Domination Jan 2011

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lume - II Issue 01 January 2011

Dynamism in Business

Environment & Change in Portfolio

Potential

Success Stories: Social MediaMarketing

Direct Tax Code Act Goods And Service Tax

Hocus-focusYUKTI


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From Editors Desk

Dear Readers,As we enter the New Year with new hopes and

aspirations, it is time for making new beginnings with addedzest and rigor.Through this edition we bring about some of the important andrelevant issues of the year that passed but the impact of which

is still afresh.The spectre of rising prices of different commodities which hasbeen haunting the Indian political scenario has brought aboutdynamism in the business environment and how has itsubstantially impacted the portfolio potential has been dealt within the cover article.On the brighter side, we share some of the business successstories attributable to Social Media Marketing and its impact onthe modern day society.Furthermore, we present a piece of knowledge which throwslight on the New direct tax codeand Goods and Service Taxand its practical implications.The Chlorophyll section uncovers the writersdeep insights intothe harsh realities of life through a poem Under MoonsCrescent.Looking forward for a year filled with new hope, fresh thoughtsand wisdom, Team Domination wishes all its readers a veryhappy and a prosperous New Year and as they say,

For last year's words belong to last year's languageAnd next year's words await another voice.

And to make an end is to make a beginning.~ TS Eliot

Until next time, Happy Reading!

Department of Management Studies, IIT Roorkee

Animesh Agrawal

Editor DoMination(Department of Management Studies, IIT-Roorkee.)


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Table of Contents

63

Success Stories: Social

Media Marketing

1

Dynamism in Business

Environment & Change in

Portfolio Potential.

5

Rishi Arora

DoMS, IIT-Roorkee

Anuj Mody

DoMS, IIT-Roorkee

Shruti Goel

DoMS, IIT-Roorkee

Charu Singla

DoMS, IIT-Roorkee

8

Creative SectionUnder Moons Crescent

ChlorophyllHarsh Singh

DoMS, IIT-Roorkee

10

Qutopia - 11


Goods And Service Tax

Direct Tax Code Act

12

Hocus-Focus


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- Anuj Mody

DoMS, IIT-Roorkee

ness Environment & Change inPortfolio Potential


11

Over a period of past few weeks, in face of

galloping prices of vegetables , crude oil and other

commodities pose a threat to the economy and yes,

to an individuals investment portfolio too.

At first, we might thinkhow does an increase in

price of these commodities affect your investment

portfolio? Well, let us start with the state of

current economy.

In its mid-December policy review, RBI decided

to keep all key rates unchanged, which was very

much in line with market expectations. But, as per

the data available with RBI, credit was increasing

at the rate of 20% whereas deposits were

increasing at the rate of 15%. This had created awide gap of Rs. 1.44 lakh crore in the system. Dr.

Subbarao wisely kept all the key rates unchanged

while decreasing the SLR to 24% from 25%. He

declared buy-back of bonds from open market

thereby infusing liquidity of Rs. 48,000 crore in

the system. RBI had to restrict itself from raising

rates as this would result in sharp increase in

lending rates and might impede the growth in the

economy.

Next review is scheduled in the last week of

January. So, what should we expect then - An

increase in rate or no change? Decrease in

reserves rates is least probable looking at the

inflation figures available. All the facts point

towards an increase in the reserve rates.

Food and fuel have a weightage of 30% in WPI.

In spite of having a good monsoon, there has

been no moderation in the food prices. This can

be attributed to unseasonal rainfall in Gujarat andMaharashtra thereby skyrocketing the vegetable

prices. Since the second week of December,

vegetable prices have been showing an

increasing trend with prices of some of them

rising two-three fold.

Well, governments intent to deregulate petrolprices has resulted in an increase of about Rs. 3

per litre. Globally, crude oil is being traded at

around $90 a barrel. This has resulted in an

increased pressure on the Government to

increase the price of diesel and LPG where it

regulates the prices by means of providing

subsidies. If government does not pass on the

increased oil prices to the end-users then it is

more likely that the burden on Fiscal deficit is

bound to rise. If it passes on the increased prices

to end users then this might trigger inflation to a

greater extent as diesel finds its use in a large

number of production processes as well as


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- Rishi Arora

DoMS, IIT-Roorkee

Success Stories:

Social Media Marketing


33

Right Message + To Right People + Right

Conversation = Social Media Marketing

Social Media Marketing refers to the process

of promoting ones business or website

through social media channels (which include

social networking websites, blogs and all such

sources where people communicate with the

help of Web 2.0). It is a marketing medium

that is defining the way people are

communicating nowadays.

