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Pratibimb July 2012 - Wack-A-Thon Special!
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Pratibimb | July 2012 | 1
FINANCE | GENERAL MANAGEMENT | HUMAN RESOURCE | MARKETING | HEALTHCARE | OPERATIONS | SYSTEMS
The Reflection of Management
A Student’s Initiative
Volume II, Issue XII July 2012 A Monthly e-Magazine
PRATIBIMB
Is there any limit to Job Hopping & Salary Negotiations for Gen X ?
By Varwo Arqra, LBSIM Delhi
The Fourth World
An object of fascination
By Siddharuh Jaiswal, IMT Hyderabad
What is the marketiog strategy qf IDEA Cellvlar ?
By Sayak Barai, IIM Lvckoqw
E-commerce - Will the bubble burst ?
By Arpab Gvha Malik, IIM Kqzhikqde
Celebrating EPISODE
An Intra TAPMI college fest
Sector Review - FMCG
By Nitio Jiodal , TAPMI Maoiral
Pratibimb | July 2012 | 2
T. A. Pai Management Institute (TAPMI) is a premier management institute situated in
Manipal and is well known for its academic rigor & faculty-student interaction. The
Institute has been recently ranked amongst top 1 per cent of B-schools in India & 4th in
the South Zone by The Week Magazine.
Founded by the visionary, Late Shri. T. A. Pai, TAPMI’s mission is to provide much
needed impetus to the task of building professional management capability in the
country. In the process, it has also played a role in strengthening the existing educational
and health infrastructure of Manipal.
We are committed to excellence in post graduate management education, research
and practice by nurturing and developing global wealth creators and leaders. We
shall continually benchmark ourselves against the best-in-class institutions. We shall
foster continuous learning and reflection, achievement-orientation, creative
interdependence, and respect for diversity with a holistic concern for ethics,
environment and society.
T. A. Pai Management Institute
Manipal, Karnataka
About TAPMI
Our Mission
Recent Updates Prof. Gururaj H Kidiyoor, is alumnus of the month (August 2012). He is an alumnus of 1990 batch from TAPMI, is presently an academician with over 13 years of teaching experience plus 10 years of industry experience. He is a Ph.D (Management) from Manipal University. Prior to joining TAPMI as a professor, he has worked in Digital Equipment ( India ) Limited, Bangalore as a Channel Operations Manager (India). He has also worked in Wipro Infotech Limited as Channel Development Manager for South India and in TVS Electronics Limited as Area Sales Executive.
Pratibimb | July 2012 | 3
TAPMI’s e-Magazine - is the conglomeration of the various
specializations in MBA (Marketing, Finance, HR, Systems and
Operations). It is primarily intended to provide insights into the
plethora of knowledge that relate to the various departments of
Management and to give an opportunity to the students of
TAPMI and the best brains across country to exhibit their
creative cells. The magazine also strives to bring expert inputs
from industries, thereby bringing the academia and industry
together.
Pratibimb the e-Magazine of TAPMI had its first issue in
December 2010. The issue comprised of an interview of denoted
writer Ms. Rashmi Bansal along with a series of articles by
students and industry experts like MadhuSudan Rao (AVP-Delivery, Mahindra Satyam) & Ed
Cohen who is a global leader and chief learning officer who led Booz Allen Hamilton & Satyam
Computer Services to the first rank globally for learning & development . It also included a
hugely successful and engrossing game for finance geeks called “Beat the Market” to bring out
the application based knowledge of students by providing them the platform where they were
expected to predict the stock prices of two selected stocks on a future date. The magazine is
primarily intended for the development of all around management knowledge by providing
unbiased critical insights into the modern developments.
TAPMI believes that learning is a continuous process and is not limited to the four walls of the
classroom. This viewpoint is further enhanced through Pratibimb wherein students manage
and contribute to create a refreshing learning environment outside the classrooms which
eventually leads to a holistic development process. The magazine provides a competitive
platform and opportunity to the students where they can compete with the best brains of the
country. The magazine also provides a platform for prominent industry stalwarts to
communicate their views and learning about and from the recent developments from their
respective fields of business which in turn helps to create a collaborative learning base for its
readers.
Pratibimb is committed in continuing this initiative by bringing in continuous improvement
in the magazine by including quality articles related to various management issues and
eventually creating a more engaging relationship with its readers by providing them a
platform to showcase their talent.
We invite all the best brains across country to be part of this initiative and help us take this to
the next level.
PRATIBIMB TAPMI’S MONTHLY e-MAGAZINE VOLUME 2, ISSUE XII JULY, 2012
Pratibimb | July 2012 | 4
It is always a pleasure to witness that certain efforts of the students are
sustained and carried forward; Pratibimb is one such. The oft-beaten
track, “We are here to learn,” ends up as a mere platitude when there are
no visible actions and documentation. Whereas there is no dearth of
actions at TAPMI, documentation is not something that many—other than
scholars—choose to engage in; it is normally viewed as uninteresting,
drab and a drudgery. TAPMIans have proved that they are equally
capable of actions and of documentation without losing the intellectual
flavour of it.
Scholarship is too important a phenomenon to be left to scholars alone,
especially in the field of management. As future practicing managers who
will be engaged in rigorous action in different fields of business, TAPMIans
have manifested both the penchant to produce research works and also
get their counterparts in other leading business schools to contribute their
thoughts to this endeavour. In this regard, TAPMIans have truly
demonstrated the evidence for creative interdependence, an important
aspect of TAPMI’s mission.
I sincerely appreciate the students and the faculty of TAPMI who have
made Pratibimb a possibility through their scholarly works, co-ordination
efforts and support. I wish the team the very best.
Dr. R. C. Natarajan
DIR
EC
TO
R’S
ME
SS
AG
E
Pratibimb | July 2012 | 5
Editor’s corner
Dear Readers,
We would like to thank all the participants and readers for
their valuable contribution. By making this magazine
monthly, we aim to provide a platform that will give you more
opportunities to share knowledge and showcase your talent by
competing with the best minds in the country.
Our presence has also augmented due to the popularity of
social media. There has been a steady rise in our total
audience, including both readers and contributors, and more
number of posts have gone viral. The plethora of topics
published include learning from management gurus such as
Peter Drucker and Michael Porter, or management
innovation that helped leading brands define themselves
better. In fact we encourage our contributors to write about
any new upcoming events related to management. For all
these amazing contributions, apart from students of TAPMI
and other premier b-schools in the country.
The articles have been selected by the Editorial Team. We
wish to thank all those who helped us in improving Pratibimb
through their feedback. We would like to take this
opportunity to extend our gratitude to all faculty and students
at TAPMI for their continual support, guidance, motivation
and inspiration that has helped us to take Pratibimb to the
next echelon.
To stay updated about the magazine, please like our page on
Facebook. Also, send in your valuable suggestions/feedbacks
Enjoy Reading!
EDITOR IN CHIEF
Sushmit Sinha
BRANDING &
ADVERTISING
Manish Mishra
DESIGN & CREATIVES
Abhishek Dubey
Namrata Mahapatra
COMMUNICATIONS
Divyanshu
PUBLISHING
Vandna Soni
FACULTY ADVISOR
Prof. Chowdari Prasad
Dean (Branding and Promotions)
TAPMI , Manipal
Pratibimb | July 2012 | 6
Contents TAPMI Bites - Wackathqo 7
Jqb Hqrriog aod Salary Negqtiatiqos: Hqw mvch is eoqvgh? 9 Varwo Arqra, LBSIM Dellhi
BANDHAN- A Ray qf hqre fqr the rqqr 12
Svgata Rqy | Abhirwra Biswas, IISWBM Kqlkata
The Fqvruh Wqrld - Is it ao qbject qf Fascioatiqo? 18
Siddharuh Jaiswal, IMT Hyderabad
E-cqmmerce - Will the bvbble bvrst qr is it jvst a hyse? 21
Arpab Gvha Malik, IIM Kqzhikqde
Is Iodia lqsiog qvt qf its charn qf beiog ao Ioxestneot Hvb? 25
Preetqsh Kvmar Srixastaxa, IIM Iodqre
BASEL III : Where Dqes Iodia Staod? 28
Jvbeeo Mqharatra | Shikha Sharna, DqMS IIT Rqqrkee
Aoalysis qf the marketiog strategy qf IDEA Cellvlar 33
Sayak Barai, IIM Lvckoqw
Sectqr Rexiew – FMCG 37
Nitio Jiodal, TAPMI Maoiral
Pratibimb | July 2012 | 7
We at Pratibimb get restless sometimes and then need something wacky to get our creative juices
flowing. So we thought of a million ideas... something wacky that would involve the best brains of the
college. This led us to organize a social-media driven branding competition right here on the TAPMI
campus. True to our nature and the kind of outcome we expected... we named it Wackathon 2012, done
under the umbrella of EPISODE, and intra TAPMI fest beckoning in the new batch of juniors.
The purpose was to give all the B-school-busy bees on campus a real life understanding of branding via
the social media and hence allowing them to prove their mettle on a podium they spent hours on every
day. Another purpose was internal branding for the college as well as letting juniors feel the grit of viral
marketing and what stunts actually make it click (read looking-cool-in-front-of-peers) .
We had to come up with products that were not just engaging but also tricky to brand, at least endorse
online. Somebody suggested the various eating joints on campus and that was it.
3 eateries with different clienteles and varying target segments to be promoted within a short time span
of 1 week allowing 6 eager teams to compete and feel the heat.
