Business Page, Current Business Scenario, Trends

The recently concluded G-20 Summit had at least two positives, if not more. Firstly, the virtual burial of the G8 grouping of rich nations and secondly, now the developed countries will look at the developing nations in a new light. And India, under the leadership of our Prime Minister, Dr. Manmohan Singh, perhaps emerged as an economy to reckon with.

The fact that the elite club of rich industrialised nations has realised that economic governance can no longer be monopolised by a handful of developed nations, is indeed a winning point for nations like India.

I believe that India has put across one vital point - that it can contribute a lot towards the management of the world economy. Today the G-20 is a premier forum on global financial and regulatory matters, and what better forum can one get to put across this point? And India has not missed the opportunity!

With the emergence of economies like India, China and Brazil, the global governance structure needs certain changes wherein these nations need to be a part of any economic decision-making - India has succeeded in making a long-lasting impression on this.

Most importantly, the greatest achievement is the fact that India was able to convince everyone that the time was premature for countries to end their fiscal stimulus packages as it would hurt the developing countries the most. Meanwhile, India's stand on greater voting rights for developing countries in the International Monetary Fund (IMF) was well received and will have greater implications in the future than what meets the eye, as of now.

India is on the path of economic evolution, vis-a-vis the current global economic order. Back home, the saddest part, however, is that many a time politico-social issues supersede economics. If this continues to happen, India will lose its credibility in the global arena. Let's just hope our think-tank (read our politicians) keep both separate.

SME task force — moving in the right direction( Posted on 18th September'2009)

After decades of neglect and struggle, it could now be the light at the end of the tunnel for micro, small and medium enterprises (MSMEs). In what could be a major paradigm shift in considering issues pertaining to MSMEs, the Prime Minister Dr Manmohan Singh has constituted an 11-member high-level task force for the sector which will be headed by T. K. A. Nair, Principal Secretary to the Prime Minister.

The decision came weeks after a 19-member MSME delegation approached the Prime Minister to look into various problems they have been facing, particularly due to global economic slowdown.

The fact that the PM has shown interest in taking up the issues of the MSME sector, can actually help in the development of the sector as a key driver for the economy. The first task before the MSME task force now would be to come out with a comprehensive set of policies to speed up the growth of the sector. The focus should be on issues like credit availability, marketing, and training and skill development. This high-powered task force will also have to decide how to further move ahead to provide relief and support to the sector.

What hit me as a positive was the urgency shown by the Prime Minister. Setting a time-frame - of three months - for this 11-member task force to draw up an agenda for action goes to show that the Prime Minister wants action. In the wake of the global economic slowdown, the suggestions that the task force will come up with to help MSMEs tide over the problems will indeed be awaited with great interest from all quarters.

With the industry demanding that the minimum period for Non-Performing Assets (NPA) for the MSME sector be extended from 90 days to 180 days and the exemption limit, under the General Excise Exemption Scheme, be raised from Rs 1.50 crore to Rs 3 crore will hopefully be taken into consideration too.

Just as I was wondering how long these WTO talks, which seek to further open up global markets in goods & services, would continue, came a breakthrough of sorts in the negotiating nations' meet held recently in New Delhi. Much has been invested in these negotiations and any breakthrough is always welcome.

If we remember last year in July, the Doha round broke down when a number of member nations could not reach a consensus on issues related to safeguards for poor farmers and sectoral negotiations for tariff elimination in select industrial goods sectors.

The resumption of Doha Round of World Trade Organisation (WTO) talks from September 14 in Geneva has been agreed upon by the Trade Ministers of key WTO-member countries and they have also agreed to fast-track the talks, which is indeed a positive sign considering that the talks have been stalled for years now.

Ministers of more than 30 nations have also rightly agreed to review the progress of the talks after three months and do all that is possible to wrap up things by 2010.

I believe that before the talks resume, India has a lot of homework to do. We will have to find answers beforehand to issues such as the safeguard mechanism for protecting farmers against imports and flexibility on opening up markets in industrial goods.

India has rightly demanded easier mechanism to operationalise special safeguards measure (SSM) and the issue of sectoral negotiations for reducing duties to zero on select industrial goods is of great importance to us. This has to be solely voluntary in contrast to the demand of the US who wants them to be linked to flexibilities in other areas like a lower reduction obligation in average tariffs.

I think it was evident in the recently-concluded informal mini-ministerial meeting that certain key differences remained in defining a clear path to conclude the multilateral trade talks. The good news, however, was that there was a marked urgency and a realisation from all members that such differences needed to be resolved for a future multilateral trading system.

Foreign Trade Policy - aiming at continuity, stability ( Posted on 3rd September'2009)

The recently announced foreign trade policy (FTP) in the current difficult times was indeed a tough task, but our Commerce Minister, Mr Anand Sharma, has done a fairly good job. Two facts in the blueprint of the 2009-14 Foreign Trade Policy that came as good news was the realistic target of $ 200 billion in the next two years and the focus on 26 new markets.

I feel the new trade policy has aimed at continuity and stability, technology upgradation, reduction in transaction costs, diversification and market expansion, and also focuses on giving a boost to the labour-intensive export-oriented sectors. Without doubt the slew of measures and incentives announced in the FTP will greatly benefit the exporters who have been hit due to the slowdown in the country's traditional export markets.
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The FTP rightfully provides an extended tax holiday, duty refund for exporters and allows duty free import of capital goods. These initiatives will help to double the country's share of global trade in the next five years, and will also help in increasing employment opportunities.

Meanwhile, the employment-oriented sectors, especially textiles, leather and handicrafts will get a major thrust from the increased incentives available under the Focus Markets Scheme to promote exports in new markets in the Latin American and Asia-Oceaniaic region. The scheme as of now covers 83 countries in Africa, Central America, CIS and Eastern Europe.

In addition, the hike in allocation for existing schemes under the Markets Development Assistance and Market Access Initiative will also benefit exporters who can now seek financial assistance under these schemes to hold trade fairs, buyer-seller meets and brand promotion to develop new markets.

Another positive factor is that the policy seeks to rationalize and simplify procedures and duties across the board by implementing e-governance in trade for the benefit of exporters. The Minister has indicated that the process will start with nine products and services with five states and hopes that by 2015 all states will be covered by this initiative. However what needs to be seen is how states ruled by political parties other than those in the UPA react and act to this.

With the notifications on the Foreign Trade Policy to be released in the next couple of days, the Finance Ministry's reactions to the various incentives announced in the policy is not yet known considering the in-fight between the two ministries on earlier occasions. Hope good sense will prevail.

Today Small and Medium Enterprises represent one of the fastest growing industrial sectors in the country. Liberalization and globalization have now created both opportunities and challenges for the industry as a whole and more so for SMEs. On one hand they can now aspire to market their products in any corner of the world, on the other hand they face fierce competition in the domestic markets from low cost imports. Moreover, with more than a year of recession, it has become very important for SMEs to reorient their focus according to the emerging market trends and thus strive to become globally competitive.

SMEs now need to identify their strengths and also evolve strategies to strengthen their capabilities in their identified sectors. Having said that, SMEs cannot achieve these on their own and need to be assisted by the respective authorities.

I have seen that despite several government schemes to uplift the SMEs, they are unable to take advantage of these schemes due to several reasons; the first and foremost being their limited knowledge about the incentive schemes announced by the government. I think the situation calls for better communication between the authorities and SMEs to ensure that the incentive schemes do not just remain on paper.

Meanwhile several SME holders whom I have met in recent times have told me that they were losing out on several orders for want of funds. I think this is a problem area and efforts should be made to earmark priority sector lending for SMEs, enhancement of credit limits and overdraft facilities, and enhancement of working capital support from the banks.

Meanwhile SMEs should also look at introduction of new products, product designs, energy efficient and cost effective manufacturing techniques, minimization of waste, optimum use of improved raw materials and packaging, upgrading quality parameters and specifications to counter the slump in demand for older product lines.

The recent signing of the Free Trade Agreement (FTA) between India and Korea is indeed a landmark achievement which can improve bilateral agreements in areas including but not limited to automobile, components, heavy engineering, electronics and electrical appliances.

At a time when the industry was feeling the heat owing to the slump in demand from traditional trading markets of US and Europe, the 'Look East' policy can help exporters to counter the effects of recession.

