Insightful article on Jamshedpur and the Tatas

I visited Jamshedpur over the weekend to see for myself an India that is fast disappearing despite all the wolf-cries of people like Narayanamurthy and his ilk. It is one thing to talk and quite another to do and I am delighted to tell you that Ratan Tata has akept alive the legacy of perhaps India's finest industrialist J.N. Tata.

Something that some people doubted when Ratan took over the House of the Tatas but in hindsight, the best thing to have happened to the Tatas is unquestionably Ratan. I was amazed to see the extent of corporate philanthropy and this is no exaggeration.

For the breed that talks about corporate social responsibility and talks about the role of corporate India, a visit to Jamshedpur is a must. Go there and see the amount of money they pump into keeping the town going; see the smiling faces of workers in a region known for industrial unrest; see the standard of living in a city that is almost isolated from the mess in the rest of the country.

This is not meant to be a puff piece. I have nothing to do with Tata Steel, but I strongly believe the message of hope and the message of goodness that they are spreading is worth sharing. The fact that you do have companies in India which look at workers as human beings and who do not blow their software trumpet of having changed lives. In fact, I asked Mr Muthurman, the managing director, as to why he was so quiet about all they had done and all he could offer in return was a smile wrapped in humility, which said it all.

They have done so much more since I last visited Jamshedpur, which was in 1992. The town has obviously got busier but the values thankfully haven't changed. The food is still as amazing as it always was and I gorged, as I would normally do. I visited the plant and the last time I did that was with Russi Mody.

But the plant this time was gleaming and far from what it used to be. Greener and cleaner and a tribute to environment management. You could have been in the mountains. Such was the quality of air I inhaled! There was no belching smoke; no tired faces and so many more women workers, even on the shop floor. This is true gender equality and not the kind that is often espoused at seminars organized by angry activists. I met so many old friends. Most of them have aged but not grown old. There was a spring in the air which came from a certain calmness which has always been the hallmark of Jamshedpur and something I savored for a full two days in between receiving messages of how boring and decrepit the Lackluster Fashion Week was.

It is at times such as this that our city lives seems so meaningless. Jamsetji Nusserwanji Tata had created an edifice that is today a robust company and it is not about profits and about valuation. It is not about who becomes a millionaire and who doesnt'. It is about getting the job done with dignity and respect keeping the age-old values intact and this is what I learnt. I jokingly asked someone as to whether they ever thought of joining an Infosys or a Wipro and pat came the reply: "We are not interested in becoming crorepatis but in making others crorepatis."

This is exactly what the Tatas have done for years in and around Jamshedpur. Very few people know that Jamshedpur has been selected as a UN Global Compact City, edging out the other nominee from India, Bangalore. Selected because of the quality of life, because of the conditions of sanitation and roads and welfare. If this is not a tribute to industrial India, then what is? Today, Indian needs several Jamshedpurs but it also needs this Jamshedpur to be given its fair due, its recognition. I am tired of campus visits being publicized to the Infosys and the Wipros of the world.

Modern India is being built in Jamshedpur as we speak. An India built on the strength of core convictions and nothing was more apparent about that than the experiment with truth and reality that Tata Steel is conducting at Pipla.

Forty-eight tribal girls (yes, tribal girls who these corrupt and evil politicians only talk about but do nothing for) are being educated through a residential program over nine months. I went to visit them and I spoke to them in a language that they have just learnt: Bengali. Eight weeks ago, they could only speak in Sainthali, their local dialect. But today, they are brimming with a confidence that will bring tears to your eyes. It did to mine.

One of them has just been selected to represent Jharkand in the state archery competition. They have their own womens football team and whats more they are now fond of education. It is a passion and not a burden. This was possible because I guess people like Ratan Tata and Muthurman havent sold their souls to some business management drivel, which tells us that we must only do business and nothing else.

The fact that not one Tata executive has been touched by the Naxalites in that area talks about the social respect that the Tatas have earned. The Tatas do not need this piece to be praised and lauded. My intent is to share the larger picture that we so often miss in the haze of the slime and sleaze that politics imparts. My submission to those who use phrases such as "feel-good" and "India Shining" is first visits Jamshedpur to understand what it all means. See Tata Steel in action to know what companies can do if they wish to. And what corporate India needs to do. Murli Manohar Joshi would be better off seeing what Tata Steel ha s done by creating the Xavier Institute of Tribal Education rather than by proffering excuses for the imbroglio in the IIMs. This is where the Advanis and Vajpayees need to pay homage. Not to all the Sai Babas and the Hugging saints that they are so busy with. India is changing inspite of them and they need to realise that. I couldn't have spent a more humane and wonderful weekend. Jamshedpur is an eye-opener and a role model, which should be made mandatory for replication. I saw Corporate India actually participate in basic nation-building, for when these tribal girls go back to their villages, they will return with knowledge that will truly be life-altering.

