English in name, Infrastructure is a shame

My earlier post on the topic of real estate evoked some response from the aggrieved group via email and it showed more insight into the murky world of real estate. This post is also on a similar topic. 

Real estate developers have a penchant for giving fancy names to their new projects. These fancy names may not be in tune with reality. The developers use such creative names to lure buyers and justify the premium pricing. Majority of print ads for new projects show random foreigner images which have no connection to the type of residents which the development would eventually house. The only reason from the developer's viewpoint could be to make the project aspirational. Names like Belvedere, Windermere, Manchester Grand (Coimbatore), Hyde Park and Bougainvilla shows how creative developers are. With more developments offering lifestyle facilities, one wonders how the maintenance of such facilities would be carried out few years down the line. Some of the thoughts mentioned above are echoed by Aruna 'Vishy' Anand (yes, she has a new blog!) as she has discovered most of these first hand by virtue of purchasing an apartment in the much hyped IT Corridor / OMR.

the property was named Sherwood Gardens or Windmere with swans .... in the lake (there is a lake with swans in a 10 km radius ), Greyshott , Bella Tuscany ( in the middle of perungudi town panchyat!) etc etc

They are all described as the ideal habitat for the global resident. A place where you can put up your legs, watch your children grow. dip yourself in the jacuzzi hob nob with equal minded gullible people !!

We narrowed on one Park Rozalia . One World .One place. The ad featured a child running around the place. The kid looked Danish , swedish ... and looked so happy . The features read like a country club. (Link)

Although the Anands purchased an 'English' home in Pallikaranai (an area which was and is still used as a dumping ground by Chennai Corporation), they also bought another property which was more centrally located, and decided to use the City apartment as it is close to their parents home. 

The recent meltdown has brought the focus back to affordable homes without the bells and whistles. Most developers are shying away from direct price discounts as they feel that this might enrage existing buyers (who are awaiting completion of the apartment). Hence, developers are doling out freebies like stamp duty waiver, free parking space etc. When it starts pinching more, expect developers to get more realistic. 

DLF Faces An Acid Test In Chennai

DLF is a recent entrant to the Chennai property scene and is facing quite a few headwinds. Sometime ago, there was news that DLF collected about Rs. 5 lakhs Earnest Money Deposit (EMD) from interested buyers even before the project managed to get all the necessary approvals. As the property prices continue their downtrend, buyers who were among the early birds to sign up are pushing DLF to drop the price to be in tune with the falling market. Although DLF has acceded to their request, the buyers feel that the discounts are not sufficient enough. DLF has very little choice other than to give in to the dissenting buyers. If DLF doesn’t cut the price more aggressively, it risks losing willing buyers who wouldn’t mind foregoing the EMD (as worst case) as their potential losses might even surpass that of Rs. 5 lakhs. DLF on its part has assured buyers that it would refund EMD if required as per the terms of the agreement.

Credit is becoming increasingly scarce for corporates and more so for the property sector. The project is about 50% booked and I wouldn’t be surprised if some of the original buyers back out if prices are not slashed. DLF might need more bookings and upfront / progress payment to fund working capital. I feel that the project delays might also be quite disconcerting to buyers as they need to wait longer to get their dream home. Without enough bookings, DLF might not be in position to continue construction at the required pace. Instead of being more aggressive on the pricing front, DLF seems to be concentrating on rewarding agents by offering them more commissions. I really doubt if such incentives can lure the ultimate buyers. If DLF has long-term plans of being a reputed player in the Chennai property market, it needs to make serious amends to appease existing and prospective customers. 

Corporate Reputation Management In Focus

Rumours about accounting fraud at Educomp have prompted the company to use Google contextual ads to direct people to their company website and giving their version of the story. The ad states that a "Point-by-Point rebuttal on allegations" is available at their corporate website.

I'm not sure why Wipro and ICICI didn't use such a medium when their companies were facing negative publicity. Most of them continue to use full page newspaper ads to dispel rumours.

