Thursday, August 02, 2012

A leadership crisis at Maruti & AP

I was reading through an article in Mint that stated - Pravat Chaturvedi, a former labour secretary in the Union government, said the happenings at the Manesar plant last week would have likely remained non-violent if the protest had been led by a “seasoned” leader. “With violence becoming the main issue, the rest of the problems have been sidelined, thus bringing no end to the problems, which started the protest,” he said. “This is the time when you need some experienced hand to guide these young workers, which the management never let happen.”

And my memories took me back to similar incidents (similarity w.r.t the loss that occured Vs that could have been controlled) that happened in AP about 18months back and the conversations that some of my friends had and I too agreed on it.

The "Million March" protest was called by majorly TRS(a party in AP) asking a million telangana activists to meet up at a place called Tank Bund in Hyderabad.

It started off as usual with deployment of huge police forces to stop people from other places reach Hyderabad as well as to stop the groups at different points and avoid them meet at single place. It was a protest as usual till a certain point of time but, as the crowd increased in numbers, the trouble started.

People started behaving the wrong way with female Journalists covering the episode followed by some minor incidents of attack on other party leaders. This style of protest continued with desecration and destruction of statues of telugu luminaries considered to be a part of the great telugu culture.

And the conversation that I spoke of was something like this "1.Had there been a strong leader who could show them a direction, the protest would have been much peaceful and not the way it went. Or else, 2.Had YSR been the CM today, the scenario would have been different altogether."

And I agreed with the second statement irrespective of the fact that, I hate him for being the most corrupt. Some might say the way he functioned was totally cruel when it came to take decisions on people who opposed him/opposition parties/other related issues and moreover he is a factionist. I too believe and support these statements but, at the end of the day all that mattered was "HE CONTROLLED".

Not only did he control these kind of issues to the best we have seen in the last 9years but, also maintained a good grip on his party and cadre in AP which has almost become a dog's fight post his death.

There are very few humans who neither need a manager to show him the right direction nor a big boss with a stick to make them fall in line. So, For everything to go smooth you either need a big boss on the top with a stick in his hand or else, you need a manager who can guide you to show what's wrong and what's right.

In the case of AP the manager was useless (you can better call dumb), the big boss died and the person who replaced him as big boss was spineless.

In the case of Maruti, the manager was paid a huge lumpsum to resign from the company because, the top management saw him as cruel and there wasn't a manager after that or if at all there was one, he was not seasoned. And the workers didn't have a direction. They couldn't see through that it is an irreversible journey that they were taking by killing a person.

On that day 1.5 years back, my friends felt that the big boss should have been alive that day and the issue would have not taken place. Yes, he would have robbed the state of many more millions of rupees through corruption but, I today see that these millions would have been nothing compared to the condition state is in post his death.

Similarly, only if Maruti might not have paid those 20 union leaders some crores of rupees to resign and get out of the factory peacefully, things might have been different. Yes, they might have become the reason for many more strikes in the past one year but, the life of a person is much valuable compared to the strike that the company faces.

P.S: I am not supporting/opposing the company/union/YSR/telangana. It's just that the culture/control and the life of a person is very valuable than corruption and strikes respectively. And a seasoned leader might have helped.
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Saturday, March 17, 2012

Preventive Health care & Interest on Savings Account

Despite huge media coverage the Union budget received yesterday, there is a good chance that you might have missed a couple of good measures.

Many a times you might have heard from people: "Prevention is better than Cure." But, hardly do we see this implemented by people in India when it comes to Health care costs. Health care costs with respect to Health Insurance and Annual Health checkups. India has recently started warming up to the idea of buying an own health insurance policy (apart from the company health insurance policy) and it is yet to warm up to the idea of having an Annual Health check-up. The budget tries to warm up the psyche of Indian population by having a sub-deduction of 5K.

Section 80(D) was earlier only giving us a deduction for Health Insurance premiums. From FY12-13 it includes an amount of 5K for any preventive health care which would ideally include any medical tests undergone by you, spouse, children and dependent parents. Ideally a annual health check-up at a branded Health Check-up chain would cost around Rs.2500-3000 per head. Hence, this may be a very small amount for a family but when you compare with the current psyche of Indian population it will be a huge step if everyone can atleast utilize this 5K.

