How do FII Investments affect stock market?

The common wisdom is that the stock market goes up when FIIs pump money and it goes down when they take their money out.

While this is true, looking at the FII investment data for the last decade shows that it is not a simple, straight relationship.

Here is a chart that shows how much money FIIs pumped into equities in each of the last 10 calendar years, and how much Nifty moved in that year. The FII investments are in Rupees Crores, and the Nifty movement is percentage change.

FiI Investments and Effect on Stock Market Returns

To me, this chart shows the following things about the effects of FII investments on the stock market:

FIIs pulling money from the market has resulted in a fall

There were only two instances in the last decade where FIIs pulled out money from the stock market and at both these times the stock market went down. The pullout was fairly severe in 2008, and the market fall was very bad as well. You may argue that just two years aren’t enough to form a conclusion but I’d say that it is fairly safe to say that if FIIs were to pull out money then the stock market will go down.

Net positive investments by FIIs don’t guarantee an upmarket

The market fell in 2001 and FIIs were actually net buyers in that year so that also shows that the market can fall even if FIIs pump in money, so just positive net investments from FIIs don’t guarantee an up market.

Biggest up moves don’t coincide with biggest FII inflows

One thing that struck me about this chart is that the biggest bars don’t coincide with sharp up-movements in the line. The biggest percentage gains in the Nifty weren’t always in the same year when FII investments were at a peak.

If you look at 2003 – the market went up quite a bit, and there were healthy inflows as well, but if you look at 2004, there were bigger inflows but the market didn’t rise up as much that year.

Similarly, 2009 and 2010 follow the same pattern. I think this can be explained with the high base effect since the market rose so much in 2003 and 2009 that there wasn’t as much room to grow in 2004 and 2010, but all the same this wasn’t something that I understood intuitively before making this chart.

You hear and read a lot about FII'S dominating the stock market movement, and that led me to believe that each big bar will coincide with a sharp rise in the line as well, which is not the case.

Some thoughts on FII Investments

Normally you hear a lot about FII investments when markets fall and people cry hoarse about Indian markets being slaves to FIIs but when the market is going up, no one complains about FIIs pumping money!

I feel that you need to look beyond these moves and think about FII and FDI investments much more holistically.

Kareena Kapoor: Marketers’ most wanted brand ‘Heroine’

Not only does she have a brimful of movie offers in hand, Kareena Kapoor’s calendar is chockablock with endorsement offers coming from the widest possible array of brands. From tech brands like iBall and Sony Vaio, cosmetic and personal care brands like Lakme, Head & Shoulders, Anne French, Vivel Di Wills, Boro Plus and most recently Lux deodorants, watch brand Citizen, confectionery brand Alpenliebe and automobile brand Mahindra Rodeo, the Bollywood actress has become the most desired brand endorser of marketers. In a latest development, the tinsel town star bagged another endorsement deal of Philips’ grooming range of hair care products for women.

There is much happening in the men and women grooming sector and Philips especially is focusing on the emerging market with new launches and new faces for its range of products. It had earlier signed on B-town actor John Abraham for its men’s grooming range and now it is banking on Kapoor’s youthful and classy appeal for its women TG.  Not just that, the electronics major coupled the announcement with new launches in the Philips Intelligent styling range of hair care products, and the publication of Philips Vogue Veda, a hair styling guide, created by Andy Uffels, Global Philips styling expert. The guide also has tips from the actress on the latest hairstyles.

Explaining the need for a manual guide with the new range, Aarushi Agarwal, Director Marketing, Personal Care, Consumer Lifestyle, Philips India, said, “We believe the Vogue Veda along with the Philips Intelligent hair styling range would empower women to experiment and always look their best. In about 15 minutes, you can make a bad hair day into a wow day.”

Commenting on the brand fit with the actress, Agarwal added, “Kareena embodies today’s woman, who believes she can have it all. At Philips, we endeavour to give women this freedom and who better to endorse these intelligent beauty products than Kareena Kapoor; a woman who truly represents the beauty with brains image.”

Talking about her association with Philips, Kareena Kapoor, said, “It’s the first time a celebrity is endorsing a hair styling range and I am proud to be associated with Philips.” She also added that today, young women are constantly trying to style their hair to try different looks. Hence, the new range uses technology to try out different styles with a lot of ease.

The new range includes a multi-styler priced at Rs. 2,495; conical curler at Rs. 2,295; pro-care straightener at Rs.2,995 and salon shine care at Rs. 1,945.

Brand USA targets 13 lakh Indian tourists by 2016

Most Indians hold a desire of living the American dream. Do an equal number also look at the U.S. as a preferred holiday destination? To attract travel enthusiasts from across the globe to the country and rekindle the holidaymaker’s interest, the global superpower has embarked on a fresh campaign, spearheaded by Brand USA.

