DoMination - April 2013

D OMINATION

AP

RIL

20

13

NEWSLETTER FROM DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

VOLUME-IV ISSUE-03

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Editorial ………………………………………………………

02 | DOMINATION, APRIL 2013 DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

- Regards

Team DoMination

Dear Readers,

It is the month of April.

As the new financial year is on,

we present you another

thought provoking issue of

DoMination from the inquisi-

tive minds.

The edition covers a

number of articles from a di-

verse and interesting set of

subjects. The cover story

“Rethinking Business” is writ-

ten by Ashish Aggarwal and

deals with the idea of organiza-

tional agility in modern day or-

ganizations. Another equally

appealing piece is the “Brand

Tribalism” authored by Manish

Rajwar. It tries to illustrate

some key characteristics and

trends in the field of marketing.

Recent budget has al-

ready created a lot of waves

both for general public and ex-

perts. This edition takes a dig

into one of the vital aspect of

“Taxing High Net worth indi-

viduals”, written by Abhay

Kumar and Sharad Srivastava. It

is an attempt to gauge the ef-

fect of the policy for govern-

ment, public and other stake-

holders.

Apart from these stimu-

lating articles, DoMination is

also rich in terms of fun quo-

tient. This month has another

round of quiz for curious

minds. Further it also contains

a beautiful poem “Winner” by

Vaibhav Shrivastava.

It is always good to lis-

ten to industry leaders. This

edition presents an interview

of Sneh Mahiwal. Sneh is a

2010 batch pass out of DoMS

and currently working in Ship-

ping Corporation of India. We

also have a success story of Mr.

Vijay Shekhar Sharma, founder

and CEO of one97, a telecom

products and services com-

pany. We hope these articles

will be helpful for the budding

managers and leaders.

Recently we have wit-

nessed “Avyudaya”, the opera-

tions summit which was suc-

cessfully conducted in DoMS.

The event was attended by

some eminent industry experts

and proved to be very useful

for the students. The edition

includes a report on the event,

and other major details.

We hope that the cur-

rent edition will be liked by

you. As we are constantly try-

ing to improve the magazine,

your guidance is most wel-

come. Please feel free to write

to us for any suggestions &

comments. Happy Reading…...

Contents Faculty Advisor

Dr. R. L. Dhar

Team DoMination

Abhay Kumar

Arun George

Nilaya Shankar

Priyank Singhal

Rohan Krishnan

Saurabh Paul

Sharad Srivastava

Designing Team

Ritesh Kumar

Sabhariswaran P

Saurabh Patel

DEPARTMENT OF MANAGEMENT STUDIES INDIAN INSTITUTE OF TECHNOLOGY ROORKEE

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

………………………………………………………03 | DOMINATION, APRIL 2013

Roorkee - 247 667, India Tel: +91-1332-285014, 285617 Fax: +91-1332-285565 Email: [email protected]

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12

04

07

23

11

18

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mailto:[email protected]?subject=Feedback

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Cover Story

Perspective | Chlorophyll | Qutopia | DoMS da Evince | Success Story | Regardez I’economie | DoMS Spotlight

04 | DOMINATION, APRIL 2013

Organizational agility of

a company implies that an or-

ganization is active in under-

standing the changes and re-

acting to them. The main chal-

lenge for an organization these

days is not just to continue its

operations but to react to

changes that happen in the

economy. The business envi-

ronment is changing every day

in terms of trends, standards,

competitions, technology, op-

portunities etc. Only those or-

ganizations which foresee

these changes and react

quickly to them thrive in to-

day’s world.

Strategic agility is the

ability of the organization to

make a new game plan when a

new opportunity emerges or

change the strategy of profit

making when some business

units are not working as ex-

pected. The strategy also in-

cludes understanding market

growth in a particular business

unit and applying its resources

to maximize the revenue.

Portfolio agility means

maximizing its revenue through

effective utilization of re-

sources in business areas

where profitability is more and

revenue growth is expected to

be better. Operational agility is

defined as the way to

strengthen supply chain and

reduce the overall cost of the

production. Today the market

has become price sensitive be-

cause of which we cannot in-

crease the price of the product

so the only way to remain prof-

itable is to reduce the manu-

facturing cost.

There are some compa-

nies which have leverage on its

organizational agility. One of

those companies is “Toyota”.

Toyota has been highly suc-

cessful in its supply chain man-

agement and its constant im-

provement. Toyota follows the

practice of “ Kaizen “ which

means continuous improve-

Business-Competing through organizational agility

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Rethinking business-competing through organizational agility


ment . Its competitors are not

able to imitate its supply chain

structure which is why they

have not been able to beat

Toyota , the largest seller of

automobiles the world over.