As per the agreement, South Korea will do away with duties on 93 percent of its industrial and agricultural products and India will reciprocate by eliminating duties of 85 percent of its goods. India has however excluded sensitive items like farm products, textile items and built up automobiles from tariff elimination commitments. These duties will be phased out on most of these products in the next couple of years.

Another positive sign I see from the pact is the fact that Korea being one of the developed nations in ASEAN, the FTA between India and Korea will, without doubt, further facilitate and expedite the FTA between India and ASEAN. If it is inked, it would be a tremendous achievement.

The exim community now should take advantage of the recently signed India-Korea FTA and look at not only exploring the markets there, but also to expand their trade basket.

Particularly small and medium enterprises (SMEs) can look at partnerships with companies in Korea. India also has a competitive edge in areas like R&D services, consultancy services, printing and publishing services, telecommunication services, educational service and tourism amongst others.

With exports growth in negative all eyes now on FTP ( Posted on 05.08.2009 )

There was no letting up as the country's merchandise exports fell for the ninth straight month in June and were valued at $12.82 billion, down 27.7 percent. Exports for the first quarter of this fiscal were down 31.3 percent at $35.43 billion, against $51.55 billion in the corresponding quarter of last fiscal.

And that's not all. Another source of worry is India's import figures of non-oil imports. While we are all talking about demand in our domestic markets, the recent non-oil imports say another story altogether. The rate of fall in non-oil imports range between 10 and 25 percent since February and stood at nearly 25 percent in this quarter, which reflects a rather weak demand in the economy. Thus there was no respite for exporters who were looking at the domestic markets to counter the weak demand from global markets.

Meanwhile, the export figures released on Monday depict an alarming situation as negative growth threatens to continue beyond 10 months if the same situation persists.

I feel that the situation calls for urgent measures on the part of the authorities to pep up exports. With the Foreign Trade Policy (FTP) slated to be announced in a couple of days from now, measures like increase in Drawback and DEPB rates, extension of promotional schemes and income tax holiday for the exports sector need to be brought in so that exporters can factor these benefits in their costing and thus offer competitive prices. Apart from export sops the FTP should also focus on diversifying the country's merchandise exports to untapped markets.

Negative growth in exports for a straight nine months is disturbing and the forthcoming trade policy needs to address the exporters' woes so that the momentum in export growth can be restored.

Opportunities galore for MSMEs in ASEAN, African markets ( Posted on 30.07.2009 )

It has been a trying time for all with demand from traditional trade markets showing a downward trend. And for micro, small and medium enterprises (MSMEs) it has been a painful time as they watched their products lying in their warehouses for lack of customers. The decline in demand has also affected production and there have been job cuts in various sectors like textiles, handicrafts, etc. We are not expected to get major contracts in the midst of this downturn from the US, UK, and European markets as was the case earlier.

The current crisis brings out global interconnectedness. Since we live in a big global village our economy is also exposed to the global market, and will therefore, not escape some slowdown.

India is however, better positioned to withstand the worst. I'm confident that a 7 percent growth is not beyond us this year and that it shall not be long before we fully regain our growth momentum. However the role of the MSME sector in very important to bring the country's economy back on track. The undeniable contribution of the sector over the years calls for a change of strategy amidst the current economic scenario.

The current downslide which has affected most MSMEs since last year, calls for a paradigm shift in their strategy and in exploring new markets. They need to look beyond the US, UK and European markets and focus on the Asian and African markets to strengthen their position and hedge themselves against risks.

Today, MSMEs should look at tapping the ASEAN and African markets. These markets are very large and are growing and have a better fit in terms of cultural understanding.

With the Free Trade Agreement (FTA) in goods expected to be signed between India and the 10-member ASEAN during the India-ASEAN summit, I have reasons to believe that this FTA will open several doors for Indian MSMEs to explore the markets in these nations.

Apart from the ASEAN markets, the African continent too has a lot to offer to MSMEs in terms of trade opportunities. After Asia, Africa is the second- fastest growing region. Since cost-effective and effective Indian technologies give us a unique advantage, Indian companies should accelerate their investments and technical tie-ups with African partners..

Africa today is an emerging market. Several nations in the continent still remain untapped - a big opportunity for Indian MSMEs. However apart from merchandise exports, the MSME sector has to look at playing a facilitator's role for larger companies in sectors including, but not limited to agriculture, mining, ICT, oil pipelines, automotive plants, chemical industry, power generation and transmission, etc. MSMEs fit well into the supply chain of larger companies and can easily fulfill their demands in Africa for new technologies, engineering services and manufacturing capabilities for local value addition.

Although the economy has shown signs of recovery, several factors that threaten to restrain the growth of Indian manufacturing sector still persist. Amongst the several detrimental factors two - high interest cost and fall in exports - have turned out to be hurdles in India's growth story.

Today, credit is available at a steep rate which is making manufacturers totally uncompetitive. Banks are reluctant to lend to SMEs that are into manufacturing owing to the fact that many of them had incurred losses in the last fiscal and banks are insisting on credit ratings for these borrowers. Additionally, banks are also asking for a higher value of collateral security than the sanctioned limit. Thus borrowing for SMEs is still a distant dream.

Now if we look at our exports, with demand from our conventional markets of US and Europe dwindling, exports have taken a beating. In a recent survey, an industry body says that "...5 out of 10 manufacturing sectors are expected to witness a fall in their export level in July-September 2009 vis-à-vis the same quarter last year." For instance, the textile sector production is likely to be lower than last year's. This means more job losses are likely.

Meanwhile I think it is an alarming situation that the share of manufactured goods exports declined from 81 percent in 1999-2000 to 63 percent in 2008-09. The government has to come out with some concrete steps to take the manufacturing and the export sectors' growth to a higher trajectory.

Cabinet Committee on infrastructure - one too many? ( Posted on 17.07.2009 )

The Budget has been announced and the postmortem is over. We gained some, we lost too. But now we need to carry on. The government too needs to do its bit. I think attaching topmost priority to the infrastructure sector and Prime Minister Manmohan Singh constituting a high-level Cabinet Committee on infrastructure is a good move.

This will hopefully put the implementation of the various infrastructure sector projects on the fast track and will help monitor the performance of various agencies involved. If we consider the SMEs, lack of proper infrastructure - especially energy, railways, roads and national highways, ports, airports, telecommunications, information technology, etc. - is a major concern.

This is underscored by a new survey by the research arm of Moody's which has said that the country's "infrastructure development is likely to be one of the key drivers of industrial activity, which will see an upturn in a few months".

It's an undeniable fact that for long inadequate roads, ports and railways have long held India back from realizing its full growth potential. Now there is hope at the end of the tunnel. However, monitoring of the infrastructure projects needs to be stringent and sans delays. Usually infrastructure projects are mired by corruption and delays and the fact that infrastructure committees have been around for years without much sheen, the newly-formed committee needs to shed its earlier tag and work on a war footing.

However at a given point of time, there are as many as 1,500 projects being implemented simultaneously and expecting the newly-formed committee to look into all these projects (which are above Rs 150 crore) and their problems is a Herculean task which makes me wonder how it is going to make it happen.

Let's just hope that it does not die an untimely death as have earlier committees!

This year the Finance Minister had to consider several factors and act accordingly in the Union Budget. And he has risen to the expectations to a certain extent. Although the equity markets gave the thumbs down to what Pranab Mukherjee had to offer, nevertheless, we can't write off the Budget proposals in their entirety.

For micro, small and medium enterprises (MSMEs) the best thing can be the announcement that has given businesses with an annual turnover of less than Rs 40 lakh the option of not maintaining their books of accounts and pay income tax on a fixed 8% of their revenues.

Now they have the option of not paying advance taxes. This scheme will come into effect from 2010-11 fiscal and will definitely provide a much-needed boost to new entrepreneurship and also reduce paperwork. I think the removal of FBT, CTT and income-tax surcharge is indeed good news for MSMEs.

The doing away of the fringe benefit tax (FBT) came as a shot in the arm for MSMEs. This tax introduced by Mukherjee's predecessor P Chidambaram in 2005-06 is a tax paid by employers on employee benefits that don't form part of the salary.

However, hiking the minimum alternate tax (MAT) rate to 15% from 10% will pinch corporates, the relief being that they will be allowed to carry forward the tax credit to 10 years instead of seven.

Apart from that, I believe that doing away with the commodity transaction tax (CTT) too will, in the long run, reduce raw material costs for MSMEs.

Mukherjee has also allowed tax breaks for manufacturing firms investing in R&D, extended the tax holiday for software companies housed in Software Technology Parks for one more year, and announced a tax holiday for companies producing natural gas, which I think are good proposals.