Brand USA is a public-private entity established by the Travel Promotion Act in 2010 to market the United States as a preferred travel destination for travellers across the globe. The first global marketing effort by the country to promote tourism in the country, Brand USA, is akin to our very own Incredible India campaign launched by the Ministry of Tourism in 2002. The difference, however, lies in the funding. Brand USA will get contributions from different verticals of the industry- tour operators, hotel chains, airlines which the U.S. Federal Government will then match its own contributions to.

The new tourism marketing entity led the sixth and largest travel mission to India, consisting of 50 delegates representing 35 U.S. destinations and companies, who visited New Delhi and Mumbai recently.
Discover U.S.

Jay Gray, Vice President, Partnership Development, Brand USA addressing media, New Delhi

Brand USA is using the ‘Discover like Never Before’ theme to create a compelling connect. The theme encapsulates two ideas- to attract the first time travellers and to renew the interest of the travellers who have visited the country before, by introducing them to places beyond the conventional tourist spots.

According to Jay Gray, Vice President, Partnership Development, at Brand USA, the need for such an agency germinated from the realisation that the market share of the U.S. was staying flat, even while international travel, the world over, was witnessing a rise.

The economic slowdown all over has had a ripple effect on the travel & tourism industry, with several people curbing their holiday plans to save for a rainy day. If the figures shared by Gray are anything to go by, Indians certainly don’t come in this bracket. “For a lot of our international markets, the growth is flat at 1-2 per cent but India is seeing a 12 per cent growth year on year,” says Gray. We had projected a 2 per cent growth from India last year. With India being one of the key markets for U.S., the agency is nursing a target of achieving 13 lakh international travellers from India by 2016 and close to 1.5-1.6 crore by 2020.

To market and drive awareness in India, it will follow a two phased approach. The first phase will be at a B2B level, wherein Brand USA and its repertoire of hotel representatives, tour operators, among others will engage with the travel trade in India. There will be road shows to educate the local trade about this new entity. The next phase, which will kick-start next year, will see consumer campaigns and representation on different media platforms.

While these activities have already started in countries like UK, Canada and Japan; China and Brazil, besides India, are the other emerging markets that will see the next round of campaigns by Brand USA. While mature markets like Australia, Germany, Italy, to name a few, will comprise the next tier of target markets.

Gray did not divulge the investment earmarked for India operations stating spends in India to be ‘significant enough to have high impact and high visibility’. At an overall level, however, close to 12.3 million dollars were spent in the initial campaign spread across UK, Canada, and Japan for a duration of three months and according to Gray, investments for the next round of markets will be in the range of 3 million to 1.5 million per market; a figure that is reliant on the type of market and the cost of media

RBI CUTS CRR, SENSEX HITS MONTHS HIGH

RBI CUTS CRR:
Rbi has brought down CRR BY 50 basis points to 4.50%. It will inject Rs 17000 crores in the market and will bring down home loan auto loan rates. This move was necessary due the lack of capital flowing in the economy which is hurting our growth.
According to the RBI's credit policy, the inflationary pressure at WPI and retail levels is still strong and the primary policy aim is to contain inflation. 

"RBI believes that inflation momentum remains fairly strong. It would want to wait for these measures to sustain and translate into productivity gains before unequivocally favoring monetary easing," said an Emkay Global Financial Services report. 

SENSEX PERFORMANCE
At 02:45 pm, the 30-share index was at 18,608.49, up 144.22 points or 0.78 per cent. The broader index touched a high of 18,715.03 and a low of 18,480.54 in trade today. 

The Nifty was at 5,629.25, up 51.60 points or 0.93 per cent. The broader index touched a high of 5,652.20 and a low of 5,585.15 in trade today. 

The BSE Midcap Index and the BSE Smallcap Index were up 1.28 per cent each. 

The BSE Realty Index surged 6.26 per cent, the BSE Capital Goods Index gained 4.81 per cent, the BSE Bankex moved 3.69 per cent higher and the BSE Auto Index advanced 2.61 per cent. The BSE FMCG Index was down 3.90 per cent, the BSE IT Index fell 3.01 per cent and the BSE Healthcare Index was 1.65 per cent lower. 

Jindal Steel (6.65%), ICICI Bank (5.32%), SBI (5.25%), Larsen & Toubro (4.91%) and BHELBSE 4.30 %(4.55%) were among the major Sensex gainers. 

ITC (5.46%), TCS (4.61%), Dr Reddy's Laboratories (4.09%), Hindustan Unilever (2.89%) and Infosys Technologies (2.80%) were among the major index losers
.  
BSE Sensex rose for a ninth consecutive session to its highest close since July 2011,.
The market breadth was positive on the BSE with 1459 gainers against 1253 losers. 