Strategic Agility:

The strategic planning

model which uses the core con-

cept of documenting and a step

-by-step analysis of ways for

an organization to reach its

goals is considered to be obso-

lete in today’s business envi-

ronment. The basic flaw here

was that the model worked on

the assumption that business

conditions the world over re-

main constant over time. When

we are not confidentially able

to predict the market condi-

tions for six months or a year,

our planning and results are

seldom coherent.

In today’s scenario what

we require is strategic thinking

as compared to strategic plan-

ning. Strategic planning is a

logical, linear, step-by-step

process for an organization to

reach its goals, whereas strate-

gic thinking is grabbing any

new opportunity and capitaliz-

ing on opportunities even with

incomplete information and

time pressure. Strategic think-

ing is continuously looking at

linear as well as nonlinear

paths for opportunity. Strategic

planning is end to end whereas

strategic thinking has no end.

Strategic agility is the ability of

an organization to remain flexi-

ble and to develop innovative

ways to create value. It is about

being an opportunist rather

than being rigid.

Strategic agility is

formed by the combination of

these three capabilities.

Strategic Sensitivity which re-

fers to sensing of growing

trends and converging forces at

real time pace. It is achieved by

the high level of attention to

the market.

Leadership Unity which refers

to the capability of the senior

management to take a quick

decision in the event of a new

opportunity/development even

if the complete data is not

available. It refers to the ability

of the leadership to understand

the strategic change and the

choices it can produce. Top

leadership needs to take a deci-

sion fast enough to capitalize

on the opportunity.

Resource Fluidity is the capa-

bility to reconfigure the busi-

ness system and redeploy the


………………………………………………………

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Rethinking business-competing through organizational agility


resources rapidly. The com-

pany should be capable to re-

deploy its resources to a new

business development which is

more profitable than the rest.

Nokia’s Experience in strategic

agility

A former President of

Nokia captured the point suc-

cinctly, “Five to Ten years ago

you would set your vision and

strategy and then start follow-

ing it .This does not work any-

more. Now you have to be alert

every day, week and month to

renew your strategy.”Nokia be-

ing an old company whose

business was forest products,

rubber and cables transformed

into an entirely telecom based

company is a brilliant example

of strategic agility.

Nokia’s success story

From the 1860’s to the

1950’s Nokia had been primar-

ily a company based on forest

products. Since then it was

transformed into a diverse con-

glomerate. Nokia had always

looked for innovation and di-

versification which led it to en-

ter into insulated cables mak-

ing business in 1960’s and then

to mobile handset company by

acquiring Mobira in 1970’s. In

the late 1980’s it was in deep

trouble due to the fall of the

Soviet Bloc in 1989 followed by

that of the Soviet Union two

years later which was its main

dealers. In a short run Soviet

demand plummeted which re-

duced the telecom business of

Nokia to half. The senior man-

agement was under immense

pressure and the last option

was to be acquired by Ericsson.

This was the time when

Nokia showed its strategic agil-

ity in sensing the opportunities

in telecom sector which led to

its overwhelming growth in this

sector.

Nokia sensed that the Gov-

ernment was likely to invite

new entrants to provide

mobile services on a com-

mercial competitive basis all

over the world. With its ex-

perience of serving local

service providers in Finland

and with market liberaliza-

tion, Nokia started learning

how to deliver end to end

services to small scale op-

erators. Simultaneously

Nokia also anticipated the

emergence of new private

operators in the market

with which they do busi-

ness.

Nokia sensed the likelihood

of full digitalization of the

network. It used to rely on

Intel processors for its semi-

conductor chips. Nokia real-

ized the implication of fully

digitalization to a better ef-

fect than its competitors.

Nokia committed early to

the emerging European

digital GSM Mobile commu-

nication standard. Nokia

also started building rela-

tionships with new inde-

pendent mobile network

operators. In early 1990’s

when the GSM market took

off Nokia had already struck

a deal with a new operator.

This shows the strategic agility

of Nokia which led it to a won-

derful growth over the years.


By:

Ashish Aggarwal

[email protected]

DoMS, IIT Roorkee (2012-2014)

………………………………………………………

Perspective ………………………………………………………

Do we have anything in

us, living in a post-modern soci-

ety, in common with the primi-

tive tribes like the one shown

in the super hit 1980 film

"Gods Must Be Crazy"? Ac-

cording to Marketing Gurus,

the answer seems to be –

"Yes". In fact they have a term

where they term us as tribes-

Brand tribes, to be precise. So

what does it mean?

According to Wikipedia,

A brand tribe can be defined as

a network of varied persons

who are linked by a shared be-

lief around a brand; its mem-

bers are not simply consumers,

they are also believers and pro-

moters. A brand tribe is capa-

ble of collective action and

therefore has implications for

post-modern business. Accord-

ing to Veloutsou and Moutinho

(2009), "In today’s postmodern

society there exists a network

of societal micro-groups in

which individuals share strong

emotional links, a common sub

-culture and a vision of life."

