Post-Diwali fortnight to register 25% job cuts: Assocham

New Delhi: The prevailing economic negativity that dampened the 2008 Diwali was expected but what was not is the post-Diwali scenario that indicates a strong slowing down. Corporate India is likely to announce lay offs of nearly 25% of its workforce within the next 10 days across seven key industrial segments, according to an analysis on ‘Jobs scenario, post-Diwali’ persented by industry chamber, Assocham.
These sectors comprise steel, cement, ITeS/BPO, financial and brokerage services, construction, real estate and aviation to begin with as their promoters are no longer in a position to sustain their operations with existing manpower strength.
Key Findings
* HR heads of a majority of the steel, cement, ITeS/BPO, financial and brokerage services including construction, real estate and aviation have drawn up conclusive plans to curtail their workforce by 25 to 30%, announcements for which are likely to come in by early November
* Most companies had wanted to start laying off employees in a phased manner much before Diwali but were advised to defer their restructuring plans
* Companies are thinking of further cutting down on bonus, ex-gratia and other incentives to reward performance
* Companies are also thinking of curtailing perks and perquisites of middle and senior managers as slowdown will continue and CEOs too might be expected to absorb salary cuts
* Manpower recruiting firms have deferred plans of expansion that require additional influx of funds since business houses in the crisis ridden sectors have stopped requisitioning human resource requirement
*The assessment suggests that negative sentiments in these sectors can be turned into an opportunity provided the Reserve Bank of India discontinues with its tight monetary policy and decreases the interest rates by at least 3%

Marriage of the Competitors : Jet and Kingfisher

Few months backs "Consolidation" was the buzzword in the in the Aviation industry. During that time Air India and Indian Airlines merged , Jet Airways and Sahara airlines merged resulting in creation of 3 major players in the Indian aviation space, Indian , Kingfisher and Jet Airways.

The recent news of collaboration between Jet and Kingfisher comes as a surprise for me.

Altough the deal does not involve any equity sharing but still Jet-Kingfisher combined will capture the 60% of the market share.

This deal is a result more of necessity than choice, with the rising overhead costs it was imperative on the airline companies to cut cost. The resulting deal will result in rationalisation of routes for both the airlines, reduction of excess staff and overall better profitability by sharing of similar costs and and may be revenue sharing

The only point to note here is that it may now perhaps mean the end of a low cost carrier model. With such a dominance force in the aviation industry the Jet-Kingfisher combined would not try to push into this model instead could now dictate the way the business is and should be carried.

Well as I had already stated in one of my earlier blogs, that the dream of the Indian middle class to fly has to be remain a dream for some more time now.

The War for the Red Sofa

Marketing Warfare has now moved way beyond the Cola domain and today has reached the other segments. The case I am referring to is the advertisement created by Reliance BIG Tv to counter Airtel's DTH launch.
Now let me tell you about the background first, The DTH business is a rapidly growing business , already biggies like Tata Sky,Dish TV, DD direct are present in the market. Sensing this as an business opportunity Reliance ADAG group also very recently launched its BIG DTH services. Bharti Airtel also had plans to enter in this business and had planned to launch its DTH services in India on 9th October.
Now comes the real story , to generate curiosity amongst audiences Airtel started the teaser Ads showing a Red Sofa, and a caption "see you at home on 9th".
This advertisement started appearing on the national televisions few days back prior to the launch , i.e in the first week of Oct.
But here came the master stroke from the Reliance Creative Ad agency, sensing this empty Red sofa as an opportunity, within a day Reliance launched an Ad with similar settings i.e Red sofa and with the caption "See you at home with 250 channels..."
The Reliance creative ad agency fully utilized the buzz created by the Airtel's ads and was sucessful in associating itself with the "Red Sofa" i.e the curiosity around the teaser ads, as a result Airtel actually had to prepone their launch of DTH services and they started showing their full advertisement with their brand name.
But honestly i feel that the damage was already done, consumers actually took a minute to understand which ad belongs to which company, and initially they all thought that this Red Sofa belongs to BIG Tv only.
Analysing this very closely i sincerely feel that the creative people at Reliance truly got it right, they were able to take a little fuzz out of the grand launch of Airtel's DTH services.
Its True "Marketing is Warfare"

West Bengal's Loss is Gujarat's Gain

Its official now , The Tata Group has finally announced that it will set up its factory in Sanand, Gujarat. This project will bring an investment of about Rs 2,000 crore in the state back in Bengal now Mamta Banerjee will have to think of new gimmicks to keep her shop alive, what a loss she has brought to the state and its people

Nouriel Roubini : “Dr Doom” or Economist at his best

Nouriel Roubini is a professor at New York University’s Stern School of Business, and head of Roubini Global Economics.

Read on for the perfect economic predictions he made :
Just after the sub-prime crisis and before the current global financial crisis emerged or any one foresaw / predicted it he in August 2006, wrote, “The scariest thing is that the gambling-for-redemption behavior…are not the exception in the mortgage industry; they are instead the norm. …If this kind of behavior is — as likely — the norm, the coming housing bust may lead to a more severe financial and banking crisis than the S&L crisis of the 1980s. The recent increased financial problems of…sub-prime lending institutions may thus be the proverbial canary in the mine — or tip of the iceberg — and signal the more severe financial distress that many housing lenders will face when the current housing slump turns into a broader and uglier housing bust that will be associated with a broader economic recession.”

Roubini went on to say, in 2006, “One cannot even exclude systemic risk consequences if the housing bust combined with a recession leads to a bust of the mortgage-backed securities market and triggers severe losses for the two huge GSEs (government-sponsored enterprises), Fannie Mae and Freddie Mac.” Talk about prescience. To add on he had also predicted the failure of Bear Stearns, Its amazing but he also predicted that Fannie Mae and Freddie Mac will eventually bite the dust, and today they are nationalized.
The story doesn’t end here , read on , a bit earlier, in July, Roubini had said that Lehman Brothers would need a buyer: it soon did, but didn’t find one, and is now bankrupt. He didn’t stop there. He predicted in July that Merrill Lynch, Goldman Sachs and Morgan Stanley would also not survive as independent firms. Lo and behold, Merrill Lynch is now set to be owned by Bank of America.

Surprised , yes we all should be , the crux of the matter is that when Roubini talks, people should listen.

The beauty of Roubini’s predictions is that they are based on crystal clear economic analysis. He had argued that the independent broker dealer model (epitomized by the former big four firms) is fundamentally flawed. These firms use the same business model as banks: they borrow short and lend long. But they borrow on even shorter time frames, use more leverage, and do not have explicit government backing (as banks have had since the Great Depression) and therefore the liquidity crunch.

To conclude i would leave it to you , to decide whether Nouriel Roubini is “Dr Doom” or Economist at his best. Your comments are welcome.