REMINISCENCE`09 ---Delhi Chapter Reunion

The Delhi chapter of alumni meet took place at Hotel Ikon Residency on the 16^th of November. The alumni had to register themselves where in information regarding themselves had to be given. Every alumni had been given a T-shirt of their size with the MANAGE and reminiscence logo printed. Delighted with meeting their old buddies the alumni where also pleased when they met other alumni which were in Delhi which they did not know.

The programme started by the host of the evening Mr. Anurag Athavale (PGP-ABM, first year) making the audience remember how much they miss MANAGE. People stood in silence for a minute to pay condolences to late Dr.A.K Arora, former honorary and visionary Director General of MANAGE.

Alumni became nostalgic when a movie (prepared by cultural committee,MANAGE) regarding how a student spends his two best years of life at MANAGE was shown. The show then was taken over by the alumni who introduced themselves, formally and informally. The alumni also spoke about their memories in MANAGE which the crowd enjoyed. Mr. Shashank Sinha and Mr. Rishab Hasija(both PGP-ABM,second year students) spoke how MANAGE can maintain its fame. They said that the students in no-help condition were trying their best to excel and that it was due to the alumni that MANAGE was living to its image in the business world. Alumni website was said to be the need-of-hour and that student-alumni partnership would help not only in website building but also organizing different chapters of Reminiscence in various cities, boosting industry relations, placements, guidance to students at MANAGE and fund raising for all this.

The hall was now welcomed for discussion. Mr. M.C Madhukar, (96-98 batch)Bharti WalMart, was of opinion that not only such reunions help establish MANAGE as a brand but also it helped students gain knowledge. He said in this modern era networking has become important and such reunions encouraged it. He was of the opinion that alumni cell should be active and emphasized on funds raising for the activities of alumni committee. He said that for a student enhancement geting best faculty was important. Mr. Nirvanjyoti,(05-07 batch) Yes Bank, was of opinion that alumni support was important against the no-help condition at MANAGE and that academic committee should be aggressive in getting the best faculty. Mr. Praveen Chandra,TCL, said that the student’s alumni committee would be instrumental to bridge the gap between the current MANAGEites and MANAGE alumni. Mr. Ajay Kakra, Yes Bank, was of opinion that to enhance the student-alumni-MANAGE relationship a website would help a lot and that alumni coming to Hyderabad should voluntarily visit MANAGE and guide students. Mr. Ravi Prakash Singh,(02-04batch) GSK, opined that industry meets with strategic people was important before the placements. Alumni could help in this case by making such strategic people available. People at large didn’t know that NAIM,Jaipur(earlier a subsidiary institute of MANAGE)was not a part of MANAGE now! Alumni in general were of opinion that MANAGE was no less than IIMs. Coordinators from Delhi were appointed at the end of the discussion namely Praveen Chandra, Nirvanjyoti, Mukesh Rana, Deepak Sagar and Ravi Prakash Singh. The alumni were now presented with mementos by most senior alumni Mr.M.C. Madhukar.  

The vote of thanks was delivered by Ms. Chitra Shri V Kumar. Photographs of alumni with alumni committee were taken. The programme ended with a lavish dinner.

Some Glimpses:

 

Agricultural research - rests in peace

Need is the mother of invention, the quote is necessarily true in every aspect of human life. But it seems that India has forgotten the quote. The ever increasing pressure of growing population, shrinking land, depleting natural resources and decreasing productivity has called for continuous research in agriculture. But according to the data available trends seem to be reversing. While the global food crisis is expanding, the research expenditures are not up to it. According to the government of India’s Economic Survey, the rate of growth in India’s food production is 1.2% a year, significantly less than the population growth rate of 1.9%. The creation of additional irrigation potential in Indian agriculture was 3% a year in the 1990s. It has declined to 1.8% in 2007. 

If we consider the productivity of wheat in India, it was 2.71 tonnes per hectare in 2002. It fell a few notches to 2.63 tonnes per hectare in 2007. India’s productivity in rice was 3.14 tonnes per hectare in 2002. This has moved up marginally to 3.18 tonnes per hectare in 2007. The productivity of wheat in America has inched down from 2.7 tonnes per hectare in 2002 to 2.6 tonnes per hectare in 2007. Even Brazil’s sugarcane productivity has merely climbed up from 70 to 71.10 tonnes per hectare in the same five year span.  India’s average rice yield today is 2.9 tonnes per hectare. By comparison, China’s average rice yield, at 6.3 tonnes per hectare, is more than double that of India. South Korea has achieved an even higher rice yield, i.e., 6.8 tonnes per hectare. 

The reason, as noted agriculture scientist M.S. Swaminathan says, is that “the lab-to-land (technology) transfer has gradually eroded”.

A 2007 report on the impact of science and technology on Indian agriculture by the Chennai-based M.S. Swaminathan Research Foundation said, “There has been no breakthrough in technology in the 1990s even to sustain the growth levels of the earlier decade.”  Currently, public expenditure on research and extension together stands at well below one per cent of GDP in agriculture.

Agricultural research has contributed significantly to improvement in productivity and, with the marginal internal rate of return on research and investment, is still very rewarding. According to an Asian Development Bank report written by C. Ramasamy and K.N. Selvaraj of Tamil Nadu Agricultural University, in Coimbatore. “A 10% increase in public sector expenditure on agricultural R&D (research and development) would induce agricultural growth by 2.4% at constant prices, and overall welfare by 3.8%”.