They are called the Brand-

Tribes.

A brand-tribe goes be-

yond brand loyalty in the sense

that brand loyalty means that

you buy the particular offering

from the brand again and again

whereas the brand tribe would

buy the associated offerings

too. For example being loyal to

Disney brand means you would

watch Disney movies again,

while being a member of a

brand tribe means that you

may choose to buy associated

merchandise like Water Bottles

with pictures of Disney charac-

ters.

So, the new post-

modern brand-tribe is in fact

no different from the ancient

tribes except in one respect.

Since the modern society is

multi-faceted, we may be



BRAND TRIBALISM

07| DOMINATION, APRIL 2013

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Brand Tribalism

DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE 08 | DOMINATION, APRIL 2013


members of multiple brand-

tribes in same and different ar-

eas at the same time.

Background:

Brand Tribalism is a

fairly new concept which can

be traced back to two research-

ers in particular. The first one is

Michel Maffesoli who pub-

lished "The Time of the

Tribes: The Decline of Individu-

alism in Mass Society" in 1996.

The next is the Bernard Cova

who mentioned it in two of his

researches – "Relationship

Marketing: A View from the

South" and "Community and

Consumption: Towards a Defi-

nition of the Linking Value of

Products or Services" in 1997

and has been improving on this

theory. There have been a lot

of other researches which

point out to evidence of such a

phenomenon.

In popular business lit-

erature too, this term is being

used more frequently. The

most prominent book on the

subject- " Tribes: We Need You

to Lead Us" is written by Seth

Godin.

How it Works:

There are 5 things which

describe a brand tribe:

Joining the tribe/ Initiation:

This is the step when the con-

sumer decides to associate

himself/ herself to the brand.

Some say that it is when the

consumer uses your product or

service for the very first time

whereas others argue that it

begins well before that, when

they first fixate on your prod-

uct/ service as their choice. The

promoters of the first stream

of thought argue that since a

lot of customers don't end up

buying the product of their

choice due to various reason,

they don't qualify. For example,

I love the iPhone. However,

since I cannot afford an iPhone,

I am not part of the iPhone

tribe. In fact, I am still a

'wannabe'. However, since I

may still display some of the

characteristics of an iPhone

owners club, I may be termed

as a non-profiting member of

the brand tribe.

Rituals: A brand tribe ritual

is a set of things you do to

show affiliation to a brand. The

annual HOG's (Harley Owner

Group) gathering is an excel-

lent example of a brand- tribe

ritual.

Shared beliefs: This is a no-

brainer. People want to associ-

ate themselves to a brand tribe

because they believe in it. For

example, irrespective of year-

on-year results, Manchester

United Fans continue to believe

that their club is the best foot-

ball club in the world.

Symbolism: Symbolism are

things you do to show affilia-

tion to your tribe without any

………………………………………………………

………………………………………………………

particular occasion. For exam-

ple, people dress up as their

favorite characters, such as El-

vis Praisley or Ghazini, to show

their affiliation to the brand

tribe for that particular charac-

ter. People bought Star-Wars

merchandise like Light Sabers

and Darth-Vader masks as sym-

bols of their brand-tribe affilia-

tion to Star-Wars movie fran-

chise.

Recruiting new Members:

People try to recruit new mem-

bers to their brand tribe

through word of mouth public-

ity. You can find numerous

such examples on product sell-

ing websites where existing us-

ers try to convince people to

buy one particular product.

Some even go on to the extent

of gifting you the item in the

hope that you will appreciate it

and start using it.

Defending your tribe: It is

the most advanced level of

brand-tribalism where you ac-

tually start defending your

brand-tribe against that of the

competitor. For example you

may have seen rubbishing a

competitor's product on any of

the social media sites or else-

where. The most prominent

one's which turned bitter are

Mac OS users vs Windows us-

ers and Apple iPhone vs Sam-

sung Galaxy users.

What is the evidence?

Although few studies

provide empirical relationships,

there have been myriad exam-

ples highlighted by researchers

which throw light on this phe-

nomenon. An early study which

signaled the presence of brand

tribes was on Harley Davidson

Owners Group by Schouten

and Alexander in 1995 which

led to concentrated marketing

efforts including the formation

of Harley Davidson Owners

Group (HOGS) and the annual

motorcycle rally organized by

them. It helped the company

strengthen its brand and main-

tain a significant market share

even in the presence of nimbler

competition.

