Awaiting the Great Nano Flood of 2010

Potential consumer segments and its conversion to Nano market

Last year Bihar faced flood that it hadn’t seen for fifty years and no one had any clue as what measure would be required to curtail it. yesterday Tata motors launched it people car- nano, which will be available to public by mid this year. Government, public & private institutions seem to be unaware and under-prepared for the NANO flood, which will grip the nation 2010 onwards.

Though nano potential market in India has been sized by many investment firms, but as the product itself is evolutionary, so will evolve its customers. In a country where public transportation has been never been emphasized on the potential is enormous. India young population is filled with such potential, we at the potential buyers which will come into being once Nano hits the market.

Nano is most likely to emerge as second car of choice for the family, where even housewives would demand, from grocery shopping to mall shopping, Nano is going to emerge as the transporting alternative for shopping escapades of upper-class Indian housewives and middle-class families which have long been waiting for second cheap alternative.
A large number of collage going crowd which till now ply on two-wheeler ranging from Rs 50,000 to 1Lac. Soon, a large number of them would be turning towards Nano, this conversion would further flood not only the road but already cramped educational institutions, which may have to invest in parking lots than on labs.

Semi-urban areas are another two-wheeler bastion, which will get dismantled by introduction of Nano car. More are more people are likely to dump three-wheeler autos and expensive SUVs for tata nano, which for some-time will have smooth run in the narrow lanes of small cities. But,

Personal Computers Manufacturers Facing Tough Market Scenario

Personal Computer market in India is facing tough times as the Q3 FY09 sales have dropped by 19% and market is expected to remain muted with no growth for overall FY09.

Personal computer sales for the period Oct-Dec 2008 stood at 1.4mn units down from the 1.7mn units a year ago. Amongst the personal computers desktops witnessed decline of 15% while sales of notebooks declined by 30%. Desktops constitute 70% of the total personal computer market and remaining is held by notebooks. Branded desktops player constitute over 60% of 5.1mn unit desktop computer market in India.

Consumption of personal computers in Oct-Dec quarter was largely led by sectors such as Telecom, Banking, education and e-governance requirement of central and state governments. But, declining demand was witnessed from sectors such as Retail, IT and SME sectors.

As large percentage of hardware component is imported, rising rupee has deteriorated the margins of personal computer manufacturers. MNC biggies such as HP and Lenovo together with Indian major HCL constitute almost half of the desktop market in India, and are facing pricing issues.

Personal computer manufacturers are expected to face rough ride ahead as economic downturn has already affected the individual demand for personal computers, corporates on the other hand are trimming not only expenditure on IT hardware but due to low capex spending in the near future they have restrained the demand for personal computers.

Non-Planned Expenditure for a Successful Political Gambit

UPA is in full swing of unveiling pre-election sops to the people. It first went to declare Rs 30,000 crore tax deductions, which is loss to revenue receipts. Then government announced increased in dearness allowance of Central government employees. A few days before this announcement, UPA was playing parliamentary morality card for not having long-term mandate to fight recession in pre-election time frame.

This is the second time in the row that UPA government is dolling out sops which it claims is part of government’s economic agenda. But, at the same instance it fails to include all such economic programs under budget. Last year every one in the government played itself as pro-farmer but when it came to budgeting it such huge expense government just forgot it as part of budgetary expenditure. A lot of such programs were put under non-planned expenditure out of budgetary provision to make budget look good. This year to government has played the same card by announcing economic sops, which are not part of budget.

UPA Government wants common population to aware only of the populist economic measure but it does not want the people to know the cost, which it will have to pay it in future. It is smartly widening the budget deficit for which it does not want to be held accountable in future.

A few weeks after the budget announcement, government has forgotten its parliamentary principals to announce massive plans to largely rope in voters then to effectively tackle the grim economic scenario. Government’s bet on cutting may not be entirely fruitful if industry does not pass on this cut to the consumers, which has often happened in the past. Pre-election sops are not always successful; a lot depends on underlying economic scenario.

ADB and S&P Stretches Govt on Either Side on Economic Recovery of India

Manmonhan Singh team which has been facing unrelenting question about country’s financial health received a shot in arm from one of the major financial institutions, ADB, about country financial condition. ADB described India’s economy as one with resilience amid global economic downturn. This will help government to ward-off questions relating to economy which government is finding hard to explain.

On the other hand, leading financial rating firm S&P has concluded that Indian economy will grow somewhere between 5.8% and 6.3% in 2009. This is much below the continuous claims of 7% growth by the government. S&P also forecasted that India will be on path of recovery by September this year, if economic scenario doesn’t deteriorate further. This is beyond the expectation and mark set by the government which wanted to reap the benefit of economic recovery during parliamentary polls this year.

Government is facing increasing number of questions for its economic mismanagement. Though, it expects last year’s farm wavier and pay-commission hike, which was not accounted in budget, to go down well with voters. But, opposition is already making case for financial negligence and with economic recovery would not happen as timed by the government; it would be tough for government to use this bait for voters.

Easy Cash Turns Killers for Indian Retail

The retail boom has come to grinding halt in India. Just a few months back Reliance had announced restructuring of its retail business. Then Subhiksha problem appeared, it was unable to finance its operations. Now, Vishal retail has run into trouble. The company is also facing liquidity crunch and is shutting down a large number of shops and cutting its employee numbers to stay afloat.

Easy money had made it possible for Indian retail companies to go for expansion mode straight from incubation. This had become corporate philosophy for expansion programs of major retailing companies. Every company in hurried desire to gain the first mover advantage had indulged in aggressive expansion on borrowed money. Once the liquidity problem stated becoming apparent in Indian market, these companies started facing cash trouble to run their operations. Easy availability of cash had led to more companies becoming overtly dependent on borrowed money to run their operations.

Subhiskha, like other retail companies over-ambitiously expanded everywhere leaving the company totally starved for cash. They didn’t bother either about its cash flows or cash reserves. This left company bewildered about its future and how to manage the current operations. Vishal Retail another darling of markets, followed similar path of growth and couldn’t see the situation getting out of hands.

Easy availability of cash in the market made retail companies short sighted with assumptions that markets would continue to grown and cash would remain available. This hypothetical assumption got translated into the business model, for which companies are paying today.