As Thought-provoking as Yesterday’s Newspaper
This is not the kind of book that professors of management, especially those from elite institutions like Harvard, normally write. They are good at spinning a new theory on a hot topic around which they hang several real-life examples and wrap it up in a catchy title. A few years later, they spin some other theory, based on a fresh set of selective examples, while the earlier one is quietly dropped. It is rare to find a professor romping across continents and companies, interviewing officials, businessmen, senior executives and thinkers, while their assistants vacuum up a billion pieces of disparate information from the Internet and other places, all of which are then laid out in a long sequence without any central thought. The result? A book brimming with current information about two countries that is as profound and thought-provoking as yesterday’s newspaper. If you read the book, you get to know a lot about China (there is little fresh information or perspective on India) which makes one wonder what is it that Khanna is trying to say?

A pointer to the lack of a central thought lies in the way the book is introduced on the flap of the dust jacket – full of wrong notions and weak ideas. The very first sentence reads: “For the first time since the rise of Western capitalism, entrepreneurs in China and India can ignore New York and London – and still build companies worth billions.” This is a bizarre statement. Could the Tatas have bought Corus without global capital? Even as Khanna was writing this book, dozens of Chinese companies were issuing shares in New York. Experts estimate that India received $40 billion last year from foreign private equity companies for investment in real estate. India’s rickety finances, weakened by continuing corruption and inefficiency, has been propped up by billions of dollars of foreign portfolio investment year after year, until the game was up this year, due to which the market has sunk by 50%. It is factually wrong and simply preposterous to say Indian entrepreneurs can ignore New York and London. The book also claims that “China and India are embracing the world on their own distinct terms.” Isn’t that stating the obvious? Every country has unique features, shaped by history, policy framework and entrepreneurial culture. Botswana and Brazil will obviously deal with the world in distinct terms, as did Singapore and Taiwan.

There are three parts to this book. Part I titled ‘Foundations’ has four chapters that cover statecraft, information and transparency, how China can build by diktat and financial sectors of the two countries. Part II titled ‘Enterprise’ has five chapters that cover Infosys of India and TCL of China; the difficulties of foreign companies in doing business (examples of Microsoft in China and METRO Cash & Carry in India); how the Chinese Diaspora (the famous Bamboo Network) made a big difference to China’s growth; a description of how China’s rural folks are better off; and, finally, the poor healthcare facilities in the two countries. These sections are packed with information – often of the mundane variety. Part III is titled ‘Future’ and, not surprisingly, is the smallest. After all, it is always so easy to describe, but so hard to prescribe. It has four chapters: China’s hard power – its foreign policy to win over despotic regimes from Burma to Africa, to grab natural resources; India’s so-called soft power (Bollywood and other means of winning over the world); and two chapters on historical and corporate connections. Why should the last two chapters appear in the segment on ‘future’ is unclear to me except as a means of bulking up the section. Unfortunately, unlike the other chapters, Khanna could not have packed the ‘future’ section with yesterday’s information! He had to offer ideas and pointers, which are absent. Indeed, throughout, the book only describes. It never prescribes even though businessmen apparently asked him whether they can make money in India and China. The book is precisely meant for those who ask such inane questions and for Harvard and Yale students who cannot locate either of the two countries on the map. After all, if you want to read this book you have to be prepared to encounter sentences like: “The Taj Mahal Hotel borrows its name from India’s best known architectural symbol, located in the northern city of Agra, and stands facing the Gateway of India, a spectacular structure overlooking the Arabian Sea, built to commemorate the visit of King George V and Queen Mary to Bombay in 1911.”

That leaves me with one final issue. What does the title mean? India and China have a population of 2.4 billion. A billion entrepreneurs out of them, that too from countries that rank a poor 120 (India) and 83 (China) among 178 countries in the World Bank’s ranking of ‘Ease of Doing Business’? – Debashis Basu

  • Like this story? Get our top stories by email.


    Innovation In Action

    If innovation is the key to value creation, Asian Paints (APIL) offers
    a good example. Stocking paints is a nightmare. You need to keep hundreds of shades in a large number of pack sizes. Multiply the two variables and you find that you will need huge retail spaces for a product for which competition is strong. Asian Paints has introduced an innovation that has completely changed the game....

