A Sip Tip

 

Every other day or so, going to a coffee shop to unwind and enjoy rich, creamy coffees is what almost anyone can do these days. With Cafe Coffee Day, Barista, Starbucks, DiBella and Costa outlets present in every nook and corner, this is a convenience anyone can indulge in.

The teas and coffees are not 'cutting chai' rates obviously, but they are worth the bucks you pay for them. But I have actually noticed something at the Barista I go to often here in Mumbai and you need to watch out for this cheap little trick as well.

I once ordered Triple Sec, which is a mocha with an orange liqueur in it. I never add the sugar without taking a sip to see if it's needed or not because most often it's not really required and, I like the slightly dark and bitter tang of ground beans to hit my taste buds.

This is personal quirk and in this case it proved to be so right. That's because the Triple Sec drink came - and after a quick sip - I realised that something was off. No, they had not spiked it with anything fishy, but I didn't even get a whiff of oranges. So, I had some more of the coffee, and then asked the staff to add the liqueur in because I didn't feel they had put in any, in the first place. This way they had to even top up my coffee while adding in the liqueur, so I got a free refill as well. Also very clearly visible at the bottom of the glass, was a layer of orange liquid that I had not seen there before. Seeing is believing.

They had tried to fool me into paying them for something that they didn't include in my coffee despite them always asking customers, if they wanted any extras like toffee, hazelnut, Irish liqueur, chocolate sauce etc, and for which they charge anywhere between Rs 40 - Rs 50 extra.

So do what I did - take the sip test and make sure you get what you ordered because if it is not added in your coffee, it will be surely added in your bill.

100 best global brands: Indian brands absent

BusinessWeek put out a list of the 100 Best Global brands in 2009, compiled by the consultancy Interbrand. Some brands have prospered amid the hard times — or at least held their own. Others have slipped a number of places. However, the magazine's website also issued a disclaimer that, "The brand valuations draw upon publicly available information, which has not been independently investigated by Interbrand. Valuations do not represent a guarantee of future performance of the brands or companies."

Overall clothing brands like Gucci, H&M and Zara have risen on this list and so have producers of perishable consumer goods like Kellog’s, McDonald’s, Marlboro, Pepsi, Budweiser, Heinz and Nescafe. Coca-Cola reigned supreme for two years in a row (2008 and 09) – that’s probably because it’s the one thing that most people consume without too much thought given to it. What’s a few liquid calories - it’s not like you have hogged a cholesterol filled meal at McDonald’s, right?

Some electronic manufacturers who did better than their peers are: Hewlett-Packard, Cisco, Apple, Samsung, Philips and Canon. Tried and trusted Sony and branded-assembled PC-maker Dell dropped down this list.

The brands who retained their last time’s position were IBM, Nokia, Microsoft, GE and Coca-Cola. While two software manufacturers – IBM and Microsoft – stayed true to their brand perception, Intel and Oracle actually fell down this ladder while SAP climbed up this beanstalk.

Car brands BMW, Toyota and Mercedes also slid down the list but Honda raced ahead. Ford remained at starting position – at No.49.

Bankers like American Express, HSBC and Citibank all fell in this ranking possibly because of all the scandals that continue to keep emerging about how over-extended most banks are in the US and how non productive some of their assets have turned out to be. If after analysing all the data and having all the best brains at your disposal, one can still make goof ups of such gigantic proportions, then some solid, plain ole common sense is the much required commodity now – not some more fancy and abstruse hedge fund. The ones who maintained their position but really lower down the list were JP Morgan (at 37) and Goldman Sachs (at 38).

Online brands, Google and Amazon moved up but eBay stayed stagnant at No.46.

The luxury brands Ikea ranked higher but Louis Vuitton stayed put at No.16.

News service provider Thomson Reuters climbed up this list to 40 from 44, as did advisory firm Accenture to 45 from 47.


The children’s entertainment segment was represented by Disney which dropped to No.10 (from 9) and Nintendo which crawled up to No.39 (from 40). So, what’s happening here - kids were bored with saccharine sweet princesses and were more interested in animated machismo?

What this list also shows is that not a single Indian brand made the cut. Where are all those loudly advertised, publicity hogging 'brands' created by fashion designers, architecture and interior design firms or manufacturers of leather products and furniture and car designers. Our car manufacturers didn't make it either. The reason could be that Indian brands have less recall than the people behind it - very much to their brand's detriment.

India doesn't have any Frank Wright, Philippe Starck, Roberto Cavalli, Steve Jobs, Richard Branson - no one who is globally recognisable and synonymous with either a particular brand or India. So, it's high time, India's businesses let their brand do the talking for them. Make it more about the product and less about the personality...especially if the personality is not going to be à la Richard Branson.