Another study which

emphasizes the importance of

brand tribes is on Toyota Prius

in Portugal. After selling only

50 1st generation Prius in Por-

tugal, the company tried to

promote it widely with the

launch of 2nd generation

model in 2005. As part of that

market awareness exercise, it

organized a meeting with exist-

ing Prius owners which can be

viewed as the first tribe ritual.

Later, a consumer created an

online community – Prius PT,

which has over 900 members

who are owners, prospects or

simply people curious to know

about the Prius. Over 100

members actively engage and

share experiences and respond

to queries. They know each

other personally. All this has

led to a boost in sales of the

Prius model in Portugal.

However, ignoring con-

sumers can also lead to crea-

tion of tribes. One of consum-

ers of a renowned computer

company faced trouble with his

newly bought laptop and the

tedious response of the servic-

ing centre. He wrote a blog

about it. Garnering a huge

amount of response from peo-

ple facing problems with their

devices of the same brand, he

launched a site which organ-

ized people who were facing

troubles with their devices of

the same brand. The negative

word of mouth publicity so


Brand Tribalism


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………………………………………………………

generated affected quarterly

sales. The company ultimately

paid attention and started re-

solving the problems one by

one. Today, the site still exists,

albeit under the ownership of

the company. All problems

posted on it are addressed

within a day. Many other anti

brand sites such as anti-Wal-

Mart, anti-MacDonalds and

anti-Starbucks exist and have

been studied which shows that

such sites have a negative influ-

ence. Companies must address

their problems in order to save

their image and market share.

What are its implications for

the Marketers?

A brand tribe has some

very distinct advantages like:

Free publicity through Word

of Mouth Advertising

Strong associations

The lower cost of acquiring

new customers as existing cus-

tomers bring more customers

Higher purchases of brand

and associated merchandise

Lower cost of defending

your brand

Future versions sell like hot

cakes from day one

In the wake of the above

advantages, marketers must

actively try to create a brand-

tribe. The initial members must

be recruited with enthusiasm.

Current users must be amazed

regularly and members of a ri-

val-brand tribe should be

wooed so that the feeble asso-

ciates may be weaned away.

The growing evidence of brand

tribes has led to rise of a few

consulting firms which special-

ize in helping companies create

their very own brand tribes.

In these rapidly chang-

ing times, all firms, big and

small need to create their own

brand tribe to survive in the

long run.


Brand Tribalism


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By:

Manish Rajwar

[email protected]

DoMS, IIT Roorkee (2012-

2014)

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Chlorophyll ………………………………………………………Its wise to learn, its GOD like to create



People with pretence, People with parallel perceptions.

Hatred with deep abhorrence,

Relations like faked connections.

Amongst them, caught up is you, Caring for people and their views.

The jolt of punch from the fate,

Impulsive enough to push you in the race.

Now, you run, you run hard, No people, no fate, just win on your card.

Don’t recognize failure,

As you never learnt to lose.

All you know is to win, All you have to choose.

By- Vaibhav Shrivastava [email protected] DoMS, IIT Roorkee (2012-2014)

WINNER


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Qutopia ………………………………………………………

It’s Exquizite, Kills your Quriosity and adds to your Quizdom. Need we say more? ‘Qutopia’ – A Utopia of the best Biz Quiz Tidbits to wreck your brains! Rush in your answers to [email protected] before 3oth April, 2013. The winner will have their names published in the next issue. Also, person getting the highest score in the current quarter (Apr-Jun 2013) will get a gift voucher. Answers in the next issue of DoMination.

Section A (1 Point for each correct answer)


1) Which is the second brand to be launched by Maruti after 800?

2) “THE ROOTS” a Chennai band, was a quartet comprising John Antony, Jojo, X and Y. Identify X and Y.

3) Which is the existing oldest football competition in the world outside Britain? Also identify the host

country.

4) What was established in 1988 by government of India in collaboration with Russia as a result of refusal

by Cray research to provide super computers to India?

5) This company started a social networking project with a code name which was named after a painting

by Albert Bierstadt. Name the company.

6) This policy seeks to strengthen India’s relationship with South East Asian nations. This policy is known

as........................................



mailto:[email protected]

………………………………………………………

Qutopia ………………………………………………………


Section B (2 Point for each correct answer)


2) What is the Occasion?

1) Identify the brand by the ad given below.

4) Identify the personality .He is film director, screenwriter and producer.

3) Identify the movie by below picture.


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Qutopia ………………………………………………………



Section A

1. HCL Technologies

2. The Fiscal Cliff

3. Related Diversification

4. Project Shakti

5. Kanwal Rekhi

6. Shanghai Cooperation Organization

Section B

1. Kung Fu Panda

2. Carrefour

3. Delhi Commonwealth Games 2010

4. Dr. Sarvepalli Rashakrishnan

Answers for Mar’13 edition

Winner of March Edition

Mohit Goyal

DoMS, IIT Roorkee

2010-2012


………………………………………………………

DoMS-da-Evince Sneh Mahiwal is a 2010 batch pass out of DoMS, IIT Roorkee and pres-ently working as an Assistant Man-ager in Shipping Corporation of India.



