consumer zing matches New Year ring

North to South, consumer zing matches New Year ring:

For most of 2010, consumers battled with double-digit inflation, especially in food. As the curtains fall on the year, battle-weary consumers are in no mood to allow the prices of essential commodities to dominate their day. December 31 is supposed to be an occasion to celebrate, and most will do so, despite the pressures eating into their budgets.

Malls and organised retail stores across major metros and cities are choc-a-bloc with consumers doing their New Year’s shopping. Last year, the mood was a bit sober, as the economy had just begun to a turn a corner at this time. Sales growth last year was about 15-20 per cent. This year, the expectation from New Year sales is about 25-30 per cent.

The mood is decidedly upbeat,New Year’s shopping is catching on. Of course, most retailers are leaving no stone unturned. On an average, discounts on consumer durables and apparel — products that fly fast during the festive season — are at 25-30 per cent. For popular products such as LEDs and LCDs, discounts are even steeper, at close to 50 per cent.

Up the wave

But consumer durables’ retailers are not the only ones benefiting from buoyant consumer sentiment. Hotels and restaurants are also raking in. According to hospitality industry sources, grade-1 hotels and restaurants in Mumbai and other metros have achieved bookings of close to 80 per cent for New Year’s Eve. This will be full by the time the day arrives.

There are about 1,600 Grade-I hotels and restaurants in Greater Mumbai, where bookings have been done in advance. The rates vary for place to place. At our restaurant, for instance, bookings have been done for Rs 1,900 per head for vegetarian food and Rs 2,500 per head for non-vegetarian. This excludes drinks. In five-star hotels, the going rate is anywhere between Rs 5,000 and Rs 8,000 for a couple wanting to eat out for the night.

But if standalone bars, restaurants and hotels expect brisk business on New Year’s Eve, so do fast food joints, cafe chains and quick service restaurants.

hose wanting to celebrate at tourist destinations have to shell out at least 10-15 per cent more this year over last year, Goa tops among travel destinations this year during New Year’s.

Last year, it was Kerala which was the top destination during New Year’s. Himachal Pradesh is also a perennial favourite for people from the north.

The total cost for travel and stay at a three-star hotel in Goa, works out to about Rs 20,000 per person for four to five nights.

To Kerala, the cost is about Rs 15,000-16,000 per person, while Himachal Pradesh works out to about Rs 5,000-7,000 per person.

Indian Car makers: In the new year

Indian Car makers likely to see slower growth in the new year:

Industry gears up for inflation-driven cash crunch amid rising costs; fiercer competition ahead

Even as global peers struggled with the after-effects of the 2008-09 economic slowdown, Indian car makers enjoyed double digit growth this year and saw their share prices outpace the benchmark market index.

But as they enter 2011, they may have to get used to a new normal—slower growth and fiercer competition.

Asia’s third largest auto market sold 1.6 million cars and utility vehicles in the eight months to November, one-third more than a year ago, according to the lobby group Society of Indian Automobile Manufacturers, or Siam. At least 33 models were launched in the first half of the current fiscal.

The auto index, which indicates the performance of auto makers in equity markets based on the share prices of 14 companies, rose 34.72% to 10,017.28 points in the calendar year—while the Bombay Stock Exchange’s benchmark Sensex rose 14.94%.

The auto industry is expected to post revenue growth upwards of 25% in the year to March 2011.

The brisk growth came on the back of accelerating economic growth, driven by healthy farm and industrial output, which boosted consumer confidence.

The growth posed challenges of its own. Auto firms such as Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Mahindra and Mahindra Ltd and Toyota Kirloskar Motor India Pvt. Ltd, among others, grappled with capacity constraints as demand outstripped supply.

The demand caught many vendors off-guard. Vehicle and part makers were forced to rethink production strategies to push plants beyond their installed capacities as the waiting queues lengthened.

India’s largest car maker Maruti, for instance, has been churning out 100,000 cars per month since March from its units in Gurgaon and Manesar, against their combined capacity of 84,000 vehicles, the company said earlier this week.

