 15% happenings…grand happenings…..
of global steel production.
And again …i repeat, why am I saying this to
Here comes a common Indian, who went to you?
London some 30 years ago for medical
treatment of his daughter, who died in a You know…why am i…..?
chronicle deasease.He stayed there and now is
UK’s 2nd richest person after L.N.Mittal.

Here also comes an average politician from

Andhra Pradesh and a common DU Professor,
in early 90s to take up a challenge, although
Corporate Radar
GSPC strikes gas field off AP coast

Gujarat State Petroleum Corp (GSPC) has struck a 'good' sized gas field off the Andhra Pradesh
coast. GSPC made the discovery in Krishna Godavari basin shallow water block KG-22.

GSPC, owned by the Gujarat state government, had won the block in the third round of auction
under the New Exploration Licensing Policy (NELP). The discovery in KG-22 is a new play and
different from its 2005 discovery in the same Krishna Godavari basin.

HDFC Q1 net at Rs 468.11 cr, up 25%

Leading mortgage lender Housing Development Finance Corporation on Wednesday reported a net
profit of Rs 468.11 crore for the first quarter ended June 30, a 25.56 per cent growth over the
corresponding period a year-ago.

The firm had a net profit of Rs 372.81 crore in the first quarter of FY 2008, HDFC said in a filing to
the Bombay Stock Exchange.

The total income rose to Rs 2,318.62 crore in the latest quarter, from Rs 1,830.39 crore in the same
period a year-ago.

TCS net up 12.10% at Rs 1,204 cr in Q1

Tata Consultancy Services Ltd (TCS) posted a net profit of Rs 1,204.01 crore for the first quarter
ended June 30, 2008 as compared with Rs 1,073.85 crore reported during the same quarter in

Total income for the quarter has increased to Rs 5,321.88 crore from Rs 4,183.87 crore in the year-
ago period.

The Group has posted a net profit of Rs 1,290.61 crore (Rs 1,202.93 crore) on a total income of Rs
6,530.34 crore (Rs 5,211.54 crore)

The Board of Directors of the company at its meeting held on July 16 has declared an interim
dividend of Rs 3.00 per equity share of Re 1/- each.

Chambal Fertilisers net down at Rs 23.79 cr

Chambal Fertilisers & Chemicals Ltd posted a net profit of Rs 23.79 crore for the first quarter ended
June 30, 2008 as compared with Rs 61.71 crore for the quarter ended June 30, 2007. However, the
total income has increased to Rs 843.77 crore fr om Rs 599.97 crore in the year-ago period.

Wipro Q1:Net profit rose to 8.14 billion rupees ($190 million) in its fiscal first quarter to June from
7.10 billion a year ago under US accounting rules.

Revenue rose 42.5 percent to 59.62 billion rupees, as it added 31 clients during the quarter.
Satyam Q1:

43.20-per cent growth in software revenues and 44.77-per cent growth in net profit for the first
quarter ended June 30, 2008 in comparison to the same period last fiscal.

The revenue was up 8.48 per cent at Rs 2620.83 crore (Rs 2,416 crore in Q4 fiscal 2008) and net
profit was up 17.32 per cent at Rs 547.70 crore (Rs 466.85 crore in Q4 last fiscal).

The quarter saw an exchange loss of Rs 36.3 crore.

Microsoft Q4:
Fiscal fourth-quarter profit jumped 42 per cent, helped by strong sales of its Office and Windows
software, but the company offered a soft outlook for the current quarter.

Earnings for the three months ended June 30 rose to USD 4.3 billion, or 46 cents per share, missing
Wall Street's expectations by a penny per share. In the year-ago quarter, Microsoft reported
earnings of USD 3.0 billion, or 31 cents per share.

Revenue increased 18 per cent to nearly USD 15.8 billion from USD 13.4 billion in 2007.

The company said it expects to earn 47 cents to 48 cents per share on USD 14.7 billion to USD 14.9
billion in sales.

CITI Group Results:

Citi reported a second-quarter loss per share of $0.49, lower than forecasts of around $0.61-67. It
took credit costs of $7.2 billion against some estimate of around $9 billion
How Reliance was built
A think different: Reliance way of business
You were first among the new crop of licensees for Partially-Oriented Yarn.

Yes, but whoever already had a licence, had a business advantage. So, what
competencies did we build? One was to get a licence in a licence-permit raj.
Getting a licence is nothing; you have to build a sustainable business. Raising
the money is another competence.

In the '80s, when I came in, the ground rules were made clear to me. 'Build this

We have received this special interview of Mr.Mukesh Ambani, which we found quite
interesting and insightful. We recommend our readers to go through every statement
made in this interview as it talks about a perspective…it also talks about many
simplistic solutions of our big problems…this is not the testimony of a
businessman..Rather an outlook of someone who thinks so much different from
business from scratch, without taking anyone from Reliance.' That forced you to be much disciplined. I
looked around and figured out in three months that this industry runs on heroes.

Experts came in with their notebooks on which they had written down all the process conditions,
temperatures, and pressures and carried these readings back with them.

It was all a feudal style of management. If we had accepted that style, we would not have grown. It was
simply not a scalable model. Of course, the easiest thing would have been to follow it. But we had a
disruptive style of management. So we said, 'we don't want people carrying their wisdom in notebooks as if
it is some kind of secretive operation.'

When the economy opened up in 1992, there was a lot of apprehension about whether Indian companies
would survive. What was your game-plan?

We were clear that we had to be internationally competitive and were passionate about building
competencies that were the best in the world even when the tariffs were very high. It was an obsession
with me to beat the Taiwanese and the Koreans who dominated the polyester business in the '70s.

That was possible only when all aspects of the business were better than them. One critical factor is scale.
We understood that, unless we had scale, we won't be world-beaters. Remember, with enormous effort
and all the limitations of the licence-permit-raj (between 1981 and 1991), we had built a polyester capacity
of 75,000 tonnes.

So, when the deregulation came, we were ready. By the middle of '95, we were producing 1 million tonnes.
Tariffs also fell sharply from 150% to 30% and later to 10%. We wanted to be internationally competitive
even when the tariffs were 300%, but being based in India became a competitive advantage when the tariff
level fell to 30%.

By that time, we had developed superb project execution capability. We had more than 300 top quality
people to execute the projects. From the '80s till today, we have not struggled to start up any plant. The
biggest companies in the world do not have this kind of record.
How did Reliance develop this mindset? There was hardly anything, except some public sector companies
as a reference in India.