Today, I am not going to talk about what, how,

when and why of Social Media Marketing. We

all know that it is a cost-effective and powerful

tool of marketing through which companies

can increase their sales and brand equity by

connecting with the customers in a better way.

Rather, I would talk about the real life

examples of social media marketing. The

stories that we are going to discuss right now

show how some organizations have benefitted

themselves by including this powerful tool in

their marketing mix. These examples show the

creative use of social media marketing by

some companies in order to get benefits out o

it. So, here you go!

Dunkin Donuts: Dunkin' Donuts is the largest

coffee and baked goods chain in the world

providing its customers with high quality

coffee, bagels, donuts and other baked goods

since 1950. There are 8,835 Dunkin' Donuts

stores in 32 countries and it serves 3 million

customers per day. Few years ago, the

company realised the importance of

connecting with their customers through social

media. Since then, it has shifted its marketing

strategy and now it can be seen active on

Facebook, Twitter and YouTube. One can see

the companys Twitter page answering queries

of its customers within minutes. All kinds of

complaints and feedback are welcome from

the public. The companys Facebook fan

following is more than 28 lakhs and is growing

rapidly. It has come up with innovative

Facebook applications like Create Dunkins

Next Donut which proved to be a huge

success, generating more than 130,000 donut

submissions and 174,000 votes. The results of

all these activities have been tremendously

positive for Dunkin Donuts. The sales have

increased sharply in the last two years. Also,

the company has won the title of Best in

Customer Loyalty for four straight years. As

David Tryder, Manager of Interactive &

Relationship Marketing says, Every brand

wants to establish as close a relationship to its

fans as it canthe question has always been

how do you do that cost-effectively, in a

meaningful way that doesnt just look like

more advertising?

Burger King: Burger King is a popular American

Fast-food chain. Its burgers and sandwiches are

quite renowned amongst the general public.


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Contd..


44Success Stories:Social Media Marketing

Burger King too is indulged in Social Media

Marketing these days. It has a significant

presence social networking websites and blogsand is known for its different Facebook

Applications. It created a Facebook application

namedSacrifice yourfriends in which a person

deleting or un-friending his/her ten friends from

the friends list would get a WHOPPER (A kind o

burger). This application was a hit and it resulted

in un-friending of 233,906 people in just 7 days.

The result was that Facebook had to ban this

application. The social network site gives PrivacyIssues a reason for banning it but the rumours

say that it was harmful forFacebooks business

as it resulted in decrease of average social

network of the people. The benefit that Burger

King got from all this drama was Visibility and

increase in its brand equity. The term Sacrifice

your friends Facebook application shows over

100,000 results in Google now.

Blendtec: Blendtec is an American company

which sells powerful blenders mainly to

households. Like other companies trying to focus

on social media marketing, Blendtec also has a

good presence on Facebook, Twitter and

YouTube. The company became the talk of the

town because of its very innovative marketing

campaign on YouTube. In this campaign named

WillItBlend?, a number of videos were created

and uploaded on YouTube to show the power othe Blendtec blender. Different unlikely things like

glow sticks, marbles, golf balls and iPhone were

thrown into the blender and turned to powder.

This all was demonstrated by the CEO Tom

Dickson himself. The campaign was a super hit.

The top 20 videos of it had more than 60 million

views on YouTube. The result was a whopping

increase of 700% in sales figures. And, this was

done at almost no cost except the cost of

shooting the videos. This has been one of the best

examplesof Social Media Marketing till date.

Starbucks Coffee: Starbucks is a chain of coffee

shops having 15,000 shops in 50 countries. It is

quite popular in North America. The company has

a presence on Social Media websites but apart

from that, it has a unique way of communicating

with its customers. It has its own version of a

social network named

http://mystarbucksidea.force.com wherein

customers are asked to share their ideas on

anything related to Starbucks. The site gives

users the ability to see what others are

suggesting, vote on ideas and check out the

results. This site is a brilliant and important

aspect of Starbucks social media strategy. Users

who are part of this network feel that they have

some role in the decision making process of the

company and it makes them feel a part of it. Till

date, there have been more than 70,000

suggestions from Starbucks customers and the

top idea got more than 100,000 votes. This has

resulted in the improvement of the overall image

of the company and has tied its customers closer

than what they were earlier. The sales of the

company have also shot up. This has also

resulted in savings on account of market research

activities that would have been done in place of

this social media marketing.

The examples given above show the concealed

power behind the Social Media Marketing. One

thing to note here is that these ways of

marketing may not work very well for some other

company if it tries to copy the ways and methods.