Hyundai Motor India, the largest exporter of cars, has been diverting supplies meant for export to meet domestic demand. Director of sales and marketing Arvind Saxena said India’s second largest car maker is removing bottlenecks and expects to scale up production from 600,000 to 670,000 cars per year.

Capacity investments by auto makers will take the annual capacity of India’s passenger vehicle industry from 3.3 million to 6.52 million by fiscal 2015, according to an estimate by Ernst and Young automotive research.

Global auto makers such as Volkswagen AG, Nissan Motor Co. and Ford Motor Co. claimed a stake in the Indian compact car segment—which sells three out of every four cars—by launching models such as Polo, Micra and Figo, among others, in 2010.

Some of them plan to export these cars as well from India, making the country a hub of the global compact car industry. The makers of luxury cars, such as BMW AG, Daimler AG (maker of the Mercedes-Benz), Audi AG and Tata Motors Ltd’s Jaguar Land Rover unit, also enjoyed an exuberant year, selling a growing number of vehicles to the swelling ranks of high networth individuals (HNIs) in the country.

BMW sold 5,345 units against 5,109 units sold by Mercedes-Benz in January-November, according to Siam. The number of HNIs in India rose 50.9% to 126,700 in 2009-10 over a year ago, according to the world wealth report, co-released by Capgemini and Merrill Lynch Wealth Management in September.

But auto makers fear the party may not continue into the new year. High inflation is sucking liquidity out of the system. In addition, the prices of key raw materials such as rubber, steel and aluminium are shooting up, putting pressure on profit margins.

The price of rubber rose 23.09% in October-December to rs.27,340 per metric tonne and aluminium increased 16.57% to rs.422.7 per kg, according to the Multi Commodity Exchange of India Ltd(MCX).

If prices continue to rise, car makers will have to raise the cost of vehicles accordingly, hurting demand. Rising prices will impact cost competitiveness. Industry experts agree it may not be easy to sustain this year’s growth rate. The cash inflow for most car makers would be better because of strong volumes, but raw material prices may dent profits.
r kg, according to the Multi Commodity Exchange of India Ltd(MCX).

20,751 per 100kg, steel went up 7.85% to R

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Rising prices will impact cost competitiveness. Industry experts agree it may not be easy to sustain this year’s growth rate. 

The cash inflow for most car makers would be better because of strong volumes, but raw material prices may dent profits.

India's best companies 2010

India's best companies to work for 2010 The 2010 study reports on how companies have nurtured their human capital in the face of the downturn, while taking some bold initiatives to maintain the top line and bottom line growth.  There are companies out there which believe in the age-old 'home-away-from-home' principle and go all out to create a 'family' of workers, while others maintain a high fun quotient around their core activity.  The Top ten India's best companies to work for 2010:

1.Google India Pvt Ltd

Location: Bangalore
Profile: Online Search, Online Advertising & Online Applications
Number of employees: 1,259
Founded in India: 1998
Gender Ratio (F/M): 1:0.99
Voluntary turnover: 30%

2.MakeMyTrip (India) Location: Gurgaon Profile: Airline tickets, Hotels, Bus and Rail ticket, Holiday Packages Number of employees: 674 Founded in India: 2000 Gender Ratio (F/M): 1:2.55 Voluntary turnover: 23.89%

3.Intel Technology India

Location: Bangalore
Profile: Information Technology
Number of employees: 2,430
Founded in India: 1988
Gender Ratio (F/M): 1:3.99
Voluntary turnover: 4.4%

4.Marriott Hotels India

Location: Mumbai
Profile: Hospitality
Number of employees: 2,433
Founded in India: 1927
Gender Ratio (F/M): 1:9.01
Voluntary turnover: 27.37%