However, the levy of 8 percent of excise duty on man-made fibre and yarn came as a bolt from the blue.

From the point of view of exporters, with exports taking a beating, increase in the allocation for the market development scheme for exporters by 148 percent to Rs. 124 crore is a right move. This scheme provides support to exporters in developing new markets and this will help exporters to identify and develop new markets.

Also, the Export Credit and Guarantee Corp (ECGC) scheme, initiated last year has been extended till March 2010, while the interest subvention for the textile industry has been extended from September 30 to March 31, 2010.

After an eventful month, the newly elected UPA government will come out with the Union Budget on July 6. And this time the Finance Ministry has a handful of issues to dwell upon - be it recession, fiscal deficit, probable deflation, or delay in monsoons.

Amidst these, the Finance Minister has to focus on a battered industry sector which is crying for support and stands to lose the most if the Budget does not bring any relief – the Micro, Small and Medium Enterprises (MSME) sector.

I believe the government should continue with the technology upgradation and modernization schemes for the MSMEs including the Credit Linked Capital Subsidy Scheme (CLCSS).

The focus now should be on skill development to enhance productivity and there should be a hike in allocation for the National Skill Development Corporation (NSDC).

The Goods and Services Tax (GST) should be implemented from April 1, 2010 as scheduled. Since GST will include Central excise, Service tax, VAT and CST, there is urgent need to issue a CST phase out notification to ensure the smooth introduction of GST.

SMEs should also be exempted from Fringe Benefit Tax (FBT). Since the expenses related to marketing and sales promotion do not benefit the employees directly, the tax levied is actually hindering SMEs from exploring new and untapped markets.

Since the credit growth is far below the expectations of RBI projections, rate cuts can yield better credit off-take and will thus ensure that the targeted GDP growth is achieved. Above that a reduction of PLR will reduce the cost of credit for the MSME sector.

Additionally, the Budget should look at encouraging an alternate means of financing for the sector. The talk of a much-needed SME Exchange has been doing the rounds and now needs to be transformed into reality. Moreover, the government should come out with specific norms for Foreign Direct Investments (FDI) in the SME sector wherein NRIs can invest.

Meanwhile an interesting study - the National Council of Applied Economic Research-Friedrich Naumann Stiftung (NCAER-FNST) study – has revealed that of the 7449 items produced by SSI units, only 842 items were reserved for the sector. Which means a huge part of the units are not protected by having their products reserved for exclusive manufacture by the small-scale sector.

However, the interesting revelation that the study brought out is that the performance of those units producing unreserved products was better than those manufacturing reserved products.

I think instead of products being reserved for the SSI sector, the government should let the market dynamics decide what the smaller enterprises should manufacture.

There is scope for our Finance Minister to help the MSME sector. July 6 will reveal all.

It's understandable that when the economy is down and out and one needs new customers as well as more sales from existing clients, one is in a dilemma whether to increase one's marketing efforts, or to save money. It's also equally true that small and medium enterprises (SMEs) cannot do conventional marketing because of limitations of resources and also because SME holders think and react differently from the marketing decision-making practices in big companies.

Since SMEs will never be able to compete with large companies when it comes to brand promotion or marketing, they (SMEs) have to make use of cost-effective tools. And if you thought that it isn't possible, you are wrong!

Interestingly, SMEs have several inherent advantages compared to large enterprises. Being small gives them greater flexibility in operations to respond quickly to changing customer needs.

Having said that however, most SMEs have difficulty in describing in clear terms the products they are selling. They are unaware of or are unable to bring out the features that buyers want to know. The worst part about SMEs when it comes to implementing a marketing strategy is that they try to do things cheap. This is actually more harmful. Firstly, you will hardly get any results and secondly, you stand to lose on the small amount of money you had put aside for marketing your products.

But the sorry state of affairs doesn't end here. I'm quite surprised to see that most SMEs don't see the Internet as a medium to promote themselves and their products. They still shy away from entering the domain which can give them not only easy access to potential buyers but also help in branding, which is of utmost importance.

Many entrepreneurs to whom I had advocated the internet as the best medium with which to promote their company and their products, say it didn't work out well for them. One needs to understand that by just creating a website and expecting it to bring in enquiries and expecting it to translate into revenue is completely wrong. It is not going to happen.

Even when going for the Internet to promote one's company and products, one needs to be very clear about 'who one's customer is' and 'what he or she is specifically looking for.' Like offline or traditional marketing, promoting via the Internet too is not an easy task. It needs a fair amount of thinking and planning. This in actuality calls for professional help.

Today, for SMEs who want to adopt the Internet as their medium for marketing and promotion, B2B portals come very handy. Since these portals are proficient in online research, strategy development and in monitoring individual companies' performances, they can be a ready reckoner for one's online marketing and promotion strategy. It's relatively inexpensive when compared to the ratio of cost against the reach of the target audience.

When traditional means are not working, it calls for a change in one's strategy. The principles of business call for change according to market dynamics and adopting the best. Are we doing the same?

The gloom is slowly lifting and there are signs of recovery in certain industry sectors. Although the change is minimal, nevertheless, we will now have to look at things positively. And while we are waiting for sops from the government, it should also not be the only option left with us.

Now is the time to take things forward. Yes, demand is currently low, so we can utilise this time in implementing certain factors in our operations that we have been postponing. For instance, this is the best time to develop a clear picture of one's business: where it stands and where it's headed.

One needs to analyse the current performance of one's business and identify the needs. Questions like 'Does my business need more new and powerful tools and approaches?' or 'How do I now define my business objectives, actions, organisational structures, roles and responsibilities?' need to be answered.

This is also the best time to analyse one's clients/ buyers. Get to know and identify the factors that influence buyer behaviour and try to analyse consumer buying roles and decision processes. Based on these findings companies need to develop new marketing strategies.

Not to forget corporate branding! Today, the markets are overpopulated with companies vying for space. As such, it has become very difficult to get one's marketing message noticed. And with the rising costs of launching a new product or service in the market, it has become even more important to cut through this clutter by corporate branding. A well- thought out or a powerful corporate branding strategy can give instant results. That is why it is important for any company that wishes its products to be successful to create and protect a strong corporate brand.

Most importantly, we also need to cut both time and costs in finding buyers. Not an easy task if you are doing things wrong. Lakhs of companies today rely on the web to find buyers for their products - cost-effective and less time consuming to say the least. If a company is into exports, imagine the huge expenditure incurred in travelling and finding buyers. Not anymore. If you are registered with a B2B portal, you can reap the benefits at a minimal cost. In addition, it saves your time too.

So before we take the big leap, we need to look into ourselves and make the adjustments required to thrive in today's market conditions. The same gloomy situation in the markets will not remain forever. But are we prepared for things when the markets brighten up and the economy is back to normal? This is the question we need to answer now.

Hectic parlays for this year's budget have begun and industry sectors have stared giving their valuable recommendations. Considering the current economic situation, I really hope the budget will find some place for the SME sector in general and the SME exporters in particular.

First and foremost, the earlier tax benefit for exports under Section 80HHC if revived can bring some relief to the exporters. Not to forget the continuance of the tax holidays for 100 percent EOUs and raising the interest rate subvention for exports from 2 to 3 percent.

Again when I see at the sector, I feel funds need to come in for technology adaptation and IT usage which can help the sector to tide over the current crisis.

SMEs today are facing severe liquidity crunch, thus affecting their expansion plans, which is very important to fuel growth. A concrete policy to answer this problem is long overdue and would be surely welcome if it figures in this year's budget.

The second hurdle that SMEs face is marketing support for exports. Without mincing too many words I can conclude that the support given under Marketing Development Assistance is highly inadequate. For promoting over USD 175 billion exports, the total allocation for market assistance is less than INR 1 billion. I hope the amount of assistance is increased substantially in the budget.

For years now, SMEs are facing stiff competition from several nations who are eating into not only their global but also their domestic market share. Finance Minister, Pranab Mukherjee and his team can consider taking certain steps like excise duties reduction for the sector and import duties hike in foreign goods which are giving undue competition to the already battered sector's manufacturing.

If these find place in the Budget in July, it will definitely be a good beginning. Meanwhile the current fiscal has started on a sour note with exports down 33.2 percent at $10.74 billion in April against $16.08 billion in the same month of the previous fiscal. Let's just hope that the budget gives us at least some reasons to smile.