    Premium Content
    Monthly Digital Access


    Already A Subscriber?
    Yearly Digital Access


    Moneylife Magazine Subscriber or MAS member?

    Yearly Subscriber Login

    Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
  • Designing Success
    Tata Elxsi is into embedded product design services, industrial design
    & engineering, animation and systems integration. Its clients are in automotive, consumer electronics, entertainment, multimedia, medical instrumentation, semiconductors, networking and telecom. It delivers
    its services through partnerships with leading companies in the field, from its seven centres and labs across in India and studios in Mumbai. Recently, the company announced the setting up of two new development centres in Coimbatore and Hyderabad and the expansion
    of its facility in Thiruvananthapuram. During the year, it set up a 100% subsidiary in Singapore for software development and trading in computer hardware and software.

    What makes this software stock different is that it has stayed away from the plain-vanilla IT services or other business application-related outsourcing. Its focus is on product design services which contributes around 75% of its revenues. It calls itself a company focused on embedded engineering. The services include software, hardware & systems design and development programs for technology products. In automotive design products alone, the company has been able to get large orders from global entities, including the Fortune-100 companies. The latest is its tie-up with the European specifications consortium AUTOSAR. Some of the high-end automotive design products in the pipeline are night vision system, headlights that adapt to the light intensity on roads at night, sensor system that studies and automatically adjusts to each traveller’s mood in seating position, lighting and air-conditioner settings, etc. A big opportunity for this company is the takeover of Jaguar Land Rover (JLR) by the Tatas. Tata Elxsi was already supplying auto-move design services to JLR and this can increase now.

    A second division, innovation design engineering, provides end-to-end brand and product development services across various industries. It claims to deploy a unique i3 (I-cube) integrated design process for the company that has been able to ‘help global players bring products to life through compelling designs.’ The visual computing labs is the most high-profile division. It does fully animated television commercials in 2D and 3D, animation and integration with live characters for feature films, animation for TV series, Internet and visual special effects. This division’s partnership with the likes of Disney and Yash Raj Films (YRF) has enabled the company to enhance its credibility in delivering qualitative animation and special effects. During the year, the company got the National Award for ‘Best Special Effects’ for the Tamil film Anniyan at the 53rd National Film Awards.

    With Bollywood relying more and more on special effects, Tata Elxsi expects revenues from this division to grow much faster. Most firms have the capability to do either animation or special effects. Tata Elxsi is one of the few players that can do both. This division currently contributes about 5% to the Rs40 crore revenues but is expected to contribute 20% by 2010. The division is already working on a major project involving an investment of around $10 million and is in line to do two more projects with YRF and Disney. UTV Motion Pictures has decided to work with Tata Elxsi for a major project.

    The fourth division is systems integration which provides a range of hardware, networking products and storage solutions including services in CAD/CAM/CAE market. In the media and entertainment sector, it offers broadcast solutions to cater to setting up of TV channels, data archival solutions and weather forecasting software. The division also has expertise in setting up virtual reality centres for manufacturing, defence and automotive industries. The division can deal with high performance computing technologies which bridge the gap between the computational power of traditional supercomputers and that of business units.

    Revenues and profits are expected to rise by 30% in 2008-09. Turnover rose 30% last year but the operating profit was up only 8%. At Rs202.30, the market-cap is 1.71 times its sales and 8.73 times operating profit. It is worth buying for the medium term.

    No Wilting Flower
    Tulip Telecom is the leader in connecting business networks

    If companies need to get their computers to connect seamlessly across India and around the world, Tulip Telecom is the preferred choice to provide that service. From a plain-vanilla software company, Tulip has diversified well into network integration, corporate data connectivity within and outside India and infrastructure management services. According to independent researcher Frost & Sullivan, Tulip is the largest data connectivity provider, which reaches more than 1,200 cities serving over 700 customers with 110,000 connects. It is the market leader in the Indian virtual private network with a 28% market share. Tulip’s closest competitors are Sify and Reliance and much lower down, Bharti. It has been working with big banking customers like HDFC, ICICI and PNB who need fail-safe connectivity, which testifies to the quality of its services. Tulip’s advantage lies in its integrated approach in providing data management services. It has bigger competition in network integration from the likes of Wipro or HCL and in bandwidth from Reliance or Bharti as also in remote infrastructure management from HCL Infosystems; but its strength lies in providing all three services simultaneously. The company has changed its corporate identity from Tulip IT Services to Tulip Telecom which reflects its sharp focus on the fast-growing telecom segment.