You see, all the right things are written in books and research papers. The trick is to ensure that there is no
gap between what is written in the books and your vision; from what is happening on the shopfloor and
what is going on in the marketplace. That is execution. That is what makes the difference.

It was not a large group, just 5-6 outstanding people. I always believe that so-called ordinary people can
achieve extraordinary results as long they are given a sensible framework. We have been able to do it in
industry after industry.
Till 2000, Reliance always said it wanted to capture the entire value of the oil and petrochemicals chain, but
after 2000, you have gone in different directions. What caused the change in thinking?

We had three thoughts. One was the fundamental belief that we will invest in businesses of the future and
we will invest in talent. We clearly saw that from oil to fabric was a value chain of opportunity and it will
remain so for many future decades.

We were sitting right in this room and my father said 'now it is your call, what you would like to do.' I said,
'we must use the competencies and cash flows to make a difference to millions of Indians'. He said, 'that's
exactly what I had mind. Let's do it.' The strategy was: while we strengthen our current business, we will
use our cash flows to invest in the businesses of the future. That's how Infocomm was born.

So, in the late '90s, you zeroed in on telecom, life sciences and retailing. . .

Actually, my father was very keen on the agri-business. He said, that is the real big business in India. We
looked at three or four businesses. We got into life sciences as a defence mechanism in the late '90s. In
1996-97, we were big in plastics already when Dow announced that they would make plastics from E Coli.

It looked like our business would be ruined because we would buy naphtha and these guys would make
plastics from salt and water. We quickly put four or five guys together to understand what Dow Chemicals
was doing. That is when we started the industrial biotech business.

Then, we stumbled on human and plant biotech. We were fortunate to have some good people and
decided that Reliance can build this business over 5-10 years without any great revenue pressures. In the
mainstream business, there was telecom or what I call infocomm.

We got into telecom in the '90s by bidding for cellular licences. But I felt that the real value is in the
convergence of information and communication; pure communication will not deliver a sustainable value;
that is why we called ourselves infocomm. It was learning a whole new domain. We brought in experts
from the outside but we essentially did it with proven Reliance people.

Mukesh Ambani on retail and SEZ plans

And then you got into retailing. . .

Within organised retailing, we are really talking of agri-based retailing. For a variety of reasons, our
economy did not get a chance to develop a sustainable value chain in the foods business.

The US and Europe saw large players in foods by the '50s and '60s; but in India, food has always been a
disorganised, fragmented value chain. We believe that India's purchasing power will be food-dominated.
The first thing we need is safe to eat food that will, in turn, meet many other needs.
By that time, we had developed superb project execution capability. We had more than 300 top quality
people to execute the projects. From the '80s till today, we have not struggled to start up any plant. The
biggest companies in the world do not have this kind of record.

But all kinds of mindless legislation remains in place and other players like Hindustan Lever have tried to
get around it without real success.

True. But we are in a different era. It is easier for people to see the value proposition -- 28% of our GDP
comes from agriculture, but 60% of the people depend on it. So, if we want to make a difference to this
60%, we will have to bring agriculture to its true potential.
Having looked at it obsessively for the past year, I feel that we can convert all our disadvantages into an
opportunity. We have fragmented landholdings; but we can integrate that with technology. With proper
inputs, there is no reason why Indian farmers cannot become world-class. What is missing? It is

We now have an opportunity to straightway catch the next wave of distribution logistics. We don't have to
go through what the world went through and we can build what even the US will not have by 2010. That is
possible today. In terms of sheer money, it may take Rs 25,000 crore (Rs 250 billion).

In the earlier days, it was impossible for corporates to think of this. Today, it is possible for the world to
finance it and for you to execute a distribution network. We are not big believers in contract farming. So
we have removed the 'r' out of cont(r)act farming. I believe that everyone should be able to relate to
market economy. If you produce something, you should be able to sell it at a market price.

What is the model that will deliver your vision?

We are working at putting the most modern technology in farms at Indian costs. I always say whatever the
US implements in dollars we should be able to do it at exchange rate of Rs 10, and then we would be
globally competitive.

When we start off, this looks impossible. Then we think through it, value-engineer it and come close to it.
That is the cost part. Then comes the quality issue. While we are working at improving the offering to the
Indian consumer, we are ultimately interested in connecting the Indian farmer to the global market. Global
consumers have to accept Indian agricultural products.

We all know India has a huge competitive advantage -- we have the largest arable land, focused sunshine,
sensible utilisation of water in 30% of land. The question is what should we do to make the US market --
the most difficult market in the world -- accept our produce. For that, we need traceability. It is a simple
technology, which we are giving the farmers. It needs certification and verification processes -- to us it is
like a process plant. You can then get the output, sort it and grade it.

At what point to grade is a decision that Reliance will make, at the farm level or at the intermediary's level.
. . what is least-cost, what works, what everybody is comfortable with.

Coarse products are easy, the problem with fresh produce is perishability -- it becomes worthless in seven
days. That is why farmers are not producing fresh. That is the tallest mountain for us to climb. . . to put in
place distribution and logistics to handle fresh. If we can send fresh produce through technology and
distribution from any farm in India to anywhere in the world at their quality standards, then imagine the

What is the arbitrage? Can you give us an example.

We talked of IT. What is IT? It is the arbitrage between the per hour rate in the US and India. We have gone
from zero to $20 billion in exporting software, employing about 1 million people in 10 years. These million
By that time, we had developed superb project execution capability. We had more than 300 top quality
people to execute the projects. From the '80s till today, we have not struggled to start up any plant. The
biggest companies in the world do not have this kind of record.

people changed the brand of India, consumption pattern and gave us the confidence that we can do

The arbitrage has narrowed but is still there. It will disappear in a few decades by which time our software
exports may be $100 billion. From a million people, it will benefit 10 million people. If that is what has
happened in software, imagine what will happen in agriculture.
Is there this kind of arbitrage in agriculture?

Let me give you some numbers. Take potatoes, the most common food across the world. From Bill Gates to
my driver, everybody eats potatoes. Now, plot the prices. Farmers in Uttar Pradesh and Bihar get about Rs
4-5 a kilo; in the Middle East, the wholesale price is about Rs 25-30 a kilo. In the US, Sam's Club, it is Rs 90 a
kilo. In Europe, it is Rs 110 a kilo. The arbitrage is 1:20. If we get our produce right, and if the US market is
opened up, you will be surprised how quickly we reach $20 billion.