General Motors files for bankruptcy protection ( 01.06.2009 )
By DAN STRUMPF and KIMBERLY S. JOHNSON, AP Auto Writers Dan Strumpf And Kimberly S. Johnson, Ap Auto Writers

NEW YORK – General Motors filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration's plan to shrink the automaker to a sustainable size and give a majority ownership stake to the federal government.

GM's bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has $172.81 billion in debt and $82.29 billion in assets.

As it reorganizes, the fallen icon of American industrial will rely on $30 billion of additional financial assistance from the Treasury Department and $9.5 billion from Canada. That's on top of about $20 billion in taxpayer money GM already has received in the form of low-interest loans.

GM will follow a similar course taken by smaller rival Chrysler LLC, which filed for Chapter 11 protection in April. A judge gave Chrysler approval to sell most of its assets to Italy's Fiat, moving the U.S. automaker closer to a quick exit from court protection, possibly this week.

The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take 12.5 percent, with the United Auto Workers getting a 17.5 percent share and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.

Albert Koch, who helped Kmart Corp. through its Chapter 11 reorganization, will serve as GM's chief restructuring officer.

Administration officials, speaking on condition of anonymity in advance of Obama's public remarks, said they expect the bankruptcy court process to last 60 to 90 days. If successful, GM will emerge as a leaner company with a smaller work force, fewer plants and a trimmed dealership network.

President Barack Obama is scheduled to address the nation about GM's future at midday from Washington, and GM CEO Fritz Henderson is to follow him with a news conference in New York.

GM also revealed Monday that it will permanently close nine more plants and idle three others.

The Pontiac, Mich., and Wilmington, Del., assembly plants will close this year, while plants in Spring Hill, Tenn., and Orion, Mich., will shut down production but remain on standby. One of the idled plants will be retooled to build a small car.

Seven powertrain and parts stamping plants will be closed starting in June 2010, while an additional stamping plant will be idled but remain in a standby capacity.

GM's filing comes 32 days after a Chapter 11 filing by Chrysler, which also was hobbled by plunging sales of cars and trucks as the worst recession since the Great Depression intensified.

The sale to Fiat means Chrysler could be out of bankruptcy within the government's original timeframe of 30 to 60 days. Chrysler's plan gives a 55 percent stake of the new company to a union-run trust for retirees. Fiat gets a 20 percent stake to Fiat that can ultimately grow to 35 percent. The U.S. and Canadian governments get smaller pieces.

The third of the one-time Big Three, Ford Motor Co., has also been stung hard by the sales slump, but it avoided bankruptcy by mortgaging all of its assets in 2006 to borrow roughly $25 billion, giving it a financial cushion GM and Chrysler lacked.

GM will move forward with four core brands — Chevrolet, Cadillac, Buick and GMC — and cut four others. The company plans to cut 21,000 employees, about 34 percent of its work force, and reduce the number of dealers by 2,600. GM said it was finalizing a deal to sell Hummer, and plans for Saturn are expected to be announced within weeks.

"There is still plenty of pain to go around, but I'm confident this is far better than the alternative," said Sen. Carl Levin, D-Mich. "It's a new beginning, it's a rebirth, it's a new General Motors."

GM, whose headquarters tower over downtown Detroit, said it believed the filing was not an acknowledgment of failure, but a necessary way to cleanse itself in an orderly fashion of problems and costs that have dogged it for decades.

GM shares fell as low as 27 cents in Monday morning trading, their lowest price in the company's 100-year history. The News Corp. unit that oversees the Dow Jones industrial average said GM will be kicked out of the index on June 8 and be replaced by Cisco Systems Inc. The index's rules prohibit it from including companies that have filed for bankruptcy.

The bankruptcy filing represents a dramatic downfall for GM, which was founded in 1908 by William C. Durant, who brought several car companies under one roof and developed a strategy of "a car for every purse and purpose." Longtime leader Alfred P. Sloan built the global automaker into a corporate icon.

GM first sought help from the Bush administration and Congress last year as it was in the midst of being staggered by $30.9 billion in losses and seeing its cash resources shrink by more than $19 billion.

Consumers, worried about the economy and the future of GM, shied away from the company's cars and trucks this year even after President George W. Bush promised loans and Obama followed through with billions more in assistance — plus a stiff set of new requirements GM was ordered to meet.

When GM failed to do so by a March 31 deadline, Obama forced out CEO Rick Wagoner and replaced him with Henderson.

Wagoner served at the helm since 2000 and was the face of GM when he first flew on the company jet to ask Congress for aid. After a firestorm of negative publicity, Wagoner rode in a hybrid Chevrolet Malibu from Detroit to Washington for a second set of withering questions before lawmakers.

But that amounted to only a sideshow as the automaker's financial position worsened. Its revenues plunged almost 50 percent in the quarter ended March 30 and it racked up another $6 billion in losses.

The Henderson-led GM faced a government-imposed June 1 deadline to restructure, slash costs and modify contracts with its union and dealers. But meeting most of those demands, plus a late agreement by many bondholders to swap portions of the $27 billion in debt they are owed for shares in a new GM, were not enough to prevent the court filing.

In fact, it was an all-out sprint to Monday's filing, as GM quickly sought to nail down deals with its union, bondholders and sell off brands and along with most of its Opel operations in Europe in an effort to appear in court with a near-complete plan to quickly emerge as a leaner company with a chance to become profitable.

The German government on Sunday agreed to lend GM's Opel unit $2.1 billion, a move necessary for Magna International Inc. to acquire the company. The Canadian auto parts supplier will take a 20 percent stake in Opel and Russian-owned Sberbank will take a 35 percent, giving the two businesses a majority. GM retains 35 percent of Opel, with the remaining 10 percent going to employees.

In the U.S., the UAW's ratification of concessions, announced Friday, will save GM $1.3 billion per year. The new deal freezes wages, ends bonuses and eliminates some noncompetitive work rules.

It also moves billions in retiree health care costs off GM's books. In exchange for its ownership stake, $6.5 billion of interest-bearing preferred shares, and a $2.5 billion note, the trust will take on responsibility for all health care costs for retirees starting next year. Higher health care costs alone accounted for a $1,500-per-car cost gap between GM and Japanese vehicles.

GM will offer buyouts and early retirement packages to all of its 61,000 hourly workers as it plans to shrink overall employment. The company also has about 27,000 white collar employees. In contrast, GM employed 618,000 Americans in 1979, more than any other company.

GM earlier outlined a plan to cut about 1,100, or 40 percent, of its dealers by the end of 2010. It also plans to shed about 500 dealerships that market the Saturn, Hummer and Saab brands.

But just cutting labor and overhead costs won't be enough to save the company. It also has been working to streamline its engineering and design, as well as standardize many parts so they can go into multiple models.

The once powerful GM earns a place in history as the largest U.S. industrial company to file for bankruptcy protection, and the fourth-largest company overall to do so based on its $82.29 billion in assets.

Lehman Brothers Holdings Inc.'s September 2008 bankruptcy filing is the nation's largest with $691 billion in assets, and likely served as a catalyst for GM — and Chrysler's — downfall, as it hastened the erosion of credit markets, making it more difficult for consumers and dealers to finance new vehicles.

AP Auto Writer Kimberly S. Johnson reported from Detroit. AP Auto Writer Tom Krisher in Detroit, AP Business Writer Harry R. Weber in Atlanta, AP Business Writer Vinnee Tong in New York, and Associated Press writers Ken Thomas and Jim Kuhnhenn in Washington contributed to this report.

The hottest chair in North Block is taken and all are letting out a sigh of relief that it is now occupied by none other than Mr. Pranab Mukerejee, the man who had sowed the seeds of India's economic reforms decades back. And perhaps no other man could have fitted the portfolio of the Finance Minister better.

Having said that, it will be tough going for this seasoned politician considering the current economic situation of the country. Even though we may be in denial mode, it is a fact that the global economic crisis has badly impacted the country's economy. Sectors like exports and IT are hit the most and are showing bleak indications of recovery and several other sectors are in need of immediate help.

Another worrying factor is the slowdown of credit flow. Mr. Mukherjee has already said in his interim budget that the government will strive to return to a 9% growth of GDP in the medium term. He has a huge task at hand in order to achieve this.

Moreover, the new Finance Minister needs to understand the need to continue with sector-specific stimuli, especially in exports, manufacturing and the infrastructure sectors, to counter the slowdown in economic growth.