The learning here is that every company has to

design a different set of activities which are

tailored to its needs.
http://mystarbucksidea.force.com/http://mystarbucksidea.force.com/http://mystarbucksidea.force.com/http://mystarbucksidea.force.com/http://mystarbucksidea.force.com/http://mystarbucksidea.force.com/http://mystarbucksidea.force.com/http://mystarbucksidea.force.com/


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- Charu Singla

DoMS, IIT-Roorkee


5Direct Tax Code Act 5

The New Direct Tax Code (DTC) is formulated in order

to replace the existing Income Tax Act of 1961 in

India. The thrust of the code is to improve the

efficiency and equity of our tax system by eliminating

the distortions in the tax structure, introducing

moderate levels of taxation and expanding the tax

base. It is designed to provide stability in the tax

regime and will eventually pave way for a single

unified tax reporting system. During the budget 2010

presentation, the finance minister Mr. Pranab

Mukherjee reiterated his commitment to bring into

fore the new direct tax code (DTC) from 1st of April,

2011, but same could not be fulfilled and now it will

be applicable from 1st April, 2012.

Some of the salient features of DTC, in general, are

the removal of the earlier Income Tax Act and

Wealth Tax Act and a single DTC is established in

place. The concept of assessment and previous year

is abolished, only financial Year terminology exists.

The status ofresident but not ordinarily resident is

removed. Moreover, the definition of assesses will

now include a person, whom the amount is

refundable, and, who voluntarily files tax return

irrespective of tax liability. Also, the Government

Assesses are required to comply with the provisions

of TDS and TCS. Apart from all these, the new DTCpropose that men and women will be treated same.

DTC removes most of the categories of exempted

income. Unit Linked Insurance Plans (ULIPs), Equity

Mutual Funds (ELSS), Term deposits, NSC (National

Savings certificates), Long term infrastructures

bonds, house loan principal repayment, stamp duty

and registration fees on purchase of house property

will lose tax benefits. Tax saving based investment

limit remains INR 100,000 but another INR 50,000

has been added just for pure life insurance, health

insurance, medi-claim policies and tuition fees ofchildren. But the one lakh investment can now only

be done in provident fund, superannuation fund,

gratuity fund and new pension fund. Exemption will

remain same as Rs. 1.5 lakhs per year for interest on

housing loan for self-occupied property. The

proposed tax slab exempts those having yearly

income up to INR 200,000( for senior citizens INR

250,000). The income Tax for those having annual

income between Rs. 2 lakh - Rs. 5 lakh is 10%,

between Rs. 5 lakh - Rs. 10 lakh is 20% and for annual

income over Rs. 10 lakh is 30%.

If we look into the taxation of capital gains, then only

half of short-term capital gains will be taxed. Long

term capital gains (from equities and equity mutual

funds, on which STT has been paid) are still

exempted from income tax. Also, provident fund,

new pension schemes and retirement benefits will

enjoy tax exemption at all three stages of savings,

accretions and withdrawals (EEE). Moreover, the

corporate tax has been reduced from 34% to 30%

including education cess and surcharge. Also, the

maximum limit of medical reimbursements has been

increased to Rs. 50,000 per year from current Rs.

15,000 limit. But, the tax exemption on leave travel

allowance has been abolished and the dividend

distribution will attract 15% tax. Also, education loan

will continue to be exempted from tax.

However, the new Direct Tax Code brings in some

critical areas of concern like double tax avoidance

agreement, General Anti-Avoidance Rules (GAAR),

taxation of foreign companies and charitable

institutions and incentives to special economic

zones.. The new draft states that the SEZ developers

who start their operations before March 31, 2011,

would be allowed investment-linked incentives. Their

capital expenditure (made within a specified number

of years) will be allowed to be treated as expenditurefor the purpose of calculating taxable profits. This will

not be of big help once they start operations as SEZ

developers do not usually incur much capital

expenditure.

Moreover, the new DTC proposes to tax the transfer

of shares of a foreign company, if the fair value of the

assets situated in India constitutes at least 50

percent of the assets directly or indirectly held by the

foreign company. Also, the introduction of CFC rules

would result in taxing income of certain overseas

subsidiaries in the hands of their Indian owners, evenbefore such income is distributed.

As, the Corporate India has long advocated its

preference for a modern, stable and simple tax

regime, this new DTC aims to reduce the tax rates

and distortions in the tax reporting system and

simultaneously wants to expand the tax base by

minimising exemptions. Whether the new DTC meets

these criteria is something that will be undoubtedly

debated over the time. However, it is the tax

administration's implementation that will determine

the long-term impact of this new tax regime.


