'Every company should have its own methodology'
(from right) Subroto Bagchi, Co-founder and Chairman, Mind Tree Ltd; L. Krishnan, Chairman, CII Karnataka State Council and MD, Taegutec India Pvt Ltd; Bharathram Lokkur, Chair, Young Indians, Bangalore Chapter and Senior Manager, PricewaterhouseCoopers; and M. Maheshwar Rao, Commissioner for Industrial Development and Director of Industries and Commerce, Government of Karnataka, at the 'Starting Young' summit in Bangalore. — G. R. N. Somashekar
A company or a start-up should continuously re-invent itself to be value positive
The choice of people determines the venture's success, said Subroto Bagchi, Co-founder and Chairman, Mindtree Ltd .
Addressing the Entrepreneurship Summit 'Starting Young' jointly organised by CII, CII Young Indians and Karnataka Department of Industries and Commerce, he said, "In addition to choice of people, entrepreneurs should respect each other professionally."
To commence the entrepreneurial journey, young people with ideas should look for others who see in the same direction at the same time, and with the same energy.
Some start early but do not get there. When one analyses their failures, we see that the right recipe — domain, tool, methodology, quality innovation and branding — are not implemented in right measure.
Giving ideas and tips to the management students, Bagchi said domain knowledge is the key differentiator.
"Your idea should be easy for people to relate to you in a short period of time. If you don't then it is clutter."
"Tool is another area. We see many projects fail or incomplete for lack of right tools. A good tool can set you apart. One needs to choose with care and with equal ambition," he said.
As for methodology, Bagchi explained that people may come, people may go. But each company should have its own methodology.
"Over a period of time that becomes their IP or differentiator, hence pay attention to this carefully."
Quality perceived by customers can be positive, negative or neutral. A company or a start-up should continuously re-invent itself to be value positive, he said. Quoting Apple as example, he said, "see how this company has moved from manufacturing Mackintosh computers to the current Apple products."
For some innovation can also be a product and for many once in a blue moon get idea or what they do something different can get a pot of gold. Hence, one needs to innovate as way of life, he said.
People have poor understanding of branding. "Brand is not a name or brand is not a logo. It is one where how a company can populate/externalise its values, products or services. Here, the entrepreneur herself/himself is a brand. Treat yourself with care, it is very precious in building a successful company," Bagchi said.
The Hindu Business Line was the media partner for the summit. M Maheshwar Rao, Karnataka Commissioner for Industrial, Development and Director of Industries and Commerce, spoke about the services offered by the State Government in starting new ventures.
Bharathram Lokkur, Chair, Young Indians, Bangalore, and Senior Manager, PricewaterhouseCooper, Siddarth Krishnkumar, Young Indians, Bangalore, spoke about entrepreneurship ranging from conceiving an idea to setting up a business in the changed economic order.
anil.u@thehindu.co.in
Rajiv Gandhi Equity Scheme may fire up retail investment
More participation
Mutual funds report good initial response to plans floated under new scheme
February 16, 2013:
At a time when retail interest has been waning, the market may have got a boost with the Rajiv Gandhi Equity Savings Scheme (RGESS).
Mutual funds that have rolled out plans under this Scheme report good investor response. LIC Nomura Mutual Fund, which launched its RGESS fund on February 9, has received around 24,000 applications. IDBI Mutual Fund, which also has a similar fund open for investment now, expects to close with about 50,000 applications, with each investor bringing in about Rs 25,000.
As investors wanting to get the tax benefit through RGESS funds need also to open a demat account, this could mean significant addition to demat account numbers too. Last year, a meagre six lakh accounts were added to the total demat accounts that now number 2 crore.
The RGESS promises a one-time tax exemption on investment of up to Rs 50,000 for first-time investors in a specified list of securities — the top 100 listed firms and public sector companies.
Investors can get tax break by opening a demat account and either buying the stocks directly through a broker or by buying into a fund that invests in these stocks. Investors seem to have taken the mutual fund route.
Brokers' worry
Stock brokers are worried about some of the RGESS features, such as the eligibility criteria and the one-off tax benefits.
Noting that they had not seen much interest in the scheme so far, Daljeet Kohli, Head of Research at brokerage IndiaNivesh Securities, said: "The scheme has been notified only recently.
"More awareness needs to be generated both amongst the brokers and through them to clients.
"Most people are inclined to looking at tax saving schemes only in the January-March quarter and it is still uncertain whether the tax benefit will continue in future.
"The extent of benefit is also too small to attract an equity investor."
Pointing out that retail interest in stocks had not received a lift despite the market gains this year, Nirmal Jain, Chairman, India Infoline, said: "The RGESS is one good step but by itself may not be adequate to bring back retail investors."
Fall in volumes
Numbers from the Bombay Stock Exchange show falling retail interest in equity trading.
Retail trading volumes (buys and sells) in the cash segment of the BSE have halved from Rs 16.75 lakh crore in 2008 to Rs 7.5 lakh crore in 2012.
The proportion of retail investor holdings in the BSE 500 companies dipped slightly to 7.9 per cent (by value) in December last year from 8.1 per cent in the same period previous year.
The new tax scheme, with its promise of bringing more investors under the equity fold, might just be what the stock exchanges needed to buck up retail participation.
SEBI seeks overhaul of securities laws
New Delhi, Feb 17:
Market regulator SEBI has sought major overhaul of the securities laws including greater authority to nail manipulators by way of powers to conduct 'search and seizure' operations and to demand information from any person in relation to its probes.
It has also proposed the recovery of monetary penalties through Income-Tax arrear mechanism, setting up of special courts to deal with criminal prosecution for violation of securities laws and recognition of SEBI's counsels as public prosecutors.