    A very interesting part of Tulip’s growth strategy is its ambitious plan of being present in every village to ensure data connectivity by the end of 2009. We don’t know of any other company that believes so passionately in the telecom potential of the rural sector. The new business opportunities it sees are deployment of e-government services, financial inclusion, retail, telemedicine and demand from social organisations.

    For instance, Tulip can design, deploy, operate, manage and maintain a network that connects all state headquarters, district headquarters, block/tehsil headquarters and also all respective horizontal offices. Tulip can further extend the network to every panchayat, citizen service centres or kiosks that may be set up across the state. It can provide connectivity using wireless technology for access in the rural areas, in the licensed and unlicensed bands. Unlike other solutions that deliver limited bandwidth and are designed primarily for voice, Tulip claims that its solutions can deliver the highest quality of voice, data and video. In an interesting experiment in rural connectivity and e-literacy called Akshaya in Malappuram district of Kerala, Tulip set up an ‘always-on’ connectivity and e-kiosks that enabled rural online banking, healthcare, Internet telephony and video conferences.

    Tulip has an interesting leader. It is headed by Lt Col HS Bedi, who comes from the third generation of a family that has worked for the Indian army. Lt Col Bedi learned computers when he was posted at the army’s faculty of computer technology and was later asked to develop technology solutions for the then chief of the army staff, General K Sundarji, and various army headquarters. After this, he was posted to the army headquarters to coordinate the army’s automation plan. He was awarded the Vishisht Seva Medal for his role in the computerisation of the Indian army. After 22 years with the army, Lt Col Bedi took over the business of Tulip as its director, gave it the right focus and took it to a leadership position in critical business segments.

    Tulip’s revenues have been rising by an average 53% over the past five quarters while its operating profit was up by a solid 107% over the same period. Its average operating margin is 19%. The stock, currently trading at Rs1,102, discounts its five-quarter average sales (annualised) by 3.02 times and its operating profit by 15.90 times. It is not cheap but, given its scorching growth and price strength in a declining market, it is worth buying.

    Street Beat stocks are selected based on 3-month rolling returns from Mega-cap, Large-cap, Mid-cap, Small-cap & Micro-cap segments of MoneyLIFE database. Disclaimer: None of the stock information, data and company information presented herein constitutes a recommendation or a solicitation of any offer to buy or sell any securities. Information presented is general information that does not take into account your individual circumstances, financial situation or needs nor does it present a personalised recommendation to you. Individual stocks presented may not be suitable for you. Although information has been obtained from and is based upon sources, we believe to be reliable, we do not guarantee its accuracy and the information may be incomplete or condensed. All opinions and estimates constitute our judgement as of the date of the report and are subject to change without notice. This report is for informational purpose only and is not intended as an offer or solicitation for the purchase or sale of a security. Past performance is no indication of future results. Investors must do their own research before acting on them and maintain a stop loss of 20% at any time

  • Like this story? Get our top stories by email.


    We are listening!

    Solve the equation and enter in the Captcha field.

    To continue

    Sign Up or Sign In


    To continue

    Sign Up or Sign In


    online financial advisory
    Pathbreakers 1 & Pathbreakers 2 contain deep insights, unknown facts and captivating events in the life of 51 top achievers, in their own words.
    online financia advisory
    The Scam
    24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
    Moneylife Online Magazine
    Fiercely independent and pro-consumer information on personal finance
    financial magazines online
    Stockletters in 3 Flavours
    Outstanding research that beats mutual funds year after year
    financial magazines in india
    MAS: Complete Online Financial Advisory
    (Includes Moneylife Online Magazine)
    FREE: Your Complete Family Record Book
    Keep all the Personal and Financial Details of You & Your Family. In One Place So That`s Its Easy for Anyone to Find Anytime
    We promise not to share your email id with anyone