TAPMI BITES TAPMI’S EPISODE WACKATHON BY PRATIBIMB JULY, 2012
Pratibimb | July 2012 | 8
The day we officially opened the contest, somebody came up with a QR code for one of those joints!
Then someone built an android app while somebody conducted an on-the-spot feedback. Interviews,
theme songs, videos, post its, and a highway on my plate-like food review episode……
The Facebook pages were made and some teams paired it with tweeting tweets, some teams suggested
selling merchandise online, while others designed logos and slogans for the joints, the list of innovative
ideas being carried out was just endless.
Lots of likes, shares and reposts later, the teams trooped in for the final presentations. One of our
eminent marketing Professor (Professor K.J. Jaims) was there to judge their presentations. Well versed
with the links of the Facebook pages and a financial times article proclaiming ―Likes don’t mean profits―
he showed each team where they actually made a mark or missed out on one.
The session was grilling and it implored each one of the presenters to connect social media more with
the bare-knuckles marketing than with the razzmatazz of it. In the end, the writing on the wall was loud
and clear. A good social media campaign can only be based on a good enough product. Like an
advertisement, social media cannot be used to woo in naive customers with fake impressions. Finally
it‘s coverage of customer engagement which gets reflected on your balance sheet not the likes or shares.
This was also the first time that Pratibimb`s new Sub-Editors (juniors who had been newly recruited into
the committee) were given a glimpse of what lies ahead for them and they too were mesmerized by the
show of intellectual prowess on Pratibimb`s Wackathon.
All in all, it was an indicator of things to come.
Just another milestone in the journey of a magazine becoming much more than what it has been
prototyped as.
Watch this space for more.
~Team PRATIBIMB
TAPMI BITES TAPMI’S EPISODE WACKATHON BY PRATIBIMB JULY, 2012
Pratibimb | July 2012 | 9
Job Hopping and
Salary Negotiations:
How much is enough? by Varun Arora, LBSIM
Gen X is known for impatience and ambition. It
wants more growth, both professional and
monetary, in shorter span of time compared to the
previous generations. The demand for more will
continue to increase with Gen Y or Millennials.
Out of several reasons, the major reasons why job
hopping is prevalent in the industry are prospects
of higher salary and better roles. The new
employees today adjust more quickly in the
workplace. So they do not have cultural issues
while changing companies.
Job Hopping:
It was a general belief amongst the HR
professionals looking for prospective candidates
that hiring a job hopper is risky. Chances are that
with even slight push by the competitor would
make the new higher switch job before even being
productive. Hence, the costs involved with hiring
an employee and providing training to make the
employee productive goes waste in such a case.
Such candidates often miss out on long term
opportunities that a company might give them.
Looking at one such example, CEO and MD of
Tata Consultancy Services ($ 10 billion
Company), Mr N Chandra joined the company in
1987 after being offered on campus. He was given
several opportunities from outside, but he stayed
with TCS. He kept looking for better roles and
was doing more every day than the previous.
Staying with one company and looking for
opportunities in long term he became the CEO at
the age of 45 years.
Still the number of job hoppers is now increasing
and the mindset towards them is changing. With
job hopping, one gets diverse work experience
than one might get in single company. Apart from
the work experience, even the salary increases.
This makes some people hop jobs as quick as 6
months. Question arises, how much is enough?
What is the ideal period one should spend in a
company before hopping job? Though some
experts perceive an ideal time to hop job is every 2
-3 years, but the perception changes with each
person and industry. Job hopping also depends on
demand and supply of talent. For example, ideal
job hopping period for manufacturing would be
higher than IT looking at dynamics of both
industries.
Salary Negotiations:
It is very common to put ―Negotiable‖ in expected
salary column. But is everyone a good negotiator
when it comes to salary? The most important
things are of course being prepared with
information like what is the industry standard pay
for the position being applied for, how high or low
does the company being applied to pays according
to the industry standard and how much does the
applicant deserve. But what strategies may lead to
good salary negotiation?
Pratibimb | July 2012 | 10
Candidates may negotiate as per their behavioural
inclination. The negotiation style may be one of
the following:
Competitive (Candidate wins with higher
salary)
Collaborative (Both parties negotiate to an
optimum and agreeable salary)
Accommodating (Candidate may not press
hard on salary to look for better prospects in
the company later)
Compromising (Candidate compromises on
one aspect for the other, say role over salary)
Avoiding (Candidate avoids negotiation and
either rejects the offer immediately or accept
and later leaves for better offer)
Salary negotiation is perceived to be like arm
wrestling match. Both parties try to push the other
down. Candidates want higher salary, while the
HR is trying to get the best candidate at lower
salary. However, the best strategy for both HR and
the candidate is to be collaborative and negotiate
to the optimum salary figure which is justified to
both parties. In long term, there may be issues
with both a high salary offer and a low salary
offer.
High Salary Offer:
In most of the companies, though there may be
salary deviations as per salary negotiation, long
term payout depends on performance of the
employee. So a person may get a higher salary in
the initial offer, chances are he may not be able to
meet the employer expectation of performance.
This may stall or reduce the salary during
performance appraisal.
Low Salary Offer:
If a person did not negotiate well and joined at a
lower salary, chances are that he would soon leave
the job for another offer where without negotiation
he is getting higher pay. This causes infant
attrition (people leaving the company within short
span of time after joining). Sometimes, the
candidate may not even accept the offer for salary
while he never communicated the salary
expectation to the HR.
Aggressive Salary Negotiation:
There are some positions at senior levels which do
not have fixed salary structure in the industry.
Often for these positions, the salary negotiations
are very aggressive. Again the question arises,
how much is enough?
There are times when people negotiate on their
current salary. Say they demand ―X‖ % hike over
and above the salary they draw. There are times
when people negotiate for ―X‖ % hike on another
company‘s offer of ―Y‖ %. Taking an example, a
person ―A‖ is earning INR 1 million per annum.
Scenario 1: A demands 40% hike on his current
salary. So the demand is of INR 1.4 million.
Scenario 2: A gets an offer of Rs. 1.2 million and
demands another company for 40% above INR 1.2
million which is INR 1.68 million.
Some people even keep revising the demand and
often depending on the requirement the offering
companies also keep revising the offer. This either
stops when salary goes very high and candidate
accepts the offer or the company completely
revokes the offer with a feeling that candidate is
deliberately manipulating the expected salary.
Conclusion:
Gen Y is justified at looking forward to diverse
and challenging roles with competitive salaries.
They use the strategies of frequent job hopping
and competitive salary negotiations. But looking
at the perspective of the companies they work for,
they need to strike the right balance. They need to
determine before switching job if they have spent
enough time in the same company and if they are
Pratibimb | July 2012 | 11
sure the current company does not have better
future prospects to offer. Same goes for salary
negotiation. Candidates need to be sure that they
negotiate to justify the salary which is as per
industry demand, their personal expectation and
justifiable for the company to pay.
References:
Michelle Marks & Crystal Harold, ―Who
asks and who receives in salary
negotiations‖, Journal of Organizational
Behaviour, 32, 371–394 (2011)
Christopher O. L. H. Porter , ―The dynamics
of salary negotiations: Effects on applicants'
justice perceptions and recruitment
decisions‖, The International Journal of
Conflict Management, Vol. 15, No.3, pp.
273-303
―Job hopping? Watch out!‖, The Times of
India (http://
articles.timesofindia.indiatimes.com/2011-
11-13/work/29765101_1_job-hop-job-offer-
job-satisfaction)
―Job hopping rate highest in India: Survey‖,
The Economic Times (http://
articles.economictimes.indiatimes.com/2010
-10-13/news/27585022_1_indian-employees
-india-scores-findings-of-factual-job)
―Chandra‘s Marathon at TCS‖, Business
Line, (http://
www.thehindubusinessline.com/features/
life/article2737892.ece?ref=wl_features_art)
Pratibimb | July 2012 | 12
BANDHAN- A RAY OF HOPE FOR THE POOR
“Modern Hr practices: a Harbinger for Growth"
A smile lingers around Shanti Hembram’s face as
she walks down the road for she has earned the
respect of her fellow villagers.
All thanks to BANDHAN, the fourth largest
microfinance organization in India which has
touched the lives of 30 lakh women across 18
states. Working towards women empowerment
and poverty alleviation, BANDHAN beautifully
exemplifies the People Participatory Policy by
recruiting HR Credit Officers and Branch
Managers from among the villagers. They have
adopted a cost effective, decentralized business
strategy inspired by the ASA, Bangladesh wherein
they have introduced a Residential Model across
1553 branches wherein all the basic necessities are
provided by the company. They have emphasized
on People Development Strategy with special
focus on value diversity by which they aim to
achieve organizational as well as inclusive growth,
for which they were awarded the Best HR
Policies by Genius Consultancy in April 2011.
Their recruitment policy focuses on human
qualities by providing functional, behavioral and
attitudinal training to villagers with graduation
degrees, comprising 85% of their HR population.
BANDHAN maintains a total transparency
principle which instills a sense of security and
mutual cooperation, emphasized by their 1:1
performance appraisal method which is open to
debate. With women as their principal borrowers,
BANDHAN accentuates on women sustainability
through economic viability by creation of
livelihood assets.
ORGANIZATIONAL BACKGROUND:
BANDHAN is a very familial term in the Hindi
vocabulary; it signifies togetherness and fostering
special bonds. This became the inspiration behind
creating a world class micro-finance institution
that works at the grass root level. BANDHAN was
born in 2001 under the leadership of Mr. Chandra
Shekhar Ghosh, a Senior Ashoka Fellow.