The food market is much bigger than the software services market. And the money goes straight into the
hands of millions of farmers. The spinoffs are enormous -- jobs, houses, durables, a whole new
consumption boom will start in rural areas.

What about the front end -- the retailing sector?

The most employment-intensive industry in the world is retail and our next generation needs these jobs.
India has a strategy for the next generation of doctors, engineers and biotech graduates, etc. But for the
country as a whole, what we need to resolve is how to create sensible jobs for undergraduates and or
those even less educated.

Organised retail alone can absorb these people in large numbers. We estimate about 1.5 million jobs from
this sector over the next three years. In the process, we will reduce the cost to consumers by 20% and
increase the efficiency of farmers thrice over. Farm incomes can go up 600% to 900% over the next few
years from the current base.

By higher prices or higher output?

Higher output. The country produces 150 million tonnes of fresh produce today. We can go to 300-400
million tonnes fairly quickly over a few crop cycles, as long as we can move those millions through the
system and have world-class quality.

This means that when you go to the market -- doesn't matter whether it is Reliance or Bharti -- you should
have the confidence that you are buying quality and it is safe to eat. After meeting the needs of Indian
consumers, how do we take advantage in fresh through exports and value added industry such as

It's really a yield-productivity-distribution story that we are involved with right now. Our strategy is
fundamentally different from the others.

In what sense….?

Most other retailers come in when purchasing power has developed. That's what Wal-Mart did in China.
India is also at that inflection point, so retail chains would come in and start in the urban areas and move
Ours is a diametrically opposite strategy. We are driven by creating purchasing power first. The farmers will
By that time, we had developed superb project execution capability. We had more than 300 top quality
people to execute the projects. From the '80s till today, we have not struggled to start up any plant. The
biggest companies in the world do not have this kind of record.

have purchasing power and their staff will have purchasing power. Today, the farmer with two acres of
land has five people in his family. It is like running a factory, but one that is only running 20% of the time
because 80% of the time he cannot sell his products.

He doesn't have the inputs to produce the right quality. What we have to do is win his trust and bring him
to his true potential so that he can run his two acres at 90% and increase his income by nine times. Once
we do it, it is such a big market that there is a place for at least 5-6 players like us. We can't do it all alone.
But we can show the way.

It is like in telecom; when we said we will get 10 million phone users, a lot of people laughed. Today, there
are 3-4 guys who are getting a million customers a month. We think exactly the same needs to happen in
farms. When that happens, we will have created purchasing power.

We will start at the bottom and sell them their first cooking range, first washing machine, first bed --
whatever is needed to improve quality of life. All this will create sustainable employment. That is really
retail as we see it. We need to execute it well and prove some of these hypotheses. We might be wrong in
some of them so we will have to fine tune, adjust and learn.

We only have a superficial knowledge about the true rural India -- the power structure, how to operate in
tehsils, what are their true concerns, etc. But we think we can significantly change purchasing power and
how we live. That's what motivates us.

How far have you progressed in your plans?

We have pilot projects in Andhra Pradesh, Punjab and West Bengal. In all three places, we are very
encouraged. There will be some big learning involved but the potential undoubtedly exists.

You also have massive plans for SEZs. What is the thought process there?

The logic of SEZ is simple. India is long on talent and we need to create as many jobs as possible in
manufacturing and services.

India's land bank is about 750-800 million acres. Out of this, 500 million acres can be potentially farmed,
but today only 300-350 million is arable and used for agriculture. We need to bring the remaining 150
million acres into productive use. More than 100 million households rely on this land base. India is creating
800,000 engineers a year and 400,000-500,000 semi-professionals. So we will bring in about 2 million
professionals into the workforce annually over the next 20 years. We need to create jobs for them.

Government jobs and self-employment in manufacturing are not enough. It is large companies that create
employment. That's the reality. So we have the supply of talent that can potentially be of the highest
quality and lowest cost for 10 years and we also have large markets here.

What is missing? It is integrated infrastructure and a reasonable assurance of facilities that are good for at
least 10 years. My target company would want to come to India but operate near the big metros. This is
the example that you learn from Shanghai or Shenzen. That is where our SEZs with integrated
infrastructure come in -- they provide an integrated airport, seaport, transportation, power and housing --
all at sensible costs.

When I put out a comparative chart, I should be able to tell big employers: this is how we compare with
Singapore, Dubai, Shenzhen or Malaysia and Korea. On every parameter, I should beat others in cost and
quality of infrastructure. India might be short of infrastructure but here you have guaranteed infrastructure
and talent.

You are near Bombay and Delhi and have access to the Indian market and global markets. So ours is an
employment-led SEZ. The strategy is first to get the employer. I think we can create 5 million jobs in each of
the two By that time, we had developed superb project execution capability. We had more than 300 top
quality people to execute the projects. From the '80s till today, we have not struggled to start up any plant.
The biggest companies in the world do not have this kind of record.

25,000-acre SEZs. But we need many more just to make sure that most of our educated youth is occupied.
The criticism is that SEzs are really land plays. . .

Most people don't understand that the residential commercial piece is also a big cost element in SEZs. For
employers to attract and retain talent, India has to be almost as attractive as the US. So I have to provide
for the cost of living -- housing, shopping environment and everything else exactly like the US, but at an
Indian cost.

We have a big talent pool in the US and they are coming back with huge enthusiasm. For our agri-business,
we are now bringing back a lot of talented Indians from the US who have worked in Wholesale Foods,
Kraft, etc.

We offer to protect their savings in a job here. If you earn $100,000 a year there, you also spend $80,000
and save $15,000-$20,000. We say, if you work for us in India, we will ensure you save $15,000 dollars a
year and are part of something exciting without a loss to you.

But this doesn't work without a scheme. If you ask me to build a power plant, I cannot give that power at 3
cents or 4 cents, unless I put up a 2000 MW project. It's the same for an airport, seaport and all the other
stuff. You need to spread costs over a sensible size to keep unit costs low.

These projects will take time to fructify. When do you expect to start getting returns?

Both agri-business and SEZs will make a sustainable return in the long run and we have a strong enough
balance sheet to sustain these. At the end of the day, it will leave us with the satisfaction of having tried to
show the way. The easiest thing for me is to go to London and New York, sit in a hotel, talk to investment
bankers and buy 10 companies.

