Friday, February 02, 2007

Rationale for exuberance

The Indian economy is growing in leaps and bounds ( projected growth rate of close to 9% looking at the year ahead). Stock market is booming with both the NSE and the BSE touching all-time highs. Nothing more exemplar of India poised than the takeover of Corus by Tata Steel for GBP 6.7 Billion.

Well, just hold on a little. Obviously, there are definite good times ahead for the economy. It is definitely a time to celebrate, but, also a time for humility and a retrospection of what we are now. Total global trade figures dwarf India's trade contribution.

India's largest firm in terms of revenues - Indian Oil at 28 Billion in USD looks puny when placed aside the world's largest firm Exxon at 378 Billion in USD. To drive home the difference in scale - Exxon made more profits than Indian Oil's revenues (and Infy's and Wipro's combined). The world's largest software maker - Microsoft makes more profits than all the major Indian IT vendors' revenues combined.

Why are these differences important?

I chose to write on this difference to highlight where India stands on the world stage. Indian firms, IT particularly, have evolved as competent players on the world stage. But, by no means are they even close to "world dominance", for that matter in any industry. Ireland is to this day is the world's largest provider for outsourced IT services. A reality check on what Indian IT firms have achieved in the last decade or so of good growth is important for them to plan ahead for the future. Indian industry has a long way to go before it can dominate the global arena. We need large firms which can steer industries and trade talks. We need good collaboration between the government and the industry to negotiate good trade deals on the world stage. All the free market activists fail to highlight the fact that international trade is still not truly "free" with the EU and US imposing tariffs and trade regulations even to this day. If the Democrats are back in office - the pro-big business environment might altogether disappear in the US.

More importantly, India still has a culture of family-owned businesses (Reliance, Birla, Tata, Wipro), which are professionally run, but yet family owned. Perhaps, it is in this inability of entrepreneurs to let go off their beloved ventures that India loses out on the world stage in terms of access to global capital flows, expansion and growth. Maybe it is a time to rethink, regroup and plan ahead for the future. It is a big world out there!

Thursday, February 01, 2007

Exxon and Co.

Once again not so surprisingly Exxon posted the largest known profits in corporate history ever - 39.5 billion USD, topping its last year's figure of 36.13 billion.  Look at these numbers:

Exxon made 100.96 billion in cumulative profit over the last 3 years and 1.05 trillion in sales.

The next two biggies :
Chevron made 68.87 billion in cumulative profit and 892 billion in sales.
BP made 61.7 billion in cumulative profit and 731 billion in sales.

(I extrapolated chevron and bp's current year profit and revenues from their respective sept 06 figures)

So all together the big 3 of big oil made 231. 53 billion in profits on 2.67 trillion in sales.

Let's translate this into what it means for the global population - assuming that 40% of all of this is coming from US consumption, 92 billion of the profits came from 300 million consumers in the last 3 years. Therefore, per capita profit for the big three in the US over the last 3 years is around 300 USD.  Remember - just profit !!

Wednesday, January 31, 2007

Sidney Sheldon is no more

Sidney Sheldon, who gave us "If Tomorrow Comes", "Windmills of the Gods" and "Rage of Angels" is no more. Read the full story here.

I bet for many like me, he was one of the authors, along with Michael Crichton, John Grisham, Tom Clancy, Fredrick Forsyth, Jeffrey Archer, and Robert Ludlum, who provided the basic core of staple reading during undergraduate days. One basic differentiator in many of Mr. Sheldon's novels was the fact that his protagonist was often a woman - strong and independent. He also won the Academy Award for the best original screenplay for "The Bachelor and the Bobbysoxer" in 1947.

Saturn Outlook

I visited the North American Auto Show in detroit and the one vehicle that really caught my attention was the new Saturn Outlook. I am not a big fan of SUVs, but this one really caught my eye.

I went and researched the vehicle on and it turns out that this one is truly a winner! Throw in Saturn's no-haggle dealer experience, you have an excellent deal on your hands.

If you are on the market for a new car also check out Saturn's new mid-size Sedan - The Aura. We got our Aura XE (the base version) in end October. It went on to win the best car award at the auto show and for a good reason. The car has a lot of standard features and the interiors are done very tastefully. Throw in a smooth ride feeling, XM Radio, GM On Star, a very juicy 3.5 L 224 HP engine (the higher XR gives you a 3.6 L 252 HP powerhouse), the car is a dream ride on the highway. We get a very respectable 22 mpg in the city and 30 on the highway.

symbolism or anything more deeper?

Mrs. Clinton announced her intention to run for presidency and the media is all over her. The same with Mr. Obama's announcement. The very possibility of a woman or maybe a non-white male ending up as the president of the world's most powerful country is awesome news .. somehow!  I say, it is high time.

Why is the US so obsessed with the new crop of candidates? Leaving out developed western countries which have had women run their government, even developing countries and some of them even Islamic (Bangladesh and Pakistan) have had women leaders.  India has had its minorities represented at the highest level of elected office.

By no means I am saying that the women (or for that matter minorities) in countries such as India, Sri Lanka, Bangladesh and Pakistan are better off than their counterparts in the USA. These countries have a long way to go before they can ensure a mature society where everyone has a fair chance of living a good life.  But, it does bother me that US has not had a person who is a non-white or for that matter female as their leader on the world stage.

Sometimes I justify my conundrum by telling myself that it is just symbolic that these other countries have had women reps while the US does not. And, that women (and minorities) in the US have the best possible opportunities, and for some reason politics does not seem to be an arena where they excel.  Somehow, a rep from the majority seems to be the most appropriate person everytime around.

However, off late, I have begun to believe that these groups just do not have a strong political voice in this country.  How else, can you justify the Government's response to Katrina and inaction following the slow pace of reconstruction in that region!  These groups do have a voice in all other arenas except "political".  Women and African-americans run businesses (however, and of course they seldom become CEOs). 

This country has a reality which makes us believe that everyone gets a fair chance - the symbolism indicates otherwise.  I am sure, people who do not agree with my opinion will show me evidence of thousands of career women and minorities leading the charge in the economic sphere.  However, as for me, I still want symbolic proof - something like at least half of all CEO's in the fortune 500 being women or at least 12% of them African-american.

I want Mrs. Clinton or Mr. Obama to win, not because I am blue, but because it will reiterate my faith in the true "freeness" of this country.  I want to believe that this country does stand for its minorities and will elect one when the right time arises.  I think it is time.