BANDHAN commenced microfinance operations
in West Bengal in July 2002. All microfinance
activities are carried under BANDHAN Financial
Services Private Limited (BFSPL), incorporated
under the Companies Act, 1956 and also
registered as a Non Banking Financial Company
(NBFC) with the Reserve Bank of India (RBI).
The microfinance operations started in July 2002
from Bagnan, a small village 60 km away from
the city of Kolkata. In 9 years, BANDHAN has
travelled a wide geography of 18 States and Union
Territories with special focus on underdeveloped
states of Eastern India.
BFSPL is engaged in the business of lending to
individual women borrowers under “Group based
individual lending” model to extend loans to
individuals undertaking various income generating
activities and operates in rural and urban areas
throughout India. The main thrust of the company
is to work with women who are in socially and
economically disadvantageous positions; for their
social upliftment and economic emancipation. The
company generally tries to form a group of about
by Sugata Roy & Abhirupa Biswas, IISWBM
Pratibimb | July 2012 | 13
20 people. The members of the group are eligible
for a loan after 2 weeks from formation and or
joining of that group. While these loans are given
without collateral & mutual guarantee, the co-
borrower/ member pressure acts as risk mitigant.
The loans are repaid on a weekly basis, with
individual loan repayment in normally 52 weeks in
the form of 44 equated weekly installments (EWI).
It has successfully accessed funding from more
than 30 banks/financial institutions.
BFSPL is, currently, operating in 174 districts
spanning across 17states of India including West
Bengal, Assam, Tripura, Bihar, Jharkhand, and
Uttar Pradesh etc. However, it is mostly
concentrated in West Bengal which accounts for
about 70% of the company‘s loan outstanding as
on September 30, 2010. Operations of BFSPL are
managed through its network of around 1,553
branches and have 27.77 lakh active borrowers
with total outstanding portfolio of Rs 1983.7
crores as on September 30, 2010.
BANDHAN‘s commitment towards triple bottom-
line values is strongly asserted by its intervention
in development activities. It believes that micro-
finance is not the last word for development of the
poor. Aspiring to holistic development of the poor,
BANDHAN offers development activities in
crucial fields of education, health, unemployment,
livelihood through its not-for profit entity. Besides,
BANDHAN also has a program exclusively for the
hard core poor.
“Why does BANDHAN primarily target women?”
BANDHAN was set up to address the dual
objective of poverty alleviation and women
empowerment. The sole solution to it lay in
focusing on increasing the family income through
women which in turn gradually helps to increase
the status of the woman in the family as well as in
the society. Her confidence and decision making
power also gets enhanced, her conjugal life
improves. There is no second thought on the fact
that women are better money managers.
INNOVATIVE HR POLICIES:
First: PEOPLE PARTICIPATORY POLICY:
Working towards women empowerment and
poverty alleviation, BANDHAN beautifully
exemplifies the People Participatory Policy by
recruiting HR Credit Officers and Branch
Managers from among the villagers. It comprises
nearly 85% of HR population in the organization.
The minimum qualification required for the people
to be recruited as Credit Officer is mainly to be a
graduate, and the target population belongs to an
age group of 20-30 years.
The reason behind recruiting HR Credit Officers
from among the villagers is because as they belong
from among them, they can clearly understand the
needs and the type of financial support the
villagers require for effective functioning in rural
areas. At the same time it reduces the cost of hiring
which is one of the important philosophies of
BANDHAN; and uniquely distinguishes
BANDHAN from other MFIs.
Pratibimb | July 2012 | 14
Second: ADAPTING THE HR POLICIES BASED
ON DEMOGRAPHY
BANDHAN uniquely adapted themselves
according to the needs of the various regions by
introducing the concept of Residential & Non-
residential Model. The Residential model is
mainly followed in West Bengal, besides taking
care of their basic wages; the employees are
provided free cost-effective lodgings along with a
mess system. Apart from it, on Saturdays they
have work only till 10 o‘clock. This helps in
motivating the Credit Officers and instills a sense
of financial stability in them. The primary focus
behind the implementation of the Residential
Model is Value Diversity. They treasure the
uniqueness of the people associated with them.
But keeping in mind the cultural values and
sentiments of people living in states like
Maharashtra who prefer working from their own
homes, they adapted their HR policies wherein the
Residential Model was
changed into a Non-residential
Model.
Third: RECRUITMENT
PROCEDURE
BANDHAN has got a very
swift recruitment procedure.
Recruitment is done through
newspaper notifications and
from staff references. The
received applications are
scanned, sorted and eligible
candidates are called for the
interview. The entire
recruitment process takes place on a single day.
Before leaving for the day, the selected candidates
are handed over their appointment letters. The
incumbents are then sent for a 3 day In Service
Orientation (ISO) course. Upon successful
completion of the ISO, they are posted at their
respective branches. Centralized recruitment is
done at the Head Office.
Apart from employing the field Credit Officers
(CO), even the Branch Managers in states like
Delhi, Bihar and Uttar Pradesh are recruited from
among the local people. This is best exemplified
in Assam wherein on recruiting local people,
communication with the other villagers has
become easy and this helps in proper
comprehension and solution to the problems.
There exists no language barrier. Other MFIs were
not able to comprehend the existing language
barrier and could not adapt to this situation.
Remuneration and Incentives: A clear grade
salary has been set along with other allowances
provided to the employees. The incentive structure
is not defined in terms of collection and number of
new borrowers.
The attrition rate was around 12% in FY10 with
gradual reduction in the past three years.
Fourth: TRAINING AND DEVELOPMENTAL
POLICY
After the initial recruitment procedure, integrated
trainings are provided to enhance the skills
required by the Credit Officers on-field. The
training program implemented by BANDHAN is a
four-phase process.
The company has a separate training division at its
Pratibimb | July 2012 | 15
Head Office in Rajpur with more than 30 trainers
in the department. The training division operates
throughout the year and provides simultaneous
training to fresh recruits and existing employees.
New recruits undergo field training as well as 3-
day Post Service Orientation (PSO) which
includes classroom training at the Head Office.
Apart from these, 1 hour meetings on Awareness
Creation and Hygiene Awareness are held for all
employees.
Capacity Building of Existing Employees: Since
the inception of BANDHAN, training on a regular
basis has been considered an important strategy to
build the capacity of the staff. For this they have
in place the People Development Strategy. The
training imparted is participatory, learner-
centric, problem-focused, need-oriented,
promoting individual involvement and
interactive. These courses are continuously
upgraded to meet the emerging needs of the
various programs of the organization. Often
external resource people with extensive experience
are invited to take courses. The senior operations
personnel, Deputy General Managers, Divisional
Managers also play the role of a trainer. Group
leadership trainings are also imparted to the group
leaders at regular intervals.
Fifth: PERFORMANCE REVIEW AND
PERFORMANCE APPRAISAL
At BANDHAN the performance review is done
twice a year within the period of June-December.
The parameters on which the employees are
judged are the functional qualities and the human
qualities. Within the purview of the functional
qualities, field-level assessments are done. Under
the human qualities, employees are reviewed for
their soft skills, convincing powers and behavioral
skills, which highlight their people understanding
and adaptability.
BANDHAN has in place a proper appraisal
system. Appraisal is done by the field Credit
Officer to check the member eligibility. This
ensures proper checks and balance because of the
localized information available to the Credit
Officer. To avoid bias during appraisal, CO‘s are
never recruited from the same region for a
particular branch. Loan appraisal process is fairly
decentralized with branch manager having final
authority for appraisal.
Appraisal Process:
The PAS (Performance Appraisal System) is
executed twice a year in the interim of June-
December. Within the PAS, one-to-one appraisal
and appraise interview is conducted. The review is
mainly done on a 10 scale scoring system and the
score is generally disclosed to the appraisee,
highlighting the reasons for the scores received.
This is an open to debate process wherein the
appraisee can clear their doubts. This instills a
sense of transparency within the organization and
facilitates in smooth functioning due to increased
communication between the different levels of
management.
Sixth: PROMOTION POLICY
The promotion from Credit Officer to Branch
Manager is based on cumulative scores obtained
from field assessments as well as the viva voce,
with more emphasis on the viva voce to critically
analyze if the person is capable of getting
promoted. Feedback is provided to the respective
employees.
Seventh: MANAGEMENT INFORMATION
SYTEM
BANDHAN has a systematic accounting and MIS
system which has evolved along with the growth
in operations. BANDHAN maintains its accounts
and loan portfolio information at Branch, Regional
Office and at Head Office level. BANDHAN is
currently shifting their management information
system from excel based manual systems to
MFSOL developed by in-house IT department and
currently information is being maintained parallel
Pratibimb | July 2012 | 16
in excel and the MIS. Currently, software testing
is being done at Head Office level with past
records being entered into the system.
Eighth: DECENTRALIZATION OF
ORGANIZATIONAL STRUCTURE
At the branch level, Branch Manager is supported
by Credit Officers (COs) to carry the field level
operations.
Management Committee Review Meetings are
held at the head office on a monthly basis with
participation of MD and Second line of
management. The Branch Level Meetings are
conducted on a weekly basis with participation of
Branch Manager, Credit Officers with random
participation of Regional Manager. At the
intermediate level, Branch Managers, Regional
Managers and Divisional Managers participate in
the Divisional Level Meetings (quarterly)
respectively. BFSPL has created reporting
structure for effective monitoring of operations.
Even the branch operations of appraisal, dis-
imbursement and collection have been
decentralized.