Still, there is severe under-investment in agricultural R&D, which has fallen from 20% of all research funded by New Delhi in 1960-80 to under 12% in early 2000s, The government, on its part, hasn’t quite walked the talk of agriculture renaissance: agriculture and allied activities’ share in the 11th Plan outlay at 3.7% is down from 4.9% in the ninth and 3.9% in the 10th Plan. Experts say it’s impossible to achieve the 4% growth rate target of the 11th Plan. The rate of growth in agricultural productivity is alarming, just about 2%, which is marginally above the population growth. With almost two years of the current Plan over, achieving 4% growth is impossible. According to Swaminathan, the production target of even the 10th Plan has not been achieved.

 

The changing challenge for Indian agricultural research

• Productivity growth must now extend to greater variety of crops, farming sectors (horticulture, livestock, fisheries, forestry) and ecologies/regions. It is particularly important to focus on areas which were bypassed during the green revolution period and where the livelihoods of the vast majority of poor, particularly women are directly or indirectly linked to farming.

• Agricultural practices and technologies that we generate and promote do not adversely impact our natural resources base. Our past strategies aimed at gains in the short run have led to serious and widespread problem of resources degradation in both irrigated and rainfed ecologies, with grave consequences for sustained productivity and overall ecology. Declining soil quality, deteriorating water resources, loss in bio-diversity have all become a serious limitation in achieving enhanced productivity.

• In view of increasing trade liberalization and emerging WTO regimes, it is important that agricultural production systems become more efficient and competitive.

• A serious consideration is given to understand and think of ways to respond to issues of climate change, which are already impacting agriculture in a variety of ways.

 

It is apparent that the demands on agricultural research are becoming more complex. While the need and concerns of enhancing productivity to meet the needs of the increasing population continue, there are additional concerns which relate to poverty alleviation, equity and sustainability issues. There is increasing pressure for agricultural research not only to result in increased yields, but also to ensure that the benefits of research accrue to the largest recipient groups and that the quality of natural resources base is maintained and improved.

 

 

 

By

 Parag Rastogi

PGPABM I

2008-10

Is it the real scenario?

On 30^th of October, ASSOCHAM in its report projected that 25 to 30% jobs could be slashed in real estate, IT, steel, financial services and aviation as a cost cutting exercise. Reacting to which the GOI vehemently criticized the report touting it as “outrageous”. Under the severe pressure, ASSOCHAM had to revert back by withdrawing the report. But the reality could not be shrouded any way. We heard that, pink slips were to be offered in banking, IT sector.

The venomous impact of recession was realized by apex bank and it was on its way to resurrect the situation. The RBI has taken every step to infuse the money in banking system by gradually reducing the CRR and SLR. Most of expert says that fundamentals of Indian banking system are strong and the impact of global crisis would be very minimal but the reality of banking system is yet to come. 

Real sector companies have borrowed Rs 75000 crore from banks and Rs 25000 crore from mutual fund companies. The NPAs of banks might increase in the end of December quarter because of recession in the economy. The individuals, who are losing their jobs or whose salaries getting chopped off, might become defaulters in coming months, these kinds of defaults, we may see in real sector, auto loan, credit card and personal loan. The uncertainty about jobs and salaries will also affect these sectors’ growth. The default may come from corporate as well. The real sector companies are feeling the heat as the bubble of real sector has burst and there is less number of customers in the market. To lure these customers they are giving offers like 1BHK is free with 2 BHK to meet out their costs. The Banks are pressurising them (corporate and real sector companies) to pay their debts as banks themselves are facing crunch of money. The major concern of banks is their asset-liability mismatches which may hurt their profits. Over the last three year, banks have funded their long term credits via short term liabilities, mostly deposits, large part of which were corporate bulk deposits and certificates of deposits.

The various measures have been initiated by banks in order to mitigate the risk of defaults. They are denying loans (personal, auto, housing etc.)  and credit cards to individuals belonging to IT companies, BPOs, real sector, aviation, and financial institutes ( NBFCs, brokerage houses, insurance companies) and in other cases strict scrutiny is being conducted before lending.

The real impact of recession and its casualties are yet to be grounded before us which will be taking place at the end of this financial year. On the basis of those we will be in situation to count our wounds and may be in position to predict the correct diagnosis in future.

Mayank

PGPABM-I

MANAGE

Where we are heading for ......

The face of terror reared its ugly head on Wednesday night once again. In one of the most horrific incidents in recent times, Mumbai was once again paralysed as it came face to face with terror as planned attacks hit at the heart of its urbane, posh, and prosperous areas of affluent living in South Mumbai. What can civil society do to deal with terror? Has the police machinery failed completely to take care of citizens? Is It time for security to be given over to the Army? Tell us what you feel can be done to make India a safer place. 

IBNLive

Redemptions in Mutual fund

October, 2008 saw the redemption pressure on the Mutual Funds (MF) due to the dearth on capital from fund houses due to various reasons. The major change was observed in the Income funds and the Liquid & Money Market funds. This has lead to RBI step in. It has provided a special window for short term credit of Rs. 20.000 crores in order to meet the redemptions pressure. The scheme wise reasons for the redemptions are as follows
ELSS redemption
The redemption from the ELSS was the least due to the three year lock in period and tax advantage issues.
Equity redemption
The change in the total Asset Under Management (AUM) of equity funds (i.e. fund investing 65% of total AUM in equity funds) was only 0.5% of the AUM of equity fund of the total MF industry as a whole. The reason for such a small change was that there was active buying of the fund units by long term investors.
Income fund redemptions
The reasons for high redemption from income fund i.e. 21.9% of the total AUM in income fund was
1) Fear among investors about the portfolio quality. The probable reason for this fear maybe that they are of the view that the money that is been invested my them in purchase of MF units is being invested in to highly risky projects or firms which may lead to losing of money if these firms defaults. And thanks to the downfall of the investment banks in USA which made their assumption concrete.
2) Corporate redemptions for their own cash requirement
3) And more over in October some of the Fixed Maturity Plans had matured hence there redemption also led to rise in total redemptions.
4) Due to the slowdown in the economy it is sure that the companies will cut their production and there fore less generation of profit, hence less dividend distribution, also there was less capital appreciation possible as the stock prices have already fallen down. This may led to low returns. Hence the investor would have thought of investing in fixed income generating schemes.

