Telgi retires...

Abdul Kareem Telgi, the mastermind behind the “Stamp Paper Scam” was yesterday jailed for 13 years and supposedly fined Rs.251 crores ( ~65Million USD).


Can someone tell me how the court expects him to pay that fine? As far as I know, he has neither inherited that kind of money nor earned it honestly. He was a middle class person who made his crores by swindling the government. If all his ill-gotten wealth has been recovered, how the f**k will he pay that fine? On the other hand, if the police have not been able to trace all the money(which is more likely) and the court now expect him to pay Rs.251 crores from the thousands of crores he supposedly made, what prevents him from enjoying what’s left of his booty when he returns from jail 13 years later? Wouldn’t every crook in the country plan an exit strategy like this?


Which is a bigger scam? You decide!

Big Fuss about Small Cars

After reading yet another news article about the middle class dream, I decided to give this a thought. If and when Tatas, Suzuki, Hero Motors, Renault and others release their car with a 1 lakh ball park (~US$ 2000+) price tag, what will happen to the Indian auto market? The market is huge, no question about it. India adds an equivalent of a Malaysia or a Thailand every year to its middle class population. But is this a good development? I wouldn’t say so.

The price elasticity for a car is 1.8 which means that a 10% drop in prices could lead to an 18% surge in demand. If the small cars come to market, there is a fear that other manufacturers could cut prices by 10-15% straight away leading to an increase of 18-22% in demand. Cheaper cars would also eat up a significant portion of the two-wheeler and three-wheeler market. Today, cars make up about 15% of the total vehicular population and two-wheelers make up close to 70% of the total. With the advent of cheaper cars, I foresee that the total vehicular population will increase at least 15% in just one year with the percentage of cars going up from 15% to 22% of total in just one year!

In addition to the large burden that these cars will place on the crumbling infrastructure, it will also place a large burden on the energy resources. Vehicles currently take up one third of the total petroleum needs of India (with a 70% two wheeler population and 15% car population). The energy needs of a 15-20% higher vehicular population (with lesser bikes and more cars) will be much higher. Energy needs of India as a whole will increase 5-10% thereby impacting petroleum prices. Remember, this is for one year and the car penetration is currently about 0.85% in India. If the penetration grows steadily, aided by price reduction and growth in disposable income and starts looking like Malaysia’s 18%, it will be time for a second emergency!! :)

Unfortunately, I couldn’t get hold of the demand elasticity for petroleum in India. For now, it suffices to say that petrol prices will certainly move northward with increase in car numbers thereby increasing the variable costs of owning a car. We haven’t even considered other variable costs like parking charges, tolls which will also increase due to market effects.

That brings us back to square one! I am sure every middle class family will own a car, but will not be able to afford to use it daily. The manufacturers and the government (which takes 30% of the car price as taxes) will make a killing and we, the middle class, die!

Retail Regulation: Commie Circus

Retailers who are planning to set up stores which occupy more than 10,000 sq ft will have to get an approval from a local body first. This is a huge step backward to the ‘License Raj’ days and a kick in the teeth to the millions of middle class consumers who were looking forward to lower retail prices with the advent of large and efficient retailers.

It’s not difficult to see who is at the helm of this ridiculous legislation. The commie rats that hold the remote control to the incumbent government claim that this is to ensure the livelihood of the 12.5 million kiranas who will be hit by the ‘unfair’ practices of large retailers. What about the hundreds of millions of consumers who are suffering from the ‘unfair’ trade practices of these ‘kiranas’? The commies are trying to protect the same people who hoard, sell goods at prices above MRP, exploit the workers they employ, avoid taxes and cause billions in losses to the government and consumers.

Let’s look at a few numbers, starting with taxation. Retail is the biggest industry in India accounting for almost 10% of GDP. Only 3% of this is organized, where the government can enforce taxation. The rest of the business is done by the 12 odd million mom and pop stores where the government has near zero visibility. Just imagine the loss of tax revenues to the government. For that reason alone, the government should have supported organized retail.

