US Embassy Officials and Genpact

This past Monday we met with U.S. Embassy Officials to discuss Economic and Political Relations with India and later met with Genpact to discuss the BPO industry and how Genpacts was able to be one of the top BPO industries in the world. I was surprised to learn that the US Embassy officials who are tasked to monitor the political situation in India do so by keeping up with politics and other areas that may be of interest to the U.S. and report back to the U.S. on these issues and topics without the Indian government being involved in what they are viewing and reporting to the U.S. I was aso surprised to learn that everything that is done by these officials is mostly to help only the U.S. in their analysis of Indian politics. The political situation monitor mentioned three issues of importance...1. Governance, 2. Corruption, and 3. Internal security threats as big issues in Indian politics. The monitor also stressed how the governement was often run by existing relationships and bribes as opposed to what is really in the best interest of the country and how there was a large disconnect between the states and country. Thee is also a prevalance of non-state elements controlling different parts of the country. We also spoke with an official from the commerce department who briefed us on the challenges U.S. firms faced when trying to enter the Indian market. This part of the governement provides consulting type fee based services and acts an advocacy group for these firms. To enter the Indian market a business requires many contacts within the market to try and overcome some of the contraints and cultural barriers. At times, tarrifs have become an issue and although the U.S. commerce officials can advocate for reducing these tarriffs they sometimes created non-tarriff barriers. The companies that are likely to succeed in entering the India market would be unique, high-tech, high-value, products as opposed to commodity type of products because commodity products often come from countries like China at a much higher cost.
More on Genpact...TBC (My laptop battery is dying and I don't have the right charger!)

Emotional Overload

My fascination with India began with my love of their food. Throughout the years I have made friends with many people who call India home. My friend Romila even jokingly refers to me as an "Indian magnet", because wherever I go, I always wind up inadvertently befriending an Indian person.

Prior to my long awaited journey to India, I felt quite prepared. My dear friend Rema had told me so much about the Hindu Gods, the caste system, proper greetings, the rich culture, and she even touched on the fact that there was a lot of poverty here. But nothing she could have told me would have prepared me for what I've seen with my own two eyes. It has been so overwhelming I don't even know where to begin.

With all due respect to everyone with any lineage to India, particularly Delhi, this is the poorest, dirtiest, poverty stricken country that I have ever seen. A bus ride from one place to another consists of men urinating in the streets, children covered in dirt and grime, malnourished animals, sharing the road with pedestrians, horse drawn carriages, bicyclists, and motorcyclists, and garbage as far as the eye could see.

A trip to the market was like no market visit I could imagine. The streets were filled to capacity with people who looked like they just may be desperate enough to do anything, and quite frankly, I just didn't feel safe. I clutched my purse the entire time as I impatiently counted down the time until I'd be safe on the bus again and on my way to my beautiful westernized hotel room.

An early morning stop at the train station included what I would typically view as an invasion of privacy, as the train station appeared to serve as the bedrooms to entire families. Everyone just walked over them as if it were normal. Nothing I've seen here wold meet my criteria for normalcy and it has been extremely difficult for me to process. During my short stay here, I've taken several opportunities to just sit and cry. My emotions are running wild. Partly due to the fact that I am incredibly empathetic in nature, but also because I have a great deal of guilt, as I think about my own life in the U.S. and how I unconsciously take so much for granted on a daily basis.

Overall, I'd say this experience is eye opening and one that everyone should experience, should they be given the opportunity. I've witnessed a lot in a very short period of time, and to think…this is only the beginning.

-Ronda Miles

Panel Discussion

We had a fascinating panel discussion on the Indian Economy and political situation yesterday morning to begin visit. Dr. Bidisha Ganguly, head economist of the Confederation of India Industry gave as a broad overview of the economy, largely painting a very rosy picture. Mr. Ravi Garg, Director of Supply Chain of Coca Cola India, was equally optimistic and described some of Coke's supply chain challenges in India. Professor Babu Mathew of the National Law School ended with a stirring rhetorical presentation that left us all with a lot to think about. Professor Mathew argued that the  new economy is leaving out a significant population in India, and in some ways exacerbating and worsening their situation through seizure of lands, disappearance of traditional livelihoods without providing new opportunities for work, and skewing democratic processes. A very lively discussion ensued.

Delhi Tour

What an interesting day today was! If you've never been to India before, like myself, today's tour would certainly be a bit of a culture shock. Even after having seen India many times on TV and seeing how alive and how busy the streets can be, it is really something else when you experience it first hand. I really enjoyed it and was surprised at how calm and collected the people were, working hard trying to make some money, while in the midst of what I described to be "organized chaos", it was amazing. Although India is a young country, it has history like no other and the people are very very proud of their history and culture as they should be. Looking forward to the Taj Mahal tomorrow.

2011 Course in India Begins

Welcome to our first post of the 2011 class. Most of the students are arriving in New Delhi tonight on a direct 14 hour flight from Newark. I arrived yesterday, but I'll be there to greet them tonight at the airport to begin a very intense 10 days of early mornings and late nights of meetings and activities. In the meantime, two students, Ashley and Robby, came to India a few days early to travel and I ran into them arriving at the hotel today, so I invited them to lunch at a place I had been planning on going to called the Andhra Pradesh Bhavan. It's essentially a canteen for people who work for the Andhra Pradesh government in Delhi, and although the sign out front said MLAs, MPs, and VIPs only, they let us in anyway for a delicious all you can eat Andhra thali. Ashley found it a little too spicy I think, indicated by the bright red glow on her face and the remains of the tasty chicken that she left mostly untouched. But fun was had by all.