………………………………………………………

Question: Please let us know

about your journey prior to

joining DoMS, IIT Roorkee.

Response: Prior to joining IIT Ro-

orkee, I was pursuing B. Tech in

Computer Science from M.B.M

Engineering College Jodhpur. I

joined DoMS as a fresher with

no prior experience and frankly

speaking I was bit nervous be-

fore joining as everybody told

me that MBA is only for experi-

enced people.

Question: How was your experi-

ence as an intern at Bharti

Airtel?

Response: I have been fortunate

to work in Bharti Airtel corpo-

rate office. Airtel was my first

entry into the corporate world

and I can vouch for the fact that

it has one of the best work cul-

tures in terms of the exposure

and flexibility you get. The

whole experience of working in

marketing division, the pressure

of launching a new product in

the market is truly knowledge-

able and exciting; the 2 months

were truly unforgettable.

Question: What are your roles

and responsibilities at Shipping

Corporation of India Ltd.?

Response: I am working in Pur-

chase and Service department

as Assistant Manager in Pur-

chase division. I am responsible

of Procuring goods, which are

essential for running our ships

safely and without any incon-

venience. For procuring materi-

als, I have to be commercially

aware with experience of each

step of the purchase cycle, the

cost specifications, the quality

standards, order-detailing and

scheduling and managing ten-

dering process within tight pro-

ject deadlines, budget parame-

ters Apart from this, I am in a

core team of ERP-SRM module

for implementing in the Corpo-

ration and Handling the Mate-

rial Master of procurement divi-

sion in ERP .And above all its all

about negotiating skills and the

ability to obtain best value for

the company.

Question: What steps SCI has

taken to manage the effect of

economic slowdown?

Response: Shipping industry is

still wading through choppy wa-

ters and it is unlikely to come

out of the rough currents at

least for the next three-

quarters. Freight rates are low.

So, 2013 might still be a stressful

year. One cannot expect re-

markable improvement. Things

might start improving by end of

2013.SCI has been conservative

in its financial management. SCI

now have a fleet strength of 79

vessels with 5.85 million dead

weight tonnage (dwt). That is

about 38 per cent of the total

Indian tonnage. SCI have young

fleet now, which means better

acceptability in the market, less

repair and maintenance and less


………………………………………………………

DoMS-da-Evince



………………………………………………………fuel consumption. SCI is trying

to increase the rates in certain

European segment, stopped

making some calls at certain

ports, trying to reduce the loss

in unprofitable segments. So I

hope, if the plan goes well, soon

SCI will be again profitable Cor-

poration.

Question: What has been the

most challenging role in your

career so far?

Response: The most challenging

part in my job is being efficient,

patient, innovative, result ori-

ented within the parameters of

government guidelines. It’s like

you are running to win a race

while your legs are cuffed.

Question: Would you like to

share any interesting incident

with us?

Response: My life is full of inter-

esting incidents and quoting

only one will be unfair to the

rest of incidents. So, I would like

to pass this question for future

talk in person with Domsonians.

Question: Any message readers,

especially for the current batch

of DoMS?

Response: Ohhh...that’s the

most difficult one to answer, I

believe I am far too young and

not that experienced to really be

spreading out messages. All I

would say is that believe in your-

self, be competitive, be bold yet

humble and try to get knowl-

edge from whatever source u

find in your way even the assist-

ing staff or the Chaiwala will

give you an insight of life . Use

your knowledge wisely and in

time.

Wish you all best of luck!!

“The road of life twists and turns and no two directions are

ever the same. Yet our lessons come from

the journey, not the destination.”

Don Williams Jr.


Success Story ………………………………………………………

………………………………………………………

Energetic, knowledge-

able, passionate, driven, posi-

tive – some of the qualities that

strike you when you meet Vijay

Shekhar Sharma, the young

and dynamic business leader,

Founder and CEO at One97

Communications Pvt Ltd.

From being the young-

est graduate from Delhi College

of Engineering (DCE) to making

One97 amongst the most cov-

eted telecom applications and

mobile services company in

Asia today, Vijay has always

sided with the unconventional

at each step. He has created

unprecedented business mile-

stones using his sharp and

quick decision making skills.

Vijay is also been credited by

the telecom industry for put-

ting together the most entre-

preneurial, agile and incisive

leadership team in One97 that

is currently powering ambitious

growth plans.

One97 Communi-

c a t i o n s P v t . L t d .