Liquid & Money market fund redemptions

If we study the past performance of this fund they have show much volatility because the main investors in this type of funds are the corporate and institutions who park their money into this type of funds exclusively because they have less maturity period and for their day to day requirements. This time the redemptions were made to pay the tax, advanced taxes & also due to deteriorating quality of the credit have led them to invest in Fixed Deposits.
The industry MF in India is still at it’s nascent stage, India still preference is given to investing in the schemes like assets like fixed deposits, PPF, bank deposits etc. So the investors with low to medium risk ability can invest into the MF schemes depending on his requirement. To my view investing in MF is a secured way of lowering your risk from harsh fluctuations in returns obtained by investing directly into the stocks. However it is also necessary to now when to exit from a scheme in order to avoid from losing money, rather than losing money, one may not be able to harvest the profit generated from the schemes. People usually forget the basic principle that buy the stocks when they no one wants and sell them when every one wants. But most of the investors just do the opposite leading to financial erosion. It is necessary for every investor to keep his hunger for risk checked because of this he end up making unwise decision which leads to repercussions which may have to be faced by him his family and those dependent on him.

Kalpakant C. Pawar
(Mutual fund advisor)
PGPABM – II
MANAGE, Hyderabad

Why FM sees hope for India despite anticipating deep global recession?

Finance Minister P Chidambaram speaking on the effect of the current global crisis on India said that there have been recessions in the past but added that the current recession threatens to last longer and deeper than before. He said that India does not have a problem but is bearing the brunt of the spillover of this global recession.

Chidambaram said that 60-65% of India’s workforce depends on agriculture and he expects a bumper crop this year and feels it will continue to grow at a robust space.

Chidambaram is confident that India will see a good growth rate at the end of this year and said that his lowest estimate of GDP is 7%.

“In the last sixty days both the government and the Reserve Bank of India (RBI) have moved swiftly to take steps that will ensure adequate liquidity is provided to industry. “ However, Chidambaram said that providing liquidity is not the panacea for the current crisis. “Providing liquidity is only the first step, the second is ensuring appropriate price and the third step is ensuring that at that price credit is actually delivered to industry.”
Here is a verbatim transcript of P Chidambaram’s speech on CNBC-TV18. Also watch the accompanying video.
Tthe world economy has changed more rapidly in the last sixty days than it has over a long time. But this is not the first time in which industrialized countries are going into a recession. There have been recessions in the past in Japan, in Europe and in the United States (US).

This recession of course threatens to be a longer and deeper recession affecting more industrialized countries. We in India are experiencing the spillover effects of what is happening in the advanced countries.

We are not the cause of the problem but we are being invited to be part of the solution to the problem.

The crisis will end some day. We must take note of the structure of economy and the manner in which most Indians live and work.

Sectoral outlook:

About 60-65% of India’s population and workforce depend on agriculture and agriculture continues to grow at a robust pace. The rabi crop is the main agricultural crop in India. In terms of sown area of wheat; we have already sown 2.69 million hectares as against last year’s 2.19 million hectares on the corresponding date. Maize stands at 2,32,000 hectares as against 1,77,000 hectare last year, jowar at 4.19 million hectare as against 3.59 million hectares last year, pulses at 6.6 million hectares as against 5.5 million hectares last year, oilseeds at 6.05 million hectares as against 4.34 million hectares last year.

The total sown area has increased very significantly this year. The monsoon had been good, farmers are busy with their work, they do not look at the Sensex or the Nifty everyday and we will have a substantial bumper crop.

The services sector in India is driven by million of small and medium enterprises. They are facing some liquidity problems but we are determined to ensure that they have provided adequate liquidity so that they can carry on their work and their business until we tide over these crises.

The section that is affected is the industrial sector; especially large manufacturing industry and the financial sector.

Newspapers are full of the problems faced by the financial sector and industry because it is people from these sectors who are readers of the newspapers and who advertise in the newspapers.

The media naturally focuses on the industry and the financial sector. These sectors indeed face problems.

We are extremely vigilant; we have been proactive. Infact, in the last sixty days both the government and the Reserve Bank of India (RBI) have moved swiftly to take steps that will ensure adequate liquidity is provided to industry.

But as I have said previously, liquidity alone is not enough. Providing liquidity is only the first step, the second is ensuring appropriate price and the third step is ensuring that at that price credit is actually delivered to industry.

I think these are not insuperable problems, these are not insurmountable problems. While the world output will decline and to that extent affect our exports, affect some capital inflows, affect external credits, we must be able to quickly substitute or compensate for that by stimulating domestic demand and providing liquidity in the domestic market.

The CMIE (Centre for Monitoring Indian Economy) captures data on investments. They say that inflation, rising cost of capital and fears of a global economic slowdown have not reduced the enthusiasm among Indian corporates to set up fresh capacities or expand the existing ones.