5.NetApp India
Location: Bangalore

Profile: Information Storage Products
Number of employees: 1042

Founded in India: 1992
Gender Ratio (F/M): 1:4.51
Voluntary turnover: 5.95%

6.American Express
Location: Gurgaon

Profile: Financial Services
Number of employees: 5,200
Founded in India: 2006
Gender Ratio (F/M): 1:1.33
Voluntary turnover: 15.00%

7.NTPC

Location: New Delhi
Profile: Energy
Number of employees: 24,708
Founded in India: 1975
Gender Ratio (F/M): 1:8.11
Voluntary turnover: 0.12%

8.PayPal India Location: Chennai Profile: e-commerce Number of employees: 419 Founded in India: 2006 Gender Ratio (F/M): 1:3.6 Voluntary turnover: 0.48% 9.Ajuba Solutions India Location: Chennai Profile: Healthcare Revenue Cycle Management Number of employees: 1612 Founded in India: 2000 Gender Ratio (F/M): 1:1.41 Voluntary turnover: 23.45% 10.SAS Institute (India) Location: Mumbai Profile: Business Analytics Number of employees: 108 Founded in India: 1996 Gender Ratio (F/M): 1:5.75 Voluntary turnover: 13.89%

China is getting cheaper than TamilNadu

China gets Gujarat cotton cheaper than TN mills:

Import from Africa economical for South India.

Chennai-based Loyal Textiles pays Rs 82,500 to get 150 bales (170 kg each) of cotton from Gujarat, country's top producer, to one of its mills in Tamil Nadu by ship. One of its competitors in China gets the same quantity cotton from Gujarat at Rs 22,500!

Even if you add the cost of getting cotton to the ports at Rs 12,500 and port handling charge of Rs 12,000 for shipments to China, it still works out cheaper. By road, sending cotton to Tamil Nadu costs as much as Rs 90,000 for the same quantity.

Truckers demand higher rates since the roads are bad. Mills in South India can get cotton cheaper from North Africa than Gujarat.

Most of the mills in Tamil Nadu are getting cotton through the Shipping Corporation of India vessels. The corporation works out the cost based on road transport rates. The problem is that shipping within our ports can be done only by Indian-owned companies. The Cabotage law prohibits shipping from Indian port to another by vessels of foreign firms.

The industry has been seeking changes to the law but those opposed point to various problems, including monitoring movement of foreign vessels within Indian waters.

Ships that bring containers to our ports with chemicals and other consignments have to return empty if they don't get any orders. Instead of returning empty, they offer to ship cotton at cheaper rates.

Freight charges are highest to Turkey at around Rs 82,000 but still work out cheaper than moving from one Indian port to another or by road.

Retail Sector

Smiles are back on retailers' faces as tills ring louder
Rebound in consumer confidence; margins to remain static.
Sector Outlook:

Shut out by the paisa-punching consumer during the slowdown years, the retail sector is back in its elements in 2010, building upon the recovery that started in 2009. The rebound was led by the value-for-money category and then moved up to the premium level.

The three quarters ending September 2010 saw a 23 per cent growth in revenues and a near-trebling of net profits for listed Indian retailers, helped in part by a lower base.

Demand promise

Rebounding consumer confidence, a step up in corporate hiring together with salary hikes indicate increased disposable income in the hands of the consumer. This points towards a bright 2011 for retailers, armed as they are with healthier balance-sheets to fund expansion.

Premium and value retail will both see demand pick-ups, as consumer spends rise. With Tier I cities fairly saturated, retailers will move to small towns and cities where growth may be higher. Mall activity, previously beset by delays, is also set to improve. Retailers such as Pantaloon are also looking to tap online buying to supplement revenues.

Hypermarkets will see higher activity next year with players such as Pantaloon, Shoppers Stop and Trent stepping up focus on this format, given the high footfalls they bring in and their position as anchor tenants in malls allowing for lower rents.

Expansion plans

Retailers have, in fact, charted robust expansion plans, against their previous cautious stance. For instance, Titan added 60 stores in the first half of FY-11. Shoppers Stop and Pantaloon plan to add about 60 to 70 lakh sq ft space in the next year.