With the full budget soon to come, I feel, besides an expanded rural employment guarantee scheme designed to create fresh jobs and focus on food security for the poor, Mr. Mukherjee's budget could include a stimulus package that could focus on tax breaks for select sectors and a massive spending plan for infrastructure. Measures to stem the slide in exports that has contracted six successive months could also figure in the budget.

The finance minister has given strong indications that "there will be more export credit available now." If we remember, during his stint as Finance Minister earlier in 1982-84, he brought about several fiscal reforms and freed India's exporters, bringing in vital foreign exchange. Will he be able to do the same this time round? The question hopefully will be answered soon!

Great expectations - but will the new govt. deliver? ( 21.05.2009 )

The mammoth Indian elections are over and the people have decided on a stable and progressive government.

With the Left parties out of the coalition, everyone now sees the UPA government headed by Dr Manmohan Singh as reform friendly.

The Manmohan Singh government now needs to focus on issues like fall in industrial output, dip in exports and slowdown of the Indian economy. I get a feeling that if the government keeps up with the economic reforms announced earlier, the economic revival of the nation will be easier and faster. Already on the first day after the polls results, the equity markets gave a thumbs up surging to record levels.

From the exporters' point of view, it is a fact that they (the exporters) are working on thin margins. Thus reforms in income tax can help exporters modernize and expand their manufacturing.

Exemption instead of refund of service tax can be the order of the day. There are enormous delays in getting refund of service tax and a great deal of paper work is involved in making applications for refund. So giving exemption from service tax can help exporters and save a lot of precious time.

Issues like lowering credit rate, deduction on investment made in plant and machinery for expansion and modernization of manufacturing facilities, cut in transaction cost by simplifying procedures, introducing accountability among all agencies involved in exports, development of exports-related infrastructure like ports, airports, roads, and containers need to be addressed on a priority basis to ensure that the economy springs back to normal.

Meanwhile the Small and Medium Enterprise (SME) sector needs special attention from the new government. To develop the sector, the government needs to look into issues including interest subvention and credit availability which can take the sector to the path of growth and independence.

The industry has great expectations of the new government. But the question is: will this government deliver the goods?

Upgrading technology must for SMEs' survival ( 13.05.2009 )

Despite the latest study by ASSOCHAM that SMEs' share in GDP will be 22 percent in 3 years, there's no doubt that they (SMEs) are still languishing in the backwaters of development - thanks to our nonchalant authorities.

Currently the sector contributes about 17 percent to India's GDP which itself is a big thing considering the fact that they have to face several problems like lack of credit, high rate of interest, red-tape and lack of clarity in government policies. It however surprises me that despite the potential shown by the sector, it still faces several constraints. Whatever banks might say, there's no doubt that SMEs still remain a neglected lot.

The good news however is that SMEs have now decided to take things into their own hands. Instead of waiting for government support they are now taking initiatives to take them to the next level -- one of them being upgrading their technologies.

Without doubt at this point of time when both morale and demand is low, upgrading technology to reduce input cost and increase production is the best thing SMEs can do for themselves. This will subsequently go a long way in increasing their share in the country's exports which is currently about 40 percent.

SMEs will now have to understand the value of technology upgrade as a strategic business tool and thus try to obtain information and explore opportunities for technological cooperation. We need to understand that there is no escaping the upgrade and improvement cycle and we have to now choose exactly which technology will yield the best results and increases performance and stability.

Right pricing can help companies tide over recession

Even as SMEs across the country are fighting for survival, we need to find answers to why some of our competing nations are doing well in the export status, while we are registering negative growth month after month.

Personally I do not agree with this view that we are not receiving inquiries or getting orders...we are. But at the end we are losing these orders to our competitors because of certain reasons - pricing being one. Finding out the best price for the products or services is of vital importance for the survival of any business - big or small.

Most of us are still unaware as to what one's competitors are doing. Pricing in most products of exporters is the reflection of a unilateral decision of the marketing department. This should not be the case.

While deciding on the price of a product, exporters and sellers should take into account a couple of factors. If there is a uniqueness about the product or service one can quote more. But if there is steep competition and there are many sellers for the same product, one should keep a more competitive price and look at ways to lower the cost of production.

Since pricing is done by calculating the fixed and variable costs associated with one's product or service, try to first calculate how much is the cost associated with each item sold or service delivered. Once this is done, one should try to explore ways in which to keep this cost at its lowest minimum.

Now for any seller it is very important to understand one's products and how one wants to position the product in the market. Is my product an exclusive luxury product for a niche market or is it a product that has many manufacturers and sellers? In the first case the seller can fix a high price while in the latter, the price has to be on the lower side otherwise the buyer might approach another seller. In the latter case especially, when one's product is one of the many existing in the market then the law of competition applies.

So before you come up with a price for your products just remember that pricing them at too high a rate or, on the contrary, at a price much lower than its market potential is tantamount to committing hara kiri. No one would like to do that I suppose!

Even during the best of times companies, particularly small and medium enterprises (SMEs), find it difficult to market their products. But now that the economy is in recession, things have become even more difficult. Demand for products is at an all-time low and finding buyers is also becoming fast difficult.

However, smart companies still have their hands full with orders. Many SME holders I have met in the last couple of months have asked me the same question: How are they getting orders while we are not? And the answer is simple. They have acted smartly and made adjustments in their marketing plan in accordance with the changing market demand. They know that marketing during recession calls for the realisation that the needs of customers or buyers change and thus strategies suited to the new reality should be adopted.

During recession it becomes a necessity for any company to thoroughly research the customer. Instead of cutting the market research budget, one needs to know how buyers are redefining value and responding to the recession.

Contrary to what people might say, recession is not the time to cut advertising. It is a fact that companies that increase advertising during recession, when competitors are cutting back, can improve their market share and returns on their investment than during good economic times.

It is also essential to make adjustments in one's product portfolios while marketing during recession. Tough times usually favour multi-purpose goods over specialized products. So weaker items in product lines should be pruned or should take the backseat while preparing a marketing strategy.

Pricing tactics too need to be made according to market realities. Buyers during recession will be looking for the best deals. Although marketing during recession does not necessarily mean cutting down prices, one may need to offer more price promotions, extend credit to long-standing customers, and market value-added after-sales services or warranties more aggressively.

In tough times, price cuts attract more consumers and a price elasticity can help. Buyers during recession take more time searching for the products and will also negotiate harder to get the best deals. They are more willing to postpone purchases, or even buy less. So SMEs need to give them a price that they can't resist.

I think it is a good period for us to take an objective look at our marketing plan and the products line before we approach a buyer.

Posted on Apr, 17 2009
General elections 2009 - will our politicians keep their promises?
As every Indian awaits her/his turn to vote and thereafter, the outcome of the General Elections 2009 to be declared on May 16, political parties are trying their might to attract voters into pressing the EVM button in their favour. Major political parties in their manifestos have come up with sops - some logical - while many others stand to hurt the economy in the long run.

While it is a must for every citizen to exercise one's right to vote, we need to be cautious about whom we bring to power. History is witness to the fact that tempting freebies offered by political parties have hurt the economy, be it offering free power or foodgrains at highly subsidised rates.

Apart from the usual hullaballoo surrounding political issues that one witnesses before every election, this year, at least one positive element was seen in the major political parties' manifestos. The usually neglected Micro, Small and Medium sector or MSMEs have found place in the pages of the political parties' manifestos.

How many of these pre-poll promises will see the light of day is another issue, but the fact that the MSME sector has come into prominence and that political parties have acknowledged and heeded the cries of this sector is by no means a small thing.

If we look at the manifesto of the Congress Party, it lists numerous promises with special focus on SMEs and implementation of nationwide skill development programme for the welfare of SMEs.

And why not... the MSME sector provides about 60 percent of the total industrial employment. Today there are 12.5 million MSMEs in India, providing employment to 30 million people, and contributing to around 50 percent of the country's industrial production.

A look at the BJP's manifesto too reveals the party's promises to "promote SMEs and the retail sector which can generate a large number of jobs and make a meaningful contribution to the national economy". It also promises "massive expansion in the use of IT in ...SMEs, retail trade, and informal and unorganised sectors of the economy."

Interestingly, the Communist Party of India (CPI) has even gone on record claiming that their's was a party of small and cottage industries.

They are now talking about "special package for protection and development of Small Scale industries, cottage industries and craft of artisans."