(www.one97world.com) today

is a business leader in the In-

dian telecom applications and

mobile services space. The

company that was born out of

one man’s passion has man-

aged to build unparalleled na-

tion-wide telecom infrastruc-

ture and delivery capability and

is recognized as a pioneer in

the field of telecom innovation.

One97 spans the length and

the breadth of the telecom

landscape in India and over-

seas, servicing across seg-

ments, customers, technolo-

gies and geographies. One97

works closely with telecom op-

erator to enhance revenue,

profitability and customer re-

tention opportunities. It also

creates innovative solutions for

the mobile eco-system for con-

sumers and corporate with

relevant content, community

and applications products.

One97 thrives on disruptive in-

novation in telecom application

space. One97 is also home to

telecom brands like mPandit,

oc2ps, PayTM; and Oorja.

One97 is headquartered in

New Delhi, with presence

across the telecom map. A

strong group of investors com-

prising Intel Capital, SAIF Part-

ners and Silicon Valley Bank

have funded One97 Communi-

cations.

Music and Gizmos are Vijay’s

other passions and he actively

supports a number of non- gov-

ernmental organizations.



Mr. Vijay Shekhar Sharma is the founder of One97, a telecom product and services com-pany. Currently he is the chief executive offi-cer of the organization.


………………………………………………………

Regardez I’economie ………………………………………………………

The concept of taxing

the high Net worth individuals

originated from the developed

countries and largely an out-

come of the recession. This was

the period when most of the

developed nation observed

negative growth in their GDP.

In order to contain the depress-

ing effect they had to spend

huge amount of money on sev-

eral activities such as bailout

packages or social spending.

This massive expenditure has

led to fiscal deficit and debt has

increased enormously over the

years. Today most of the devel-

oped countries' debt has in-

creased so exhaustively that it

is going to overtake their GDP;

and in some cases it already

has. It means the government

has more debt liabilities than

its gross production i.e. techni-

cally bankrupt economy. To

avoid the collapse of the econ-

omy, the government has re-

sorted to discriminatory taxa-

tion policies which emphasizes

that those who earn more will

be taxed more heavily. The

idea of higher taxes for richer

people is hotly debated and

even transferred into a political

issue. For example in 2012, this

was the one of the hot issues in

France presidential election.

Interestingly the socialist Party

Candidate Mr. Francis Hollade

who vowed to tax the super

rich by 75% finally won the

election. Similar calls for tax

regulations are on the rise in

other developed nations like

France, Australia, US, UK etc.

An overview of debt-to-GDP

ratio is given for several coun-

tries.

The data provides some fasci-

nating insights. It reveals that

most of the developed coun-

tries were reeling under high

debt. Europe is also reeling un-

der the pressure as evident

from the 150% figure of Greece

and over 100% figure for Italy.

Asia on the other hand, is doing



TAXING HNI


………………………………………………………

Taxing HNI ………………………………………………………

exceptionally well barring Ja-

pan. USA, the largest economy,

too has surpassed the critical

mark of 100% and making des-

perate efforts to save its econ-

omy. In 2013, it passed a very

controversial law “The Ameri-

can Tax Relief Act 2012”or

popularly known as Fiscal Cliff

Bill; which talks about increas-

ing GDP growth along with rais-

ing tax rates and a cut in social

spending.

The obvious question in

such situation is, what the way

forward is. In layman terms the

deficit can be controlled by two

ways, either increase the reve-

nues or reduce the expenses.

To increase revenue govern-

ment usually go for disinvest-

ment of public assets or tax

rate increases. Similarly cost

cutting can be done by auster-

ity measures such as decrease

in social spending and the re-

moval of subsidy. Each method

has their comparative advan-

tages as well as disadvantages.

Out of them, increasing taxes is

most often used technique by

governments. However many

believe that taxation should be

done according to their finan-

cial position rather than a

sweeping policy for everyone.

Socialistic mindset, politically

correctness and income ine-

quality are various factors

which play their part in these

decisions.

In India story is not too

different though not as serious

as developed nations. As of

now India is having debt which

comprises about 68% of GDP.

The good thing is that the gov-

ernment is aware of the situa-

tion and taking necessary

measures. Following the global

trend, economic advisor to

Prime Minister of India, Mr. C.

Rangarajan has suggested for

higher taxes for the super-rich

in India. His proposal has been

considered and in recent an-

nual budget for the year2012-

13, Finance Minister Mr. P.

Chidambaram proposed an ad-

ditional income–tax surcharge




………………………………………………………

Taxing HNI ………………………………………………………

of 10% to super-rich of India. In

Indian context, a person having

an annual income equal to or

more than 1 crore falls under

the category of High Net worth

Individual or Super Rich. The

results of such policy are yet to

be seen but many eyes are fix-

ated on it. The success or fail-

ure of such initiative would dic-

tate similar or otherwise deci-

sions in other nations. This also

symbolizes a role reversal

where a measure taken by a

developing country might be

replicated in a developed econ-

omy. However the task is not

easy and there are many ifs

and buts attached to it which is

explained below.