Even when it comes to creation or protection of jobs, which is why the commie bandicoots are raising a hue and cry, the case is dicey. A ‘kirana’ employs 2.5 people on an average. It means that there are about 31.25 million people employed by the kiranas in India. We must remember that these are mostly low skilled workers with absolutely no job security who probably earn a couple of thousand rupees a month at best. A good portion of these are likely to be over worked child workers. On the other hand, according to projections, if organized retail touches 20% of the total retail business by 2010, it is expected to generate about 4.5 million jobs. This means that organized retail will still retain about 70% of the jobs when it replaces the inefficient ‘kiranas’. Even on a pure jobs generation basis, both organized retail and ‘kiranas’ are almost equals. Add to that the fact that most jobs in organized retail come with better training, skills, pay and security than at a ‘kirana’.

After poking holes all over the commie argument, let’s come to the biggest shocker of it all. Large multinational retailers who enter India, whom the rabid commies are supposedly targeting, probably won’t even compete with the kiranas consciously. A consumer will in all probability choose a neighborhood ‘kirana’ for impulsive purchases and visit a large retailer for his planned purchases. Of course, the mushrooming of ‘kiranas’ at every nook and corner will probably stop but they won’t be erased totally.

So, with all logic pointing towards the contrary, why is the government still going ahead with this legislation? Simple, old habits die hard and the babus and netas just want to increase their avenues to harass businesses and extract more moolah!

Ten Million US Dollars....

and no takers! That is the approximate market size for a niche medication and no one's interested! Has it occured to you that there are no pain killers for expectant mothers? What happens when expectant mothers get bad headaches, backaches, migraines or they just hurt themselves? They have to just sit and wait for the pain to subside naturally!

You must be wondering what I am babbling about. Let me explain. I have seen an expectant mother suffer from severe pain for the past four days. She cannot take any of the pain killers available as they might harm the baby. That made me wonder about the lack of pain killers for this niche market.

I tried to come up with a ball park estimate of the market size. Considering the world market is futile as the size of the market probably does not justify the logistics & marketing costs. So let's confine ourselves to China, India and Pakistan markets and regional pharma companies.

Number of births in 2006 in these three countries - 48,088,444
Assume only the top 40% can afford medicines(pessimistic) - 19,235,378
Discounting for multiple babies/mother, expectant mothers - 17,311,840 (90% of above)
Expectant mothers who suffer from some kind of pain - 12,983,880 ( 75% of above)
Average number of tablets/person over 9 months(pessimistic) - 5
Total Tablets sold - 64,919,399
Price of tablet (US $) - 0.1
Market Size (US $) - 6,491,940
(All birth statistics have been gleaned from public domain)

Please remember that I have assumed that only the top 40% of population would be able to afford medication which is truly pessimistic. The assumed average number of tablets per person over nine months is also small, it can easily be double that number. The price can be higher as it is a niche market and in the absence of any other alternative, the willingness to pay may be significantly higher! I have assumed a price of Rs.4 per tablet. I would readily pay double that amount.

Looking at all this, the market size is between US$ 6.5 -10 Million. This market can be easily expanded to include kids, senior citizens. Yet, there are no takers!!

CRM again

I called up a 'telephone directory' service this morning and asked for the telephone number of a hospital. I had to take a family member to the hospital and I was happy as the lady was unusually quick in her response. I was about to say "Thank You" and drop the line when she goes.. "Sir, would you be interested in discussing this fantastic offer we have?"

Well, I have no problem with that approach to selling products and services, after all, the directory service is not for charity. But, when the caller asks for the number of a hospital, doctor or other emergency services, please make sure that it is not an emergency before you start peddling something.

When CRM goes bad...

Wikipedia defines CRM as:

Customer relationship management (CRM) is a broad term that covers concepts used by companies to manage their relationships with customers, including the capture, storage and analysis of customer information.

Find below two very bad examples of CRM. Top honors go to the CRM efforts by the house of Khoday's. For the uninitiated, Khoday's is a biggie in the Indian alcohol scene (some people might argue otherwise, but that's beside the point). This is a greeting card that Khoday's decided to send out this season.



Guess who they would like to meet more often? Nope, not me. Not even my dad... it's my mom who received this card! They sent this card to a 53 year old house wife who hasn't tasted alcohol all her life!

The second spot (not half as funny as the above) goes to Dr.Batra's. They sent me 3 SMS in the space of 5 days saying that I have missed my appointment with them. What's so unusual about it? Nothing much except for the fact that the SMS barrage started the moment I walked out of their clinic right after my first appointment!

Way to go guys!! Wishing you all the best!!