To fight back the impact of world-wide recession, the party has promised to "defer recovery of loans till at least such time that the recession ends, grant subsidy on already produced goods" to help particularly export based SSIs, in marketing in the internal market.

Other political parties too have come up with sops for this industry sector. However, it remains to be seen whether these promises will be implemented once they come to power. Going by the manifestos of political parties, MSMEs have a lot to gain this time - currently only on paper though.

But will these promises be forgotten after the 15th Lok Sabha is formed? Will the issues of the sector return to the cold storage again till the next General Elections? These are the questions we need to ask before we go to vote! Let's hope the new government brings in good news for the MSME sector.

Negotiating effectively is the key to success in business.
Negotiations are part and parcel of a business. Whether one is buying or selling, negotiations play the most important role in day-to-day business proceedings. Despite the need for effective negotiations, businesses, particularly Small and Medium Enterprises (SMEs), in most cases falter in this department.

I have noticed that SMEs consider negotiations as merely lowering the price tag to suit the buyer. Actually there is more to it. Marketing departments of SMEs need to understand that lowering the price of products at the drop of a hat can put a question mark on the buyer's mind as to the quality of the products. He might ask himself: Why is he lowering the price? Is the quality of the product okay?

So instead of lowering the price it is best to add value to the product. Instead of discount, one should consider offering additional products, services, support, or development, while maintaining the price, or even increasing it. For instance, give certain added products or services which have been launched recently. This gives you an opportunity to let the customer test the new product too. It might pay off with future purchases. If possible, give an extension on the warranty or prepone your delivery date.

It is also very important to gather as much information one can on the buyer before one goes calling. His past buying history, his negotiating history, so on and so forth.... It's an unholy custom with most sales persons that they usually never list the issues involved before they go for a call. Neither are they aware of what they want to achieve and what they can offer if the customer says 'NO'. Thus it's very important to ponder on the core issues and also to keep the attractive additions at arm's reach just in case they need to make the offer more attractive.

SMEs in general and their marketing teams in particular need to bear in mind that when they hear a 'NO' from a customer and they are about to walk away from the negotiating table empty-handed, it also means that they have not done a good selling job. This calls for regrouping and approaching the customer again.

Having said that there are times when SME holders will feel that no deal is better than this deal. The customer should not get mixed signals that the seller is desperate to sell and thus give him an upper-hand to gain even greater concessions.

Lastly, I feel SMEs and their marketing teams should always remember that it hardly matters to the customer if they sign the deal today or three months later. They also have an option to approach another seller. But this customer matters to you and it matters more to your company. Also remember, being a seller it is you who has a target, and not the customer. One chance is all we get...the question is: are we being able to turn this chance into success?

Get a marketing strategy...make winning a habit!
In today's business environment it has become imperative that we use our knowledge and experience of marketing strategy development and marketing planning and focus on working with our clients to get the thinking right. Developing marketing strategies and implementing them will only help us to get sustainable results in our businesses. Developing successful marketing and how we add value for our clients is the mantra to success in business.

But the question is how much importance do we give in formulating a recognised best-practice by developing effective marketing strategies and marketing plans? Also, are we serious enough in developing and implementing the effective marketing strategies for our clients?

I feel we many a times we do not give much thought to these as a result we are unable to get the best results. Companies even do not have a clear plan as to what they want to achieve and how they plan to achieve the same.

Marketing today is an essential instrument for increasing one's effectiveness and growth. A good marketing strategy allows optimization of the company's activities, gives a clear picture of target clients, and helps in adjusting the distribution system.

It's a fact undeniable that business failure rates amongst small and medium enterprises (SMEs) are high owing to the fact that they do not have clear cut marketing strategies.

SMEs in many cases fail to portray a professional image which drives away customers. They are unable to convince potential customers or clients that their business that can deliver what they promise.

SMEs today need to understand their existing and potential customers which can make a big difference to their business. Market research or gathering, analyzing and interpreting customers, markets, competition, and the industry can be the best ways to know what customers want and thus help in preparing a marketing strategy accordingly.

SMEs will now have to see marketing as an investment rather than a cost if they really want to remain competitive. It is equally important to expect to get a return on that investment, but unless one uses the right marketing strategy, it will be next to impossible to get any returns at all. So before you start marketing your products, make sure you have a marketing strategy in place beforehand. It's pointless shooting in the dark...you might win once but not always!

Posted on Mar, 16 2009
Business In Singapore.
Welcome to GCA
Global Corporate Advisory Pte. Ltd. (GCA) (also known as LCC GLOBAL) is a Singapore-based corporate advisor that specialises in professional services such as incorporation, accounting, taxation, auditing, corporate secretarial, business advisory and other solutions to SMEs and MNCs in various industries.
GCA is headed by Certified Public Accountants. With its extensive resources and network, GCA is able to fulfil these services through our strategic global team of professionals.

Incorporation Specialist Group
Services:
(a) Singapore Company Incorporation

Registration of Foreign Corporation in Singapore (Singapore Branch)
(b) Singapore Business Registration

Partnership (requirements are similar with LLP but with at least 2 local partners and at least 1 local manager)

Sole-Proprietorship
(c) Offshore Company Incorporation (The British Virgin Islands - BVI)

Corporate Secretarial Group
Services: Company Secretary, Nominee Local Director / Shareholder, Filing of Annual Return.

Accounting & Tax Group
Services: Accounting/Book-keeping, Tax Compliance, Goods & Service Tax (GST), Preparation of Unaudited Financial Statements, Preparation of consolidated accounts etc.

Assurance Group
Services: Statutory Audit, Auditors' Certification (Gross sales, lucky draw, Major Exportors' Scheme - MES, etc)

Corporate Finance Group
Services: Initial Public Offering (IPO),Due diligence, Strike-off, Liquidation, Judicial Management & Receivership, Corporate Restructuring, Mergers and Acquisitions, Funding via Bank Loan

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Services: Employment Pass/Enterprenuer Pass Application.

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With just a couple of weeks left for the beginning of a new fiscal, this is perhaps the best time to prepare a business plan. With demand in the markets likely to remain low - at least for a couple of months - the much-needed adjustments in one's business plan has become imminent.

Perhaps, I think, at this juncture we need to ask a few questions before we jump to any conclusions as to how we are going to run our businesses next fiscal.

First and foremost one needs to take a good look at the product-line. Are these products really in demand or do they need certain modifications? The product-line must be in accordance with the demand in the market - there is no doubt about that.

Secondly, several nations with whom one had done business in the last calender year are now in recession. So one must ask oneself: What will be my target markets this year? Who are my would-be customers? Once these questions are answered, it will not be very difficult to find new customers. Having said that one should not forget the old customers. This is also the best time to stick to old customers. Try to give your old customers some extra incentives to keep them interested.

Thirdly, keep you business plans realistic, flexible and dynamic so that it gives ample time to cope with unexpected changes in the markets. Rigid and complex plans are not going to see the light of the day this fiscal.

This is also the time when both PSU and private banks will be reluctant to give credit. So if you are looking for credit go with a feasible project which a bank can't deny. Simply blaming banks will not help when you are at fault for not having a proper business plan.

Unarguably, this fiscal's business plans have to be specific, attainable, realistic and time-bound. We have three weeks before us to plan and face the next fiscal with exuberance and confidence or we just carry on with the same plan and wait for things to brighten up. The smartest businessmen are the ones who make the changes rather than wait for things to change. So, are you one of them?

Even though the government is working on a package for the export community, I feel it would be intelligent enough if we look into our operating module and make certain adjustments in order to stay in business with profit margins intact.
At a time when several SME exporters are unable to take the pressures of shrinking overseas markets and are thus closing shop, e-commerce can be the best option to cut down costs of operation and also to get enquiries. This is the time to make new clients as the older clients are going into their shells and Internet-enabled tools like B2B can help to explore newer markets and thus come in touch with new customers.
I feel monitoring one's cash flow is very important and it will be advisable to forecast one's cash flow on a monthly basis and ensure that the expenses do not exceed them. Apart from that, one should carefully evaluate and work towards converting excess and obsolete methods into cash-generating assets without, however, losing sales.
Additionally, exporters and SMEs alike need to shake off the myth that the first thing businesses should do when they face a financial crunch is to cut on their advertising costs. This is a negative approach and actually harms the image of the company.
During this time it is actually profitable to increase the advertising budget when the competitors are down and out. With less competitors in the market, it pays to advertise more and let your customers know about your products. In short, the best time to promote your brand is during this impending slowdown.
I strongly believe that SMEs should now weed out all non-performing assets from their operating systems and review their expenses.
While you are waiting for the authorities to provide certain sops, don't give up on your attempt to eliminate unnecessary expenses without harming your corporate image.
The best possible way to do so is to relocate funds to advertise one's products and to take the help of various B2B tools. SMEs who have done so have profited even while others were cursing the situation.
Rising to the occasion and acting accordingly is the mark of a good businessman. So what's your strategy - to go with the flow or to act differently and make the most of the times?