The first reservation is

regarding the taxpayer’s head-

count which is dismal by world

standard. Going by finance

ministry report in 2011-12, the

total number of taxpayers has

been just 3% of the total popu-

lation. Even of these total tax

paying population, around 89%

of people comes under income

category 0-5 lakh and their

contribution is not much (just

10% of total tax collected).

Only 1.25% people come under

high annual income segment of

20 lakh and above and their

contribution is 63% of the total

tax collected. Talking about the

Super Rich category, only

42800 people qualify for the

group who has an income more

than 1 crore. In comparison,

USA has a huge taxpayer base

which is 42% of their total

population. Therefore the reali-

ties of India and USA or other

developed countries are com-

pletely different and same poli-

cies can’t work everywhere.

The developed countries

have very evolved tax struc-

ture, income tax policies and its

enforcement. Their system is

very efficient when compared




to ours. Indian process is lesser

user friendly and it involves ex-

perts to even file the tax re-

turn. On the other hand, USA

has very simple process which

could be fulfilled by an ordinary

person.

Another issue is cultural

by its nature. In India many

people do not pay taxes even if

they earn higher. There are

many people from business

and agriculture class who even

comes under super rich cate-

gory but do not contribute any-

thing to government tax collec-

tion. It is mostly service class or

big corporate who follow the

rules. Therefore such policies

basically affect the person who

follows the rules and does not

encompass those who violate

it. The overall impact on long

run could be far reaching as

many otherwise honest people

would start trying to look for

safe havens. Hence tax evasion

is a potentially damaging as-

pect of this.

There are some other

reasons for opposition of taxa-

tion as well. In long run taxes

tends to deteriorate the mar-

ket which is known as dead-

weight loss by economists. Also

taxes act like a cap on purchas-

ing power and thus act as re-

ducing agents for demand. This

affects the supply in a negative

way and therefore the total

gross production declines. The

chain reaction further leads to

unemployment and then socio-

economic problems such as

crime and depression. Apart

from them taxes also discour-

ages the entrepreneurial spirit

as it kills the desire to be

wealthy. In practical sense also,

tax collection in India has not

increased with increasing tax

rates. India tax system is com-

plicated and brittle. By increas-

ing tax burden on an individual,

it will only work for adding to

the earning of lawyers and

charter accountants for their

advice on how to evade taxes.

Currently India is having

a fiscal deficit of 5.3% of GDP,

which is highest among the

BRICS country. The GDP growth

rate is also not very healthy

with little over 5% mark, the

lowest in the decade. The cur-

rent fiscal and economic situa-

tion of the country is very

alarming and requires special

attention. It is time for govern-

ment to remain vigilant and

carefully assess before taking

any step. Considering the impli-

cations, taxing high net-worth

Individual is certainly not an

ideal way to reduce the fiscal

deficit. A better way is to re-

duce subsidy as it overcomes

many of the deficiencies which

taxes have such as deadweight

losses. The social sector cut is

another viable option although

it carries political baggage

along with it. Government has

already implemented some of

the measures such as deregu-

lating the fuel prices, imple-

menting austerity measures in

government functioning, steps

to increase FDI etc. Apart from

these, strict policy enforcement

is required while spending

money on social sector

schemes. Some people have

also argued for disinvestment

route. This needs additional

scrutiny and those whose per-

formance is not up to the mark

can be sold out, like Air India.

In effect, a combination of

these strategies in varying de-

grees is what is required at the

moment. It should also be

evaluated from time to time to

decide on further steps. Vari-

ous reward schemes such as

………………………………………………………

Taxing HNI ………………………………………………………




………………………………………………………

Taxing HNI ………………………………………………………

rebate for regular payers or

those who pay taxes above a

certain limit could also be lev-

eraged to attract new segment.

Coercive technique such as in-

creased tax burden can work

for short duration but more ho-

listic solutions are required for

long term and sustainable

growth.




By- Abhay Kumar [email protected] Sharad Srivastava [email protected] DoMS, IIT Roorkee (2012-2014)

………………………………………………………

DoMS Spotlight ………………………………………………………

In the contemporary

world, the buzzwords are PPP,

supply chain, investors, share-

holders, customer, rural supply

chain etc. To highlight these

issues and to bring lucid per-

spective on these important

issues, Operazione (Operations

Club of DoMS, IIT Roorkee) or-

ganized AVYUDAYA-2013 in as-

sociation with an ISTD De-

hradun Chapter on

15/03/2013. The event was

graced by the presence of emi-

nent speaker like

Mr. Mangu Singh , Manag-

ing Director – Delhi Metro

Rail Corporation (DMRC)

Mr. Shammi Dua, Head -

Logistics and customer ser-

vice – Akzo Nobel India Ltd

Mr. Keerthi Prasad, Head -

Program Management Of-

fice Business Transforma-

tion, CSC

Mr. P. K. Garg, Indian Rail-

way Service of Engineer

The summit was sponsored by

IFB, global leader in home ap-

pliances and Valuence training

and Research Pvt. Ltd., knowl-

edge services Provider Com-

pany.