IT major Wipro was in the news when it emerged that World Bank had banned them for alloting shares to some World Bank employees. If Wipro made no mistake, then why didn't they disclose the ban and defend their move when they received the ban notification from World Bank. If they had done so, they need not have embarked on the firefighting exercise to explain their stand.

And, both hid the fact that all this had happened till the Bank chose to reveal it. If they had nothing to hide, and felt they were being wronged, why didn’t they make an issue of it? This is the question any normal being will have on reading about it all, and the fact is that all the immense wordage put out by the two firms, including a lofty internal mail to his lakh-odd employees by Wipro’s legendary chairman, Azim Premji, doesn’t address this crucial point. (Link)

Business Journalist Govindraj Ethiraj explains this issue in more detail in this Business Standard article:

So what was Wipro doling out, bribe or speed money? I would assume that like any restricted offering, which is what a Directed Share Programme ought to be, the upside was in the fact that some people could get hold of the shares as against others who did not. The price is incidental. Somewhat like getting a well-priced IPO stock in India in the primary market, with the expectation it will zoom on listing or thereabouts.

So maybe it was closer to speed money. Handing out a favourable allotment in a share offer because a good relationship will help the company in the long term. And what better way to do it than to make your customers a part of the shareholder family? Except that World Bank employees are not customers — the Bank is and it’s what I would call a governmental organisation. Nor are they the equivalent of customs officials who can hold up cargo. But then that’s the point, the fine line only gets finer. (Link)

Profiting From The Crisis

Search for Satyam on Google and the Sponsored Link is one by IT Consultants Everest Research Institute offering a research report titled - "Satyam Crisis Analysis".

Related Article: PTI report dated 21st Jan delves more into the above topic and details the contents of the Everest Research report.

One More Indian Fraudster Arrested

It's the season for dubious businessmen to face reality. The man who shot to fame selling electronics (mostly TVs and Hi-Fis) at dirt cheap prices in the 90s is the latest Indian businessman to end up behind bars. Kabir Mulchandani has been arrested in Dubai for duping customers in real estate transactions. Back in the 90s, Kabir ran a firm called Baron International and sold cheap electronics products under brands like Akai, Aiwa and TCL. The TVs used to be priced around Rs 10K when most other brands used to cost upwards of Rs 20K. Kabir also made a name for himself bundling the different products and offering unbelievable exchange offers. The fact that he couldn't run a brand for more than 2 years, probably hinted that his model was not sustainable. Since the brands didn't last long, he lost the consumers' trust since people had concerns about after sales service and repairs. It looks like Kabir's family had moved to the Middle East after running up huge debts in India. 

Scores of investors have been allegedly defrauded of over US$ 100 million by Mulchandani, chairman of `Dynasty Zarooni'. At least 10 members of an `investment club,' which last year promised huge profits from the company's preferential access to real estate deals, have lodged complaints against Mulchandani, his Emirati business partner, Hilal Al Zarooni, their joint venture `Dynasty Zarooni' and two other employees. 

Investors say Mulchandani in March received subscription fees of US$ 81,697 (Rs 40 lakh) a month from 12 members. He promised them returns of US$ 272,242 (Rs 1.3 crore) a month after six months, or US$ 1,633,453 (Rs 8 crore) in September. Zarooni is reported to have denied any participation in, or knowledge of, a fraudulent scheme. "One hundred per cent I deny this, there is nothing illegal whatsoever,'' he said. (Link)

More Troubles For Pyramid Saimira

The impact of the credit crunch couldn't be more pronounced. After recent disclosures about the pledging of promoter shares in Satyam, it has now emerged that Pyramid Saimira's promoter has also pledged his shares to financial institutions. Since PS Saminathan couldn't meet margin calls, the institutions have been selling his shares in the open market. 

Pyramid was in the thick of the action because of the poor response for Kuselan and also because of the abandoned Marmayogi project.

Theatre chain operator Pyramid Saimira Theatre Ltd clarified on Tuesday that some financial institutions, with whom promoters had pledged their stake, sold 6 percent in the firm between October and December.

The company clarified that it was facing a liquidity crunch and then suffered losses in a mega-budget film, 'Kuselan,' prompting the promoters to pledge some shares to raise funds.