Data: Interbrand, BusinessWeek. To view the table, click here: http://bwnt.businessweek.com/interactive_reports/best_global_brands_2009/

Job hunting: What's the forecast?

More than any other crises, the only one people truly care about is whether or not they have a job. Everything else looks tolerable when you have steady income coming in and shoring up your bank account. With the plethora of job websites up, there are a lot of resumes that can be scanned and there are apparently a number of jobs available as well. These jobs ofcourse don’t fit every experience profile but that’s where head-hunters are expected to do their matchmaking – fixing up the right people to the correct jobs on offer.

Naukri.com has been coming out with a monthly report of what’s on offer with regard to jobs, salary and increment expectations, which sectors are hot and which are not etc. The report is a nice glimpse at what’s going on in the jobs scenario, especially when the hearsay is that recruitment is stagnating or the jobs on offer are not quite in keeping with a person’s experience or expectations.

The former may be a myth but the latter is true. I’ve personally got offers from just about anyone and everyone who wants to do something or anything with writing and editing. There is no saying how long those firms have been around and how long are they likely to last, if you went to work for them. So, I’ve not been tempted to apply for most of those job-alerts I keep receiving from the website. There may be many like me out there – eminently employable but just not eager to grab drab offers.

May be that is the reason why the naukri.com report JobSpeak states that: “Hiring activity dipped across all experience bands in December ’09 owing to the end-of-year holiday season, with the maximum decline of 6.7% in the 4 to 7 years experience buckets.”



Graphic source: Naukri.com JobSpeak Report

As the pie chart (from the JobSpeak report) shows, the number of people who fall in the 4-7 years job experience category is the largest at 36% followed by 31% who are in the 0-3 years category of experience and 22% who fall somewhere between these two – in the 8-12 years experience category.

Here are some other points to ponder from the Naukri Hiring Outlook Survey 2010 that the site has e-mailed with their routine report. Since this is going to be subjective and the nature of the questions require people to ‘project’ a picture, let’s hope that in actuality, things develop along these lines.

Recruiters say that:
- 72.3% of recruiters say that new jobs will be created.
- 24.2% say that replacement hiring will continue.
- 1.2% believe that layoff will happen.
- 2.3% of the population believe that no jobs will be created.

There’s a slight goof up with this one in the report. I’ve corrected it here. Most hiring to take place in the 1-3 years experience bands. So, this is not good news for people with more experience who don't want to do BPO kind of jobs.
- Fresher's- 9%
- 1-3 years- 42.1%
- 4-8 years- 40%
- Above 8 years- 9%

Recruiters say that:
- 43.6% say increments will range between 5% to 10%
- 40.7% recruiters expect it to range between 10% to 20%
- 8.9% expect above 20% increments
- Only 6.7% expect it to be less than 5%

There’s more easy-to-understand information in this 10 page survey report. Read it here: http://w10.naukri.com/mailers/recruiter/Hiring_Surve/Hiring_Outlook_Survey_jan10.pdf?othersrcp=10385&wExp=N

Who created the most wealth in India?

The global economy is dancing all over the scoreboard and the people who have to keep up with twinkle toes – stock brokers, bankers, economists, business-owners – all have their hands full. Everyone is coming out with a set of numbers and studying them for us - laypeople. Motilal Oswal has also done the same but they have come out with a wealth creation study which makes for interesting reading.

This report looks at the top 100 companies who have added atleast Rs 1 billion to their market capitalization over a period of 5 years – 2004-09 – that was reviewed. The report also aims to gauge by when India will hit the next trillion dollars (NTD) high note again after having done it for the first time in the financial year 2008. But the next NTD is predicted to be created a lot quicker – in the next 5-6 years - if India continues to grow nominally at 12%-15% per annum and at the current US$/INR rates.

In the run-up to this NTD era, the report sets down the criteria, by which Indian companies will be significantly adding to their bottomline as well as your portfolio, if you held on to or bought their stocks. These companies all enjoy three kinds of entry barriers and have great managers helming them:

1. Demand-side includes customer captivity due to a strongly differentiated product/brand, force of habit or high switching costs, including the difficulty of searching for substitutes. These brands enjoy strong distribution network. Demand-side entry barriers such as trusted brands are intangible and typically result in firms enjoying very high return on capital.

2. Supply-side entry barrier mainly arise from the company being the lowest
cost provider of goods/services in the category due to one or more of the following:
a. Patent protection for products and/or production processes; and
b. Privileged access to critical inputs (eg captive ore mines).

