Bajaj to Focus on Scooter Market Again!

Check out this article...

http://www.business-standard.com/india/storypage.php?autono=346889

Did they read the post below?:)

Have You Got Your Bonus Yet?

"Heyy have you got your Bonus yet?! Dunno what will happen this year, job raha to kafi hai!" Sounds familiar?

I guess that seems to be the mood and tone of most conversations these days and there is gossip aplenty what with employees having ample time on their hands to blabber, scrap, chat or write on walls:) only to be interrupted by some breaking news of some rumoured layoff or paycut somewhere or even the occasional utter disbelief of someone getting an increment or
maintaining their previous year’s bonus!

I came across some innovative ways that companies are using to pay/ compensate their employees.Here are two brilliant ones that I read about! The minds that could conjure up the complex structures for the CDO's, CDS’s and what not are at work again!

Credit Suisse: Pooling of bad loans

The most innovative undoubtedly is Credit Suisse (CS). The Swiss Bank which has taken a hit on the chin from the subprime mess in the US, is planning to create a pool of illiquid assets worth USD 5 billion. The employees, especially top management will receive equity in this new pool of illiquid securities.

Now that’s a brilliant idea! CS compensates its employees without a cash outflow; the employees get assets that are already heavily marked down (60-70%), making it more likely that they will appreciate as the credit markets thaw over the next few years (plus something is better than nothing and getting something despite creating all the mess is even better!)and the employees are incentivised to hold on for a longer period to get the full benefit. That’s not all, it allows CS to avoid making further writedowns on those assets because any mark to market gains or losses would be offset by the corresponding losses or gains on its liability to employees.

What happens to the shareholders and the creditors? Wouldn’t they want a pie of this too? Something is better than nothing or as Warren Buffet puts it..."There might still be some puff left in a discarded cigar butt"!

Goldman Sachs: Converting Restricted Stock to Unrestricted stock

Goldman Sachs (GS) employees are suddenly not feeling as bad about their miniscule bonuses. Last week GS announced that it
had changed the way it grants certain stock options which included easing the rules on when restricted stock options could
be sold! Simply put, it enabled cash strapped employees to use their hitherto restricted and hence illiquid GS stock like an ATM! Creative accounting? Well GS says it’s the industry norm and they were conservative earlier.

Why aren’t the Indian firms doing this? Or are they? Accounting for ESOP's and employee benefits has been an area of debate and a fertile ground for creative accounting. Now if Ramlinga Raju could get creative with the most basic and simple form of money i.e. cash, imagine what the creative minds at work may have done with the ESOPS and employee compensation numbers!

Anyways am not advocating any of these fancy schemes or creative accounting. That’s for the professional's to do(om?). But amateur HR managers can come up with something much simpler yet useful. For e.g. hotel companies could give bonuses to their employees in the form of room nights, airlines can dole out flying miles. Rooms and airline seats are anyways going empty! So managements can definitely do with some goodwill plus the additional cash inflow from employee spends on enjoying these freebies, not to mention the productivity from the cash saved and the employees retained!

Am sure there are many more ways to do this! Any HR guys listening?!

Retail Recce

The past few weeks US newspapers have been full of news about a dismal holiday season for retailers in the US. There are news galore of retailers doing distress sales, filing for chapter 11 protection et al. Now we all have heard about the decoupling and India having a strong domestic demand and Retail being a sunrise sector and there being room for everyone and all that.

So on one lazy weekend in the last week of December i did a small recce of the retailers in Vashi. Started my reccee from Dmart. Had heard about this retail chain but was visiting an outlet for the first time. First Impressions - a no nonsense, no frills retailer targeting the masses. It was full of people (which is not an uncommon site in Malls in India, infact in most public places in India!)balancing their shopping bags! DMart has a very Apna Bazaar like feel, if you have seen one, except its more organised and professional.

Feeling good i moved to a Reliance Fresh outlet. Coming from a Dmart it looked Fresh and Colourful. Though what was missing were the people! The only people in it were the employees! Same story at the 'More' by Aditya Birla retail. Next i went to a Foodbazaar. More people than the earlier two but thinner than the usual hustle and bustle. Slow and down so far.
Next destination was Subhikha. This was quick, i just had to pass by it. The store has been shut! Enough of small empty or closed boxes (stores) i thought... i decided to visit the Big Box retailers and moved to HyperCity. Excellent store, excellent merchandise, excellent layout..empty ailes! More Hype than customers.

I stepped out and moved to the last store on my list. And then i knew where the crowds from all the earlier stores had vanished...offcourse to the Great Indian Shopping Festival at the Big Bazaar! (picture Biyani as the pied piper luring away all the customers!:) Call it another marketing gimmick, call it an air conditioned market or call him a bania! At the end of the day, He Sells.Period.

Though this time the Great Indian Shopping Festival was not half as great as the earlier campaigns. Slow and down for sure.
The excesses of the party are showing. During the good time everyone and his uncle, infact anyone, with deep pockets and grand visions was jumping into retail and was busy rolling out stores, launching multiple formats, making announcements..
But as Warren Buffet puts it
"Its only when the tide goes out, you learn whos been swimming naked!"..we'll know soon:)

Hamara Bajaj!

Hamara Bajaj - Buland Bharat Ki Buland Tasveer......what does this famous television jingle of the 80's remind you of?!

Well the ubiquitous scooter of course! Bajaj was the undisputed 'Scooter King' in India and there used to be wait lists and black marketing to own this coveted vehicle. Somewhere down the line Hero Honda swept the market away with its motorcycles. They were more stylish (compared to the scooter), more functional and stole a march over the fuddy -duddy scooters. However,Bajaj refused to acknowledge this and kept protecting its scooter kingdom whereas Hero Honda on the one hand and Kinetic Honda on the other hand (with its ungeared and more stylish scooters) was reshaping and reclaiming the two wheeler market. Bajaj realised this mistake a tad too late and started playing catchup. It did some brilliant work with the Pulsar and came back strongly in the two wheeler err..motorcycle sweepstakes. It thought it had made a remarkable comeback (which indeed it had! but in the motorcycle segment and not the two wheeler segment).

They say History repeats itself. So again the Two wheeler market is undergoing a
transformation with ungeared scooters (check out the success of Honda with Activa and Hero Honda with Pleasure) and electric mobikes looking to undermine the hegemony of the motorcycle segment.

Is Bajaj commiting the same mistake again? Is it again running full steam with Blinkers On when the race has changed or does Rajiv Bajaj have something new up his sleeve?