Kuselan, a Tamil film which was also re-made in Telugu, was released in August 2008 and fared miserably on the box office.

As the current period is the peak season in south India for film release and confirmations, the firm hopes its locked-in money will be released, easing the cash crunch. (Link)

I expect more troubles for Pyramid Saimira as they have been hit badly on both the business and financial front. Other issues relating to the SEBI letter and promoter's fight have cast a bad light on them. Cancellation of Marmayogi and sudden termination of Simran Thirai have not helped them either. I wouldn't be surprised if they go bust in the near future. 

Satyam's Ten Point Plan To Boost Employee Confidence

Satyam has unveiled a rescue package for its associates, the terms of which are detailed below. Like Satyam's notional cash pile, here is a fictional story on how Satyam can encounter this crisis and restore confidence of the Associates.

1. Satyam will launch Satyam-PWC Centre of Creative Accounting & Management (SCAM) 

This Centre will be headed by Srinivas Vadlamani. Satyam Associates can enrol in this SCAM and develop their creative accounting skills. SCAM will impart best practises by benchmarking with other world class firms like Enron and Worldcom. People who know US-GAAP and other accounting standards need not apply as you are over qualified. Your skills will be put to full use during quarter close and year-end. Placement is assured in one of the Satyam group companies like Maytas, Samtay, Tamasy, Tasmay etc.

2. Satyam-ISB Centre for Corporate Misgovernance (SICC)

Under the stewardship of M Rammohan Rao, Satyam will establish this centre to groom the next generation of Directors who can fill the Board positions in Satyam group and also aspire for similar position in many other tainted companies in India. We will also teach you how to draft your own resignation letter before resigning from the board.

3. All associates will be offered a chance to throw shoes at Ramalinga Raju like what happened to Bush recently.

4. All Associates will be given stock under the Employee Shock Option Plan (E-Shock). Before future confessions, Ramalinga Raju will update the E-Shock holders in advance so that they can sell their shares before the stock crashes.

5. All Associates will be provided company Memorabilia like T-shirts, caps, key chains, coffee mugs etc. to be sold on Ebay. The right moment to sell these items would be around the time we announce our bankruptcy. 

6. Employees who nod their heads well will be appointed to the Board and will be paid Rs. 12 Lakhs per annum. The best such nodder will be paid upto Rs. 1 crore per annum. Such directors need to maintain silence at the Board meetings. The only word they are allowed to say is YES. Although you will be called independent directors, you'll have to depend on Raju & Co. for everything.

7. Life long supply of Hyderabad Biriyani to tide over the crisis. All associates will get Free tickets to FIFA world cup 2010 & 2014 for which Satyam is the co-sponsor.

Satyam is also contemplating the acquisition of Tamilnadu government-owned TASMAC as the name closely resembles the names of Satyam and Maytas. If this deal goes through, you'll be assured of free supply of liquor. We have engaged the services of domestic investment bank JP Murugan to assist us in this strategic acquisition.

8. For Satyam Associates who are dis-associated (laid off), you'll be offered agricultural land under the possession of Maytas so that you can be self-associated (Self-Employed). Some of the land documents might be forged and Satyam, Maytas or the Raju family will not take any responsibility for the genuineness or otherwise of these land documents. 

8. Satyam will float a new website called www.SatyamCVs.com where employees can apply for outside jobs. Instead of the associates posting their CVs on other third party websites like Naukri and Monster, associates can now post their CVs directly on this site. This site will only accept CVs from Satyam associates. The front page of this site will contain a ticker showing the number of CVs in the site. This will give an assurance to the outside world that we do have the 53000 employees stated in our financial reports. Our interim CEO Ram Mynampati just inaugurated this job site by uploading his CV. Our HR team will be able to assist if you have any queries or doubts about this site. While showing projects that you have worked on, you are free to choose from any of the 500 Fortune 500 companies as our audited accounts shows that all of them are our customers. Please accomodate if the site is slow as we are experiencing huge traffic on this site. Even our HR people (who are normally quite free) are very busy updating their CV's on this site.