This is well captured in the data collected by CMIE.

We captured 557 new projects in the September 2008 quarter adding Rs 5,22,812 crore. This is the third largest quarterly investment captured in India’s history. While, 557 new projects have been captured in the quarter ending September 2008; 48 projects have been completed in this quarter and CMIE also notes that 45 projects have been shelved.

On GDP:

So I think what we need now is to deal with each problem as it arises. Anticipate the problem, deal with it by using sound economic principles and a certain amount of courage and confidence. While there is a slowdown, what does a slowdown in India mean? The lowest estimate of any think-tank in India is 7% growth. Why is 7% growth a matter for wearing sackcloth and ashes? The world output will go by about 2% that is still three times the world’s growth.

There will be a slowdown but the steps that we have taken and that we will take can to a large extent compensate for the factors that are causing the slowdown and I am confident that we will end this year with a very satisfactory growth rate.

I cannot put a number on the final growth rate. IMF’s (International Monetary Fund) estimate made last week places at 7.8% many analysts have said between 7% and 7.5%. The RBI has said 7.5% to 8%. If anyone can tell me that the worst is over for the world then I can confidently predict what the growth rate will be. But let us assume that for another month or two there will be further bad news; even then we will grow at a satisfactory growth rate. Next year we will bounce back to a much better growth rate.

What is required now is confidence, courage and taking the steps that are necessary to compensate for the ill effects of a world slowdown.

On Indian exports:

It is likely that our exports will dip and we may not reach the USD 200 billion but that was what I said last year as well but eventually we reached the target last year. We will be close to the target this year but we can compensate for that by stimulating domestic consumption.

On capital flows: We have already witnesses some outflows as a result of Foreign Institutional Investors (FIIs) facing redemption pressures back home. But we are compensating for that. The World Bank has promised to substantially increase developmental assistance to India. We are looking to multilateral regional banks for more funds to flow into India and we have relaxed the conditions under which the Indian industry can raise capital aboard both debt and equity. A number of companies have in the last 10 days raised ECB abroad at very attractive rates. So we can compensate for that by allowing our companies to raise capital abroad.

On depreciating rupee: The rupee has depreciated because the dollar has shown an extraordinarily strong performance and so it’s ironical that money is flowing back to the country where the crisis originated but that is the complaint I have heard from every Finance Minister in the world. There is pressure on the rupee. But once the flows reverse as we believe it will, FCNR rates (Foreign Currency Non-Resident (Bank) {FCNR(B)} account have been revised, ECBs have been liberalized. Once the flows begin to come into India, it is quite possible that the rupee will climb up.

At the moment there is a huge demand for dollar coming mainly from oil companies and others who have to meet some payment obligations. It is quite possible that in about a month or two the direction of flows can reverse. FDI’s are still quite strong and the rupee will settle at an appropriate level.

Sensex and Nifty:

I think what is important is not to be focused on the Sensex or the Nifty everyday. If you look at that you suddenly feel you have become poorer, you have not become poorer or richer. This is simply an index which points to the estimate of investors of the potential of that company or that sector in the future. That one number should not determine all our actions. It should not determine what we have for breakfast and it should not determine whether we go to the gym or not or it should not determine whether we will take a walk in the park.

That is a number but there are many other numbers which I think will make for the totality of India’s economy. Agriculture is robust and we will ensure the services sector dominated largely by SME’s is provided with adequate liquidity so that they can carry on with their business. We will take steps to stimulate the domestic economy to compensate for the downsides caused by a downturn in the world economy.

At the end of the year, you will find that India has returned a very satisfactory decent growth rate given the world conditions and next year I am confident we will bounce back

The Economic crisis: End of Capitalism??No more laissez faire??

The recent economic crisis originating from US and gripping the entire world like a wild fire signifies the defeat of the most acclaimed neo-conservative economic theory propounded by Friedman. “Free markets are inherently stable if left to themselves and depressions and other economic drawbacks are a result of government interventions”, if this was the theory which was so acclaimed and practiced to the core by the American people then why was the Wall Street bailout bill passed by the bush govt??
Why did the so called big names in the financial world need the $700 billion bailout??
Was the capitalist world so insensitive that it did not realize the aftermaths of such an event??
Were these corporate honchos so masked by the revenue figures and the profitability index that they did not pay heed towards the basic funda of lending loans? Lending loan without any collateral, when an average American was having 120% as his household debt, when his entire savings as a percentage of his disposable income was -2% makes absolutely no sense.

Was it again Victory for Keynes the great and the theory of moderate school of economics …??

BLOOD DONATION CAMP AT MANAGE ON THE OCCASSION OF GANDHI JAYANTY

On the auspicious occasion of Gandhi Jayanti, the techno-managers, the students of MANAGE took the opportunity to dedicate the day for a noble cause. They came forward together to donate blood for the nation.
The programme was inaugurated by, Sri K.V.Satyanarayana, IAS, the Director General. He then appreciated this noble gesture. He congratulated the students for this admirable action. The students had managed to motivate their faculty and all the campus staff to participate. This programme was organised in MANAGE campus itself, with the help of Red Cross Society for Thalasemia patients.
Zeal and enthusiasm was rampant among the budding managers, and they once again proved themselves to be responsible citizens of the country. About 60 students, faculty and staff donated blood.
It was really great to see that people, who previously shuddered at the sight of an injection syringe, willingly came forward to contribute for the noble cause.

