Kingfisher Airlines on the rocks

Vijay Mallya's Kingfisher Airlines is deep in the red. "Kingfisher Red" has become a self-fulfilling name. This aviation company anxiously awaits the emergence of some kind of a saviour. It is anybody's guess whether there will be corporate amputation or a corporate takeover. Mallya has started identifying external excuses for his self-inflicted misery. He has raised issues like "Should a business be forced to carry on despite loss?" (i.e. does not an airline have the right to cancel flights?) and "Does it make sense for the government to insist on catering to ungainly routes?"

He is a firm believer in "privatising profits and socialising losses". Hence the Civil Aviation minister was requested to come to his succour. Vayalar Ravi in turn sought help from the Finance Minister who turned to the Petroleum Minister. Not one to put up with the game of passing the misplaced buck, Mallya turned to the Prime Minister. The latter wants the ministries concerned to look into the matter. What else can a Prime Minister without authority do? Has it not occurred to Mallya that only the UPA Chairperson can ease him out of the quagmire?

Why is Kingfisher in this predicament? Unlike his father, Vijay Mallya keeps chasing glamour. This strategy does not always make business sense. There is a story (apocryphal?) of the Chairman of a bank who decided after travelling once by Kingfisher Airlines that a company that delights its customers so well cannot fail and thereafter started lending to the Airlines. He had overlooked the caution that excellent customer service is only a necessary, but not sufficient, condition for corporate success.

It will be unwise on the part of the government to pressurise the banks or the oil companies to extend a favourable treatment to an ailing company. That will amount to penalising the tax payers. Mallya should actively look for a buyer. Ego should not stand in the way of common sense.

Riding the storm of life

Here is a nice narration on how to deal with life by Janina Gomes that recently appeared in TOI Speaking Tree.


Riding the storm of life




Janina Gomes
Jun 15, 2011, 12.00am IST

We do not have to go to the foot of the Himalayas to attain inner peace. We

also do not need to renounce everything before attaining quietude.

Instead, we can live day to day in inner quietude. If we look at all of

life's experiences and their disturbing content with inner eyes, the

disturbances we undergo will remain at the periphery. Deep down there will

be an emotional quiet.

Inner peace is all about coping. If the unpleasant and painful memories

remain too long with us, we will not make the transition that we are called

to make from restless non-acceptance to quiet acceptance.

We are in a win-win situation when we accept the challenge of living,

discriminating how far we should go along a certain track, who we should

relate to in more intimate terms and those we need to distance because their

values are so disparate from our own.

If we are self-sacrificing and wise, we will remain calm and tranquil

despite the provocations we face. We do not avoid difficult people and

circumstances, but learn to deal with them by distancing ourselves from them

and building on relationships that bring happiness.

Withdrawal is an option but it would lead to disengagement and

non-involvement and that does not bring required results. The inner peace we

crave for comes after traversing a long passage. Learning with experience,

we begin to take things in our stride. It's not all that easy, though.

There are many ways to cultivate and build on inner peace. We could set some

time aside daily for prayer and meditation. Disproportionate understanding

can blow up the way we perceive things. We could spend quiet time in the

garden, in silent communication with plants and trees. We endure life's

storms and learn to absorb its shocks and we find that we are, in fact, in

the midst of all these circumstances, communing with God, a tangible

presence in our lives.

Coping is not just reactive, it's proactive, too. We pick up the mantle

thrown to us and practise patience, detachment, endurance, serenity and

acceptance of all that comes our way. To overcome obstacles and difficulties

we need to develop coping skills that encompass emotional, mental and

spiritual needs.

The only difference between the wise and the foolish is that the wise learn

to cope with reality and transform it and the foolish get swept away by the

ups and downs of life.

Life is uncertain; it is unpredictable. It is also unfair, it seems. But in

learning to cope with all the ups and down of life, we begin to live a full

life.

There is the parable of the wise man in the gospels who built his house on

rock. It withstood all the rains and storms. On the other hand, the man who

built his house on sand watched his house get destroyed in the rain and

storm. Hence, we need to cultivate rock-like resilience and welcome

attributes that will help us to cope. The reward of inner strength is inner

peace. Right here, in your living room, your workplace, in your family you

will find inner peace. We do not have to look too far.

Once we learn to cope, the going will be easier and there will be no need

for camouflage. There is no need to hide our real selves. We will be able to

stand up and meet life on our own terms. And experience the fulfilment of a

pilgrimage well weathered

Hindustan Unilever

18th March 2010 we discussed the none-too-good state of Unilever group under the caption "Unilever in crisis mode?" There are some happy tidings since then.

Harish Manwani who continues as Chairman of HUL will additionally be COO of the Unilever group. Gopal Vittal, one of the EDs of HUL recently remarked, "The question is , are we winning in the markets of tomorrow, with the consumers of tomorrow, in the segments and the channels of tomorrow, because in each of these there are tailwinds coming our way".

Nice to hear. Though focus on future is necessary, we need to realise that the long run is only a seres of short runs. If a company does not do well in a series of short runs, its long term strategy also gets stymied. Strong headwinds in the near term may not allow us to survive in the distant term.

Myopia is bad. Hypermetropia may be worse!

BRIC cleaves in the middle (contd.)

Coincidences never cease to surprise us. Have a look at the following report from AFP:

29 December 2010 - 11H26



Medvedev fires space chiefs after satellite failure

"A Proton-M rocket, carrying the Russian Glonass-M satellites, blasts off from the Russian-leased Baikonur cosmodrome in Kazakhstan on December 5. President Dmitry Medvedev has fired two top space officials and reprimanded the head of Russia's space agency after the failed launch of three vital communications satellites, the Kremlin said. AFP - President Dmitry Medvedev on Wednesday fired two top space officials and reprimanded the head of Russia's space agency after the failed launch of three vital communications satellites, the Kremlin said.