Meaning of Regressive and Progressive Income Tax

Definition of 'Regressive Tax'

A tax that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder.

Some examples include gas tax and cigarette tax. For example, if a person has $10 of income and must pay $1 of tax on a package of cigarettes, this represents 10% of the person's income. However, if the person has $20 of income, this $1 tax only represents 5% of that person's income.

Sales taxes that apply to essentials are generally considered to be regressive as well because expenses for food, clothing and shelter tend to make up a higher percentage of a lower income consumer's overall budget. In this case, even though the tax may be uniform (such as 7% sales tax), lower income consumers are more affected by it because they are less able to afford it.

Definition of 'Progressive Tax'

A tax that takes a larger percentage from the income of high-income earners than it does from low-income individuals. The United States income tax is considered progressive: in 2010, individuals who earned up to $8,375 fell into the 10% tax bracket, while individuals earning $373,650 or more fell into the 35% tax bracket. Basically, taxpayers are broken down into categories based on taxable income; the more one earns, the more taxes they will have to pay once they cross the benchmark cut-off points between the different tax bracket levels.

The U.S. progressive income tax is effectively a means of income redistribution. Individuals who earn more pay higher taxes; those taxes are then used to fund social welfare programs that are used primarily by individuals who earn less. Critics of the progressive tax consider it to be discriminatory and believe that a flat tax system, which imposes the same tax on everyone regardless of income, is a fairer method of taxation.

Targeting the Right Executive for the Complex Sale

When you're in the middle of a sales campaign and navigating a complex client organization you can typically identify multiple executives at various levels in the organization who influence the buying decision for a major purchase. However, for each sales opportunity there is usually only a single executive who would be considered as the relevant executive for that opportunity. Identifying therelevant executive may be the best use of your time in your current (or next) sales campaign. How is the relevant executive defined? It's the executive who stands to gain the most – or lose the most – as a result of the outcome of the project or application associated with your sales opportunity.

To dramatically illustrate the concept of a relevant executive, think about a key sales opportunity that you lost. Were you aligned with the most influential person in the client organization – the person who made the ultimate buying decision? If not, your competitor was probably aligned with that person and that's why you lost the deal.

Why is it so critical to identify the relevant executive? Because that executive may be in a unique position to proactively make a purchase decision or usurp a buying decision that has already been made in the formal decision-making process. Successful salespeople are tuned to the formal decision-making process; it’s the one that's described in the RFP or articulated by those who actively participate in the formal decision-making process. (How many times have you heard the expression, “You don't need to go over my head; I'll be making this buying decision.”?) But in nearly every sales opportunity, there is an informal decision-making process taking place. Successful salespeople understand that the informal process always trumps the formal process and they take action to make certain they are aligned with the key players who are part of the informal process.

But how do you identify the most influential person in the client organization as it relates to a specific sales opportunity? First, be constantly aware of what’s happening in the client organization. Observe how major buying decisions are made, who wins when reorganizations take place, and which executives receive the special assignments that are meaningful and significant. Additionally, look for who’s connected to other key players within the client organization. Notice which executives are tapped to lead the new projects of high importance. Discuss these events with your supporters or mentors in the client organization and then triangulate your information to develop your conclusions. Then, if you can align with the executive you think has the most to gain or lose - the relevant executive for the sales opportunity – spend some quality time with that person.

Your objective is to get that relevant executive selling for you so that you can win the deal. Salespeople often talk about their coaches in client organizations and the value of a coach when buying decisions are imminent. Sometimes a coach can be on the sidelines cheering you on; he is transparent with his support for you, your company and your solutions. Yet when you leave the client's location, the coach can become silent with respect to that support. What should be cultivated is a mentor – someone within the client organization who not only openly supports you in your presence but also sells in your absence, especially when you are in the middle of a sales campaign. After your presentation is over and you've left the building, a mentor will stand up and openly support you and your solution. If you can identify and align with the relevant executive and have that executive also become your mentor, the results can be extremely powerful.

Here's a word of caution, however: Because influence is situational, the person you identify as the relevantexecutive for the current sales opportunity might change for the next opportunity. It's important to understand this, because some salespeople fall into the trap of mapping the politics and influence in their key accounts for one deal and expect that those variables will remain constant for all subsequent deals. Influence is always in motion and there are so many factors involved in the complex sale that you need to profile influence one sales opportunity at a time.