Selective hiring and moderation of unreasonable expectations in the salary is the new mantra among HR professionals. Companies such as Tata Capital and Hinduja Group have reworked their hiring plans and are now looking at hiring lesser employees than planned earlier.
Tata Capital Ltd, a wholly-owned subsidiary of Tata Sons, which recently hired Harshawardhan Sabale as Co-head for its PE Growth Fund has restructured its hiring plans and is now hiring currently for critical positions.
Amar Sinhji, head (human resources), Tata Capital Ltd told FE, "Right now we are not doing mass hiring but are looking at filling critical positions only. But will also be hiring about 30-40 graduates at the junior level and post graduates from premier management institutes as well."
Similarly, Hinduja Group continues to hire for its new initiatives but becomes selective, however a lot of moderation has happened at the middle level and junior level positions, the group HR head reveal declining to give specifics.
"For our new businesses and at leadership position we continue our search for the right candidate. Also there has been no revision or cut in the compensation however the unreasonable hike of 50%-80% has now been moderated," said Sudhanshu Tripathi, group president, Hinduja Group.
Experts believe that salaries are now rationalised and justified compared to the extraordinary increase earlier. Salary of a CEO in the financial service sector is the highest and ranges anywhere between Rs 1.5 - 3 crore. A CEO in IT, telecom and insurance draws anywhere is between Rs 1-2 crore. In the media and entertainment the salary is between Rs 1.5 to 2.75 crore and in the pharma sector it is in the range of Rs 75 lakh to Rs 1.5 crore. However, the manufacturing sector is the lowest payer with the CEO's salary in this sector ranging from Rs 40-80 lakh only. In the retail sector CEO of Indian retail company gets paid in the range of Rs 80 lakh to Rs 1.2 crore and an MNC retail company CEO gets paid up Rs 2 crore, say experts.
Pick 'n' choose
• According to experts, salaries are now rationalised and justified compared to the extraordinary increase earlier
• Tata Capital Ltd has restructured its hiring plans and is now hiring currently for critical positions
• The company will also be hiring 30-40 graduates at the junior-level from premier management institutes
• Hinduja Group continues to hire for its new initiatives but has become selective
• Unreasonable hike of 50% to 80% has now been moderated
• Manufacturing sector is the lowest payer with the CEO's salary in the sector ranging from Rs 40-80 lakh

Posted by Admin Business Posted on Nov, 14 2008
Business : Finally govt. wakes up to the woes of exporters

The ball has been set rolling with the government all set to announce a fresh package to revive the export sector in the wake of severe global recession. And as the country's export growth rate recorded the steepest fall in half a decade, declining by 15 percent in dollar terms, there can't be a better time for the government to improve the conditions for exporters than the present.

Even as the government is considering a package for exporters, I see India missing the export target of $200 billion set for the current fiscal in the face of global economic slowdown - the authorities need to get their act together and respond fast.

A slew of measures to sustain the export growth momentum following the spill-over effect from US and EU -- India's two biggest markets-- is what the government actually needs to come up with.

Everywhere global economic slowdown is impacting exports and the government can no longer remain a mere spectator for long.

The Commerce Minister himself has agreed that 'there is choking of credit, and combined with elevated risk perception, will lead to lower capital flows and reduced levels of foreign direct investment.' A fresh package for exporters at a time when exporters are facing demand crunch in the developed world can be the best thing to happen.

Although the Commerce Ministry is pitching for a total tax waiver for exporters, both at the Central and state levels, I see the finance ministry taking the proposal with a pinch of salt. It may perhaps be a repeat of an earlier situation when the exporters were caught in a messy situation due to differences between the Commerce and Finance ministries. Let's hope it doesn't happen again.

Meanwhile, the extension of the pre-shipment credit to 270 days, as against 180 days previously, is a good move and will invariably bring some relief to the export sector.

Let's just hope that whatever package the government comes up with, it should be able to help exporters to compete in the world market in the current scenario.
Bikky Khosla
CEO
Tradeindia.com

Abraham Lincoln once said. " Believing everybody is dangerous. Believing nobody is very dangerous. "
Why is this quoted here ? ...
Since we have launched our SEVAQ project, which is a unique one till date for Surat City ( To know more, read Expressions / Articles at MyCitySurat, or call 98792 27286 ), we are experiencing rather funny things.
As a part of promotion, we started calling some residential numbers and tried to get permission for FREE service at their office. Dear friends, it's our tradition since established that we would never put any ' * ' when we use FREE word. When we say FREE, it must be understood as FREE. In short, we were offering them a free service nothing but as an introductory offer.
What we observed is ...
1. We were considered as tele-callers for marketing any product and outrightly rejected by " We don't need anything ".
2. We were heard for some minutes and asked, " Why are we giving it free to them ? ". And when explained, they said " We will come back if we need any service in future. "
3. We were told to come to their offices ( while we were asking for domestic services ) for discussion.
In our meeting, while we were discussing this thing, remarks have been made by some aggressive members that such people don't deserve any service and they should be left on their own.
But the point coming out from this is really very interesting. We are receiving so many stupid and useless marketing calls that we have been rigid to all such things. We have closed the windows of our mind to accept everything in fear of getting cheated by something. Here, I would like to quoted again a nice thing said by Rabindranath Tagore " If you close the windows to prevent false entering, truth too will be left outside ."
We are requesting again to all that this is the time to work together. This is a big world there and we all are suppliers to others and customers for others. We are not living on any island and therefore, we must join hands to survive in such difficult time.
More later,
ADMIN

Dear friends,
As leading service providers for Domestic & Industrial needs, we meet business owners, industrialists and discuss current situations.
One common thing is coming out from all talks that the time, today, is really bad for industries and businesses.
Many have already reduced their staff and others are going to follow the same sooner. Considerable cut in salaries also happened in many units.
Last in - First out is the common criteria to lay-off the staff. Even small indisciplinary act could be a reason for termination in such time.
If you are a employee, this is time to put your best in interest of your company, not only for survival of your own job but for the company too.
More later,

Posted by Admin MyCitySurat Posted on Nov, 12 2008
Business:Govt. must come out with relief package for SME exporters

The month-end may bring some good news for SME exporters. There are speculations rife that in a bid to bail out the export sector hit by the global financial crisis, the government is likely to grant a relief package to all small and medium export units hit by foreign banks defaulting payments.
There are even reports that the government may go ahead and provide group insurance coverage for all unorganized workers in these industries by paying a premium.
The relief package, particularly for SME exporters, may help them to recover from defaults made by foreign entities in honouring payment obligations to Indian exporters... it’ll be a good thing if the announcement really does come.
Having said that, the government should also give financial assistance to ECGC to ensure that they take a higher risk to cover SME exporters.
Already the export growth rate slipped to 15 percent in October, the lowest in five years with the country facing a threat of dwindling exports as leading world economies are heading towards a slowdown.
Industry circles have already predicted that exports are likely to witness a shortfall of about 20% against their target of US$ 200 billion for 2008-09 as prevailing domestic economic conditions have caused severe dampening effects on potential exports segments of Indian economy.
So the authorities should also come up with steps to provide cheaper credit to exporters and should extend the tenure of pre- and post- shipment from the present 90 and 270 days respectively.
I have reasons to say that the government should hike the entitlement of the duty credit scrip under the focus market scheme from the existing 2.5% of the FOB value of exports if they really want to provide some relief to the exim community.
If the reports are true, then it will indeed be a good news for exporters who are already reeling under recessionary trends to sustain their past export buoyancy.

Bikky Khosla
CEO
Tradeindia.com

Money : What is the safest asset today?
MoneyControl.com - PV Subramanyam October 29, 2008.