Are you going to do that too?

(Laughs) Depends on the value we get and what excites us. But that's the easy stuff. What does it take? It's
deal-making followed by a PR pitch to justify it. That doesn't give me the same satisfaction: of saying that
we tried our hardest to blaze a new trail or change the status quo. There are 300 to 400 of us who think the
same way.

Young people want to go to Punjab and stay there for a month to figure out what works. In telecom, when
we said we would go into six lakh villages, a lot of our friends thought it's all talk. Even the regulator was
sceptical. Today, it is rural areas that are making more money.

I have noticed that talent is automatically motivated by larger goals and some of the brightest people want
to do things that are different. After we hire from the IIMs and IITs every year, we run them through a six-
month induction programme where we teach them the Reliance way and let them choose where they want
to work through a competitive framework.
Each business makes a presentation. In the '90s, finance and treasury was the in-thing. Then, it was
marketing. In the last two years, most bright young people want to work in rural areas. This is a big mindset

In retailing, they are saying, we don't want to do merchandising; we want to create those rural markets. In
that sense, it is great fun. I always tell my young guys, we are going on an expedition together. When you
do that we need to support each other because we can get lost quickly.

What has been your best investment so far?

Our best investment has been in technology and in developing skills. For instance, we invested Rs300 crore
in techBy that time, we had developed superb project execution capability. We had more than 300 top
quality people to execute the projects. From the '80s till today, we have not struggled to start up any plant.
The biggest companies in the world do not have this kind of record.

nology that gave us unparalleled transparency and accountability within the organisation.

It allows us to spend Rs 40,000 crore (Rs 400 billion) a year and sleep in peace. We were among the first to
introduce videoconferencing in India. In the 80s, we invested in helicopters to go to Patalganga to save
time. People saw it as flashy lifestyle. For us, it was facilitating investments.

The other big investment we are now making is in talent. We are developing a culture of creativity that will,
in turn, create critical product-service differentials. You must see our life sciences business to appreciate
this. Another way to say this is that we are investing to build the skills and experience of our people so that
they can then believe in their conviction, take risks and deliver results. Let me also answer the flipside.

We have not invested well in marketing ourselves. It is partly because of my trait. I believe that if my
conviction is right, I will not need to go and explain myself to anyone. I believed that ultimately everyone
will figure out what you are. We are changing this approach.
News in View
‘Financial institutions must exit ITC’ : Politics assuming the center stage

“If they (BAT) are offering a good price, then what is preventing UTI from offloading its
Mr Amar Singh — whose Samajwadi Party is the key to the survival of
the ruling Congress-led UPA Government — wants the Unit Trust of India
(UTI) and other public financial institutions to divest their stake in ITC Ltd in
favour of British American Tobacco (BAT).

Public financial institutions have a combined 34.31-per cent holding in ITC, which includes 11.90
per cent of UTI and 14.35 per cent of Life Insurance Corporation of India. This is more than the 32
per cent controlled by BAT through its associates.

Mr Singh’s observations come in the light of recent reports of UTI proposing to sell a substantial
part of its 27.11 per cent stake in Axis Bank. A similar offloading of financial institution holdings in
L&T and ITC has, however, been deferred. In L&T’s case, the apparent reason given is the
company’s role in manufacture of strategic and defence-related products, while in ITC, the
Government presumably wants to maintain restrictions on operations of foreign tobacco

He also suggested that the setting up of nuclear power plants should not be restricted to the
public sector. The Anil Dhirubhai Ambani Group and the Tatas were among those to have evinced
interest in nuclear energy.

RBI tightening screws again:

The Reserve Bank may go in for further tightening of money supply as there is no likelihood of
inflation coming to single digit in the next six months, according to indications given by the central
bank governor to a parliamentary panel.

Some more monetary measures may be taken to contain the aggregate demand to counter
inflation, RBI Governor Y V Reddy told members of the Parliamentary Standing Committee
attached to the Finance Ministry.

Last month, the central bank has raised short-term lending rates for banks-- repo-- by 0.75 per
cent in two instalments, while also increasing mandatory cash deposits of banks by 0.50 per cent
in two phases to suck out excess liquidity.

For the week ended June 28, inflation rose to 11.89 per cent.
Slowing economic growth, rising inflation, growing debt and Political uncertainty as well as a
widening fiscal deficit -- strained by higher interest payments, civil service wages, loan waivers
and subsidies are all causing deep concerns on Indian Economy’s short-term outlook. The budget
deficit in India is likely to blow out. With a forecast of 3.5 per cent of GDP this year, and the risk is
on the upside. Add in the state governments and off-budget items brings a 10 percent deficit
Moody's outlook: the downside risks have grown on account of high oil prices and an inadequate
reaction from the government.

Standard & Poor’s outlook: the rising cost of subsidies, debt write-offs and public sector wage
rises had increased the risk of a downgrade of India's BBB-minus rating, the lowest investment-
grade rating.

The external position remains strong, but analysts are worried that domestic problems and a
flight of capital could combine to bring down the country's credit standing. Annual inflation, as
measured by the wholesale price index, is at 11.91 per cent, it’s highest in 13 years.

Fitch Ratings lowered the outlook on India's BBB-minus local currency rating to negative from
stable but maintained the stable outlook for its foreign currency rating, also at BBB-minus.

Jim Rogers: Hot on China, cold on India”China is a country I am very hot on. I believe that
Chinese economy will overtake the US economy, and China has the best
investment potential in the world today,” Rogers, author of such famous
books like Hot Commodities and A Bull in China.

”Asia is fuelled by massive investment and growth. And in Asia, China is

the hottest destination. So I continue to look for investment
opportunities in China,” Rogers, who along with billionaire investor
George Soros founded the successful Quantum Fund.

In 1998, Rogers launched the Rogers International Commodity Index, a composite, US dollar-
based, total return index, designed to meet the need for consistent investing in a broad based
international vehicle. The Index represents the value of a basket of commodities consumed in the
global economy, ranging from agricultural to energy to metal products. Rogers may be hot on
China; but when he talks about India, the legendary investor gets cold feet. “I am excited about
India as a travel destination. For an investment proposition in India, I would think twice,” he said.