Corporate India can do it but most of the time is willing to shy away. For those corporate leaders who are happier winning awards and being interviewed on their choice of clothes, my advise is visit Tata Steel, spend some days at Jamshedpur and see a nation's transformation. That is true service and true nationalism.

Tata Steel will celebrate 100 years of existence in 2007. It won't be just a milestone in this company's history. It will be a milestone, to my mind of corporate transparency and generosity in this country.

It is indeed fitting that Ratan Tata today heads a group which has people who are committed to nation-building than just building inflluence and power. JRD must be smiling wherever he is. And so must Jamsetji Nusserwanji. These people today have literally climbed Every Last Blue Mountain. And continue to do so with vigour and passion.

Thank God for the Tatas!

Note:
Before this article I always thought that Tata's should have done always more socially responsible but have a look on corporate India and tell me another company or business house which has done more than them. Other software companies might have done more as better business house made there share holder's millionaires but have anyone made such a powerful yet humble attempt to empower rural India.

Few months before the budget I have one of top IT companies chairperson to lobby saying that Software Company should pay taxes and contribute to Indian growth since they pay taxes outside nothing to Indian government where there operations are.

But let me tell you one thing have this top honcho ever built till now any development centre in rural India. Microsoft has done total charity in India bigger than this India IT companies do together. The one of the top IT companies have 1000 sq ft. area for per employee (I doubt even we afford that area at home) on the name of recreation – they feel we don't have comfort on our homes so they provides better than home facility. There corporate styles tell us to afford the luxuries when half of the countries is barely could afford necessity.

Friends nothing against the capitalism – a king must live like a King. But a king has responsibility for public at large at least they must stop speaking like politicians when it comes to social responsibility and start doing something for people.

I have one honest suggestion for this big IT companies as they can afford some shaving of the revenues rather than looking to make tax free SEZ's which need large pool of employees which is available in TEIR I and II cities only. They shall come out with smaller development centers in smaller cities near engineering colleges and help engineering colleges to produce world class output. This will fuel the rural growths which have just started with disposable income. This will even be beneficial for them as fresher's will be available at lesser infrastructure and salary cost in smaller cities.

This is time for another IT revolution and challenging the mindset. If we could empower our rural India we could achieve a growth trajectory which is impossible to comprehend. This is the time technology can afford and rural India is roaring just feed it with proper resources.

The End of a 1,400-Year-Old Business

What entrepreneurs starting family businesses can learn from the demise of Japanese temple builder Kongo Gumiby James Olan Hutcheson The world's oldest continuously operating family business ended its impressive run last year.

>

Japanese temple builder Kongo Gumi, in operation under the founders' descendants since 578, succumbed to excess debt and an unfavorable business climate in 2006. How do you make a family business last for 14 centuries? Kongo Gumi's case suggests that it's a good idea to operate in a stable industry. Few industries could be less flighty than Buddhist temple construction. The belief system has survived for thousands of years and has many millions of adherents. With this firm foundation, Kongo had survived some tumultuous times, notably the 19th century Meiji restoration when it lost government subsidies and began building commercial buildings for the first time. But temple construction had until recently been a reliable mainstay, contributing 80% of Kongo Gumi's $67.6 million in 2004 revenues.

>

Keys to Success

Kongo Gumi also boasted some internal positives that enabled it to survive for centuries. Its last president, Masakazu Kongo, was the 40th member of the family to lead the company. He has cited the company's flexibility in selecting leaders as a key factor in its longevity. Specifically, rather than always handing reins to the oldest son, Kongo Gumi chose the son who best exhibited the health, responsibility, and talent for the job. Furthermore, it wasn't always a son. The 38th Kongo to lead the company was Masakazu's grandmother.

>

Another factor that contributed to Kongo Gumi's extended existence was the practice of sons-in-law taking the family name when they joined the family firm. This common Japanese practice allowed the company to continue under the same name, even when there were no sons in a given generation.

>

So if you want your family business to last a long time, the story of Kongo Gumi says you should mingle elements of conservatism and flexibility—stay in the same business for more than a millennium and vary from the principle of primogeniture as needed to preserve the company. The combination allowed Kongo Gumi to survive some notable hard times, such as when it switched temporarily to crafting coffins during World War II.

>

Burst Bubble

The circumstances of Kongo Gumi's demise also offer some lessons. Despite its incredible history, it was a set of ordinary circumstances that brought Kongo Gumi down at last. Two factors were primarily responsible. First, during the 1980s bubble economy in Japan, the company borrowed heavily to invest in real estate. After the bubble burst in the 1992-93 recession, the assets secured by Kongo Gumi's debt shrank in value. Second, social changes in Japan brought about declining contributions to temples. As a result, demand for Kongo Gumi's temple-building services dropped sharply beginning in 1998.