The proposals have been discussed by the SEBI board and are being sent to the Ministry of Finance for necessary amendments to the relevant securities laws, a senior regulatory official said.
SEBI has decided to pursue these proposed amendments in view of the challenges faced by it in areas such as the recovery and realisation of monetary penalties and regulation of pooling of monies from public by schemes including those in the nature of collective investments, among others.
The market regulator has been facing impediments on its investigation and enforcement powers with regard to protecting investments by attachment of assets. It has also faced challenges to enforcement and implementation of its orders, the official said.
In addition, SEBI has been facing restrained in taking necessary actions against market manipulators as it lacks an effective power of search and seizure, and due to limited sharing of information with overseas regulators as well as lack of power to call for information from any person in relation to enquiry or investigation.
SEBI had last sought amendments to the Securities Laws in 2009 and had sent its recommendations to the Finance Ministry.
However, the Ministry later informed it that SEBI should pursue only critical amendments for the time being, as the government had set up a Financial Sector Legislative Reforms Commission (FSLRC) to rewrite and harmonise the entire gamut of financial sector laws.
Accordingly, SEBI in 2011 forwarded a proposal containing only critical amendments to securities laws, which it felt cannot wait long and must be perused independent of the recommendation of the FSLRC.
The Finance Ministry in December had sought certain clarifications with regard to the proposed amendments, pursuant to which SEBI has now decided to limit its proposals to the "most important and critical amendments" and keeping the others for consideration after FSLRC recommendations.
Managing 'balance-sheet' recession
BL V. BALAKRISHNAN,
'Infosys business hedged on both sides of economic cycle — whether boom or downturn'
February 17, 2013:
These are unusual times for Infosys. India's second largest information technology products and services outsourcer, and so far the most profitable one, may well lose both tags this year.
While third-placed Cognizant is hot on Infy's heels in terms of revenues, arch-rival and industry leader TCS, already comfortably ahead of Infosys in terms of overall revenues, is about to pull ahead on the profitability yardstick too, if the results of the first three quarters of the ongoing fiscal are anything to go by.
In the first three quarters of 2012-13, TCS' average profit margins have pulled over half a per cent clear of Infosys, while the revenue gap has widened to around $3 billion.
Durability Concerns
Over the third quarter, Infosys managed to post a better than expected net profit on the back of several large outsourcing deals — valued at $731 million — won during the October-December quarter, and a higher than expected revenue guidance for the final quarter.
Despite this surprisingly good performance, analysts tracking the stock, as well as long-term Infy watchers are uncertain as to the durability of this comeback.
"Infosys is extremely good — and the people it has at the top are extremely good — at managing in a high-growth environment," says a senior executive search consultant who has worked closely with market leaders in the IT sector on C-level hires, on the condition of anonymity.
"But one is not sure how well placed they are in tackling a slowdown."
Well-hedged
But V. Balakrishnan, Infosys's former Chief Financial Officer (CFO), and the man widely tipped to be a frontrunner for the CEO job in Infosys once incumbent S.D. Shibulal steps down in a little over two years, begs to differ.
He says its business is hedged on both sides of an economic cycle — whether during a boom or a downturn, which it faces at present.
"When times are good, companies spend more on IT because they need IT to manage growth. When things slow down, companies spend more on IT because they are worried about managing costs," he argues.
Revenue spread
However, Bala, as he is popularly known within and outside Infy, still sees slower decision-making when it comes to technology-related outsourcing spends, despite reports of marginal improvement in the US economy and a complete lockdown in Europe.
This is going to be its biggest challenge. Despite some recent gains in Europe (it won 13 new clients and grew revenues by over 16 per cent during the third quarter in Europe), the company still gets 60 per cent of its business from the US.
Going forward it is working on a 40:40:20 revenue spread from US, Europe and the rest of the world.
"This is a balance-sheet recession and it will take a while and stakeholders need to get used to that," Balakrishnan told Business Line.
A company can grow in a slowdown, provided there is no prolonged uncertainty in the economic climate," he added. "But he admits that the current slowdown is inherently different from the ones he has seen in the past, which were shorter. I never saw such a prolonged downturn," he admits.
Realigning priorities
For Infosys, this has meant a rejigging of priorities.
"It's not how big a company you are, it's about how good a company you are," says Balakrishnan.
For Infosys, this has meant a re-calibration of goals. Growth is still key, but profitability, and the ability to stay competitive in the future, are equally important.
This has meant a shift in focus to the development of more products and intellectual property in-house.
Nearly two years ago, it launched 'Infosys 3.0' — an ambitious plan to move the company into high profit business, like high-end consulting and IP-based product innovations.
The goal was to move into "non-linear revenue" growth, which means revenues grow faster than costs.
For a company which has so far focussed on delivering services and solutions to clients, this has also meant considerable need for re-skilling of employees, across the board, from fresh graduates to lateral hires," he says.
For Balakrishnan, who currently heads the India-focused verticals within Infosys, this has also meant paying more attention to the home market.
Home market
India a growth area for the company, growing at 15 per cent in this fiscal," says he, adding, "Indian corporates with increased globalisation in sectors like manufacturing are investing in ERP."
But the big bang might be provided by the government buck.
"As in developed economies, government starts technology investments, which are taken up by the private companies over a period of time," he says. He is banking on some key reform measures, including a pending Bill on citizen's rights to get essential services, going through, which will expand the market for IT.
Cash reserves
Balakrishnan ducks questions on the CEO issue, insisting there is a "lot of time" left for that bridge to be crossed. But, as the former CFO, he does address one issue that has been drawing analyst flak — its growing pile of cash in reserves.
Balakrishnan says just because the money is there, it does not mean that acquisitions should follow.
"Unlike other companies, we won't make acquisitions to grow our revenues. We prefer to have cash on hand and acquire companies that have strategic value."
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