INDIAN AGRICULTURAL EQUIPMENT INDUSTRY

The Agricultural Equipment Industry is a key sector that contributes to agricultural growth and productivity. Agricultural Equipment industry plays a key role in supporting the performance of the agricultural sector in India. Farming activities are increasingly getting mechanised, and the availability, quality and performance of agricultural equipment has an increasing impact on improving the output and productivity of the agricultural sector. While India manufactures and deploys a range of agricultural equipment across the industry value chain, tractors and tillers are the two that constitute the bulk of the industry.
The manufacture of basic agricultural implements is largely by village artisans and tiny units, small scale industries and the State Agro-Industrial Development Corporations. Medium scale industries operate in their own premises with adequate infrastructure, sometimes forming a part of an industrial estate. They also have manufacturing and marketing facilities and employ skilled manpower. Products such as diesel engines, electric motors, irrigation pumps, sprayers and dusters are produced in this sector. Complex products such as land development machinery, tractors, power tillers, post harvest and processing machinery and dairy equipment are manufactured by large players in the organised sector. Mahindra & Mahindra’s Farm Equipment Sector (FES), which designs, develops, manufactures and markets tractors for Indian and overseas markets, is the largest manufacturer of tractors in India. Other major players include TAFE, New Holland, John Deere, Escorts, Eicher, HMT, Sonalika and Punjab Tractors.
Indian tractor industry is the largest in the world, accounting for one third of global production. The tractor market in India is cyclic and has been growing steadily over the years. There has been a continuous growth of about 20 per cent Y-o-Y for the industry since 2003. There was a recession between 2000 and 2002 owing to poor monsoons. There was a production of 296,080 tractors in 2005-06 as against 249077 tractors in 2004-05. The market is segmented in terms of horsepower into the 30 HP and less (lower) segment, the 30 HP – 40 HP segment and the higher segment beyond 40 HP. The medium horse power category tractors, 31-40 HP, are the most popular in the country and fastest growing segment, which contributes 51 % of the total market. All major players cater to all the three segments. There has been a trend to move towards higher HP tractors, in recent years. This has been prompted by the need for newer applications and increasing awareness among farmers about new mechanisation options.
93% of the tractor industry is concentrated in the 12 major states, namely Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, Maharashtra, Madhya Pradesh, Punjab, Orissa, Rajasthan, Tamil Nadu and Uttar Pradesh. Punjab, Uttar Pradesh and Haryana are the largest markets for tractors, together accounting for more than 50 per cent of sales. Tractor exports from India have been registering continuous growth. From US$ 78 million in FY01, tractor exports rose to US$ 235 million in FY05, a CAGR of 31 per cent. Sizeable quantities are exported to Africa, the Middle East, Asia, South America and other nations. The penetration of almost all categories of agricultural equipment, as measured by the number of equipments per hectare, is quite low in India. Also the penetration levels are also not uniform throughout the country. While the northern region is now almost saturated in terms of new tractor sales, the southern region is still under penetrated.
Assistance in the form of subsidy at the rate of 25 per cent of the cost with permissible ceiling limits is made available to the farmers for the purchase of agricultural equipment including hand tools, bullock-drawn/power driven implements, planting, reaping, harvesting and threshing equipment, tractors, power-tillers and other specialised agricultural machines under the centrally sponsored scheme of Macro Management of Agriculture. According to the Economic Survey 2006-2007, 7,292 tractors, 16,500 power tillers, 64,610 hand tools, 41,854 bullock-drawn implements, 15,236 tractor driven implements, 6,080 self-propelled/power-driven equipment, 81,496 plant protection equipment, 6,587 irrigation equipment and 66,464 gender-friendly equipments were supplied to the farmers under the Scheme during 2005-06.

Anshumant and Gurashish

PGPABM-I(First Year)