>

By 2004, revenues were down 35%. Masakazu Kongo laid off employees and tightened budgets. But in 2006, the end arrived. The company's borrowings had ballooned to $343 million and it was no longer possible to service the debt. In January, the company's assets were acquired by Takamatsu, a large Japanese construction company, and it was absorbed into a subsidiary. To sum up the lessons of Kongo Gumi's long tenure and ultimate failure: Pick a stable industry and create flexible succession policies. To avoid a similar demise, evolve as business conditions require, but don't get carried away with temporary enthusiasms and sacrifice financial stability for what looks like an opportunity. These lessons are somewhat contradictory and paradoxical, to be sure. But if sustained success came easy, then all family businesses would have a 1,428-year run.

4 Rules for Asset Allocation

One of the biggest (if not the biggest) determinants of how well your investment portfolio does is how you divide your assets into various investment vehicles. What percentage do you need in cash, stocks, bonds, real estate, and so on? It's a difficult question to answer for many. But in this piece, let's simplify the process into four rules for asset allocation. They are:

 

Rule No. 1: If you need the money in the next year, it should be in an interest-bearing savings or money market account.

 

Rule No. 2: If you need the money in the next one to five (or even seven) years, choose safe, income-producing investments such as Treasuries, certificates of deposit (CDs), bonds, bond funds, income funds or balanced funds.

 

Rule No. 3: Any money you don't need for more than seven years is

a candidate for the stock market.

 

Rule No. 4: Always own stocks. Even if you're at or near retirement age, stocks can help your portfolio beat the debilitating effects of inflation. In a growing economy, do a buy and hold approach for high quality growth scripts.

Interview of Warren Buffett - CNBC

Part:2

Part:3

Part: 4

Part:5

China’s soaring economic growth, POWER & MORE POWER

China’s soaring economic growth has been headlined in recent years by a single, attention-grabbing statistic: China each year adds new power generating capacity equal to the UK’s entire electricity grid. But China surpassed this benchmark last year, according to new figures released quietly at the end of January by the China Electric Power News, the mouthpiece of the state industry. The paper reported that new power capacity in 2006 had expanded by 102 gigawatts, or roughly equal to the entire capacity of the UK and Thailand combined, or about twice the generating assets of California, the state with the biggest economy in the US. China expects its installed power generating capacity to grow by around one third to 840 gigawatts by the end of the decade.

I wonder if any reader can doubt their GDP numbers.....

Rs 450,000 cr fund shortage in power sector

After the dismal performance in the 10th Plan, the power sector is facing a similar fate in the 11th Plan with the Centre, states and private companies estimated to fall short of a massive Rs 450,000 crore during 2007-12 -- nearly 45 per cent of the total funds requirement.

The country needs about Rs 10,31,600 crore to add more than 70,000 MW of generation capacity, besides creating and upgrading transmission and distribution systems. However, the sector would have a shortfall of Rs 4,51,607 crore, as per the report of Working Group on Power for 11th Five-Year Plan.

The major chunk of the shortage is for states which are slated to make total capacity additions of around 24,000 MW in the 11th Plan and need Rs 5,14,167 crore. On a debt-equity ratio of 70:30, states need an equity capital of Rs 154,250 crore, but surprisingly have no equity available to fund the expansion. Out of Rs 3,59,917 crore of total debt required, the states can arrange Rs 1,64,973 crore. This leaves a gap of close to Rs 2,70,000 crore in debt and equity for the states taken together, after considering an additional Rs 80,000 crore in funding by special schemes such as APDRP and Rajiv Gandhi Gramin Vidyutikaran Yojana.

The massive shortage is not surprising given the fact that the state utilities suffered a loss of Rs 26,150 crore and posted a negative rate of return of 27.43 per cent, according to the Economic Survey released in February 2007. According to the report, the 11th plan capacity addition target has been set at 68,869 MW. But since around 23,000 MW has been added in 10th plan, compared to the targeted 41,000 MW, the 11th plan would need a capacity of 76,000 MW.

During 2007-12, the Centre would add at least 37,000 MW, private firms over 9,000 MW and states 23,000 MW. (Economic Times)

Rs 50,000 cr required in '07-08 for Basel-II CAR

PSU banks alone will need a whopping Rs 50,000 crore in the current financial year to meet capital adequacy requirements under Basel-II norms, a finance ministry official said on Thursday.

"Public sector banks will need to mobilise Rs 50,000 crore by the end of the financial year, for the implementation of Basel-II norms," secretary (financial sector) Vinod Rai said. Banks are required to set aside Rs 9 as capital for every Rs 100 they lend.

"The current year may witness banks use a variety of options to shore up capital for Basel-II, including raising tier-I and II capital. More than a dozen public sector banks have enough headroom to dilute government equity up to 51% and raise capital," a government official said. However, sustaining GDP growth at current levels will require greater credit growth.

It has been argued that the credit-to-GDP ratio in the country at 30% is much lower than in developed countries where it is more than 150%. Bankers were divided on the moderation of credit growth. Canara Bank CMD MBN Rao said, "A calibrated increase in credit growth is desirable."

The capital requirement will increase if credit continues to grow at the same pace as the last three years: 28-30%. The Basel-II norms, that will be in force for 2007-08, require banks to assign risk weightage based on borrower's credit rating