Some Media Stories

Here are some of my comments in the media.

http://www.financialexpress.com/news/Entrepreneurship-on-the-shelf/319928/

http://www.telegraphindia.com/1080603/jsp/business/story_9357138.jsp

http://economictimes.indiatimes.com/articleshow/msid-3169545,flstry-1.cmshttp://economictimes.indiatimes.com/.../Inflation_charts_growth_path_for_private_labels/articleshow/3047440.cmshttp://www.telegraphindia.com/1080605/jsp/business/story_9367269.jsp%20- -http://www1.economictimes.indiatimes.com/articleshow/3058848.cms

Indian Players Versus Global Corporations

The balance of power in the business world is shifting slowly but strongly. The era of domination by the global corporations is over. They have to fight for every square inch of space with their homegrown rivals. I believe the same story is going to repeat in the Indian retail space.

The global corporations earlier dominated by their capital, talent and expertise. The new financial order entails easy access to capital for everybody. The markets are more transparent and global capital today is chasing the best opportunity everywhere. The talent today is much more mobile and it has discovered that the domestic companies provide enough excitement, faster mobility and more opportunity to add value. The movement of talent also leads to faster dissemination of knowledge and expertise.

Besides these, the local companies have great local relationships and understanding. So today key players in India in retail others can match any corporation in financial muscle power. They would have acquired size, insights and the right business models by the time the foreign entrants start their businesses. The lead time along with the local insighting will be of immeasurable strategic advantage and almost impossible to neutralise. So the Tescos and Carrefours will meet worthy rivals when FDI opens and they come here.

High Real Estate Costs and Retail

The real estate rates in the country today are truly stratospheric. At their basic, the commercial rates (both capital value and rents) reflect the profile and the potential of the catchment area. But rates get skewed by the demand-supply mismatch, the amount of black money (esp. in India), the market sentiments and the dynamics in other channels of investment.

The rates in India are amongst the highest in the world. The commercial lease rates in markets like Khan Market have crossed Rs. 12000/- per annum. The markets like GK1, M Block in Delhi or Linking road in Mumbai are close to Rs. 8000/- per annum for good real estate. This has been caused by low supply of good real estate, euphoria in India’s potential and huge inflows from abroad -from Indians, foreign funds and investors.

The lease rates are comparable to those in the richest countries. The market potential is nowhere close to them. This means that the retail business starts off with a great handicap. The businesses have to find new sources of efficiencies to offset the high real estate costs. The real estate costs in Indian markets today, are seventy to two hundred percent higher than what the potential truly reflects.

This, more than anything else, is likely to slow down the retail growth in a couple of years when the excitement of new business models dies down and the reality of cash strikes back. Several players will find the losses unsustainable.

The answers, however, lie in factors which are very difficult to be addressed. The long-term solution lies in building infrastructure which spreads the population better and reduces commute time, more supply of quality real estate with better regulation and urban planning, reducing black money (which tends to get most into real estate) and making the current opaque regulation system more transparent.

Old Delhi

Here are some interesting snapshots of Old Delhi on a grey, cold Sunday afternoon in winter. This is where the past exists both in its inspiring architecture and its way of life.