Ninth: MAINTAINING ACCOUNTABILITY AND
TRANSPARENCY
BANDHAN is very transparent and accountable to
its various stakeholders with every work being
documented. Over the years, different rating
agencies (M-CRIL, CRISIL, and CARE etc) of
Strolling down the bustling marketplace of Ultadanga, an animated voice piercing the tranquility of the
morning air is sure to enter your ears! Tumpa Makal proudly displays her array of fishes arranged in a
tempting manner. As buyers throng around her stall and rummage through the pile of glistening fishes,
she keeps on boasting the best quality.
"What gives her so much confidence?"
Tumpa recalls how wretched things were, when the sole-earning member of her family was her hus-
band. "I was just another nondescript woman with no income, no identity and no decision-making power.
Sending my two daughters to school was my dream. It was my neighbor’s prosperity which motivated
me tremendously and I took a Suchana loan of Rs 5,000 for starting a business of selling fishes. And all
my financial worries were put to rest right from the first day" says a radiant Tumpa. Thereafter
BANDHAN gave her loans of Rs. 8,000, 12,000 and 15,000 in three subsequent terms. With soaring
profits she is also running a meat-shop. On completion of the last cycle, a loan of Rs 20,000 was ad-
vanced to her. This need-based credit supply has helped her to do prolific business. From days spent in
oblivion, she is now at the centre of attention, each morning. Not that she complains, "This is just the
beginning, there's more to come.‖
With her impressive record, BANDHAN would be more than happy to assist her—not just for now, but
in the long run too.
Like Tumpa, millions of women are indebted to BANDHAN has a long way to go to fulfill the dream of
becoming a world-class financial institution by 2015 transforming the lives of 6.5 million people across
the globe.
Fig: Tumpa Makal at
Ultadanga fish
market
Pratibimb | July 2012 | 17
high repute have assessed BANDHAN on various
grounds.
For handling growth, BFSPL has created separate
departments including administration, training,
internal audit and operations with clearly
demarcated roles and responsibilities.
The ingenuity of BANDHAN lies in its effective
implementation of grass root level HR policies
with field level assessments based on functional
competencies, which ensures a loan repayment
rate of 99.97%; which is not seen in other MFIs.
Their sole weakness is the lack of an expansion
plan and singular focus on HR development.
BANDHAN visualizes itself as a world-class
financial institution by 2015 transforming the lives
of 6.5 million people across the globe. Like Shanti,
millions of women are indebted to BANDHAN but
their work is only half done as they still have miles
to go, touching the lives of millions.
REFERENCES:
Grading Report 2009-2010; Bandhan
Financial Services Pvt Ltd
Grading Report- 2010; Micro-Credit Ratings
International Limited (M-CRIL), Gurgaon,
India
Performance Report; August 2011; Bandhan
Financial Services Pvt Ltd
Social Assessment: Enhanced
Comprehensiveness Report; Micro-Credit
Ratings International Limited (M-
CRIL),Gurgaon, India
World Bank 2006; www.worldbank.org
(23/05/2012; 22:45 hrs)
Bandhan Financial Services Pvt Ltd;
www.bandhanmf.com/publications.html
(16/05/2012-25/05/2012; 10:45 -15:56hrs)
Pratibimb | July 2012 | 18
The Fourth World
- Is it an object of Fascination?
by Siddharth Jaiswal , IMT Hyderabad
We along with many analysts and economists
seem to think this convergence force of
globalization is real and universal, and that all the
emerging markets will continue to grow rapidly,
catching up with income levels in the west. A
closer look shows that globalization did not, in
fact, resonate equally in all developing nations.
There is a broad array of countries that are not
fully connected to global flows of trade and
money. These nations comprise a chaotic Fourth
World of ―frontier markets‖ in which political
leaders have yet to buy fully into the global
market consensus, and the economic expansion is
still more erratic than the norm. The frontier
nations occupy a world where insider trading can
run rampant because it‘s officially tolerated,
where financial data is unreliable as authorities do
not really demand clarity from businesses,
research here is often less about number crunching
than about pressing one‘s ear to the walls for the
latest rumors. The state of semi-lawlessness makes
them volatile, with economic growth from a high
of 20 percent in Ghana to a low of 2 percent in
Serbia compared to big emerging markets like
China and South Africa with 9 and 3 percent
respectively. The ―macro mania‖ that seized
observers of emerging markets over the last
decade, as they rose and fell in unison, this
phenomena did not extend to the fourth world
where every market tends to follow its own
peculiar rhythms often at the whim of local
leaders. Cambodia opened its stock exchange in
July 2011 and there were no companies ready to
list, making it the only stock exchange in the
world with zero trading and another instance is
that of Ukraine‘s ―forced listing‖ in 2008 when the
government forced big companies and banks to
sell stock to the public which resulted in
companies selling a tiny portion to comply with
the rule which triggered lesser free float leading to
less commitment a company has to the basic
values of a public enterprise i.e return to
stakeholders, not surprising outsiders see the
Ukraine market as something of a joke. Frontier
markets of the fourth world often fail the basic
task of the market, which in theory is to match
buyers and sellers in an open forum that allows
them to agree upon a fair price. When rumors pass
as information and rules make no sense, neither do
prices. There is no doubt about the huge potential
these nations hold, but they need to capitalize on
this potential by opening up to the outside world
and work towards proper governance. They are
home to more than one sixth of the world
population, but account for just 5 percent of global
GDP and attract only 0.5 percent of global
investment. An at most universal assumption
holds that this gap will close over time and the
fourth world is the place where the world will
witness most explosive growth in the coming
decades.
Disconnected in Middle:
The most isolated region from the global market
and its trend is the Middle East, Iran and Iraq. The
key frontier markets in the Middle East are the
petro-monarchies of the gulf region, and the
largest among these by far is Saudi Arabia which
Pratibimb | July 2012 | 19
is the only country which is open for investors, but
only from within the gulf. This resulted in a
spectacular stock market bubble in 2005, with
Saudi Arabia‘s stock market becoming the biggest
among the developing world, larger than that of
China and India, solely based on oil-rich locals
and neighbors. The quantum of this bubble was a
good deal crazier than the dotcom insanity that
gripped the United States at the turn of the
millennium, and it pooped soon enough. But when
a bubble pops in the gulf it does not make any
sound as no one pays much attention as foreigners
are not allowed in. Hence, it would be good idea
for the Middle East to open the gates to its
economy and gear up for a diversified growth
model.
Promising Road:
Few among the Fourth world nations have already
started showing ability to grow and grow quick.
They are in line to be called the next emerging
markets of the world. Few of such economies are
Sri Lanka, Vietnam etc which could prove to be
the next growth miracle.
Sri Lanka’s Peace Dividend:
In the 1960‘s Sri Lanka was billed as the next
Asian growth miracle, only to be stymied by tryst
with socialism that played a direct role in igniting
the civil war which derailed Sri Lanka‘s
development for 30 years. Today after the civil
war, it seems that Sri Lanka‘s time has finally
come. Though the growth dipped sharply during
the war, the economy continued to grow at an
average pace of 5 percent. The only reason for this
was the young educated population situated in the
western province that produced strong growth in
service industry. The north and east province that
account for 30 percent of land and 15 percent
population was mostly war zone. With the nation
whole again, achieving 7 to 8 percent of growth in
the next decade could be well within reach. With
government keen on growth and the aim to raise
the country from 102nd position to 30th in the
World Bank‘s rankings by business climate by
2014. But the path does not
promise to be easy as the socialist experiment of
1970 had lead to high taxes and government debt
which still equals to 80 percent of GDP. However,
it is bringing the vast swaths of formerly rebel-
held territory back into play and exploits the
country‘s long-standing strength of highly literate
population and its geographical location between
the two key shipping routes of India and China.
Markets are especially bad at foreseeing the
financial implications of war; the most famous
example is World War 1, which took the investors
by complete surprise, leaving with huge losses.
Conversely, markets are also quite week at
recognizing the financial benefits from peace, well
studied by agencies such as World Bank and UN,
the peace dividend is real and Sri Lanka is poised
to be a big beneficiary.
Vietnam’s Port to Nowhere:
Vietnam offers a classic case of a small country
that had greatness thrust upon it. By middle of the
last decade investors were not only hyping
Vietnam as the next China but, also throwing
more money at it than it could absorb. In 2007 the
investment produced a net inflow of $17 billion in
Pratibimb | July 2012 | 20
a $80 billion economy, a ratio four times than
China ever achieved. The leadership simply lost
control of the economy and in 2008 the bubble
went bust. Vietnam always followed the footsteps
of China, but it lacked the volume and scale which
China held as its biggest strength. Additionally the
operating cost in China was much lesser than in
Vietnam, it is very difficult to connect with
international shipping ports as most of its 54 ports
were built for river routes which increased the
logistics cost. It has to get back to the basics of
economics by building roads, communications and
infrastructure to connect business. The leadership
is investing into education at a high pace than
China and focus on high skill labor development.
It‘s a good time for the government to deep dive
into fundamental issues and concerns of the
economy and plan a path ahead, hence a huge
potential to regain its charm as the next China.
References:
Lunn, Smith et.al (2006). A political and
economic introduction to China. House of
Commons Library, Paper no:06/36.
Bergsten F.C. , Gill B et.al (2007). The
balance sheet of 2007 and beyond. Center
for Strategic and International Studies.
Nicholas R. Lardy (2011). Rebalancng
Economic Growth.
Richar Sharma (2012). The Breakout nations
―Journal of world economy and foreign
trade‖ , published by Emerald EarlyCite,
ISSN:1754-4408, May 2012.