Even though India like China has been growing phenomenally well, political and bureaucratic
hurdles still exist in India. “Plus, the infrastructure in India continues to be bad compared to
China. In China, truck drivers drive at the speed of 70 kilometers per hour. In China, they can drive
only at a speed of 20 kilometers because the roads are so bad. Moreover, he is upset with India,
because of the Indian government decision to ban futures trading in some commodities. “I am a
commodity investment guy. So whenever I hear governments meddling with commodity
investments and futures trading, I get upset,” Rogers added.
RBI’s Quarterly Review of 1st Quarter

Infrastructure & Manufacturing:

The six infrastructure industries, comprising nearly 27 per cent of the IIP, posted a
lower growth of 3.5 per cent during April-May 2008 as against 6.9 per cent a year
ago. Production picked up in respect of coal and crude oil whereas deceleration was
recorded in the output of petroleum refinery products, electricity, cement and
finished (carbon) steel.

The production of basic, capital, intermediate and consumer non-durable goods

decelerated to 3.5 per cent, 6.5 per cent, 2.3 per cent and 8.8 per cent, respectively,
from 9.4 per cent, 16.9 per cent, 9.7 per cent and 15.4 per cent during April-May
2007. Output of consumer durables, however, recorded a higher growth of 4.8 per
cent as compared with 0.8 per cent a year ago.

Service Sector:
Indications of moderation in some sub-sectors:

In Communication Sector,0.89 million lines were added & 16.5 million new
telephone connections provided during April-May 08 as compared with 11.2 million
new subscribers added during the corresponding period 2007-08.

Railway revenue earning freight traffic increased by 9.4 % as compared with 5.4% Q1
FY 08.

Cargo handled at major ports increased by 10.3 % during April-may 08 against 17.7 %
last year.

In Civil Aviation, handling of import cargo and export cargo increased by 9.3% and
7.6%,respectively,as compared with 21.7% and 1.6% during April-May 07.

During the first quarter of 2008-09, foreign tourist arrivals increased by 10.2 per cent
as against 8.2 per cent a year ago.

Passengers handled at domestic and international terminals increased by 5.9 per

cent and 9.0 per cent, respectively, during April-May 2008 as against 24.4 per cent
and 13.1 per cent, a year ago.
Consumption & Investment:
In real terms, private final consumption expenditure (PFCE) and gross fixed capital
formation (GFCF) increased by 8.3 per cent and 13.8 per cent, respectively, as
compared with 7.1 per cent and 15.1 per cent in the previous year. In nominal terms,
PFCE declined to 55.3 per cent of GDP during 2007-08 from 55.8 per cent in the
previous year whereas GFCF increased to 33.9 per cent from 32.5 per cent.

Up to July 4, 2008 non-food credit of scheduled commercial banks (SCBs) rose by 25.9
per cent (Rs.4,85,709 crore) on a year-on-year basis, higher than 24.6 per cent
(Rs.3,69,109 crore) a year ago. During the current financial year so far, non-food
credit of SCBs increased by Rs.40,344 crore (1.7 per cent) as against a decline of
Rs.12,519 crore (–0.7 per cent) in the corresponding period of the previous year.
Food credit recorded an increase of Rs.6,322 crore as against a decline of Rs.2,292
crore in the corresponding period last year.

Sectoral deployment of bank credit available up to May 2008

Credit to the services sector recorded the highest growth (31.3 per cent), followed by
industry (26.9 per cent), the agriculture sector (19.3 per cent) and personal loans
(15.9 per cent). Growth in housing and real estate loans decelerated to 13.8 per cent
(21.6 per cent a year ago) and 31.9 per cent (69.7 per cent), respectively.

Within the industrial sector, there was a sizeable credit pick-up in respect of
infrastructure (41.7 per cent as against 32.6 per cent a year ago), cement and cement
products (54.5 per cent over 18.3 per cent), chemicals (24.8 per cent as against 14.2
per cent) and petroleum (62.8 per cent as against 51.6 per cent).

There was moderation in credit growth to basic metals and metal products (24.0 per
cent as against 29.3 per cent), textiles (20.9 per cent as against 32.9 per cent),
engineering (23.4 per cent as against 25.1 per cent), construction (29.6 per cent as
against 49.2 per cent) and vehicles (26.7 per cent as against 28.6 per cent).

Credit to industry constituted 43.1 per cent of the total expansion in non-food bank
credit up to May 2008, followed by services (29.5 per cent), personal loans (17.2 per
cent) and agriculture (10.1 per cent).

The share of infrastructure in total credit to industry increased from 21.2 per cent to
23.7 per cent. On the contrary, the share of credit to textiles, chemicals, engineering
and metals declined to 10.9 per cent, 7.6 per cent, 6.1 per cent 9 and 12.1 per cent,
respectively, from 11.5 per cent, 7.7 per cent, 6.3 per cent and 12.4 per cent.

Priority sector advances grew by 18.3 per cent with a moderation in their share in
outstanding gross bank credit to 34.0 per cent in May 2008 from 35.7 per cent a year
Global Economic Outlook

Global economic activity decelerated in an environment of surging inflation and

heightened uncertainty. The slowdown is deepening in the advanced economies and
could affect emerging market economies (EMEs), notwithstanding the strength of
domestic demand. Financial risks remain high and concerns about rising losses have
exacerbated the pessimism on the macroeconomic outlook.

According to the update of World Economic Outlook (WEO) of the International

Monetary Fund (IMF) released in July 2008, global real GDP growth on a purchasing
power parity basis is expected to decelerate from 5.0 per cent in 2007 to 4.1 per cent
in 2008 (3.7 per cent in WEO, April 2008) and further to 3.9 per cent in 2009 (3.8 per
cent in WEO, April 2008).

Global food prices

The steady rise in world prices of all cereals has pushed up the food import bill,
generating widespread increases in domestic food prices on imported pressures. The
food price index of the Food and Agricultural Organisation (FAO) increased by 44 per
cent on a year-on-year basis up to June 2008, resulting in a doubling of global food
prices over the past two years. In the global foodgrains market, prices of major crops
such as corn, soyabean and wheat have increased by 82.7 per cent, 84.2 per cent and
28.1 per cent, respectively, by July 25, 2008 from their levels a year ago in response
to surging demand, sparking food riots in several countries.

Global food imports are forecast by the FAO to be US $ 1,035 billion, i.e., an
additional US $ 215 billion over the level recorded in 2007. The food import bill of the
Low-Income Food-Deficit Countries (LIFDCs) is likely to climb to US $ 169 billion in
2008, 40 per cent more than in 2007.