We were also fortunate to have



AVYUDAYA-2013


saurabh

Sticky Note

………………………………………………………

Avyudaya’13 ………………………………………………………Prof. S. P. Gupta, Deputy Direc-

tor of IIT Roorkee, with us. The

event started with the lighting

of the lamp by the dignitaries

and a welcome note by Dr. San-

tosh Rangnekar, Head of the

Department. Dr. Rangnekar

emphasized the need to de-

velop oneself in entirety. He

talked about the multitude of

clubs which department has

and the various summits which

they have conducted .This was

followed by the introduction

regarding the theme of event

by Dr. Rajat Agrawal. He

started on the need and impor-

tance of operations in the cor-

porate sector, industry, country

etc. He highlighted how coun-

tries like Japan and China util-

ized operations to emerge vic-

torious in the present coeval

world.

After his insightful lec-

ture, the dais was taken over

by Mr. Mangu Singh, MD -

DMRC. He dealt mostly with

issues such as PPP, DMRC con-

struction issues and Carbon

Credit. He explicitly stated the

importance of the public sector

in building organization like

DMRC. He said though PPP is a

very novel concept but high-

lighted that PPP in Rapid trans-

port like India has not achieved

much success. The challenges

which the corporations face are

mainly financing, land, and re-

source constraints. He further

highlighted how DMRC is earn-

ing carbon credit by saving on

energy consumption. An inter-

esting question was raised by a

student whether it will be pos-

sible to replicate DMRC in In-

dian railway. To this, Mr.

Mangu Singh answered that it

is easy to build a great organi-

zation when you are building it

from scratch. He cited DMRC as

an example.

The second speaker was

Mr. Shammi Dua, from Akzo

Nobel India Ltd. He started his

session by asking questions to

the student such as what is the

role of Mangal Pandey in sup-

ply chain Management. He ex-

plained that after the first war

of independence, British built

Chawani (cantonments). He

also gave another example of

Bhelpuriwalas to highlight how

they manage their inventory

and supply chain. Then he dis-

cussed the topic “The heart of

India - Rural India”. He stated

that the rural India is going to

be a future booming sector of

India.

Apart from this he highlighted

following points:




………………………………………………………

Avyudaya’13



……………………………………………………… Logistics versus Supply Chain

Collaboration

Systematic approach in Ne-

gotiation

Finally he explained supply chain

of paint. During the session a

student raised an important

question regarding current sce-

nario. As the economy is not

growing as anticipated, so what

is the role of SCM in the current

times. The speaker aptly re-

sponded that one has to be

more aggressive in an economic

slowdown. The CEO would like

to conserve cash which will re-

duce the inventory as well as

operational cost.

After the enriching ses-

sion, the next speaker was Mr.

P. K. Garg. His session was en-

thralling as he spoke from the

heart. He taught the difference

between “My world” and “The

world”. He also emphasized on

the need to know your heart

and pursue your dreams. He

gave his own example how he

wanted to become a professor

but he joined railways. He even

gave a reference of Steve Jobs,

who is a college dropout. Finally

he concluded by saying that do

whatever you want that makes

you happy.

The final speaker was Mr

Keerthi Prasad. He started by

highlighting the importance of

business model and its effect on

the cloud computing. He ex-

plained the concept of platform

servers etc. Further he talked

about Google war and con-

cluded by highlighting that cloud

is going to be the future.

The event was further

charmed with the presence of

Mr. Manoj Sadavarte, Location

Head – Godrej & Boyce Mfg. Co.

Ltd. H also shared his under-

standing on various contempo-

rary issues and topics. His ses-

sion was very much enjoyed by

student community. He encour-

aged students to actively engage

in industry projects and learn

about real business environ-

ment.

After this a panel discus-

sion was conducted where all

the eminent speakers shared

their understanding. The discus-

sion was very fruitful and en-

riched the knowledge of the stu-

dents.

This marked the end of

the event. A note of thanks was

delivered and a token of grati-

tude was presented for their

time. The session was much en-

joyed by the students.


………………………………………………………

Avyudaya’13



………………………………………………………It was a very important event

not only about operation man-

agement but also for various

other business functions and

proved successful in achieving

its goal



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DoMination - April 2013

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