Medvedev fired Vyacheslav Filin, vice president of the Energia Rocket and Space Corporation, and Viktor Remishevsky, the deputy head of Russia's Roskosmos space agency, news agencies quoted a Kremlin statement as saying.

The Russian president also reprimanded Roskosmos chief Anatoly Perminov, the statement added.

"On the Russian president's instructions, Roskosmos will undertake additional measures to strengthen its performance discipline," the Kremlin statement said.

A Russian Proton-M rocket failed to reach its initial orbit during the December 5 launch, causing it to dump the three high-tech Glonass-M satellites near the Hawaii Islands.

It marked an embarrassing setback to Russia's much-publicised attempts to introduce a global rival to the US Global Positioning System (GPS), a programme that was first begun by the Soviet Union in 1976."

Last week, India's attempt to launch a GSLV rocket ended in failure in the first stage itself causing deep embarassment. However, no scientist was fired. We may perceive the contrasting styles of Russia and India in any of two ways.

1) There is accountability in Russia, but not in India.

2) India is more considerate and does not resort to witch-hunting.

The choice is yours.

Unilever in crisis mode ?

Hindustan Unilever (HUL) is strategically important to Unilever as repeatedly claimed by the latter. The number of households as customer base is perhaps the largest for HUL among all Unilever companies. Unilever admittedly learns a lot from the experience of HUL. HUL (HLL before it was rechristened) has produced many stalwarts (called Listers inhouse) who were subsequently promoted and repositioned globally by Unilever. HUL markets a bouquet of products which are household names in India. HUL has also been a coveted employer for a long time. Many executives trained and sharpened in HUL are now ably managing other companies.

All does not seem to be well with HUL of late. Unilever is rumoured to have cracked its whip and advised HUL to show better results, both topline and bottomline. The renowned marketing expertise of HUL has been steadily losing its sheen in this century. Has the company lost its way ? In early noughties, HLL started focusing its attention on "power brands" with a view to bolster its profitability. Instead of boosting profits, the strategy resulted in diminished sales and profits. This double whammy forced the company to dwell on opportunities from bottom of the pyramid for some time. When this changed marketing strategy failed to improve its fortunes, the company started re-emphasising its high-margin products. This to-and-fro marketing mess-up brought disrepute to the company and stakeholders began to view it as a company in terminal decline.

When a firm is seen to be in decline, exits from top management lend further credence to negative public opinion. D,Sundaram, Vice-Chairman of the company quit a few months back. He was the CFO of the company for a pretty long time and the public used to associate him with the financial well-being of HUL. His departure from the company when he was only 54 years of age fuelled suspicion that HUL was perhaps a sinking ship.

Even before this news was fully digested by the market, out comes the information that M S Banga who was earlier Chairman of HLL and presently in executive Board of Unilever has decided to call it a day in Unilever and to reinvent himself in some other (and perhaps better) environment. He is aged 55. Is there something behind the formal mutual encomiums exchanged between Unilever and Banga when the surprising announcement was made ?

When in a crisis, it is not unusual for persons and companies to go berserk. Is this what happened when HUL released an advertisement recently disparaging Tide natural ( detergent made by P&G) by name ? Is it desperation masquerading as a competitive ad ?

Corporate distress is often foreshadowed by a dent in the share price. HUL, ITC and P&G Hygiene are viewed as peers in the stock market . HUL was quoting at a premium of Rs.40 over ITC for a long time. It has now started suffering a discount by the same amount. HUL's Price to Earnings Ratio was traditionally more than ITC's because of the latter's predominant exposure to tobacco. At present, PE Ratios of HUL, ITC and P&G are 24.4, 25.8 and 29.7 (based on closing prices on 18th March) respectively.

Will HUL regain its pristine lustre as a sought-after employer, a marketer of "quality products" and a darling of the stock market ? Or will it cease to be a gem in Unilever group, denting the group's fortunes in the process ?

Why most things fail

I should have known better.I understand from a Reuters' message datelined 19th inst.that the Professional Association of Teachers,London has clarified that there is nothing called 'failure'.It is all 'deferred success'.--Srivarahan"K.R.Srivarahan" wrote:"Why most things fail:Evolution,Extinction and Economics" is a book written by Paul Ormerod and first published in March this year by Faber & Faber.He is a former Head of the Economic Assessment Unit at The Economist.His earlier books include 'The Death of Economics' and 'Butterfly Economics'.Irrelevance of mainstream economic theories is the common theme of these books.The writing in the latest book is a (AH)Kalroesque combination of rigorous reasoning and unambiguous statements.There is no reference to cliches like 'Murphy's Law' and Icarus Paradox though they are apparently appropriate to the title.The book reasons why as many as 10% of American companies vanish every year.It explains the causes for failure of public policies (plans to promote integration,ameliorate poverty,reduce inequality,enhance social mobility etc.).Though brief (255 pages),the book's coverage is comprehensive including game theory,bounded rationality,Slim-Fast vs.the Atkins diet,Coca-Cola vs. Pepsi,how the success of Windows is more accidental than planned,etc.(The New York Times commented in 1985,"Running Windows in 512 K of memory is akin to pouring molasses in the Arctic.The product is essentially useless."Comments of Bill Gates and Steve Ballmer in 1988 are even more surprising.Bill Gates:"OS/2,designed by IBM and Microsoft will be the environment for office computing in the 1990s".Steve Ballmer:"We are not going to have any more Windows.It is all OS/2".)Interesting parallels are drawn between extinction of biological species and closure of business firms.