The other measure was related to the interest earned on the balance in savings account. This is good for 2 reasons.

A. Earlier, it was taxable under "Income from other sources" and effectively you should be paying tax on the interest at the highest rate applicable on your salary. Most of us are unaware of this section or neglect it, which says that you need to declare the interest earned on Savings/Recurring/Fixed deposits and pay tax on the same. Although this is a small amount, it might get you into trouble with the Income tax department in the future. Under this budget, it is exempted up to a Savings Account interest income of 10K. This gives you a small extra income and at the same time makes your life easier with respect to the filing under extra income related issues.

B. Last October, RBI has deregulated the interest rates earned on the balance in Savings account and we have seen a couple of mainstream banks offer a higher rates of 6-7%. But, this wouldn't have made much sense since, the interest is taxable and the final gain in hand might hardly differ between those banks paying you 4% and 6-7%. With the income exempted up to 10K, it might make sense to have a savings account that pays you 6-7% unless until the account features are bad enough.

The amounts saved under these two categories of Health and Interest income might be very small but, it goes in the right direction of long term financial and life planning.

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Friday, February 17, 2012

Kotak's aggressive 6% interest rate campaign

This is for those financially educated people wondering about kotak's aggressive campaign of 6%.

If you are in the above mentioned category you might have had a feeling of "Kotak Mahindra Bank burning money on unnecessary ads" every time you have seen their aggressively run "6% interest on savings account" campaign. The same was the situation with one of my colleague who questioned the rationale and answered herself with, "Everyone might give 6% very soon. What's there in advertising so heavily?"

But the answer is there's a lot to it than what you can see. You will understand this if you were one among those looking to buy a Air conditioner (or an electronic household item) about some years back. This was the time when you were attracted towards one or two companies advertising aggressively that their air conditioners are rated by certain agencies and are the best on features such as low electricity consumption, etc.,

You might have felt that these products are the best whereas a person from an electronics (retail) industry or a person having knowledge of the industry would have been having the same feeling "Burning money on unnecessary ads". And a similar colleague of yours would have said "Everyone might give a rated AC very soon. What's there in advertising so heavily?" This would have been the feeling since, the government/regulator had just sometime back made it mandatory for products to be certified for rating.

Although you cannot compare a savings account to an Air conditioner as a product or the respective change in regulations this comparison highlights the view from a customer's psyche.

RBI has deregulated interest rate on savings account deposits which was earlier fixed at 4%. This has lead to YES bank and Kotak Mahindra Bank increasing the savings account deposit interest rate to 6% followed by an aggressive campaign from Kotak for the last 3 months. Everyone expected many other banks to follow suit but, it hasn't happened and might not happen for good reasons. If you are one among those who knows about deregulation and that a 6% interest can hardly mean only a 500 rupee higher interest post tax than what you currently get (on an average savings account balance of Rs.50,000), the campaign will give you a feel of "Burning money on useless ads".

But, the answer lies in questioning "How many people know this?" and "How many are financially educated to this level?"

In the first case you were a person from the industry or else, industry wise educated. In the second case, you are not from the industry or industry wise educated and hence, the attraction towards aggressive advertising by the electronics company.

A country with a huge not so financially educated population presents in itself a huge opportunity to a company which has first mover advantage that Kotak is striking on. Looks like the campaign is wonderfully targeted at such customers and the liners like "Don't look at it as 2% more. Look at it as 50% extra. Interest of Rs.10,000 will become Rs.15,000" leaves people with slight awareness of deregulation also thinking. 

And seems like a campaign which many of us might have seen as an unnecessary/useless spend, has already helped it through an enormous increase in the pace of new savings accounts opening. 

However, hope they have a strategy in place to build strong relationships on these accounts. Else, once other major banks increase(if they choose to, looks like they will not) the rate to 6%, it is a well known story "The huge number of dead savings accounts across the country".

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