While the expected good harvest in the current year may exert a dampening effect
on inflation, food prices are unlikely to ease significantly in view of the escalated cost
of inputs and sustained demand including the need to replenish stocks.

The overall stance of monetary policy in 2008-09

● To ensure a monetary and interest rate environment that accords high priority to
price stability, well-anchored inflation expectations and orderly conditions in financial
markets while being conducive to continuation of the growth momentum.

● To respond swiftly on a continuing basis to the evolving constellation of adverse

international developments and to the domestic situation impinging on inflation
expectations, financial stability and growth momentum, with both conventional and
unconventional measures, as appropriate.

● To emphasise credit quality as well as credit delivery, in particular, for

employment-intensive sectors, while pursuing financial inclusion.
Crossing Beyond Boundaries
article has been contributed by Steve Masterson of Free Republic. We found this
article extremely interesting and hence prompted ourselves to publish it in originality
without any changes with requisite permission by the author.

This is indeed a beautiful piece about the US$ and the stories behind it. We believe,
our readers would also find it quite interesting.

A Nightmare for the US

The Voice (issue 264 - 11th May) ran an and New York. It is not accidental they are
article beginning, ' Iran has really gone and both US-owned.
done it now. No, they haven't sent their first
nuclear submarine into the Persian Gulf. The Wall Street crash in 1929 sparked off
They are about to launch something much global depression and World War II.
more deadly --next week the Iran Bourse will During that war the US supplied provisions
open to trade oil, not in dollars but in Euros' and ammunitions to all its allies, refusing
This apparently insignificant event has currency and demanding gold payments in
consequences far greater for the US people, exchange.
indeed all for us all, than is imaginable.
By 1945, 80% of the world's gold was sitting in
Currently almost all oil buying and selling is US vaults. The dollar became the one
in US-dollars through exchanges in London undisputed global reserve currency -- it was
treated world-wide as `safer than gold'.

The Bretton Woods agreement was established.

The US took full advantage over the next reserves, of all other countries, in gold and all
decades and printed dollars like there was currencies -- that a massive 66% of this total
no tomorrow. The US exported many wealth is in US dollars!
mountains of dollars, paying forever-
increasing amounts of commodities, tax cuts In 1971 several countries simultaneously tried
for the rich, many wars abroad, to sell a small portion of their dollars to the
mercenaries, spies and politicians the world US for gold. Krassimir Petrov, (Ph. D. in
over. You see, this did not affect inflation at Economics at Ohio University) recently wrote,
home! The US got it all for free! Well, maybe 'The US Government defaulted on its
for a forest or two. payment on August 15, 1971 . While popular
spin told the story of `severing the link
Over subsequent decades the world's vaults between the dollar and gold', in reality the
bulged at the seams and more and more denial to pay back in gold was an act of
vaults were built, just for US dollars. Each bankruptcy by the US Government.' The 1945
year, the US spends many more dollars Bretton Woods agreement was unilaterally
abroad than at home. Analysts pretty much smashed.
agree that outside the US, of the savings, or
The dollar and US economy were on a precipice resembling Germany in 1929.

