Thursday, November 27, 2008

India Inc. badly needs a Ganguly

For cricket fans celebrating India's triumph over Australia, the last ten years have been truly memorable ones. Ten years ago, Indian cricket was almost down for the count. Match fixing allegations were destroying the faith of fans. India travelled to Australia and was humiliated 3-0 in the test series. Back at home in early 2000, it lost badly to South Africa. Crisis was an understatement and disaster had become the ruling word. Even the great Sachin Tendulkar appeared dejected and gave up the captaincy. That was when Saurav Chandidas Ganguly took over as the captain of the Indian cricket team. Even die hard fans were not very optimistic; sure Ganguly was the God of the offside, but the Indian team had degenerated into a bunch of hopeless losers. And arguably the best team ever led by Steve Waugh was coming to India to conquer the 'final frontier'. That was the series when India discovered what a gutsy and determined leader Ganguly could be. That was also the series (Who can forget the knock of 281 by V.V.S. Laxman?) when the Indian team started believing in itself. That was also when India started playing as a 'team'. Even the most cynical Indian will salute Ganguly not just for his leadership skills, but also for the manner in which he transformed India from a bunch of whiners and losers to a confident, in your face and aggressive team that was ready to take on the world.

Fans will also know that the rise and rise of the Indian cricket team coincides with the rise and rise of India. For much of 1990s, analysts wrote off Indian companies. For most of 1990s, India Inc. went through a painful and wrenching phase of restructuring and transition. But as the 21st century dawned, a series of entrepreneurs started successfully taking on the world and global competition and winning quite a few battles; just as the Indian cricket team did under Ganguly. The dream run accelerated with Indian companies taking over foreign ones in rapid succession. There were occasional hiccups no doubt as some Indian companies stumbled; just as the Indian cricket team stumbled now and then. But there was little doubt that both the Indian cricket team and India Inc. had emerged as potential world beaters.

In Nagpur, the Indian cricket team continued the journey towards becoming world champions. But the same can no longer be said of India Inc. In the last few months, the global financial meltdown has hurt the Indian economy very badly. The bad news has gone way beyond Dalal Street to shop floors and boardrooms and investments are being frozen & plants are being run for just a few days a week. Despite a falling Rupee, Indian exports are down and exporters have started shedding jobs by the thousands. Both the Prime Minister Manmohan Singh and Finance Minister P. Chidambaram offer platitudes that no one is buying anymore. Without a shadow of doubt, the Indian economy and India Inc. are facing a full blown crisis that could well destroy not just the growth story, but also millions of Indian dreams. What India Inc. needs badly at the moment is a leader like Saurav Ganguly who can transform threats into winning opportunities. Anyone for a new kind of ''Dada''-giri?


Thursday, November 13, 2008

This is Called Collusion, Period

It was quite an interesting sight: the flamboyant and now a tad corpulent Vijay Mallya hugging the reticent and a tad hesitant Naresh Goyal even as camera bulbs kept flashing. In an astounding accomplishment, bitter rivals Jet Airways and Kingfisher Airlines had formed a strategic alliance. And for a while, it appeared as if the alliance had all the blessings of the Union Minister for Civil Aviation Praful Patel. Both gentlemen called it the need of the hour and together raised a chorus to get more benefits and doles from the State because the aviation sector is bleeding. Both blamed rising fuel costs as the principal factor behind the huge losses being generated by commercial carriers in the country.

But the fact of the matter is very simple: the two have willingly and openly formed a cartel with the tacit blessing of the government. It is now difficult to fly Kingfisher or Jet from Delhi to Mumbai without paying at least Rs.7,000 for a one way fare. I suspect that if airlines like GO, Spicejet and Indigo are compelled to fade from the scene, a one way ticket between Delhi and Bombay will cross Rs.10,000. Any which way that you look at this, the consumer will be the big loser and the notion of 'competition' will become a joke in this sector. On top of that, it would be a travesty if Jet and Kingfisher are bailed out by the government at the expense of the consumer and the tax payer. By 2006, when Mallya and Goyal were locked in mortal combat to become the aviation King of the country, both the airlines were aggressively gunning for market share. To be bigger and bigger seemed to be an obsession with both.

Please remember; by this time, the whole world knew that oil prices are rising and virtually any analyst worth her salt was forecasting higher oil and fuel prices. And yet, Naresh Goyal ended up taking over Air Sahara and Vijay Mallya effectively killed the middle class Indian dream of flying by taking over Air Deccan. Since they claim to be very successful entrepreneurs, surely they were aware of the risks they were taking in buying off low cost carriers at a time when rising oil prices were leading to questions on their viability? Surely both knew that bad times are coming, even as they splurged company money on new routes, more pilots, more crew and more of everything? They erred and as entrepreneurs, they must pay a price. After all, competition means that you lose in business if you make the wrong decisions. A bail out to both the airlines by the government will be a travesty. If at all the government does provide a bail out, it should be after the two sacrifice a bit of their equity stake in the companies.

The tragedy is, in sector after sector in India, companies are merrily forming cartels and taking the consumer for a ride. In every case, the government makes some polite and threatening noises about cartels and promptly goes back to sleep. If Indian consumers are to ever get what is their due, regulation in India will need to be made far more effective. And, the State cannot afford to hand pick personal favourites in the corporate sector. That is the worst form of crony capitalism. Surely Dr. Manmohan Singh is aware of that?