Statistics China. (2012). Economic Growth
2012. Retrieved from http://eng.stat.gov.tw/
mp.asp?mp=5
Pratibimb | July 2012 | 21
E-commerce - Will the
bubble burst or is it just a
hype? by Arnab Guha Malik , IIM Kozhikode
Ecommerce or rather E-tailing is still at a nascent
stage in India. The noticeable trend is that
established categories like books, mobile,
electronics etc. are experiencing growth. In India
penetration of online shopping using Credit card is
low. The customers haven‘t matured enough. Cash
on delivery is thus the direct byproduct of this,
something that is unheard in the west. What drives
ecommerce is the want for convenience buying in
this age where consumerism and hedonism rule.
The Indian e-commerce has developed a lot in the
last few years. Consumers across urban India,
according to published reports, are going for deals
worth Rs. 20,000-25,000 today. Earlier, they
stayed in the Rs. 2,000-5,000 range. According to
a Vizisense study in 2011, adoption of e-
commerce product sites is higher at 57% in urban
India beyond the top eight metros‘ 43%. Today,
between Letsbuy, Flipkart, Infibeam and Naaptol,
$100 million worth of TV sets are being sold
annually. And this number is growing very
quickly.
So why are there talks of another bubble building
up? The fall of VC-backed Taggle in December
set tongues wagging; however the failure of a
single startup is too small a sample size to argue
that the whole segment was in serious danger.
The problem is: with most e-commerce providers
not being profitable yet, what‘s pushing the
valuation sky high? With the mushrooming of so
many e-com websites, it has to be seen whether
the Indian market can absorb all of them, if all of
them can stay in the target group consideration set.
And more importantly, are they financially stable.
Flipkart raised close to Rs. 750 crore at a valuation
of $ 1 billion. The company raised funds to build
capabilities in logistics, technology, customer
support etc. to scale up the business and others are
following suit.Snapdeal.com has raised $40
million at a valuation of $100 million (Rs 530
crore) in July. Other players like Fashion and You
and Myntra have also raised huge amounts of
money at significantly high valuations.
Pratibimb | July 2012 | 22
The extremely high price to sales ratio and PE
ratio defies all logic. Mahesh Murthy, co-founder
of Seedfund, a VC firm finds appalling mismatch
between toplines, sales, margins and valuations.
"How can a company with toplines of Rs 50 crore
raise money at a valuation of $1 billion? The
valuations have a ratio of 1:100 vis-à-vis sales to
market cap. The company is yet to break even. The
valuations, then, to my mind, are insane,"
According to Deepak Shenoy, founder
MarketVision, and financial writer, to justify a $1
billion valuation, the company needs Rs 1,000
crore in toplines at a minimum 5 per cent margin.
However this is far from being achieved. Hence
there are apprehensions of a bubble.
There is a price war out there; an intense
competition among the players to get more and
more buyers to register on their website. Every
player claims to have huge customer base and with
varying amount of money spent on marketing and
visibility, their online traffic increases. Consider
the case of Jabong.com, with an aggressive
promotion, it has risen to 47 in the Alexa traffic
rankings for India leaving behind established
players like Myntra, Infibeam etc.
But the interesting part is that the calculation of
revenue per user has gone for a complete toss.
Loyalty is out of the window and means nothing
for a customer. Every website claims great value
and affordable prices. In the greed to sell more
every retailer takes up more orders than they can
actually deliver, more orders than stock resulting
in order cancellations, irritated customers, and bad
customer reviews.
The Net Result is often One-night stands or short
term sour relationships. Customer acquisition is
being done at the cost of selling below cost price
and this price increases many folds the moment
you have new customers who are not loyal and
dissatisfied as it means that they will not shop
again. They are Lost Customers.
The logistics partners are also to blame here who
have no accountability and usually misplace the
order or deliver the products late. In some case
they do not report to the company after the
delivery is made. In an environment like India
where cash on delivery rules, websites lose money
on account of dropped orders and customers
refusing to accept the packages
So when they are barely eking out a living with
neither much customer loyalty, no revenues, only
losses to show and a price war and insane
competition to deal with, is the valuation sane?
One might argue that the Indian internet market
with almost 100 million users internet users out of
which only 7 million are online buyers provide a
huge opportunity for future growth along with the
consumers maturing and having more confidence
on ecommerce websites . The IAMAI report
Source: Indian Ecommerce Report, IAMAI
Pratibimb | July 2012 | 23
highlights that the overall potential for e-
commerce will increase from 146 million
households in 2009-10, to 229 million households
in 2024-25. It further says that the core potential
for consumer e-commerce in India will increase
from 71.4 million, to 141.8 million households.
Core potential includes all households in the high-
income category, and those in the
medium-income category which have attained
graduate or secondary level of education, and at
the same time, engaged in more productive
occupations.
However, looking in a cynical way, the number of
shoppers online won‘t grow at a staggering pace in
the near future and neither the growth
opportunities unless the websites reinvent
themselves and keep on differentiating themselves
in terms of building a unique customer value
proposition, rather than becoming a ―me too‖
player.
Already the deals market is highly saturated and
the presence of big players like snapdeal and
mydala means high entry barriers for others.
Moreover the customers after a few days get tired
of deals. In fact how long can you expect them to
be excited about deals on spa, facials, food and
what not? Taggle was the first casualty in this sub
segment.
But saying that the ecommerce bubble will burst is
being a bit too harsh to portals who have a long-
term plan, have been investing in the right places
like beefing up their supply chain and having a
single minded focus on customer satisfaction. But
it is an undeniable fact that the bubble will burst
for many and invariably each failure will send
valuations downward; but it‘s going to take a
fundamental weakness for one to come to the
conclusion that valuations are at a bubble level.
There are opportunities but only if they realize:
focusing on how many orders one can fulfill
ensuring customer satisfaction in at least 85-90%
cases rather than how many orders can one ship in
a day. This realization will only make them wiser
to invest in their supply chain and make it more
efficient.
The IAMAI report states that the reasons for this
mismatch between potential and actual e-
commerce consumers are lack of trust, fulfillment
issues, and shopping experience.
Till now there has been inadequate infrastructure
and only a few have started to invest in backend.
In fact they should work hand in hand with the
logistics partner and jointly invest in the
distribution system. Only when the logistics
partner is on board sharing the same vision of
providing good service to customers, will the
decline rates come down. It is 4% for some portals
and may be as high as 30-40% for some.
Pratibimb | July 2012 | 24
The websites must realize the power of multiple
warehouse and shorter lead times which can
actually make whole cycle run faster and bring
multiple benefits to all. If they can‘t address the
issue of distribution and creation of multiple
warehouses, SOR (Sales or Returns) is another
procedure that they must follow. Keeping least
amount of inventory with them should be a
prerogative to cut costs
The focus should be on developing innovative
delivery models and setting-up high standards of
safety and quality of services. Only when they fix
issues like reducing the Order Processing Time,
reducing the Shipping Time and un-complicating
the Return policies/mechanism, will customers
become loyal. Better customer loyalty increases
the brand value which in turn will increase their
chances to sustain and remain stable.
References:
http://www.moneycontrol.com/news/
features/will-e-commerce-bubble-burst-2012
-_643132.html
http://www.hindustantimes.com/News-Feed/
SectorsInfotech/E-commerce-or-e-bubble/
Article1-803841.aspx
http://www.pluggd.in/stop-blowing-our-
ecommerce-bubbles-297/
http://www.business-standard.com/india/
news/is-online-retailnext-bubble-waiting-to-
pop/461511/
Indian E-Commerce report, IAMAI
Pratibimb | July 2012 | 25
Is India losing out of its
charm of being an
Investment Hub? by Preetosh Kumar Srivastava, IIM Indore
Indian economy has been in news due to its
economical bad performance for last 1.5 years.
Huge Current Account Deficit, Depreciating
Rupee, Policy Paralysis, Spiraling Inflation, and
almost zero industrial production growth have
been core reasons of India‘s falling credibility in
terms of biggest emerging countries. Recent
warning from Standard and Poor‘s of degrading
India‘s rating to below Investment grade has
added to already surmounting worries.
But I have an optimistic view for our nation‘s
economy. In order to present my point, I would
like to go back to reasons why India gained
unparalleled attention of world in the past, what
compelled Mr. Jim O‘Neil, chairman of Goldman
Sachs Asset Management to coin BRIC and add
India to it. After this I would come back to
assessment of current situation and its reasons.
Good set of reasons of rising Indian on global
economic front includes growth in all segments of
GDP accounting sense - capital, labour and
productivity growth. One of key advantage for
India has been the demographic dividend with
youngest populations, being trained much better
than past. (Median age of Indian Population is
around 28 years). Second, Increase in Savings
rates and Investments rates has gone up by almost
35 per cent, particularly since the time Indian
economy was liberalized. Third, India is home to
the biggest English speaking population adding
huge scope and potential to service sector. Fourth,
rising consumption in India due to its new life
style drove Indian economy. Fifth huge
Infrastructure potential and large capital inflows in
form of FDI and FII has helped manufacturing
sector to grow.
Now let us look at current issues and explore its
reasons:
1. Current Account Deficit: Higher global oil
prices leads to an increase in the current account
deficit which invariably drives up interest rates
and slows down the economic growth. To put this
in a clear perspective, an increase of 10 US dollars
in oil prices lead to a one and half per cent
reduction in the GDP of any developing countries
which are importing oil. Moreover due to slow
down in Europe, Indian exports has gone down
significantly. United States President Barack
Obama‘s conservative policy further increased
export issues. However with oil prices going down
globally in first half of the year and slow but
steady improvement in Euro Zone will strengthen
our trade balance this year.