MANAGE, Hyderabad

Indian Dairy industry - An Overview

India is largest milk producer in the world; in 2006-2007 its milk production was100.9 million tonnes & per capita milk consumption is 246gms/day (2006-2007). It is also having second largest no. of cattle & highest no. of buffalo in the world. This underscores the potential of India to be as the biggest player in the dairy market, at world stage. The overall growth rate of the dairy industry in India is 4 %, which is almost 3 times the average growth rate of the dairy industry in the world. In India, dairy industry is mostly unorganized & only 15 % of this sector is organized. The share of organized sector is expected to rise rapidly, especially in the urban region. Milk processing level is 35 percent.
The growth rate of agriculture is stagnant, below 2% (Recently it touched 4% but next year projection is again gloomy), and livestock sector growth rate is more than 4.5%. Small and marginal farmers own only 33 % of land, and about 60% of female cattle and buffaloes &75 % of households have 2-4 animals on average. Dairying is a part of the farming system in India & feed is mostly residual from crops. Most imp thing is that dairy is a source of regular income; crop income is seasonal so it minimizes risk. Dairying comprises 1/3 rd of rural income. Livestock is a security – asset to be sold in times of crisis. It is also important as it is a tool for rural income generation, rural nutrition & women empowerment.
The value of milk & milk products in India is more than Rs. 1179 billion in the year 2004 -05 (Almost equal to the combined value of the paddy & wheat). Out of India’s total milk production, no less than 65% is consumed unpasteurised. Of this percentage, 44% is consumed in the rural area where it is produced. The remaining 21% of the unpasteurised milk is sold to urban consumers. Rest 35% of the milk production that is pasteurised, 22% is processed by the unorganised dairy sector. This means that only 13% of the Indian milk procurement is processed in the co-operative and privately owned dairy industry. The majority of this, 8% of the total milk procurement, is processed into packaged or loose pasteurised drinking milk for consumers in the major cities. The other 5% is used to make products with added value, such as milk powder, ghee, ice cream, cheese and fresh milk products. Some important milk products are:
Infant Milk Food, Milk Powder, Whitener, Condensed Milk, Malted Milk Food, Butter, Cheese, Ice Cream and Ghee.
The organized industry handles only 15 per cent of milk, with 36 per cent being handled by private dudhias and unorganized players and 46 per cent being retained in rural areas. Within the 15 per cent organized sector share, private and cooperative/government dairies handle an equal quantity. Organized sector is mainly made up of the co-operatives but now the private players like Reliance, Britannia, and Nestle etc. are also coming in this sector.
Dairy sector was de-licensed in 1991. The Milk and Milk Products Order (MMPO) 1992 has some controls over Collection areas/milk sheds specified & processing capacity was fixed. But after revising the MMPO in 2002: controls stand were withdrawn. After that private sector investment in dairying has increased considerably. Previously, co-operatives did not have any competition from the private sector but now considering the potential, several big players are coming in this sector. To strengthen co-operatives, the government has also reduced interference in management & now farmers are free to govern their cooperative organizations.
From 2000 onwards, Indian dairy products, particularly milk powder, casein, whey products and ghee started making their presence felt in global markets. The decade of 2000-10 will be recorded in dairy history as the decade of exports. India today is the lowest cost producer of per litre of milk in the world, at 27 cents, compared with the U.S' 63 cents, and Japan’s $2.8 dollars. Now to take advantage of the lowest cost of milk production and increasing production in the country multinational companies are planning to expand their activities here. Some of these milk producers have already obtained quality standard certificates from the authorities for exports. This will help them in marketing their products in foreign countries in processed form.
Dairy demand is income elastic, this means increase in income and increase in population- high growth rate for dairy. The urban market for milk products is expected to grow at an accelerated pace of around 33% per annum. This growth will come from the greater emphasis on the processed foods sector and also by increase in the conversion of milk into milk products. Specially the demand for Ghee & table butter is rising at faster pace, 8 % & 10 % respectively. By 2011, Dairy India projects the value of the industry to be more than double to Rs 520,780 crores. With all this India Dairy industry is poised to play a bigger & central role at world stage.

Prakash Saini
PGPABM(08-10)

A truly “fab”ulous story..........

Fabindia is a brand that needs no advertisement. For over 47 years, the Delhi-based retail chain has been providing world-class handloom textiles. It has the unique distinction of maintaining its relationship with its rural suppliers. With a retail presence of 86 stores in 39 cities, the chain has about 22,000 artisans as its supplier base. This is all set to expand to 100,000 by 2010.
The way the entire system operates is the most interesting part. The mastermind behind the entire plan is the Managing Director of the company William Bissell. Small-scale weavers and artisans are brought under the ambit of a corporate entity, which is called Supplier Region Companies (SRCs), in which they hold shares. There are currently 17 SRCs that are operational throughout India. Matters such as quality control and timely production, together with the basics balance sheet, profit and loss account, dividend, and change of auditor are impressed into the minds of the artisans by the directors.
The artisans and the weavers who know of no other source of income, other than the wages paid to them daily now have a giant leap in their income by becoming the shareholders of a company. The operations of the SRCs are currently managed by The Artisans Microfinance Limited (AFML), which is allowed to have 49 percent of the equity. While the artisans hold 26 percent shares, 10 percent are held by the employees. There is a huge potential of pooling of funds since the rest 10 percent can be held by venture capitalists and outside investors. The authorised capital of an SRC, whose board has one or two artisan-directors, ranges from Rs 40 lakh to Rs 1 crore.
This successful story could ideally be replicated in the agricultural sector. Our farmers are facing problems similar to the artisans in terms of poverty, low standard of living and lack of capital for investment in their fields. But, before any serious attempt is made, all the uncertainties regarding the replication has to be taken into account.
References: Business Today and Business Line, April 15 2007.

Avinash,
PGPABM-I

Food Retail Growth to Double by 2020

The food retail business in India is growing at the rate of 47 % as comapared to the overall retail growth(oraganised) of 26 % and is expected to double at $482 billion by 2020 as against $236 billion in 2006. High disposable income and growing exposure to global lifestyle and other factors such as health consciousness, and convenience have impacted in change in consuming patterns of modern Indian consumers. Around 80 mn Indian consumers who have an annual income of over $5,000 will be the primary drivers of the food retail business, and this was reconfirmed at a CII seminar 'Foodpro 2007' in Chennai.
India is the fourth largest economy in terms of purchasing power parity and the consumer base is growing with the households of annual income of over $5,000 expected to increase from the current 81 million to 147 million by 2015. The processed food consumption is all set to treble to $300 billion by 2015 and the value of processed fruits & vegetables will increase to 10% in 2009-10 and 15% in 2014-15. All these are a clear indicator of the future the food retailing has and this gives all the agri business managers a prospective carrer in this sector.

SOURCE: CII conference"FOODPRO 2007" AND CSO

Manisha Mishra,
PGPABM-II

VIbrANtMANAGE: ThE NeW BlOg 4 ThE NaYe LoG

http://managevibrant.blogspot.com/
All work and no play makes jack a dull boy. Put in your thinking hats & freak out..........

Is ban on future trading in commodities justified……..???