3. Economies of Scale

4. Great management

So, which companies made the grade based on the above selection process? Here they are:

- Hero Honda Motor because it’s a market leader.
- Maruti Suzuki because it has appropriate product mix with the widest distribution and service network.
- Mahindra & Mahindra because it’s a market leader in UVs and tractors with an excellent track record of innovations.
- BHEL because it enjoys near monopoly in thermal power plants.
- Larsen & Toubro because it’s the preferred engineering/construction company for complex projects.
- HDFC Bank (in private sector) because it’s a high brand equity with the most consistent performance track record.
- State Bank of India (public sector) because it’s the largest bank with the highest reach and which offers play on insurance as well.
- CRISIL because it is the No.1 in India and belongs to the group of global No.1, Standard & Poor.
- HDFC because it is the long-standing market leader with lowest processing costs.
- Dabur India because it enjoys strong positioning in the ayurveda / herbal products platform.
- Nestle India because it’s a near monopoly in instant noodles and infant nutrition.
- Mundra Port because it’s one of the largest ports on the Gujarat coas.
- Sun TV because it has dominant market share in South India.
- Pantaloon Retail because it is a market leader by far and enjoys significant early mover advantage.
- Bharti Airtel because it has the highest market share, lowest cost and is a well-recognized brand.

What also emerged in this study was that:
• Value migrates from basic spend to discretionary spend categories.
• Winner categories emerge when demand hits the J-curve – this means that when product prices match a large section of the customers’ affordability level.
• The categories which can become large in relation to the economy emerge winners.
• Consolidated categories will benefit more than fragmented ones.

Some 66 companies with entry barriers created Rs 8,314 billion between 2004-09. The remaining 34 companies with no or low entry barriers accounted for Rs 1,323 billion in the same timeframe.

Here are some of the other salient points:

• The sensex earning per share (EPS) will grow up to 29% in the early FY11. Beyond this period, it will revert to a median of 15%-20%.

• Interest rates may remain at the same level or may move higher.

• The highest wealth destroyer industries between 2004-09 were: Others – 24%, Oil & Gas – 17%, Banking & Finance – 16%, Auto – 13%, Pharma – 12%, IT – 11%, Metals – 6%.

• The highest wealth destroyer companies in the same time period (in the order mentioned) were: Ranbaxy, IOCL, Tata Motors, ICICI Bank, HPCL, Satyam Computer, Oriental Bank, Tata Steel, Reliance Infrastructure and MTNL.

• Wealth creating companies were mostly new-blood firms that were around less than 40 years. For eg. There were 60 companies that had been around for only 40 years and they had created wealth amounting to Rs 6,700 billion. While the older firms of 50 years and above (there were 40 of them) had created only Rs 2,917 billion between 2004-09.

• 30 public sector units (PSUs) at one time were contributing almost 50.6% of the wealth between 2000-05. After the phased out divestment process, 16 PSUs contributed 27% between 2004-09.

• The best performing PSU sectors were mining & metals (37%), engineering (25%) followed by oil & gas (23%).

• 43 MNCs created a high of 50% of the wealth in the country between 1994-99 and it dropped to 2% (by 8 companies) between 1999-2004. From 2004-09, around 23 companies made 14% of the wealth.

• The best performing MNC sectors were FMCG (63%), Engineering (13%) and Automobiles (10%).

• The private sector created 73% of the wealth – by 84 companies in 2004-09.

The Fastest Wealth Creators were: Unitech, Areva T&D, BF Utilities, Opto Circuits, NMDC, Shri City Union, United Spirits, Jindal Steel, Sterling International and Chettinad Cement.

The Biggest Wealth Creators were: Reliance Industries, Bharti Airtel, BHEL, NMDC, ONGC, ITC, Infosys, Larsen & Toubro, SAIL and HDFC.

Consistent Wealth Creators - 2005 to 2009
Pharma
􀂄 Cipla (4)
􀂄 Dr Reddy's Lab (3)
􀂄 GSK Pharma (2)
􀂄 Piramal Health. (4)
􀂄 Ranbaxy Lab (4)
􀂄 Sun Pharma (2)
FMCG
􀂄 Asian Paints (3)
􀂄 ITC (5)
􀂄 Nestle India (1)
Others
􀂄 Hero Honda (5)
􀂄 HDFC (5)
􀂄 HDFC Bank (1)
IT
􀂄 Infosys (3)
􀂄 Wipro (3)
􀂄 Satyam (2)
Others
􀂄 Reliance Inds (2)
􀂄 Ambuja Cement (1)

Number in brackets shows how many times these companies appeared in the top 10 list.

For a more detailed study, take a look at the report here:
http://www.motilaloswal.com/MOSL/uploadedFiles/MOSL/Knowledge_Center/Wealth_Creation_Study/Download_Reports/14thWCS.pdf