'FORGET stocks. Invest your money in buying a bigger bed. You can tuck away all your cash here', read an sms that I got the other day.
Funny I thought, but it really gives away what the world is thinking today. Everyone and his uncle are scared to invest their money!
"Should I keep all my money in cash? Is it the best asset class at this time?", is the question most of you are asking. Here is my analysis.
Cash has risk too!
Cash is surely one alternative but don't forget that there is a huge amount of risk. What risk? You might have a thief as a visitor and he can make a clean sweep (And the bed idea might not be a great one here!).
Besides, fire is another threat if you have cash lying at home. And we cannot rule out the possibility of natural disasters destroying your cash either.
And if all this isn't enough, then remember that inflation erodes the value of your money. So, idle money is inflation's delight!
Now that cash has been ruled out, here are some other investment options. But at this stage, are they worth it?
Bank deposits
This is an attractive avenue for many people because they want to 'preserve their capital'. Banks pay anything between 3 to 11 per cent per annum as interest on the fixed deposits (FD). However, post tax and post inflation returns on FDs are either negligible or even negative. Hence, this is not a great option either.
Income funds
If you think interest rates have peaked and will only fall now, you can keep your money in income funds. This is because when rates keep rising, the market value of securities that the income fund invests in, falls. This impacts the returns of these funds negatively. Similarly, when interest rates fall, the market value of securities increases, thus generating more returns for the fund.
But do you understand the rate scenario? Are you sure that interest rates have peaked? If you are not, then don't lay your bets here. It would only be a gamble.

Real estate
A popular news channel announced that property prices will fall by 30 per cent in the coming months, so it would be foolhardy to invest in property now.
If you think that real estate will give you a return in excess of the interest rates at which you are borrowing (for the next 20 years), then you can invest in this avenue. For instance, if you buy property with a home loan at 12 per cent interest and if you feel that your property will give you returns of around 15-20 per cent, you can think of putting your money here.
Again, for a lay person to understand how property markets move is like hitting darts with your eyes closed. And it's best to stay away from guesswork.
Equity (read mutual fund SIPs) rule the roost!
Experts on all the business channels seem to think that the markets are a bad place NOW to keep your money. Of course I find solace in the fact that the experts are only looking at a teleprompter and not at a crystal ball.
I must admit that I do not understand equity markets as well as the experts on television. However, I have kept my SIPs running and they have been on for seven to nine years. I do not intend stopping them. If you have a long term view, think Systematic Investment Plans. It cannot get better than that!
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Business : Exports plunge, exporters face severe financial crunch
The recent steps taken by RBI has indicated that the focus is now on growth - this is good news. Credit availability of Small and Medium Enterprises (SMEs) was getting costlier and the reduction in Repo Rate and CRR and SLR, is a move on right path.
I think SMEs should be getting the good news soon about banks reducing interest rates. The recent RBI move will also ensure that enough liquidity comes into the market to help Indian Inc. expand, diversify and modify its plans.
The government needs to take steps to restore overall business confidence and inflation management monetary policies need to to take backseat.
When it comes to SMEs, I always feel that the government should promote cluster-based financing. This will help lower the interest cost to SMEs.
Even industry body, FICCI, has said 'the government must give emphasis on reviving large, medium and small industry, giving a boost to exporters, meeting the genuine credit needs of trade and business.'
However things seem to remain gloomy for exporters in the coming months with falling demand from key markets. Several exporters I have met recently have expressed displeasure that LCs and international credit lines are not being accepted and thus they were going through a severe financial crunch.
Already export growth has slumped to the lowest level in 18 months in September and there are indications that this figure might drop further in the days to come.
I strongly believe that to ease this pressure the government has to consider continuing the interest rate subvention scheme on export credit at least up to March 31, 2009
Restoring duty drawback rates to the level existing before September 1 can be another move that can instill some amount of confidence to the exim sector, particularly in the SME sector.
Only time will tell whether the government is serious about providing relief to the exporters. To announce rate cuts is one thing, to translate the same into reduction in cost of credit for SME exports is another.

Bikky Khosla
CEO
Tradeindia.com
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Posted by Admin MyCitySurat Posted on Oct, 27 2008
Government's Diwali Gift : Price Cut in Petrol ?
Time cannot be better to announce handsome price cut in price of Petrol and Diesal as Crude price is hovering below 70 $ per barrel. In fact it has breached the level of 65 $.
We do feel that Government should announce price cut in Fuel as soon as possible. Considering the situation, we feel the government will make an announcement tomorrow, on the auspicious day of Diwali.
It can be the sweetest gift to Indians from the Government.
Director - MyCitySurat
( 9.40 pm, 27th October 2008 )
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Below is the news, sourced from http://biz.yahoo.com/ap/081027/oil_prices.html

Oil prices pull back as investors eye falling demand, ignore OPEC move
HOUSTON (AP) -- Oil prices fell to their lowest level in more than a year Monday before rebounding to just above $63 a barrel as growing evidence of a global economic slowdown had investors betting on a further drop in energy demand.
Traders undeterred by OPEC's sizable production cut late last week also appeared to be taking their cues from world stock markets, which slumped again Monday with the Nikkei index in Japan closing at its lowest in 26 years, down 6.4 percent. Hong Kong and European markets followed suit, closing or trading substantially lower.
Wall Street was wavering in morning trading, with the Dow Jones industrials down about 22 points, or 0.27 percent, at the 8,355 level after having fallen more than 100 earlier.
"The market ignored OPEC's attempt to shore up prices as there are larger, long-term problems plaguing the market that a short-term production cut cannot overshadow, including softening demand, institutional unwinding and the credit crunch," Raymond James & Associates analyst Darren Horowitz said in a note to clients Monday. Institutional unwinding referred to selling by funds, including those that need to raise money to pay off margin loans, or money borrowed to buy stocks and other investments
Light, sweet crude for December delivery declined 93 cents to $63.24 a barrel in trading on the New York Mercantile Exchange.
On Friday -- even after the Organization of the Petroleum Exporting Countries announced a 1.5 million barrel-a-day cut -- oil fell $3.69 to settle at $64.15. Prices have plunged 57 percent from a record $147.27 on July 11.
"The mood is fairly negative reflecting worry about the international economic outlook," said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney. "If there is further weak economic data in the U.S. or Europe, prices could come under more downward pressure."
Iran's OPEC governor Mohammad Ali Khatibi said Sunday a reduction in production "will be considered" at the group's next meeting in Algiers in December -- a meeting that might even be held early if necessary.
"I thought the OPEC cut was a fairly decisive act, but concerns of recession in the major economies remain dominant," Moore said. "OPEC's cut does take a step toward tightening the market."
Vienna's JBC Energy said prices were out of OPEC's control -- for now.
"Oil is currently being driven by the present financial crisis and not by OPEC cuts," said its research report. "As oil prices are being pressured by the credit squeeze and a lack of liquidity, they may stay largely detached from supply factors for several weeks to come. As a result, OPEC is currently struggling with factors beyond its control."
Investors have been paying close attention to signs that a slowing economy and higher gasoline prices earlier this year have hurt crude demand in the U.S., the world's largest oil consumer.
The Department of Transportation said Friday that Americans drove 5.6 percent less, or 15 billion fewer miles, in August compared with same month a year ago -- the biggest single monthly decline since the data was first collected regularly in 1942.
A gallon of regular gas fell 3 cents overnight to a new national average of $2.668, according to auto club AAA, the Oil Price Information Service and Wright Express. That's roughly a dollar less than what was paid just a month ago and 18 cents below gas prices one year ago on Oct. 27.
In other Nymex trading, gasoline futures fell 1.41 cents to $1.438 a gallon, while heating oil slipped 1.63 cents to $1.9538 a gallon. Natural gas for November delivery fell 17.5 cents to $6.572 per 1,000 cubic feet.
In London, November Brent crude was down $1.75 to $60.30 a barrel on the ICE Futures exchange.
Associated Press writers Alex Kennedy in Singapore and George Jahn in Vienna, Austria, contributed to this report.

Only CASH is KING ... No any other 'thing' can be a KING today ...
Cash is king is a cliched expression sometimes used in analyzing businesses; it refers to the importance of cash flow in the overall fiscal health of the business. The phrase is a favorite of Alex Spanos and has sometimes appeared in Motley Fool articles and commentaries. It describes the importance of sufficient cash as an asset in the business for short term operations, purchases and acquisitions. A company could have a large amount of accounts receivables on its balance sheet which would also increase equity, but the company could still be short on cash with which to make purchases, including paying wages to workers for labor. Unless it was able to convert its accounts receivable and other current assets to cash quickly, it could be technically bankrupt despite a positive net worth.
( Source : wikipedia )