They are also fairly well-placed to bankroll this expansion. As they sought to reduce debt pressures, collective debt:equity went down from 1 time in FY-09 to a comfortable 0.7 times in FY-10. Interest costs so far in 2010 have reduced by 5 per cent , after a 78 per cent increase in FY09. Retailers have also been able to raise funds through Qualified Institutional Placements.

Exclusivity

Returning investor confidence in retail was evidenced by retail initial public offers, which collectively raised over Rs 500 crore in 2010. Two companies that made a debut were – Jubilant Foodworks in food retail and Talwalkars Better Value Fitness in the health and fitness space.

Their exclusivity afforded them a premium in valuations over other retailers, with trailing valuations of 70 and 57 times, against the 20 to 45 times of other retailers. A younger population with the propensity to spend on food and entertainment, as well as an increasingly health-conscious nation support the prospects of these players.

Margins

The retail segment, while holding promise in revenues, may slip up on the margin front. Operating margins in the first half of FY-11 were helped by a drop in raw material costs.

However, cotton and yarn prices and even synthetic fibre prices are northward bound, and could reverse this saving for apparel retailers. Retailers with backward integration such as Page Industries and Kewal Kiran may manage better margins. Food retail could also see squeezed margins as food inflation lead to spikes in raw material costs.

Two, selling and promotion costs, at 4 per cent of sales are up from the 3 per cent in the year before. Increased competition, especially in the smaller towns where retailers are planning to go, may require higher promotion spends. Operating margins, therefore, currently at 7-8 per cent are not likely to show much improvement.

Finally, as retailers step up expansion, interest cost savings that helped a net margin improvement of 2 percentage points in 2010 is also unlikely to persist, and net margins will remain at 3 to 4 per cent.

The outcome of the much-debated FDI in single brand and multi-brand retail is likely to emerge in 2011.

FDI

Retailers may benefit in partnerships to set up store chains, since 100 per cent FDI in either single or multi-brand retail is hardly likely.

Food and grocery retailers, such as hypermarkets Big Bazaar and Star Bazaar, may additionally benefit from supply-chain expertise foreign retailers bring with them.

Floundering retailers such as Koutons or Vishal Retail could receive a boost from foreign investments, whether by private equity players or foreign retailers looking to benefit from these retailers' massive store chains. Valuations of these stocks may thus see some improvement.

Supply Chain Management: Why it is important?

Supply Chain Management Software As A Services

A successful profit-driven organization is one that achieves a good level of profitability. In order to do this, there is a need for an effective supply chain management software

A successful profit-driven organization is one that achieves a good level of profitability. In order to do this, there is a need for an effective supply chain management software. The efficacy level of the said chain relies greatly on the supply chain management software as a services.

Defined as the control of materials, information, finances and other resources as the output moves from the supplier to the manufacturer to the wholesaler to the retailer and finally to the customer. The entire network that involves these different elements is referred to as the supply chain. Each stop gives out an additional value to the product and at the same time, benefits from its passing by.

Management of the chain is focused on making sure that every single party involved in the chain is able to get the optimal level of benefits that can possibly be accessed in the whole process. It is necessary for an individual to understand this basic concept to get a good shot at how an organization's logistics and operations go. 


The product is the most important element in supply chain management. It is essential to consider various factors when determining and manufacturing the product. One of which is the demand. A product is useless if it is not something the customers want. More so, the time it takes for the product to get into the customers' hands is also something to take note of. 


Demand is possible only if the customer has access to the information pertaining to the presence and possibility of the product. Within the supply chain, information involves the different parts of the different processes the product has to go through before it gets to the hands of the consumer. 


Last comes financing. It plays a major role in the supply chain since each step of the process entails specific costs. The manufacturers, for instance, gets to deal with the suppliers concerning the possible payment arrangements pertaining to the supplies of raw materials and similar needs. 