2. Depreciating Rupee: Rising trade deficit is
one of reasons of rupee depreciation. With imports
bill going down it will soon get stabilized.
However we cannot blame rupee only for its
depreciation, US Dollar has strengthened itself
against almost every currency in the world.
Moreover with rupee being depreciated, returns
for overseas investors go down significantly. This
circular loop hamper the sentiments all round.
Moreover, high prices of gold has created fear
among investors and hence with possibility of
gold bubble, investor has shifted back to one of
safest currency, that is, US Dollar, which has
Pratibimb | July 2012 | 26
further created an additional demand for dollar
and hence depreciating rupee in Indian market.
Inflation further decreases the purchasing power in
India against other currencies leading to
depreciation of the currency.
However with trade balance being in control due
to oil prices going down, base Inflation topping
out, confidence of investors getting back to Indian
Stock market due to further expected rate cut by
RBI in second half of year, Rupee is likely to
come back by at least 10% from its current level.
3. Policy Paralysis: The lack of enthusiasm about
Indian market is now clearly more a result of the
governance of our country which has recently
come under severe doubts about its
potential. Everyone around the globe is talking
about this hurting policy paralysis and lack of
ability to take decisions which has stalled our
economy at a crucial stage when India could have
benefited most in the world because of its so many
positives. So far India‘s elite class has been
reserved in their expression of condemnation of
controlling agent. However it is clearly a sign of
depression and dejection that they have recently
aired their disapproval of the government so
firmly. Mr.Azim Premji, Mr. Narayan Murthy and
Mr. Deepak Parekh had recently shown their
expression of worry.
First time in history of independent India, Prime
Minister has been addressed of being a rubber
stamp. Despite being one of the most honest and
educated prime minister not only of India but also
of the world, Mr. Manmohan Singh has been
accused of witnessing so many scandals and doing
nothing about it. Anna Hazare‘s movement against
corruption took the attention of the media, which
affected investor sentiments globally. But this
campaign will surely help India in long term if it
achieved its objectives.
Indian market has suffered a lot. Clearly at a time
when China has recalibrated development, became
much slower and moved towards consumption
service linked growth and leading towards ease of
commodity prices, it was policy paralysis in
addition to huge deficit that let India not getting
advantage of all these.
Moreover, now we can sense a clear sense of
urgency in government now post budget session
and with elections coming up in two years. Hence
we might see some of reforms and policy being
framed in short period of time and help Indian
growth story.
4. Spiraling Inflation: Recent increase in
commodity prices despite increase in keep policy
rates and ratios by our central bank has been
terrible experience for each of us. There is an
agreement amongst economists and other
knowledgeable people that economic inflation
could either be caused by either an increase in
supply of money or a decrease in the quantity of
goods being produced. India has certainly suffered
from both. By tightening money supply we
expected the first reason to nullify but could not
achieve due to change in consumption pattern. I
firmly believe pushing it down could hamper our
own growth as it would play a key role if India has
to grow faster. But no improvement in production
side has caused inflation to sustain at a level
which has been cause of worry. I expect that
some of the reforms may incentivize the industry
to play a dominant role and government acting in
tandem could tap the opportunity to curb the
inflation.
5. External Factors: Ongoing issues in Europe
has dampened worldwide markets and badly
impacted our economic growth. I hope that leaders
of European nations would take resolute action to
resolve the economic troubles facing them. Greece
exiting out of Euro Zone could add another set of
worry for whole world and India would be no
exception. In order to solve this and to guarantee
worldwide policy synchronization to sustain
macroeconomic stability contributing to fast and
sustained recovery of the world economy.
Pratibimb | July 2012 | 27
Now, I would come back to recent warning of
S&P of degrading India. I assume this warning is
certainly a wakeup call for government to put
things in place as fast as possible. But in my view
if we look at a time frame of 2-4 years, these
issues will be handled and Indian growth story
would be seen back to 8-9% if not in two digit
growth. Keep in mind that fundamentals for India
has not changed with an exception of government,
sick of policy paralysis, and which is expected to
take U-turn from the way it has proceeded so far if
they want to remain in the parliament. Hence, with
government taking adequate steps and external
factor easing out, in the time frame of 2-4 years,
we would certainly be one of top performing
BRICS member. Hence India may not be first
preference for worldwide investors in short term
but would certainly become most lucrative
investment hub for any other time frame.
Pratibimb | July 2012 | 28
BASEL III : Where Does India Stand?
by Jubeen Mohapatra & Shikha Sharma, DoMS IIT Roorkee
Introduction:
Before embarking on the depiction Basel III
norms and their futuristic impact on the Indian
Banks and Economy at large, let's start off with a
simple question: What is a Venture? It simply
means an undertaking which has inherent Risks
and Returns .When some capital is invested in a
venture; it is expected to yield some returns or
benefits out of it. But the buck does not stop here,
as along with returns come the rabble-rousers; the
different kinds of risks that plague an investment.
Risks entail all potential losses which have
detrimental effects on the expected output or the
Returns. The risks can be quantified and analysed
under many heads namely Market risk, financial
risk, Operational risk, Credit risk etc. It is intrinsic
to all the ventures from FMCG companies to
Automobile giants to Non- banking financial
companies to the most reputed of banks.
The 3 Basel Accords: Raison D’être:
Basel Accords were created under the aegis of
Basel Committee on Banking Supervision to
provide various avenues of safety against the
various credit, operational, market and liquidity
risks vis-a-vis the liquidation of banks. The first
round of deliberations was conducted in 1988 in
response to the insolvency fiasco of Herstatt
Bank of Cologne; which was attended and ratified
by the Central Banks of G10 nations. It gave rise
to the de rigueur guidelines known as Basel I
which elucidated the capital requirements to avert
credit risks. The number of nations adopting it has
since burgeoned to 100 worldwide.
In June 2004 followed the Basel II regulations;
which broadened the horizon of Basel I to include
banking laws and regulations pertaining to capital
adequacy , arbitrage regulation , risk
quantification , risk classification and risk
sensitive capital allocation. The final version of
this dictum entailed three ―Pillars‖ or Concepts
namely: Minimum Capital Requirements,
Supervisory Review and Market Discipline,
catering to the different risks and their
repercussions. It also included a framework of
tools called Risk Management System to detect
and deal with prima facie evidences of risks and
fend off residual concerns like systemic,
concentration, reputation and legal threats to avoid
a financial tailspin.
However, Basel II has been sporadically criticized
by a section of economists for having magnified
the effects of the credit bubble. Basel II made it
imperative for the banks to obtain credit
worthiness ratings and loan risk evaluations from
unfettered credit rating agencies. However these
agencies in lieu of awarding honest ratings,
swindled the credits awarded to weak Mortgage
based Derivatives on beefy payments from the
client bank leading to disastrous consequences.
Since then Basel II has been appended and
updated many times on the back of numerous
financial turmoil and the sequence of reforms
eventually culminated in formulation of Basel III
regulations. The accord brought into existence
during the year 2010-11 aims to plug the
deficiencies which led to the late 2000 banking
crises.
Pratibimb | July 2012 | 29
Basel III: An Overview:
Apart from bank‘s capital adequacy, stress
tolerance and market risk pruning, the third Basel
accord also sketches out well defined contours of
bank leverage, capital and liquidity requirements.
It tries to reconcile the banking regulations with
economic robustness to safeguard against the
financial frailties. Some salient features of the
latest accord are as follows –
The accord has five broad implications:-
The first dictum tries to better the quality,
eminence, consistency, and transparency of
the capital base, by segregating the capital of
a bank into 3 heads –
a. Tier I or Core capital( common
shares , retainable earnings, disclosed
reserves and equity ) ,
b. Tier II or Supplementary capital
(Instruments in need of
harmonization , Revalued and
Undisclosed reserves ) and
c. Tier III capital (needs to be
eliminated).
Second change strengthens the risk coverage
of the capital framework by trying to
marginalize the credit risk.
Third pillar offers a leverage ratio based
system to entrench the Basel II risk
frameworks.
Fourth point requires building up capital
buffers during good times, on which the
banks and clients can fall back on; during
stress and instability.
Fifth one involves creation of a novel global
liquidity standard; involving calculation of
de facto liquidity coverage ratio, called Net
Stable Funding ratio. It also limits the bad
loans.
Indian Banking Sector, Basel III and Growth
Scenario:
After Reserve Bank of India pronounced final
guidelines for Basel III commencing January 1st,
2013, and to be implemented by March 31st,
2018; speculations have been rife about its
potential effects on the Indian GDP growth and
whether or not the Indian Banks will be able to
meet the cumbersome capital requirements. The
Graph showing spiralling Indian GDP , and Basel III might further accentuate the degrowth.
Source : www.tradingeconomics.com , Indian Central Statistical Organisation
Pratibimb | July 2012 | 30
potential trade off between preventive safeguards
and languishing economic growth has been
making rounds in the economic debate mills of the
country. And the cascaded effects of still to be
tamed inflation, oil price hike, a free-falling Rupee
and sluggish industrial expansion have only
escalated the concerns.
So is the Indian Banking Fraternity ready for
implementation of Basel III? Will it invigorate
the economic and banking standards or will it
worsen the already plummeting growth rate as
well? Prima facie it seems like a conundrum, but
an in-depth analysis reveals that the long term
benefits outweigh the imminent shortcomings.