9. All our candidates for whom we have offered campus placements are required to report to work immediately. They will be accomodated in the new shiny benches bought for this purpose. These benches are located outside the office building. We felt this is best way out as we have decided to switch off the Air-conditioning inside the premises to cut costs. All the new joinees should come with a Cash deposit (in lieu of the bond) of Rs. 2 lakhs each. Satyam intends to use this money to tide over the working capital crisis. Once you come onboard, we will try to send you on onsite project where you can recover your Rs. 2 lakh deposit within a short period.

10. Since some of our cheques are bouncing, we will now be handing over the salaries in cash instead of cheques. Associates are required to count and verify the genuineness of the cash before leaving the office premises. No future claims will be entertained. 

Satyam CFO's Answer On Cash Balance

This is how Satyam's CFO Srinivas Vadlamani answered when an analyst asked about the unusually high cash balance. The transcript of the Oct 2008 (Q2) analyst call is difficult to download from Satyam website. I have managed to pick up the transcript from another site. The CFO's creativity has been put to test here. The answering tone from the last paragraph proves that Srinivas Vadlamani made up the reply.

Kawaljeet Saluja – Kotak Equities

Hi, my question are for, Srinivas. Srinivas any specific reasons why you have $500 million parked in current accounts which does not yield any interest.

V. Srinivas

No that is basically, as of the quarter ending, but subsequent to that the amount goes to the deposit accounts; majority of its in deposits now.

Kawaljeet Saluja – Kotak Equities

But Srinivas if I look at deposit account for the last 4 quarters that number has remained absolutely flat and most of the incremental cash flows have been parked in current accounts and this is not something is this quarter trend. Would you highlight the reasons for it?

V. Srinivas

No basically what will happen is this amount will be basically in different countries and then we will be bringing them to India based on the needs. Basically some of them are in overnight deposits and all that. So now, we have kind of placed them into normal term deposits. So next quarter onwards, we will see that as part of the deposits.

Related Read: ET article titled "How one analyst almost nailed Satyam" dated 10th Jan

Accused #2 in Satyam Fraud: Srinivas Vadlamani

Although Ramalinga Raju has absolved his entire senior management of any wrongdoings, it is common knowledge that a financial crime of such magnitude could not have been committed without the knowledge of the bean counters. The person in focus here is Srinivas Vadlamani, the Chief 'Fraud' Officer of Satyam. Willingly or unwillingly, Srinivas has been party to the accounting irregularities at Satyam. Ramalinga Raju is lying when he says that his CFO and other top management were not involved. Given where things stand, Srinivas should have either been sacked or he should have resigned on his own. The more time he is given to remain in Satyam, he could cover up or hide some of the irregularities to protect himself or some of the other executives. Alteast the interim CEO Ram Mynampati should have mentioned that he is appointing a new interim CFO to assist him. The CFO has lost the trust to continue in his current role and nobody (including the ineffective Board) seems to be bothered about throwing Srinivas out.

Update: Interim CEO Ram Mynampati informs during the press conference that CFO Srinivas Vadlamani has not been in office for the past week. Srinivas has sent in his resignation today and the Board is yet to act on it.

Satyam's Books Were Fudged, Raju Resigns

After the aborted Maytas deal, questions were raised about the future of Satyam and its current management and there were lot of rumours in the Indian media about the likely candidates who might acquire / merge with Satyam. In what can be termed as a dramatic turnaround, Satyam's chairman Ramalinga Raju has resigned after admitting some serious irregularities in its books. Among the frauds are some time tested tricks like inflating sales, inflating profits and understating liabilities. The inflated profits led to the huge pile of 'fictitious' cash in the balance sheet. This 'cash' was the one which was to be used for the proposed Maytas acquisition. The unusually large amount of cash (that too lying in their Current Account) on Satyam's balance sheet had raised some concerns earlier. Satyam management never did anything to allay these fears. It looks like the worst has come true.

Satyam Computer Services' decision to keep large amounts of excess cash in current accounts which do not yield interest income is raising eyebrows and prompting questions about why it has been growing the hoard of idle surplus money. 