The US now had to find a way for the rest of Until recently, the US-dollar has been safe.
the world to believe and have faith in the However, since 1990 Western Europe has
paper dollar. The solution was in oil, in the been busy growing, swallowing up central and
petrodollar. The US viciously bullied first Eastern Europe. French and German bosses
Saudi Arabia and then OPEC to sell oil for were jealous of the US ability to buy goods
dollars only - it worked, the dollar was saved. and people the world over for nothing. They
Now countries had to keep dollars to buy wanted a slice of the free cake too. Further,
much needed oil. And the US could buy oil all they now had the power and established the
over the world, free of charge. euro in late 1999 against massive US-inspired
opposition across Europe , especially from
What a Houdini for the US! Oil replaced gold Britain - paid for in dollars of course. But the
as the new foundation to stop the paper euro succeeded.
dollar sinking.
Only months after the euro-launch, Saddam's
Since 1971, the US printed even more Iraq announced it was switching from selling
mountains of dollars to spend abroad. The oil in dollars only, to euros only -- breaking
trade deficit grew and grew. The US sucked- the OPEC agreement.
in much of the world's products for next to
nothing. More vaults were built. Iran , Russia , Venezuela , Libya , all began
talking openly of switching too -- were the
Expert, Cóilínn Nunan, wrote in 2003, 'the floodgates about to be opened?
dollar is the de-facto world reserve currency:
the US currency accounts for approximately Then aero planes flew into the twin-towers in
two thirds of all official exchange reserves. September 2001. Was this another Houdini
More than four-fifths of all foreign exchange chance to save the US (petro) dollar and the
transactions and half of all world exports are biggest financial/economic crash in history?
denominated in dollars. In addition, all IMF War preparations began in the US. But first
loans are denominated in dollars.' war-fever had to be created -- and truth was
the first casualty. Other oil producing
Dr Bulent Gukay of Keele University recently countries watched-on. In 2000 Iraq began
wrote, 'This system of the US dollar acting as selling oil in euros. In 2002, Iraq changed all
global reserve currency in oil trade keeps the their petro-dollars in their vaults into euros. A
demand for the dollar `artificially' high. This few months later, the US began their invasion
enables the US to carry out printing dollars of Iraq.
at the price of next to nothing to fund
increased military spending and consumer
spending on imports. There is no theoretical
limit to the amount of dollars that can be
printed. As long as the US has no serious
challengers, and the other states have
confidence in the US dollar, the system
The whole world was watching: very few But matters this month became far, far worse
aware that the US was engaging in the first for the US dollar. On 5th May Iran registered
oil currency, or petrodollar war. After the its own Oil Bourse, the IOB. Not only are they
invasion of Iraq in March 2003, remember, now selling oil in euros from abroad -- they
the US secured oil areas first. Their first sales have established an actual Oil Bourse, a global
in August were, of course, in dollars, again. trading centre for all countries to buy and sell
The only government building in Baghdad their oil!
not bombed was the Oil Ministry! It does not
matter how many people are murdered-- for In Chavez's recent visit to London; he talked
the US, the petrodollar must be saved as the openly about supporting the Iranian Oil
only way to buy and sell oil -- otherwise the Bourse, and selling oil in euros. When asked
US economy will crash, and much more in London about the new arms embargo
besides. imposed by the US against Venezuela, Chavez
prophetically dismissed the US as 'a paper
In early 2003, Hugo Chavez, President of tiger'.
Venezuela talked openly selling half of its oil
in Euros (the other half is bought by the US). Currently, almost all the world's oil is sold on
On 12 April 2003, the US-supported business either the NYMEX, New York Mercantile
leaders and some generals in Venezuela Exchange, or the IPE, London's International
kidnapped Chavez and attempted a coup. Petroleum Exchange. Both are owned by US
The masses rose against this and the Army citizens and both sell and buy only in US
followed suit. The coup failed. This was bad dollars. The success of the Iran Oil Bourse
for the US. makes sense to Europe, which buys 70% of
Iran's oil. It makes sense for Russia, which
In November 2000 the euro/dollar was at sells 66% of its oil to Europe. But worse for
$0.82 dollars, its lowest ever, and still diving, the US, China and India have already stated
but when Iraq started selling oil in euros, the they are very interested in the new Iranian Oil
euro dive was halted. In April 2002 senior Bourse.
OPEC reps talked about trading in euros and
the euro shot up. In June 2003 the US If there is a tactical-nuclear strike on - deja-vu
occupiers of Iraq switched trading back to - `weapons of mass destruction' in Iran, who
dollars and the euro fell against the dollar would bet against a certain Oil Exchange and
again. In August 2003 Iran starts to sell oil in more, being bombed too?
Euros to some European countries and the And worse for Bush. It makes sense for
euro rises sharply. In the winter of 2003-4 Europe, China, India and Japan as well as all
Russian and OPEC politicians talked seriously the other countries mentioned above -- to
of switching oil/gas sales to the euro and the buy and sell oil in Euro's. They will certainly
euro rose. In February 2004 OPEC met and have to stock-up on euros now, and they will
made no decision to turn to the euro -- and sell dollars to do so.
yes, the euro fell against the dollar. In June
2004 Iran announced it would build an oil The euro is far more stable than the debt-
bourse to rival London and New York , and ridden dollar. The IMF has recently
again, the euro rose. The euro stands at highlighted US economic difficulties and the
$1.27 and has been climbing of late. trade deficit strangling the US--there is no
way out.
The problem for so many countries now is There is one `solution' -- scrap the dollar and
how to get rid of their vaults full of dollars, print a whole new currency for the US. This
before it crashes? And the US has bullied so will destroy 66% of the rest of the world's
many countries for so many decades around savings/reserves in one swoop. Imagine the
the world, that many will see a chance to implications? Such are the desperate things
kick the bully back. The US cannot accept now swimming around heads in the White
even 5% of the world's dollars -- it would House, Wall Street and Pentagon. Another is
crash the US economy dragging much of the to do as Germany did, just before invading
world with it, especially Britain. Poland in 1938. The Nazis filmed a mock
Polish Army attack on Germany, to win hearts
To survive, as the Scottish Socialist Voice and minds at home. But again, this is a finger
article stated, 'the US, needs to generate a in the dam. So, how is the US going to escape
trade surplus to get out of this one. Problem this time?
is it can't.' This is spot on. To do that they
must force US workers into near slavery, to The only global arena of total superiority left
get paid less than Chinese or Indian workers. is military. Who knows what horrors lie
We all know that this will not happen. ahead. A new world war is one tool by which
the US could discipline its `allies' into keeping
What will happen in the US? Chaos for sure. the dollar in their vaults.
Maybe a workers revolution, but looking at
the situation as it is now, it is more likely to The task of socialists today is to explain to as
be a re-run of Germany post-1929, and some may as possible, especially our class, that the
form of extreme-right mass movement will coming crisis belongs purely to capitalism and
emerge. (dollar) imperialism. Not people of other
cultures, not Islam, not the axis of evil or their
Does Europe and China/Asia have the so-called WMDs. Their system alone is to
economic independence and strength to blame.The new Iranian Oil Bourse, the IOB, is
stop the whole world's economies collapsing situated in a new building on the free-trade-
with the US? Their vaults are full to the brim zone island of Kish, in the Persian Gulf. Its
with dollars. computers and software are all set to go. The
The US has to find a way to pay for its dollar- IOB was supposed to be up and running last
imperialist exploitation of the world since March, but many pressures forced a
1945. Somehow, eventually, it has to postponement. Where the pressure came
account for every dollar in every vault in the from is obvious.
world. Bombing Iran could backfire It was internationally registered on 5th May
tremendously. It would bring Iran openly and supposed to open mid-May, but its
into the war in Iraq, behind the Shiite opening was put off, some saying the oil-
majority. The US cannot cope even now with mafia was involved, along with much
the much smaller Iraqi insurgency. Perhaps international pressure. From now on, anyone
the US will feed into the Sunni Vs Shiite in the know will wake up every morning and,
conflict and turn it into a wider Middle-East even before coffee, will check out the latest
civil-war. However, this is so dangerous for exchange rate between the euro and dollar.
global oil supplies. Further, they know that
this could be temporary, as some country
somewhere else, will establish a euro-oil-
exchange, perhaps in Brussels.
Society And Business

Corporate social responsibility is the new mantra manipulation, corruption, communal overtones
for the organizations who consider the interests and bitter infighting. There is a need for public-
of society by taking responsibility for the impact private partnership with well-defined controls and
of their actions on customers, employees, processes for the best use of resources for social
suppliers, shareholders, communities and other change. Social reforms driven by the corporate will
stakeholders, as well as the environment. The bring people together, turn the attention of the
obligation for working for the community and masses to tasks that benefit society, and reinforce
the society at large comes voluntarily for these peace and harmony. There is a need for public-
organizations. This obligation is seen to extend private partnership with well-defined controls and
beyond the statutory obligation which any other processes for the best use of resources for social
run of the mill organization excercises.The change.
essence of CSR can be beautifully summed up in
the following words. In recent times, a number of foundations set up by
leading Indian firms, including Infosys, Wipro,
“Concern for the community is often mistaken Tata’s, TVS, IOCL and Dr. Reddy's Laboratory have
for socialism. On the contrary, capitalism thrives taken a keen interest in corporate activism to
only when every citizen is an asset in economic improve healthcare, education and living
activity and has opportunities to succeed.” conditions and reduce poverty. These foundations
support numerous government primary schools
An essential component of corporate social and have developed processes and methodologies
responsibility is to care for the community. It for effective change. They support hundreds of
encompasses the endeavor to make a positive non-governmental organizations and have built
contribution to the underprivileged communities orphanages, hospitals and schools. For example at
by supporting a wide range of socio-economic, IOCL corporate social responsibility (CSR) has been
educational and health initiatives. Inculcating the cornerstone of success right from inception in
corporate social responsibility is also about the year 1964. Every year, IOCL sets aside a fixed
training young minds and helping future portion of its profits for spreading smiles in
generations organize themselves for greater millions of lives across the country through a
good. Many of the community projects and comprehensive community welfare and
programs are driven by active participation of development programme. Indian Oil’s community-
these young minds. A number of focused focused initiatives include allotment of
initiatives are implemented to bring about small petrol/diesel station dealerships and LPG
changes like general health awareness, distributorships to beneficiaries from among
improving the level of education and enhancing Scheduled Castes, Scheduled Tribes, physically
the livelihood of the people. handicapped, ex-servicemen, war widows, etc.

