Friday, July 30, 2010

Dr. Nitin Nohria (Dean, HBS) on India

A galaxy of industry biggies were at the JRD Tata Memorial Oration yesterday. A few interesting points made by Dr. Nohria in his address:
1. The last Century belonged to the US. It was able to do that because American economy / companies kept evolving. GE is the only company that was in the Dow Jones for the whole of the century.
2. Japan had its time in the 80s. But they could not stay there because they did not evolve.
3. In the last decade or so, India's position in the global economy is being recognised. It is tough to get there - it is tougher to stay there. If we become complacent - and think we will get our "rightful" share of the global economy - we will not remain there.
4. Sumantra Ghosal believed that companies need to be good at three things - being cost effective, addressing localised market segments & innovation. (a) In the first decade after liberalisation, Indian companies became cost effective to withstand global competition. Bharti did that through a majorly outsourced telecom model, keeping only key aspects like branding to themselves. (b) In the second decade, companies like Bharti targeted localised market segments - not corporate or urban middle class - but discovered newer markets in rural India. CK Prahalad's fortune at the bottom of pyramid is at work. (c) This decade, companies need to get on to innovation.

My personal comments:
1. Bharti was spoken about - but not Reliance. Remember? This was a JRD Tata Memorial Oration.
2. One hour is too long for reading a prepared speech. Nohria could have engaged with the audience better. But yes, the quality of his thoughts carried the day through. Brilliance was oozing out of the bald pate!

Thursday, July 29, 2010

Next IPO Scam?

New listing. Share price doubles on first day of trading. Trading on first day more than 12 times the shares offered in IPO!
Circular trading to push up prices? Another IPO scam from the same state where the last major one came from?

Wednesday, July 28, 2010

Timing of Price-Sensitive Corporate Announcements

This is the season for quarterly financial results. Most companies are announcing their results during the stock exchange trading hours viz. 9 am to 3.30 pm. The electronic media broadcasts the information immediately; pricing of the stock in the share market is influenced soon after - often based on half-baked information and knee-jerk reactions. Where is the time for a balanced analysis? This is the age of 2-minute noodles and 2-second stock analysis! By the time the information hits the traditional print media the share market has already decided what is good, bad and ugly.

Should companies announce price-sensitive information after the stock exchange trading hours? This would give enough time for balanced analyis, before the stock exchange commences trading the next day. Also, it ensures that stock prices are influenced, not only by the electronic media (with its inclination to sensationalism), but also by the print media.

Reliance Industries was among the few large companies this earnings season, to announce their results after trading hours, yesterday.

Hong Kong and its Economy

Met Raymond Yip of the Hong Kong Trade Development Council yesterday. He mentioned, how, over 90% of their Gross Domestic Product (GDP) comes out of services - one of the highest proportion in the world.
What followed was interesting - they control a big slice of manufacturing through their shareholding in China and other countries. This aspect of manufacturing does not get captured in GDP, which goes on the basis of geographical territory. Gross National Product (GNP), which goes on the basis of ownership, would capture it. Thus, when Tatas own steel operations abroad, the output would be part of GDP of UK, but become part of GNP of India.
With globalisation, companies have their operations spread all over the world. This trend will only increase. Should we consider giving more importance to Gross National Product (GNP), when we evaluate the role of countries?

Me and my Berries

Over the years, many of you kept suggesting that I start a blog. So, dear readers and participants in my programs, here I come.
I propose to share my views on various developments around me - in small bites. You can decide how much you can stomach - like berries. These are my thought berries.
I hope to be regular, but do not have any frequency in mind.
Happy reading. Look forward to hearing from you and making this platform interactive.