Just like every leap of faith, this step also has both
pros and cons. The downside begins with
requirement of a massive capital raising by Indian
banks, in the tune of Rs 1.67 trillion over the next
five years to cater to their growth necessities and
boost up their held capital. This figure is churned
out from the new Basel III norms requiring a
minimum 5.5 per cent in common equity stock by
March 31, 2015 against 3.6 per cent now.
Moreover creating a capital buffer by March 31,
2018 entails dilution of equity up to 2.5 percent. It
has also hiked the minimum overall capital
adequacy to 11.5 per cent as opposed to the
current level of 9 percent. For now the private
sector banks like ICICI, YES, Kotak Mahindra etc
seem to be in a comfortable position to meet the
guidelines as compared to the public sector peers
like SBI who need large chunks of funding to mop
up the required capital for compliance with Basel
III.
Because of such a massive capital structure
overhaul the Indian banks will have to go for
stringent loan disbursements which won‘t be
helpful for the Indian industrial sector which is in
dire need of banking support to fortify its position.
Moreover under the new norms, for every 1%
increase in Non-Performing assets the Banks need
to gather 25000 crore worth of back up capital. So
the banks are expected to go harsh on loan
defaulters and tidy up the sectors of economy
A graph showing Bank Credit Requirements Vis- a -Vis held deposits
Source : http://www.thehindubusinessline.com , Article3405002.ece
Pratibimb | July 2012 | 31
where NPAs are proliferating rapidly like the
critical Power sector and MSME sector; among
others. Henceforth, any rate cuts expected from
the chests of RBI will aid in boosting up the
capital buffers of banks rather than accelerating
the economic progress. All these factors might end
up in a medium term reduction in growth rates of
around .05 to .15 percent as per OECD studies and
will most certainly have an adverse impact on the
presently effervescent Indian economy.
With that being said, let‘s take a look at the
vibrant side of things, the bigger picture.
As far as CAPITAL ADEQUACY is concerned,
Indian banks are better placed than most of the
foreign foils, to make a transition to the stricter
capital regime. The seemingly draconian
regulations set by RBI even after liberalization of
monetary policies, will actually work in favor of
the Indian banks. The existing RBI norms are
more stringent than the international Basel III
standards, which mean that the equity capital ratio
and capital adequacy ratio of rated Indian banks
are pegged well above the required margins of 9%
and 14% respectively.
Moreover recently the international credit rating
agency Moody‘s and its Indian subsidiary ICRA
have gone on records stating that the conservative
return on equity and higher cost of capital on loans
adopted by Indian banks will actually be seen in a
positive light after the implementation of Basel III
and it will be CREDIT POSITIVE for the
developing economy of the subcontinent.
Further the LEVERAGE RATIO under Basel III
needs to be 3% to check derivative counterfeits
and takes up cudgels against off the balance sheet
trading .But the same ratio for Indian banks lies
between 4.3 to 4.5% thus providing a hefty
cushion and making it further easier and
rudimentary to implement Basel III.
Moving on to the LIQUIDITY COVERAGE
RATIO required to provide cash flow for stress
period of up to 30 days , here also Indian banks
are much well endowed as compared to the
foreign banks given the traditional saving
mentality and conformist practices. The liquidity
requirements of Basel III can be comfortably
offset from two major sources namely; Cash
Reserve Ratio-CRR (4.75%) and Statutory
Liquidity Ratio – SLR (24%).
The biggest yet intangible benefit will come in
form of HEDGING against cyclic fluctuation in
business market. Economic activities progress in
form of cycles and banking system which
operates in sync with the economy, is universally
pro-cyclic . When the economy is zesty and
rollicking, carried away by the booms, banks
throw caution to the winds and disburse large
amounts of loans , thus accumulating unbridled
defaulting risks. During a downturn as seen in
case of housing bubble of US , these
contraventions impede the very fabric of the
banking system hurtling it into a spiral of abyss.
The creation of additional capital buffers under
Basel III would put some shackles on the
unfettered bank-lending as sufficient amount of
capital has to be preserved now. This restrain will
smoothen the large swings when the business
cycles go berserk, thus acting as a shield. India has
Name of the Bank Assets as on 31.3.2011
The Ratnakar Bank 3230
Nainital Bank Ltd. 3292
The Caholic Syrian Bank Ltb. 9829
The Lakshmi Vilas Bank Ltd. 13301
The Dhanlaxmi Bank Ltd. 14268
City Union Bank Ltd. 14592
Tamilnad Merchantile Bank Ltd. 16117
The Karur Vysa Bank Ltd. 28225
The Karnataka Bank Ltd. 31693
The South Indian Bank Ltd. 32820
Smaller Banks like the afore mentioned , with
limited assets will find it difficult to conform to
Basel III norms , resulting in dearth of loan dis-
bursal to the smaller industries.
Pratibimb | July 2012 | 32
already witnessed a few moderate tremors in the
wake of Eurozone and US slowdown. Hence, for
countercyclical measures to be proficient and
effective, our banking system has to improve its
ability to envisage the business cycles at sectoral ,
industrial and systemic levels.
Conclusion:
There is a famous quote: ―Whatever was on the
left-hand side (liabilities) was not right and
whatever was on the right-hand side (assets) was
not left.‖ This comment came in the context of
Lehman Brothers, who foundered so shoddily that
their assets were not even worth a fraction of their
book value and their entire capital base was worn
out. It simply exposed the decay that had crept
into the financial machinery, as a result of loose
lending, subprime mortgages, shadow financial
institutions, speculations, large NPAs and
insufficient liquidity buffers, which planted the
seeds of the great downturn. In this light, Basel III
can prove to be an earnest and triumphant attempt
to avoid crises like the late 2000s. Basel III tries to
ensconce the balance sheets of banks by
enhancing common stocks of equity, creating
capital buffers to absorb shocks, increasing
liquidity of assets, marginalizing the leverages,
improving transparency as well as the market
discipline.
The famous adage ―make hay when the sun
shines‖ is paramount in the case of Indian Banking
fraternity. Given their secure position in contrast
with the tumultuous west, coupled with rising
diplomatic and economic clout of India in world
map, Indian banks are ever so ready to perk up
their banking regulations by embracing Basel III.
Yes, in the initial phases it will decelerate the
growth fractionally but then again all good things
come with a price tag .In the long run it will prove
to be a prudent and constructive step as the strong
balance sheets will make our banks resilient
enough to withstand the financial quakes. Coup -
de- Grace!
References:
Apr 09, 2012 : Implications of Basel III for
Capital, Liquidity and Profitability of Banks.
(www.rbi.org.in)
Moody‘s Analytics
Economictimes.indiatimes.com
Pratibimb | July 2012 | 33
Analysis of the
marketing strategy
of IDEA Cellular
COMPANY PROFILE:
Idea is the 3rd largest mobile services operator in
India, in revenue terms, and recorded a subscriber
base of over 100 million or 17.28%(Approx.) of
the total mobile connections in India as of 31st
January 2012. As on 31st January 2012, the
company is leading the MNP (Mobile Number
Portability) race, with a net gain of close to 11
million subscribers. The company also leads all
other competitors in having the most active
subscriber base, scoring highly on the VLR
statistics. Idea's Revenue for the year 2011 stands
at $3.43 Billion. Currently Idea is the 6th largest
mobile operator by subscriber base. Idea cellular
acquired 3G licenses in 11 telecom circles for Rs.
5768.59 Cr during the spectrum auction in May
2010.3G services have already been launched in
7 circles out of the 11 circles that Idea has
acquired licenses. Idea Cellular is planning to be
a world-class internet service provider (ISP) in
India. It is working to establish state of the art
infrastructure.
by Sayak Barai, IIM Lucknow
Pratibimb | July 2012 | 34
CURRENT SITUATION ANALYSIS:
Porter’s five forces:
SWOT Analysis:
Strong brand recognition
Internet sales
Growing reputation in global
market
Complexity of operations
Absence in rural southern areas
due to presence of existing
competitors like Aircel
Expanding business operations
Value added services
Utilize 3G spectrum in 11 of 22
circles in India by providing
services like WiMAX and LTE
Expand rural reach
Fluctuations in foreign currency
Government policies (on going
tiff with DoT over acquisition of
Spice telecom in 2008 may lead to
cancellation of licenses for Idea in
multiple circles)
Pratibimb | July 2012 | 35
CURRENT CUSTOMER SEGMENTATION
Idea Cellular currently segments its customer
profile into 2 basic groups:
1) Prepaid Customers and
2) Postpaid Customers
Prepaid Customers are generally the personal use
customer group i.e. non institutional. This
segment accounted for around 80% of the
customer base (2008 figures) and the remaining
20% was accounted for by the postpaid customer
base.
The customer base is also segmented into groups
according to the monthly revenue generated:
The segmentation here is done as:
1)VIP customers: These are the customers who
form the VIP group as the name suggests and
comprises of MPs, MLAs, industrialists and other
high profile customers. These are given high
attention in services as they are key to
implementation of services across their regions.
2)Corporate Customers: These are the
customers having more than five connections to
their name and generate revenues in excess of Rs.
10000 a month. These are usually institutionally
driven connections and are post-paid customers.
Service quality in terms of Value Added Services
provided including preferential customer service
treatment is provided to retain these high value
accounts.
3) Platinum Customers: These are the
customers whose current monthly expenditure on
Idea Cellular Services is in excess of Rs.1500 per
month. The revenue generated from these
accounts includes Voice, Data and VAS services.
Around 60% of these are from the post-paid
group while the remaining 40% are from the pre-
paid group. Institutional Customers account for
around 70% of the post-paid base while the
remaining are the personal usage customers.