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- Shruti Goel

DoMS, IIT-Roorkee


76

In view of modern times, the centre has

proposed Good and Services Tax so that an

efficient and harmonized consumption taxsystem can be established in the country. As

there are parallel systems of indirect taxation at

the central and state levels, each of the systems

needs to be reformed to eventually harmonize

them.

When we look around, the world has the same

rate of tax for the goods and services. This is the

foundation of GST in India. In the Union Budget

for the year 2007-2008, Finance Minister

proposed that India should move towardsnational level Goods and Services Tax that

should be shared between the Centre and the

States. The then proposed date of its

implementation was April 1, 2010 but now it has

moved to April 2011.

The goods and service tax (GST) is a

comprehensive indirect tax that is levied on

manufacture, sale and consumption of goods as

well as services at a national level. This

integration of goods and services taxation would

provide India with a world class tax system,

hence will improve the tax collections. This will

put an end to the differential treatment o

manufacturing and service sector since the

olden days. It will also abolish taxes such as

Central sales tax, State level sales tax, entry tax,

stamp duty, telecom licence fees, turnover tax,

tax on consumption or sale of electricity, and

taxes on transportation of goods and

services.GST will help to eliminate the cascading

effect of multiple layers of taxation and willform a common tax base. GST is likely

to increase the competitiveness of Indian goods

and services in the international market and

boost Indian exports, as the phasing out of CST

and other taxes would reduce the cost of locally

manufactured goods and services.

The basic need for GST was to overcome the

shortcomings of VAT both at the central and the

state level. CENVAT of the Government of India

does not include several Central taxes such as

additional customs duty, surcharges, etc., and

hence keeps the benefits of comprehensiveinput tax and service tax set-off out of reach for

manufacturers/ dealers. Moreover, no step has

yet been taken to capture the value-added chain

in the distribution trade below the

manufacturing level in the existing scheme of

CENVAT. The introduction of GST at the Central

level may lead to revenue gain for the Centre

through widening of the dealer base by

capturing value addition in the distributive trade

and increased compliance.In the existing State-level VAT structure there

are several taxes which are in the nature of

indirect tax on goods and services, such as

luxury tax, entertainment tax, etc. Moreover,

the CENVAT load on the goods remains included

in the value of goods to be taxed under State

VAT, has a cascading effect, which therefore

needs to be removed. In the GST, this cascading

effect has been removed with set-off, and a

continuous chain of set-off from the original

producer's point and service provider's point up

to the retailer's level is established. Moreover,

with the introduction of GST, burden of Central

Sales Tax (CST) will also be removed and the

States will be bestowed with the additional

power of levying the taxes on services.

The GST at the Central and at the State level will

thus give more relief to industry, trade,

agriculture and consumers through a more

comprehensive and wider coverage of input tax

set-off and service tax setoff, subsuming ofseveral taxes in the GST and phasing out of CST.

Therefore, the first step in implementing GST is

convergence of the service tax rate and the

CENVAT rate. . The central excise duty should be

converted into a fully fledged manufacturing

stage VAT on goods and services and the states

sales tax systems should be transformed into a

retail stage destination based VAT, before the

Goods And Service Tax


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Under Moons CrescentThe clock ticks 12,And this year ends,

Fragrance of new year smells like scent,Glaring the memories of a year that went,

I feel the wishes that new year sends,A heavenly grace almighty descends,

A divine joy in the air blends,A pleasure to my heart it lends,

Walking on the streets on chilly night I see,A beggar of 60 sick and old

Who shivers and quivers from assault of cold,

Coughing and crying but trying to hold,

-Fresh Green Creativity, right from the roots of DOMS

through the leaves of this newsletter


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Sitting by his side ,Is his grandson of 5,whose father has died,

Caught in mysterious tides,

Their wounds they try to hide,

In this extreme cold,Dressed in tatters the child tries to be bold,

But innocence falls from his face like gold,Slowly sleep takes him into its fold,

Lost in his dreams,

Out of this worlds realms,Is ignorant of a new year that gleams,So beautiful it seems,

A pain and a joy have made their dent,

Towards new trajectories my soul tends,

I try to get what new year meant,Out on street under moons crescent

-- Harsh SinghDepartment of Management Studies, IIT Roorkee

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99

1) In 2010, this country overtook Japan as worlds second-largest economybehind USA in terms of GDP. Name this Asian giant?

2) In the biggest financial scandal of 2010, this company was sued for fraudby the Securities and Exchange Commission (SEC) for Insiders tradingconcerned in a deal known as "Abacus". Name this company which finallyin July 2010, settled with the SEC and had to pay a fine of $550 million.

3) This was the largest IPO (Initial Public offer) in the history of IndianStock Market. The $3.46 billion deal attracted $52.5 billion of demandand shot up by 40% on its first day of trading. Name this company thatwent to the primary market in October 2010.