As speculation increases about the amount of available cash that is being shown in the books of India's fourth largest software exporter, at least one major brokerage firms saying it has concerns about cash utilisation at the Satyam, describing it as "baffling." (Link)

The full text of Ramalinga Raju's letter to the Board is available on Livemint site.

He said that the balance sheet has inflated cash & bank balance of Rs 5040 crore. No board member had any knowledge of the real situation as against books. The balance sheet was inflated and accrued interest of Rs 376 crore in the books is non-existent.

He further writes in the letter that Rs 1230 crore was arranged to Satyam, which is not reflected in books. 

Raju in his letter further said that the Q2FY09 reported revenues of Rs 2700 crore Vs actual revenue of Rs 2112 crore. The Q2FY09 operating margin reported was Rs 649 crore against Rs 61 crore. The Q2FY09 numbers had Rs 588 crore of artificial cash in books.

He said that he is prepared to subject himself to law of the land and face the consequences. The account manipulation started several years ago. An attempt to eliminate the manipulation was failed, he added. (Link)

Although corporate frauds and accounting irregularities have come to light in the west (Enron), this is one of the biggest of its kind in India. If a company of the scale and repute like Satyam indulges in such activities, there may be numerous other smaller frauds happening in the small and medium sized listed companies which may never be unearthed.

Normally, the first one to face the flak in such a circumstance would be the auditors. We saw it in Enron where Arthur Andersen was in the spotlight. Similarly, PriceWaterhouse Coopers (PWC) would have to face the heat over their involvement in this whole issue.

Raju's excuse that the accounts were fudged and profits were overstated to project that thecompany was financially stable and to ward off any takeover attempt because of the negligible  promoter stake is simply unacceptable. It is like saying that I copied in the exam to avoid being scolded by my parents and teachers. 

Satyam's future looks bleak in its current form. DSP Merrill Lynch, which was appointed to look at strategic options has also backed out. There is also the risk that lot of the contract renewals might not come through because of the credibility issue. In this economic climate, taking over a company with over 50,000 people is not an easy task. The buyer needs to work with a lot of unknowns and it is going to be a fire sale.

If all this drama had not happened, Maytas acquisition might have gone through and that might actually have benefited the shareholders as real assets were to be infused by parting with the fictitious cash.

How soon can we expect Ramalinga Raju to be arrested?

Testing Times For The Textile Sector

It is not just bankers and techies who are losing jobs during this financial crisis. WSJ has an article how the recession is impacting India's textile and garment export sector which is the backbone of the Tirupur - Coimbatore belt.

So far, most of the textile industry's job losses are among its least-skilled and lowest-paid workers at spinning mills, dyeing houses, and stitching and embroidery factories. Employees in such operations, mainly women, earn about $2 a day. It isn't unusual to spot child workers in such factories, although it's illegal to employ them.

....

That is evident in the small city of Tirupur, 37 miles from Coimbatore. Tirupur used to be a thriving center for the Indian garment trade, with almost 3,500 apparel makers. Locals call the city "little Japan" for its dependence on exports. Half of the garments made there are shipped to the U.S.

Now, trucks delivering raw cotton to Tirupur factories are half-empty, reflecting slumping orders. Workers who have had their shifts eliminated or shortened sit idly on the stoops of their garment plants. (Link)

An Elephant, Not A Tiger

The word elephant is widely used by the Western media when talking about India and The Economist is no different. Their special feature on India has interesting reports on Inter-state disparities, state of the economy and the outlook for the Indian IT industry. I only hope they'll start thinking of new titles for their future stories on India.