Corporate social responsibility has much

broader implications for the nation as a whole. It
reduces dependency on the government for a
social change. Most governmental programs
quickly become entangled in political
However, the challenges in India are enormous. decoration, which may have socially more
Social responsibility should not be limited to redeemable value than current methods. If there
large successful corporations; there should be are quality issues, then corporations can use their
greater participation from most small, medium, resources to increase quality awareness among
and large businesses. The goodwill firms can artisans. Unfortunately, the above roles to create
generate from acts of social responsibility may, demand and improve quality rest on the
in fact, be worth far more to the businesses than government; however, resources spent for such
the amounts they give. Corporations collectively activity hardly reach the intended beneficiaries.
can make India a better place for every citizen.
Corporate social responsibility is about tradition Inculcating corporate social responsibility is also
and culture. Firms can institutionalize about training young minds and helping future
voluntarism among employees through generations organize themselves for greater good.
appropriate incentives and recognition. Internal Social responsibility needs to be deeply ingrained
performance evaluation of employees could from childhood. The admission to elite private and
recognize community work. Community work public universities should not only be based on
can take many forms: teaching in government academic grades, but also on participation in
schools, supporting NGOs financially, community activities and leadership roles. Social
empowering women, cleaning parks, planting responsibility is about leadership and respect for
trees, volunteering in orphanages, protecting fellow human beings. Scholarships should be
the abused. Corporate social responsibility can awarded to those who show community leadership
be much more than charity. An innovative way along with academic performance. Unfortunately,
to contribute socially for firms is to spend in in India, admissions to even some of the best
towns and villages, and to buy products from institutions are purely based on performance in
millions of artisans who are at the bottom of the entrance exams. Worse, entering the civil services
economic pyramid. Much has been discussed is also about securing high grades in academic
about the Fortune at the Bottom of the Pyramid subjects. Thus, parents and young minds are
(Author: C. K. Prahalad), which calls for focused intently on examinations and
corporations to design products/services for the examinations alone. Obviously, the next
enormous population at the bottom of the generation is groomed likewise. To break this
pyramid. The basic assumption is that this cycle, there needs to be a radical change in the
population segment has some disposable incentive structure in the educational system, and
income and firms can still make profits on large admission and hiring process. Consideration must
volume. Why not consider creating wealth at the be given not only to grades, but also to leadership
bottom of the pyramid, which can increase roles and societal impact; these may have greater
disposable income and buying power? For value to not only to corporations but also to
example, firms can give artisans' products as society.
corporate gifts or use them for interior


IBS Hyderabad
………..It could happen in your ORGANIZATION!!!

Do you think FINANCIAL and CORPORATE frauds are on rise in India? What would
you say is the cause for these scams and frauds…..??? Is it because of corruption in
high places, lack of monitoring or pure greed?
A recent survey by Pricewater house Coopers found that 24% of Indian companies have
experienced significant economic crimes over the last two years with financial frauds
being the most widespread. Banks, public sector organizations, financial services, all are
the victims of different kinds of frauds.

What actually this word FRAUD means?

It is a persistent obstacle in the cooperative banks found themselves in the

functioning and growth of all the Eye of the storm. Whether it is stock market
sectors in all countries. And when fraud, bank fraud or cyber fraud, it can have
it happens in FINANCIAL sector, it material and lasting impact on businesses
is known as FINANCIAL FRAUD. and their reputations.
Certain actions like defrauding of
ignorant investors, sale of
securities based on false
One such case is of Mr.N.C.Agarwal who is an
disclosure, market manipulation,
Executive Engineer of UP Power corporation.
trades at unusual prices in order to
He defrauded the corporation for over
do transfer pricing and cartel
Rs.2.90 lakhs in January, 2002. He had been
formation recur again and again
depositing cheques presented by a company
across corporate world across the
in the name of his son instead of the
corporation’s bank account. But this case and
The infamous scams of Big bull many such cases got buried under the layers
Harshad Mehta, Ketan Prakash, of corporate world.
Sanjay Seth and the recent Indian
India has been ranked as the 88th most
bulls scam and Kingfisher Airlines’
corrupt nation. Steps and measures should
credit card frauds are still fresh in
be taken by government and MNCs to
our minds. Even before the dust
promulgate the niche accounting area,
settled on these scams, the Unit
thereby doing fast redressal of frauds.
trust of India and a host of
BUT, BUT, BUT…………………

Our government has decided to drop a proposal for having a separate legislation for
financial frauds. This has been declared in 5th progress report on the implementation of
the recommendations in Joint Parliamentary Committee (JPC) report on Stock market
scam. Government is of the view that the existing legal provisions are sufficient to deal
with frauds and there is no need to go ahead with a separate legislation to deal with
financial frauds.

Do you think that there is no need to pay special attention towards increasing frauds?

Its said that, “Fraud never goes or vanishes, it just moves around.”

Fraud doesn’t shift locales, organizations and markets, it strengthens and increases. As
Indian economy grows and credit expands, new opportunities arise for deceit and
deception. Through identity theft, forgery, misrepresentation and manipulation, we are
all at risk of substantial loss due to these frauds. So, Be cautious and aware. Don’t let
fraud catch you and your organization off guard. Prepare yourself for the battle against
this rising danger of the CORPORATE WORLD.
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Stockyard by Mr.Akshar Prem and Mr Chandra Prakash .All the liabilities and issues concern to
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