4) This program was launched in the tribal village, Tembhli in Nanurbar,Maharashtra on 29th September, 2010 which aims to give a uniqueidentity to all Indians. Name this ambitious project of the UPAGovernment which will give a unique 12-digit number to every citizen ofIndia and could be used in financial inclusion and accessing governmentprograms by the masses.

5) In a first of its kind corporate event, in April 2010, this company shutdown its Chinese operation in protest for what it termed as an attack on

its servers by Chinese hackers which resulted in the mail accounts ofChinese human rights activists being unethically accessed. Name thismodern day corporate giant which has its slogan as "Don't be evil".

6) This is the crisis which hit Europe in March 2010 following the financialrecession of 2008-2009 and threatened to engulf the whole of theEurozone countries. What is the name of this crisis which also risks theEuro and the European Union and has recently spread to Ireland?

Flashback 2010

-Rajneesh and Anirudh

DoMS, IIT-Roorkee

Its 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! Mail in youranswers to [email protected] . The winner will have their names published in

the next issue. Answers in the next issue ofDoMination.

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1) In 1948, this head of India's largest business conglomerate launched Air IndiaInternational as India's first international airline. Name this Bharat Ratna Awardee whoalso has the distinction of being India's first pilot.

2) A recent Hollywood movie by the name 'The Social Network' is based on the life of thefounder of a social networking site which has revenue of over US $800 million. Name thisHarvard dropout American entrepreneur.

3) In economics, an oligopolistic market structure (dominated by a small number of sellers),the market players use this theory to model their behavior in taking strategic decisions.Which theory is this, which also has wide-ranging application in other fields as well suchas biology, political science, computer science and philosophy?

4) As Pioneer of the co-operative movement in India, this diary co-operative organization

has revenue of over Rs 67.11 Billion and was founded in 1946. Name this largest exporterof dairy products in the country.

5) This Theory was developed by Nassim Nicholas Taleb and captured in his book by thesame name published in 2007 which explains the disproportionate role of high-impact,hard to predict, and rare events that are beyond the realm of normal expectations inhistory, science, finance and technology. Examples of such events are Internet, thepersonal computer, the September 11 attack etc. Name this theory.

6) What connects the following terms?

Dogs: Cash Cows: Stars: Question Mark

The Answers of Qutopia-10 were:

1) Jehangir Ratanji Dadabhoy (JRD) Tata (July 29, 1904November 29, 1993)

2) Mark Zuckerberg, the founder of Facebook.

3) Game Theory

4) Amul (Anand Milk Union Limited), a Diary co-operative in Gujarat, India.

5) The Black Swan Theory or "Theory of Black Swan Events" by Nassim Nicholas Taleb

in his book "The Black Swan"

6) BCG Matrix (Boston Consulting Group Matrix) developed by Bruce Henderson in

1968.

Winners are:

Anil Santlani (DoMS IITR 2010 -12) Chanpreet Singh (Infosys Technologies Ltd) Chittrang Dalal (NMIMS Mumbai)


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ukti conceptualized by Department of Management Studies, IITRoorkee is not just another B-Plaompetition. Unlike other B-Plan contests, it focuses on developing new schemes for one specifirganization in focus. Yukti, a Sanskrit word, means logic or reasoning, implies logically weighingnes ideas in the organizations frame of reference. The ideas will be tested on the basis of thei

elevance to the organization in focus, its applicability and its feasibility. The focus should not onle on operational aspect but also to provide the strategic directions to the future of organization.his year the organization in focus is National Small Industries Corporation Ltd.(NSIC) which haeen working to fulfill its mission of promoting, aiding and fostering the growth of small scalndustries and industry related small scale services/business enterprises in the country.

Hocus-Focus 1


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Comments / Feedback Mail to: [email protected]

Tel: 01332-285014, 285617, Fax: 01332-285565

Do Visit: http://www.iitr.ac.in/departments/DM/pages/Index.html

Department of Management Studies,Indian Institute of Technology Roorkee,

Roorkee Uttarakhand-247667

The TeamEditor

Animesh Agrawal

Sub-Editors:

Akanksha TikkuRama Pruthi

Siddharth SrivastavaRohini SharmaDeep Pathak

Sudeep DakuaPallavi Arora

Udit GuptaMukesh Rathi

Design Team:Animesh Agrawal

Shruti GoelAnuj Mody

Contributors:

Anuj ModyRishi Arora

Charu SinglaShruti GoelHarsh Singh

Rajneesh & Anirudh

i h A l

Domination Jan 2011

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