As India’s economy grows rapidly, so will the regional disparities. Of 260 SEZs that have so far been fully approved, a big majority are in India’s richest states, including 42 in Tamil Nadu, 38 in Maharashtra and 23 in Gujarat. This trend will exacerbate Indians’ existing grievances and perhaps lead to more conflict. Managing this schism effectively would require enlightened and skilful government, of which India has too little and not much prospect of more. (Link)

Subhiksha Sails Through Choppy Waters

Subhiksha, the retail venture of R Subramanian is facing a crisis of grave magnitude. The supermarket chain which has its roots in Chennai has grown too big, too fast in the last few years. While their model had several flaws (No frills / unattractive stores, frequent stock outs), their aggressive growth outside South India indicated that they were probably doing well. The deterioration in the equity markets put paid to Subhiksha's IPO plans. Poor sales and unavailability of easy credit might have resulted in a situation where Subhiksha is not able to pay employees, suppliers and landlords. The New Indian Express carried a cover story on Monday (8th Dec) explaining the situation. Another report in NowPublic has also mentioned similar complaints.

More than 700 employees of 97 stores run by Subhiksha, the supermarket chain in the city have not been paid their salaries for the last two months by the company, which has told them to pick up groceries from the stores in lieu of their pay packets.

However, with the shelves empty — all major suppliers of goods such as HLL have stopped supplies as the firm has defaulted on payments — the employees are in a state of panic. (Link)

Subhiksha has since denied the allegations.

I had tried Subhiksha during their initial days. Back then, the shops didn't allow the customers inside and one had to give a shopping list to the counter staff who would collect the stuff from the respective shelves. With such a concept there was no possibility of an impulse buy as Subhiksha didn't provide a shopping experience. They then tweaked this model to allow customers inside the shop. The shelves were pretty ordinary and one could notice that they had run out of stock for most of the key items. One had to visit other departmental stores to complete their shopping requirements. The only thing which drew people to Subhiksha was the aggressive pricing. They used the pricing power to enter the field of pharma retail. Their offer of 5% discount for pharma products met with strong resistance from the Pharma Distributors and Retailers Association which sensed that their trade will be affected if Subhiksha Medical shops were allowed to expand. Stock outs were another common phenomenon in the Pharma business as well. With so many problems, one could feel that Subhiksha was never among the top of the mind recall of the shoppers. 

I could sense Subramanian's ambitions when I spotted him at the Giant Hypermarket in Tampines (Singapore) sometime in 2007. The shop was teeming with weekend shoppers when Subramanian was busy observing the behaviour of the shoppers in the different sections. He came across as unassuming and hardworking. Aggressive expansion, poor back-end infrastructure, improper demand forecasting together with extremely bad credit and equity markets have dented Subhiksha's growth plans. 

This is not the first time Subhiksha has been at the receiving end. Even biggies like Reliance Retail are in retrenchment mode. The big question now is whether Subhiksha will fold up. Azim Premji, in his personal capacity, recently picked up a 10% stake in Subhiksha (the stake was acquired from ICICI Ventures). Shutting down unprofitable stores, laying off people and resolving the back-end problems would help them recover somewhat from the current crisis. The other option is to put them up for sale. Whatever be the outcome, Subhiksha has some serious rethinking to do.

Flying In A Private Jet To Beg For Money

The US automobile industry is facing its biggest crisis ever and the head honchos of the Big 3 Auto makers (GM, Ford and Chrysler) are lobbying hard for a government bailout. The CEOs of these companies were in Washington DC recently to meet up with the government authorities. The 3 CEOs flew to Washington DC in their own private jets and this has attracted widespread criticism at a time when their companies are in dire need of cash. Critics say that the CEOs should have gone for commercial airlines or jet-pooling instead of flying in 3 different private jets from Detroit to Washington DC. 

Some lawmakers lashed out at the CEOs of the Big Three auto companies Wednesday for flying private jets to Washington to request taxpayer bailout money.

"There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses," Rep. Gary Ackerman, D-New York, told the chief executive officers of Ford, Chrysler and General Motors at a hearing of the House Financial Services Committee.

"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious."

He added, "couldn't you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it."

When contacted by CNN, the three auto companies defended the CEOs' travel as standard procedure.

Like many other major corporations, all three have policies requiring their CEOs to travel in private jets for safety reasons.