After getting some insights from the commodities course made me to write this article. As myself being pro future trading I cannot resist people saying future trading leads to inflation. There is reason to it why I am saying that future prices don’t lead to increase in the prices of the commodities. We saw in the February 2007 that the future trading in the wheat was banned, even after the ban; the prices of wheat continued to rise sharply and reached $400/quintal. The reason for this abrupt increase in the prices was low output from major producers like US, Argentina, Australia and the subsequent ban on export of wheat by these countries. So I see no reason in banning wheat future trading as the price rise was due to lack of supply of the commodity to meet the rising demand.
The same is case with ban on trading of tur and urd which were banned for trading one month prior to wheat ban i.e. on January 2007, the production of tur in the year 2005-06 was 2.74 million tonnes while it was 2.31 million tonnes in 2006-07 how can decline in production match with day to day rising demand in this case the prices of the commodities are likely to rise.
In order to review whether futures trading really cause price hike government of India appointed a committee under the leader ship of Abhijit Sen. The committee had submitted its report. As per the report this committee had made an observation that food grains at no point accounted for more than 6% of total volumes of future trading in agricultural commodities. In fact the current volume of future trading in commodities in India is quite less than the international norms. More over the draft report of the expert committee on futures commodity trading, has recommended better regulation and participation by farmers in the commodities market even while saying that there was no evidence to suggest that futures trading stoked inflation.

As it was rightly by Mr. Bhashyam Seshan,CS (NCDEX) that exchanges as like NCDEX who trade in commodities futures are just playing the role of thermometer, they help us to know what is the current situation in the market which will further help us to decide what steps can be taken to avoid the foreseen price volatility. There is no use breaking the thermometer just because it is showing high temperature.
Future trading is just a price discovery mechanism and in order to improve this mechanism we need to standardise our local mandis which helps us to get the spot prices, it is very necessary that the spot prices should be arrived by fare means by suppressing the faulty practices of trade like hoarding or black marketing. In fact our government should take certain steps so as to involve the farmers in to this business so as to benefit directly from the benefits of future trading and secure his future position by mitigating the risk involved due to price fluctuation.

Kalpakant C. Pawar

PGPABM-II

MANAGE.

Changing Agri Commodity Market.....SAMANVAYA.....

Mr. Pradeep Srivastava and Mr. Shashi Shekhar Interacting with students at MANAGE

Mr.Pradeep Srivasatva, Senior Manager (Purchase), Britannia Industries Limited (BIL) was on campus on 13th August. He was accompanied by Mr. Shashi Shekhar, Manager (purchase) at BIL. Being a very affectionate alumni of PGPABM (batch 97-99) of MANAGE, he addressed the joint session of current 1st and 2nd year of PGPABM on changing agri-commodity markets, challenges in procurement of wheat etc. He also dwelt on the importance of developing insights and contrarian way of thinking while taking a view of the markets so that right decision on timing and price of buying can be taken. In his own words “Keep your eyes and ear open all the time to understand things better than others”. On being asked about the slowdown in economy he said that commodity inflation will require more vigil by managers and this makes the role of agri-business managers more vital. He said “Despite some signs of slowdown, this is the best time to be an agri-business manager”.
He particularly asked the students to build a strong foundation in Statistical tools and techniques because of their growing relevance in the complex markets of today. As an answer to a query he lauded the opening up of MCX spot exchanges and wished that it succeeds. In his view “Commodity exchanges are the future of trading in India” and bans on trading on wheat etc. are due to nascence of future markets here. “Things will improve with our growing understanding of how the markets work”.

Visit of Mr.Sanjay Das,National Category Manager-Staples.....SAMANVAY..

Mr. Sanjay Das visited the MANAGE campus and talked about Retail industry and Spencers retail and their status in India. He talked about the major retail formats of Spencers. According to him “Mergers are leading to profit generations but due to business tycoons entering in organized sector prices will hike.” Mr. Das is an alumni of MANAGE (1998-2000) and has worked with companies like ITC, Monsanto etc. He focused upon the qualities which an agribusiness professional should possess in these times of severe competition and asked students to work on innovative ideas and concepts to strengthen their foundation. He said “Future of Agri business managers in retail is good” but its for the students how they cash it.

Here we begin..

Visit of Mr. M.P. Poonia (Dow Agrosciences) to MANAGE

Mr.Poonia at SAMANVAY…..The Industry Interface Programme.
Mr.Poonia interacting with students at MANAGE, Hyderabad.

Mr. Poonia visited the campus and talked about present scenario of Agro Chemical industry. He threw light on the various requirements which an agribusiness manager needs to fulfill while getting into this sector. He talked about various pros and cons of prevailing scenario of the industry in India as well as World. He had a long interaction with the students and gave them the insights of agrochemical sector. According to him “Ag. Chem. Market is 5% inspiration and 95% perspiration.” and said that students entering the input sector should be prepared for the grind in initial years. “Indian Ag. Chem. Market is worth 690 MM $ US, out of which 61% is held by insecticide and 17% by herbicide” said Mr. Poonia


Excerpts:

“India is a market facing with business with small customers spread around the country.”

“Indian Ag. Chem. Market is worth 690 MM $ US, out of which 61% is held by insecticide and 17% by herbicide.”

“GM crops are hampering insecticide business, thus insecticide companies need to have to have strong portfolio to survive.”

‘Maximum competition to basic manufacturers is given by generic manufacturers.”

“Rapid commoditization is leading to conversion of brands into commodities.”

“Technology is shortening the life cycle of product.”

“Distribution Channels have now become capital intensive, decentralized and delayered.”

“Mergers and acquisitions are the order of the day as it leads to synergy of resources.”

“Ag. Chem. Market is 5% inspiration and 95% perspiration.”

