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Wednesday, August 14, 2013

Jewels in the Crown: How Tata of India transformed Britain's Jaguar

The first industrial power, Great Britain was also fast in losing national iconic brands- most were sold out to foreignersROLLS-ROYCE MOTOR CARS, THE MINI,  OXO, MANCHESTER UNITED,KITKAT,THAMES WATER,P&O, were few of them.  And most brands lose value in M&A. In Asia Pacific region, value after acquisition declined by 38%. Chrysler merged with Mitsubishi motors in 2000 with lot of hype and  fell apart four years later.
In this scenario, Tata Motors acquired jewel of the British crown, Jagaur along with Land Rover from Ford paying $2.3 billion. Observers had described Jaguar as a basket case and joked that since most bidders were primarily interested in the potential for Land Rover, the sale proposition by Ford was `Buy one  and get one'. Most cynical of them including UK politicians argued that Tata had simply paid a lot of money for two well known brands and that before long , JLR's equipment and expertise would be shipped off to India, leaving the West Midlands as an automotive wasteland. They reminded of the promise made by the Chinese manufacturer Nanjing Automotive when it acquired the remains of MG Rover and said it would revive mass production at Longbridge. Shareholders in India were equally pessimistic and share price post acqisition dropped by 77% from its previous high. a rights issue intended to fund the purchase was a dumb squib.
Tata pulled along, arranged $3 billion bridge finance piecemeal from 21 different lenders active in Indian market, invested further 800 million pounds in R&D and managed the acquisition in its own Tata style, empowering people. The turn around of Jaguar, given up by giants of U.K & USA, clearly show that the Uncertainty Avoidance Index of Indian mangers was more favourable to manage global firms now .There has been no brand erosion, jobs remained in Britain and Jaguar as an independent entity survived and prospered, all due to the vision of Ratan Tata.

Journalist Ray Hutton chronicles the development in an eminently readable book.

Sunday, August 11, 2013

What would be India's GDP if investment in IT and intangibles is factored

The US economy will officially become 3 per cent bigger in July as part of a shake-up that will see government statistics take into account 21st century components such as film royalties and spending on research and development. Billions of dollars of intangible assets will enter the gross domestic product of the world’s largest economy in a revision aimed at capturing the changing nature of US output. A brief look at the emerging scenario:

Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. GDP can be determined in three ways, all of which should, in principle, give the same result. They are the product (or output) approach, the income approach, and the expenditure approach. The most direct of the three is the product approach, which sums the outputs of every class of enterprise to arrive at the total. The production approach is also called Net Product or Value added method. This method consists of three stages:
1.           Estimating the Gross Value of domestic Output out of the many various economic activities
2.           Determining the intermediate consumption, i.e., the cost of material, supplies and services used to produce final goods or services; and finally
3.           Deducting intermediate consumption from Gross Value to obtain the Net Value of Domestic Output.
Both firm-level and national income accounting practice have historically treated expenditure on intangible inputs such as software and R&D as an intermediate expense and not as an investment that is part of GDP.  Now, this exclusion of intangibles is increasingly questioned. Economists in USA pointed that business investment in intangibles is a vital aspect of business activity, and the investments shown below represent a large and growing portion of the overall economy
  • Computerized information (mainly computer software)
  • Scientific R&D
  • Non-Scientific R&D

o   Cost of development of new motion pictures, films and other forms of entertainment.
o   Investment in new designs
o   Estimation of product development by financial services and insurance firms.
  •  Investment in Economic Competencies

o   Spending on strategic planning
o   Spending on redesigning or reconfiguring existing products in existing markets,
o   Investment to retaining market share
o   Investment in brand names
o   Employee training.

The rapid expansion and application of technological knowledge in its many forms (research and development, capital-embodied technical change, human competency, and the associated firm-specific co-investments) are key features of recent U.S. economic growth. Accounting practice traditionally excludes the intangibles component of this knowledge capital and, according estimates exclude approximately $1 trillion from conventionally measured non-farm business sector output by the late 1990s and understates the business capital stock by $3.6 trillion.

Can we expect our GDP estimates to be revised likewise?

Tuesday, August 06, 2013

125 start-ups funded by DeiT under TIDE

Department of Electronics and Information Technology (DeiT) under TIDE ( Technological Incubation and Development of Entrepreneurs) has supported 125 start-ups with seed capital routed through the TIDE Centres. Some of them are highlighted here.

Gamma Porite Electrotech
about us
Gamma Porite is a Clean Technology Product Company.  They have in house developed an innovative driver for LED lamps which is fitted with  IP Natura LED, which reduces energy consumed by the lamp fitted with their driver by  20 %.

Monday, August 05, 2013

EPO and DeitY will undertake joint activities in ICT related patent activities

European Patent Office (EPO) and Department of Electronics and Information Technology (DeitY) have agreed to undertake the following activities jointly.

1. Sharing of Best practices in ICT related patenting between Europe and India.
2. Searching ICT technologies and computer implemented inventions with Global Patent Index (GPI).
3. Sharing of Indo-European best practices, case studies and success stories related to patents in the ICT domain.
4. Global Patent Index (GPI) test access and online trading.

For details contact  :Ajai Garg ,