Certain problems can occur within this management. These can include the distribution strategy as well as the distribution network configuration. The cash flow and inventory management can also be sources of issues within the chain. 


For a business end product to be successful, an effective supply chain management is definitely a must-have. It is all about the different operations and processes that take place within an organization. Hence, it is a necessity to maintain its presence and well-being


WALMART is the best example for maintaining their supply chain through the integrated software..

Entrepreneurship:Business Incubators

Business Incubators: business support resources and services

Business incubators are programs designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts. Incubators vary in the way they deliver their services, in their organizational structure, and in the types of clients they serve. Successful completion of a business incubation program increases the likelihood that a start-up company will stay in business for the long term: Historically, 87% of incubator graduates stay in business.

Most common incubator services:

• Help with business basics
• Networking activities
• Marketing assistance
• High-speed Internet access
• Help with accounting/financial management
• Access to bank loans, loan funds and guarantee programs
• Help with presentation skills
• Links to higher education resources
• Links to strategic partners
• Access to angel investors or venture capital
• Comprehensive business training programs
• Advisory boards and mentors
• Management team identification
• Help with business etiquette
• Technology commercialization assistance
• Help with regulatory compliance
• Intellectual property management

Unlike many business assistance programs, business incubators do not serve any and all companies. Entrepreneurs who wish to enter a business incubation program must apply for admission. Acceptance criteria vary from program to program, but in general only those with feasible business ideas and a workable business plan are admitted. It is this factor that makes it difficult to compare the success rates of incubated companies against general business survival statistics.

Incubators in India

Agro Industry: Last Decade

Indian Agro: Farm output bounces back

Has Indian agriculture turned the corner? Official data on crop production as well as consumption of key farm inputs suggest so.

The accompanying table shows output trends for major crops over three periods: 1995-2000, 2000-2005 and 2005-2010 (April-March). For each of these five-year periods, the average production has been taken, in order to minimise the impact of unusual year-to-year fluctuations arising from the vagaries of weather.

A clear picture emerges. The early half of this decade was pretty bleak for agriculture, with output stagnating or rising only marginally in most crops, and declining in the case of oilseeds and pulses.

Turnaround time

However, the subsequent five-year period – roughly coinciding with the United Progressive Alliance (UPA) in office – has witnessed a reversal of fortunes in foodgrains, oilseeds and sugarcane. In some crops – cotton, maize, potato and onions – the production increases have been quite significant. Even milk has posted a bigger jump relative to the preceding period.

The evidence of a turnaround is further borne out when one looks at the ‘input' side. There has been a robust rebound, for instance, in tractor sales and consumption of fertilisers, reflective of higher demand originating from farms.

Part of the overall improved agricultural performance is explained by higher yields. This is particularly apparent in cotton and maize, where Bt technology and increased penetration of hybrids have made a difference.

But equally, if not more, important has been the role of prices. During 2005-06 to 2009-10, the average wholesale price index (WPI) for ‘food articles' went up by 40.76 per cent, which was more than the 24.14 per cent for ‘all commodities'.

It was the other way round in the previous five years, where the cumulative general WPI inflation of 20.30 per cent exceeded the 9.27 per cent of food.

Twin bonanza

The more favourable terms of trade for agriculture in the recent period are likely to have induced farmers to ramp up output, just as the earlier lower relative prices may have discouraged expansion of cultivation. The combination of higher production and better price realisations has, in turn, helped boost rural incomes.

That still begs the question: Why have food prices spiralled so much despite the farm sector staging a revival of sorts during the UPA regime (unlike the earlier period when prices ruled soft even in face of stagnant production)?

The answer could lie in the increased purchasing power accompanying higher economic growth rates over the last 5-6 years. This has led to a situation where food production is now having to keep pace not just with rising population (as in the past), but also rising incomes.

Demand-pull

The growth in the purchasing power base may have made prices more volatile than before – with the result that even a 10 per cent production shortfall nowadays translates into a 100 per cent price increase. Onions are a live example of this.