4) Gold Customers: These are the customers
providing revenues to the company between
Rs.1000 and Rs.1400 a month. The pre-paid base
is again smaller in this segment accounting for
nearly 35% of the customers. A healthy split is
found between personal and institutional usage
customers.
5) Silver Customers: This customer group
provides revenues in the range of Rs.750 to
Rs.999 to Idea Cellular each month. Pre-paid user
group is in the range of around 55% while
institutional sales account for around 80% of the
post-paid group.
6) Medium Volume users: These are the
customers generating between Rs.220 to Rs.750
each month. Prepaid customers form around 65%
of the group while this group accounts for
approximately 30% of the whole customer base
of Idea Cellular.
7) Low Volume customers are the customers
generating revenues less than Rs.250 per month
Tier 1 Metropolitan Circle:
Customer Segmentation Description
Products Pre-paid and post-paid mobile services
Services
GPRS, voice and SMS based entertainment services, call-
forwarding, call conferencing, regional, on-net, national and inter-
national roaming, GSM gateways, vehicle tracking and automatic
meter reading
Channels Direct outlets
Complementors Ericson, Nokia and Siemens
Unique competencies
6 SIGMA, net setter data cards & Blackberry solution, largest cus-
tomer base, NLD license, market leader in Maharashtra, strong dis-
tribution channels
Pratibimb | July 2012 | 36
Target Market:
The Target Market is the high revenue generating
segment of the Platinum and Gold Customers. It
is strategic for the company to increase user base
in these two segments as they generate a steady
income source and most being post-paid, the
company is usually assured of ease of collection
of bills.
Major Benefits for these customers:
These are even given treatment in
Customer care.
These are generally high data usage group
and hence given dedicated Time Slots when
their data usage is detected to maximize
usage and revenue generation as a result.
The Metropolitan and Urban circles have
mobile density of 134% as compared to
29% in rural areas. Hence, more focus
should be on expanding in rural segments.
With the advent of 3G services and
increasing number of smart phones,
operators should focus on advanced value
added services like live streams, mobile
money etc.
Strategy makers should think on the pricing
policy of postpaid plans of corporates and
affordability of the consumers to beat the
competition. Company should come with
new ideas & innovations to increase the
sales & market shares. Company should
focus more and more on advertising to
promote services in corporate world.
References:
http://en.wikipedia.org/wiki/Idea_Cellular
http://www.mashpedia.com/Idea_Cellular
http://3ginternetdatacard.in/index.html
http://www.3gidea.in/
https://www.uwtmobile.com/
http://www.itu.int/ITU-D/treg/projects/itu-
ec/Ghana/modules/FinalDocuments/
Interconnexion.pdf
http://www.onesimcard.com/
www.ideacellular.com
Customer Segmentation Description
Products Pre-paid and post-paid mobile services
Services
GPRS enabled information services like internet browsing, data
cards and mobile email, call-forwarding, ring back tones, back-
ground music, voice and sms chat, ringtones, horoscopes, expert
advice and subscription services.
Channels Direct and indirect
Complementors Ericson, Nokia and Siemens
Unique competencies 6 SIGMA, high quality network structure, centralization of several
applications
Customer Segmentation Description
Products Pre-paid and post-paid mobile services
Services Krishi voucher, NOKIA life tools, providing health care services
Channels Indirect outlets
Complementors Ericson, Nokia and Siemens
Unique competencies Usage of solar power as Base Transceiver Station (BTS), frequency
optimization techniques
Tier 2 Urban Circle:
Tier 3 Urban Circle:
Pratibimb | July 2012 | 37
Sector Review
– FMCG by Nitin Jindal, TAPMI Manipal
Sector Overview
India‘s FMCG sector is the 3rd fastest grow-
ing sector. It has grown almost 18% in the
Q3FY12. Its revenue is almost 2.4% of the
Indian GDP.
Indian FMCG Sector envelops large sectors
of personal care, health care, home care and
food and beverage. Therefore money circu-
lated in this sector is huge.
FMCG companies and consumer facing sec-
tors like consumer durables and consumer
finance are suggesting continued growth in
the tier II and tier III cities and rural mar-
kets.
Introduction of GST this budget can system-
ize taxation if implemented uniformly. It
will help in avoiding multiple taxes like oc-
trai, CST , VAT etc. Hence, would result in
lowering of the prices and would boost de-
mand.
Although, FDI is much debated and kept
round the edges, it can fall back anytime.
Since , this government would be making
moves to save its neck, one can expect FDI
to open
Nevertheless though the NREGA allocation
has reduced, the wage per day are now being
increased. This in turn would have a psycho-
logical impact on the income levels in rural
markets.
Product innovation which was not much tak-
en care of by Indian FMCG companies has
taken centre stage now.
Awareness for nourishment amongst the ru-
ral population particularly for the younger
generation is increasing. Baby and health
food companies like Nestle India and GSK
consumer are strong long term players and
would outperform their home and personal
care peers. The rise of Marico‘s super pre-
mium refined oil, Saffola in the rural mar-
kets also cannot be ruled out in the long
term.
A consistent rise in urbanisation would be a
supportive factor for the health food compa-
nies.
With the increase in better housing struc-
tures in rural India called as ‗Pucca‘ houses
would benefit paint companies, especially
players like Asian Paints with the widest
distribution and most comprehensive portfo-
lio.
Affordability has substantially improved
during the last few years indicating the po-
tential for growth in branded products. Ex-
ample in Bihar a rural household typically
comprises of about 8-10 people per house-
hold.\ Assuming a daily wage income of
INR100 per person, an individual household
would have an income of about INR20,000
per month, which we believe is a decent in-
come to afford branded consumer staples.
FMCG companies like HUL, Marico, Parle
etc. are targeting BOP. BOP consists of 900
to 950 million people. This segment poses
large scope of growth as this market is still
untapped. Contribution of rural market go-
ing to rise from 34% to 44-50% in year
2020.
Pratibimb | July 2012 | 38
Figure 1
New Road Connectivity making key
difference to FMCG demand
Source: Bloomberg
Figure 2:
Rising urbanization led by infra development
aiding literacy rate and hence awareness of
branded products
Urbanization has grown 31.2 % in FY12
Source: Bloomberg
Figure 3:
Improvement in literacy has led
increase in income level and
increase in awareness about the
branded products, hence resulted
in affordability and growth
Literacy has increased almost
9% in FY12
Source: Bloomberg
Pratibimb | July 2012 | 39
Figure 4:
Average pay per day has increased
to 100 according to MG NREGA .
Hence increasing the disposable
income
Average pay per day has increased
by 11.11% in FY11
Figure 7:
Companies like HUL tying up
with telecom service providers
like Tata Teleservices to get
better footfall and mindshare
Figure 6:
FMCG companies are focusing on
the direct reach to the rural market
Companies like HUL, ITC which
have widest distribution would be
key beneficiary
Figure 5
Conclusion:
Third fastest growing sector in India
Large money is circulated in FMCG
Uniform implementation of GST can lower prices and boost demand
Product innovation, the new mantra in FMCG sector
Consistent rise in urbanization
BOP poses large scope of growth
Pratibimb | July 2012 | 40
Introduction
`Does the stock market overreact?' De Bondt and Thaler in 1985 gave start to a new wave of thinking
known as behavioural finance. Weak form inefficiency of the stock market was discovered by them after
analysing how people are systematically overreacting to unexpected and dramatic news events which were
surprising and profound. The Efficient Market Hypothesis as proposed by Fama (1970) asserts that the
stock prices reflect the relevant information. The asset prices follow a random walk path i.e. they are
merely random numbers. The study conducted by Caginalp G. and H. Laurent (1998) by the predictive
power of price patterns finds patterns and confirms that they are statistically significant even in out-of-
sample testing and report.
The pattern of the stock index might help in predicting some of the effects of the various events. The
calendar anomalies tends to exist which goes against the efficient market hypothesis. The researchers have
used Gregorian calendar to investigate the calendar anomalies. There are various countries and societies
which follow their own calendar on the basis of their religion. For example, the Hebrew calendar is
followed by the Jewish society, which is strictly based on luni-solar, the Christian society follows the
Gregorian, which is based on solar, and similarly Hindu and Chinese follow their own.
The Hindu calendar is called ―Panchanga” and it is based on both movements of the sun and the moon.
The festival of ―Diwali‖ is typically occurs at the end of October and beginning of November.
The special ritual called ―Mahurat Trading‖ can be observed on major stock exchanges like NSE, BSE,
NCDEX to name a few lasts for about an hour. It is performed as a symbolic ritual since many years. It
marks a link with the rich past and brokers look at it on a positive note. It marks an auspicious beginning to
the Hindu New Year. The investors place token orders and buy stocks for their children, which are
sometimes never sold and intraday profits are booked, however small they may be. Thus, it is widely
believed that trading on this day will bring wealth and prosperity throughout the year.
It is interesting to observe the behaviour of trading activities during the period preceding and succeeding
Mahurat Trading. The purpose of this study is to know the effect of the festival prior and post diwali on the
the returns.
Econometric methodology
I have measured stock return as the continuously compounded daily percentage change in the share price
index (S&P CNX NIFTY) as shown below:
Rt = (lnPt – lnPt-1) x 100 …………………… (1)
Where, Rt = return at time t
Pt, Pt-1 = closing value of the stock price index at time t, t-1.
I have used S&P CNX Nifty as it has got the most liquid stocks in its portfolio. Further, the National
Stock Exchange is largest in terms of Market capitalisation and Volume. I have used the data of the
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