Transforming India’s logistics infrastructure

To get the most from massive investments, India must adopt a coordinated approach that aligns the development of each transport mode with the country’s needs.


SEPTEMBER 2010 • Rajat Gupta, Hemang Mehta, and Thomas Netzer
Source: Travel Infrastructure Logistics Practice

Continue @:

http://www.mckinseyquarterly.com/Transforming_Indias_logistics_infrastructure_2670

SKS Microfinance Plans IPO

This news appeared in the Indian Edition of WSJ.

IPO Pits Profit vs. Altruism
Indian Microlender Sees Scale in Capitalism; Industry Pioneer Has His
By ERIC BELLMAN
Hyderabad, India

SKS Microfinance Ltd. moved a step closer to bringing Wall Street to the slums of India. But that also will bring more criticism from microfinance experts who say profits and initial public offerings have no place in the industry.

SKS won approval from the Securities Exchange Board of India to proceed with an IPO, according to people familiar with the situation. The company and its early investors expect to raise more than $250 million from the deal, which is likely to happen within 30 days and would make SKS the first microlender in India to go public.

Only a handful of microlenders around the world have made it to the global stock markets, so the SKS deal could encourage other companies in the sector to follow. SKS is the largest microlender in India, with a portfolio of about $1 billion. About $5 billion in microloans were made in the country last year, and the IPO would help SKS borrow money to fuel expansion.

"The only place you can get the amount of money that is needed to help the poor is in the capital markets," Vikram Akula, founder and chairman of SKS, said in an interview. "That's why we are doing this IPO."

But as SKS's executives and investment bankers went on a roadshow to stir up interest in the shares, they stressed how little profit the company makes. The strange sales pitch reflects sensitivity to accusations that SKS is gouging borrowers even as its makes millions of tiny loans to poor families.

Pioneer of Microlending
Mr. Akula has a decades-long relationship with Nobel Prize winner Muhammad Yunus, the founder of Bangladesh's Grameen Bank, who is credited with sparking the microfinance revolution. The two men now stand on opposite sides of the question of whether altruism and capitalism can coexist.

"Microcredit should not be presented as a money-making opportunity. It is an opportunity to make an impact on poor people's lives," Mr. Yunus said in an interview. "An IPO gives a wrong message."

Mr. Akula, a 41-year-old U.S. citizen and Yale University graduate, launched SKS in 1998 after working in nonprofit organizations in India that tried to help the poor. Even the best-run groups lacked the capital or the organization to meet the needs of the world's poor, so he decided to build a new kind of microlender that wouldn't have to depend on government money, grants and charity.

Before launching the company that would become SKS, Mr. Akula went through the training program at Grameen Bank, telling Mr. Yunus that he wanted to tweak his model to reach more people. "If I remember correctly, he just smiled," Mr. Akula said.

Mr. Akula started on his own with a small team that went from village to village in the southern state of Andhra Pradesh. He used the Grameen model, which sets up groups of poor women and lends them as little as $50 to help with small businesses like growing vegetables or running a tea stand.

He also took cues from McDonald's Corp. and Starbucks Corp., standardizing training and lending procedures to cut costs and accelerate growth. Employees were paid a decent wage so that Mr. Akula wouldn't have to rely on volunteers and regional managers from top, rural business schools. And he built in enough profit to make the business appealing to institutional investors.

The debate about profit's place in the microlending market exploded in 2007 when Mexican microlender Banco Compartamos SA listed its shares. Its original investors and founders took home millions, sparking accusations that they were profiteering from the poor by sometimes charging more than 80% annual interest.

Mr. Yunus contends that any microlender charging borrowers more than 15 percentage points above its cost of capital needs to cut costs or profits—and pass the savings on to the poor. SKS charges around 18 percentage points above its cost of capital.

"Vikram is a very capable young man," Mr. Yunus said. "But he took a wrong turn when he decided to use microcredit for making money."

Mr. Akula said he needs to build in around five percentage points of profit to expand, adding that Mr. Yunus's expectations are too high because his experience is in markets likes Bangladesh, where he didn't have to deal with the high costs of reaching remote villages.

A Subprime Crisis?
Some analysts and investors are worried that the growth being fueled by healthy profits could result in a subprime crisis as competing microlenders give too many loans to poor borrowers who can't repay them.

SKS has seven million borrowers, up from 200,000 five years ago. In the same period, the company's profit growth has averaged more than 200% a year.

MFIs Attract Executives From Other Sectors. Access thousands of business sources not available on the free web. Learn More .Mr. Akula said SKS could charge interest rates of more than 40%, instead of its current average of 28%, but doesn't the company needs only enough profit to attract investments and lending for its rapid rollout.

Even after the IPO, a majority of SKS's investors will be committed to sticking with the lower-profit model, he said.

Earlier this year, Mr. Akula sold part of his SKS stake for more than $10 million. He said he isn't ashamed of the money, adding that rewarding microfinance employees with benefits closer to those in the conventional finance world is part of his business strategy.

—Arlene Chang contributed to this article.