Great Job Guys

Dear All

A great effort. My best wishes are with all of you and I am sure you will make all efforts to spread all the information about agri business in India. I am sure in the times to come you will become the source of information for all be it industry, academics, planners or students. Please ensure you keep this Blog live all the times and also ensure that the information you post on this Blog is authentic and credible.
All the Best

Prof. Sanjeev Varshney
XLRI Jamshedpur
India

Change in the name of blog

Hi friends , there is a small change in the name of blog to make it more reachable to all the people outside MANAGE and everyone. This step has been taken to increase the traffic to the blog. Now the blog will be called as AgribiZMANAGE instead of MANAGEagribiZ.

Shashank.

SAMANVAY.....THE INDUSTRY INTERFACE PROGRAM

The annual industry interface 2008 is started

FINANCIAL STRATEGIES FOR VALUE CREATION”

INTRODUCTION
India has a large rural population, spread over a large area posing a challenge for the Government to develop them, Financial Institution to involve them in their purview and Corporate to tap the bottom of the pyramid for sustainable market development. One of the most important hurdles in the fulfilment of these goals is the lack of financial inclusion. Government spending on rural development is not giving results due to the inefficiency of the system (Trickle down effect), financial institution can’t finance because of high risk involved and corporate not able to tap the rural market because of lack of purchasing power of the rural people. If we analyse the data of last few years we see the gap between the rural and the urban standard of living is increasing and the financial institution and the corporate are concentrating more on the urban population because of high returns and easy accessibility. The argument can be bolstered by following data. Number of small borrowing account in rural areas increased by 2.5% where as the same in urban areas increased by 13.8% between 2000 and 2005. For the same period number of bank offices increased by 330 in rural areas where as in urban areas it rose by 2575(source: RBI). This growing inequity need to be curtailed and minimised for the purpose of poverty reduction and overall growth of the rural India. So to achieve an overall social improvement through financial inclusion, a perfect frame work in which Government, Financial Institutions (FIs) and Commercial entities can work together, is required. The barriers to “ready” rural access to finance are high transaction cost, credit information asymmetry, high uncertainty or risk, use of credit for non-productive purposes, lack of training, knowledge and awareness about opportunities and changing technology etc. In the context of solving these issues and achieving stated objectives, a model in which different stakeholder can play a substantial and effective role with equal participation from government, financial institution, private companies and the rural masses can change the scenario of financial inclusion at very grass root level. Following role need to be played by different stakeholders to achieve 100% financial inclusion:
1. Government
The assistance provided by the government in the form of National Rural Employment Guarantee Programme “NREGP” (which includes providing at least 200 days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do unskilled manual work) can be divided into two parts. One will be given as wage and the remaining part (approx. 30%) can be kept as security by the Government. Amount kept by government can be used as security by the Financial Institution to provide credit to any other adult member of the family to start up his /her own work, recommended by the person working under NREGP. This step will increase the confidence of FIs in rural lending as it will mitigate their risk. Also, policy issues like Credit Information Bureau Act, 2006 (Dr.Rakesh Mohan, 2006) can help the FIs to get credit information about these people, so the credit limit can be decided accordingly. The Government can take such a step with any other scheme meant for rural development. The interest earned by government by keeping the security amount with banks can be used in project like Bharat Nirman.
2. Financial Institutions
FIs involved will include Commercial Banks, NBFCs and Foreign Banks. As their major concern is high risk and high transaction cost, the former can be supplemented by security mechanism of the model provided by the government where as the transaction cost can be reduced by the use of concept like Mobile Banking and telecommunication (which will cater to the needs of several villages thus increasing accessibility and reducing cost). Retired Postmen and school teachers can be used as representatives for FIs for credit enhancements in the form of reliable information. Starting with lending activity, a relationship can be built with rural people in subsequent years (in the form of savings and insurance) which will further enhance the business of these FIs. Another forward linkage can be established among the Banks/FIs and the Commercial Entities, who will purchase the end product made by the rural enterprises, in the form of better services and easy lending.
3. Rural household
This model provide a solution for the rural household to get out of the vicious cycle of poor economic condition for e.g. low credit availability leads to low risk bearing ability which leads to low productivity leads to low value addition and finally to low returns. The model benefits the rural household in providing financial inclusion, easy credit availability, full year employment, sense of savings(as the 30% amount with Government will be given to them at the end of the financial year in the form of bulk amount). The credit received by the rural household will be used in starting their own work for which the training and knowledge will be given by the Commercial entities, who will sell their end products in the market. So, by applying this approach we make sure that the credit will be used only for the productive purposes and thus helping the rural household in increasing their income, clearing their debt and improving their living standards.
4. Commercial Entities/Private companies
These entities will provide support to the rural household by providing market for their end products and imparting essential skills and training to produce market acceptable products. In turn, there will be a boost to the rural marketing, rural retailing and consumerism thus tapping the huge untapped rural market, with a sense of corporate social responsibility.

CONCLUSION
As the need of the rural credit is obvious, the proposed model is a win-win situation for the Government, Financial Institutions, Commercial Entities and Rural household with everyone getting benefited. By adopting this model, Government will efficiently use the same resource for NREGP in employment generation as well as facilitating credit to the rural household. Financial Institutions will mitigate the risk and lower the cost of transaction in lending credit to rural masses and in turn will expand their business like insurance at the bottom of the pyramid. From the view point of commercial entities, it will be proved as an opportunity to get associated with rural people to attain a market for sustainable development, whereas for rural people the model will open up a plethora of opportunities to transform the vicious cycle into virtuous cycle

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