"Making a big to-do about this when issues vital to the jobs of millions of Americans are being discussed in Washington is diverting attention away from a critical debate that will determine the future health of the auto industry and the American economy," GM spokesman Tom Wilkinson said in a statement. (Link)

Drawing Inspiration from Saravana Stores

Outlook Business has a story on how Kishore Biyani of Future Group (formerly Pantaloon) is grooming the next generation in running the family business. What's interesting to note is the fact that a visit to Saravana Stores in Chennai is almost mandatory for all people who join Future Group in key roles. 

Early next morning, the Future Group CEO, the three younger family members, all of whom joined the business over the past two years, and a bunch of about 20 other key Future Group executives are to catch a flight to Chennai. They are planning a ‘deep dive’ into the popular retail destinations in the city, including the dirty, bustling and prosperous Ranganathan Street in T Nagar. This is the old-world retail capital of Chennai, and still holds its own against the swanky malls that have sprung up in other parts of the city. The family is visibly excited about this trip, even though this is the last in a long series of deep dive programmes Biyani has done with his family and professional team. (Link)

I'm surprised Kishore Biyani continues the same training regime even after the recent fire incident at Saravana Stores which exposed the lack of basic infrastructure like emergency exits at the popular shop.

Sometime earlier this year, I read "It Happened In India" by Kishore Biyani and Dipayan Baishya. The book on the growth of Biyani and the Future Group didn't live up to the initial hype. I felt that the narration style was heavily borrowed from Sam Walton's "Made in America". Big Bazaar is not yet a business / retail icon on the lines of Walmart and the book should have presented a humbler story of the Future Group. 

Here is an excerpt related to Saravana Stores from the book:

Saravana Stores is a twenty-five year old, family-run store located in the heart of Chennai and has a very simple philosophy to run its business - low margin, high turnover. Covering five floors and a basement, it stocks everything from appliances and groceries, to clothes, jewellery, toys and eyeglasses. Its textile and garment section too has everything from Kanchipuram silks to bed sheets and there is a vessel section that has loads of steel utensils. There is a separate block for fast food, where delicacies include idlis, pooris, parottas, soft drinks and ice creams. These are as popular as the special laddus and the Mysore pauk on offer. Located somewhat close to the railway terminus, one can see hordes of people getting in and coming out with shopping bags at any time of the day and any time of the year. It has around a hundred and twenty people just to manage the crowds but one doesn't get the best customer experience in the store. To many, Saravana may be a shopper's nightmare, but there are lot of customers who just love it and approve of it with their frequent footfalls. I would estimate that this single shop must be doing more than Rs. 200 crore worth business each year.

WorldSpace Goes Bust

WorldSpace Inc., a pioneer in the field of Satellite Radio has filed for bankruptcy. WorldSpace carved a name for itself providing quality music devoid of commercials. It targetted a premium audience and charged an annual subscription fee. Listeners also had to buy a compatible radio set to enjoy their programmes. The Carnatic music channel offered by WorldSpace was quite popular as there were no other competing offerings in Radio (FM etc) in this niche space. KL Radio, a Tamil channel from the stable of Dinamalar, was also available on WorldSpace. WorldSpace also caught the attention of the public by roping in ARR as their brand ambassador. ARR’s signature tune brought instant recognition to WorldSpace.

Digital satellite radio broadcasting company, WorldSpace Inc, has filed for bankruptcy protection in a court after failing to obtain new financing.

WorldSpace is present in over 130 countries worldwide. It launched its India services in 2000 with over 35 free-to-air channels. In 2002, it converted a few of its channels to pay and went completely pay in 2004. 

As at the end 2007, it had a customer base of over 1.6 lakh in India — over 93 per cent of its world-wide subscriber base.

 

It beams over 45 channels in India, most of which are branded ‘WorldSpace’ though a few are owned and operated by other players such as BBC, CNN, AIR and KL Radio. (Source: The Hindu Business Line)

From the beginning, I had my own reservations about the viability of a paid subscription model for commercial radio broadcasts in India. The hardware requirement was another drawback. In a market where FM channels reign supreme and where the FM feature is ubiquitous in mobile phones and car stereos, WorldSpace should have known that the writing was on the wall.