Stephen J. Bistritz is the co-author of the best-selling sales book, “Selling to the C-Suite,” published by McGraw-Hill in 2010. He is president and founder of a global sales training and consulting firm based in Atlanta. Visit his website at www.sellxl.com

How the Sensex is calculated

For the premier Bombay Stock Exchange [ Images ] that pioneered the stock broking activity in India, 128 years of experience seems to be a proud milestone. A lot has changed since 1875 when 318 persons became members of what today is called The Stock Exchange, Mumbai [ Images ] by paying a princely amount of Re 1.

Since then, the country's capital markets have passed through both good and bad periods. The journey in the 20th century has not been an easy one. Till the decade of eighties, there was no scale to measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market.

Sensex is not only scientifically designed but also based on globally accepted construction and review methodology. First compiled in 1986, Sensex is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies.

The base year of Sensex is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print as well as electronic media.

The Index was initially calculated based on the "Full Market Capitalization" methodology but was shifted to the free-float methodology with effect from September 1, 2003. The "Free-float Market Capitalization" methodology of index construction is regarded as an industry best practice globally. All major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float methodology. (See below: Explanation with an example)

Due to is wide acceptance amongst the Indian investors; Sensex is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time (From 1979 onwards). Small wonder, the Sensex has over the years become one of the most prominent brands in the country.

The growth of equity markets in India has been phenomenal in the decade gone by. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. The Sensex captured all these events in the most judicial manner. One can identify the booms and busts of the Indian stock market through Sensex.

Sensex Calculation Methodology

Sensex is calculated using the "Free-float Market Capitalization" methodology. As per this methodology, the level of index at any point of time reflects the Free-float market value of 30 component stocks relative to a base period. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization.

The base period of Sensex is 1978-79 and the base value is 100 index points. This is often indicated by the notation 1978-79=100. The calculation of Sensex involves dividing the Free-float market capitalization of 30 companies in the Index by a number called the Index Divisor.

The Divisor is the only link to the original base period value of the Sensex. It keeps the Index comparable over time and is the adjustment point for all Index adjustments arising out of corporate actions, replacement of scrips etc. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate Sensex every 15 seconds and disseminated in real time.

Dollex-30 

BSE also calculates a dollar-linked version of Sensex and historical values of this index are available since its inception.

Understanding Free-float Methodology

Free-float Methodology refers to an index construction methodology that takes into consideration only the free-float market capitalisation of a company for the purpose of index calculation and assigning weight to stocks in Index. Free-float market capitalization is defined as that proportion of total shares issued by the company that are readily available for trading in the market.

It generally excludes promoters' holding, government holding, strategic holding and other locked-in shares that will not come to the market for trading in the normal course. In other words, the market capitalization of each company in a Free-float index is reduced to the extent of its readily available shares in the market.

In India, BSE pioneered the concept of Free-float by launching BSE TECk in July 2001 and Bankex in June 2003. While BSE TECk Index is a TMT benchmark, Bankex is positioned as a benchmark for the banking sector stocks. Sensex becomes the third index in India to be based on the globally accepted Free-float Methodology.

---

Example (provided by rediff.com reader Munish Oberoi):

Suppose the Index consists of only 2 stocks: Stock A and Stock B.

Suppose company A has 1,000 shares in total, of which 200 are held by the promoters, so that only 800 shares are available for trading to the general public. These 800 shares are the so-called 'free-floating' shares.

Similarly, company B has 2,000 shares in total, of which 1,000 are held by the promoters and the rest 1,000 are free-floating.

Now suppose the current market price of stock A is Rs 120. Thus, the 'total' market capitalisation of company A is Rs 120,000 (1,000 x 120), but its free-float market capitalisation is Rs 96,000 (800 x 120).

Similarly, suppose the current market price of stock B is Rs 200. The total market capitalisation of company B will thus be Rs 400,000 (2,000 x 200), but its free-float market cap is only Rs 200,000 (1,000 x 200).

So as of today the market capitalisation of the index (i.e. stocks A and B) is Rs 520,000 (Rs 120,000 + Rs 400,000); while the free-float market capitalisation of the index is Rs 296,000. (Rs 96,000 + Rs 200,000).

The year 1978-79 is considered the base year of the index with a value set to 100. What this means is that suppose at that time the market capitalisation of the stocks that comprised the index then was, say, 60,000 (remember at that time there may have been some other stocks in the index, not A and B, but that does not matter), then we assume that an index market cap of 60,000 is equal to an index-value of 100.

Thus the value of the index today is = 296,000 x 100/60,000 = 493.33

This is how the Sensex is calculated.

The factor 100/60000 is called index divisor.

Dettol is Still The Best and Will Remain the Best

Dettol celebrated its 75 years of existence in 2008. This highly popular antiseptic brand has come a long way since 1933. After a plethora of extensions and experiments, this brand is still ruling the Indian market as the most preferred antiseptic lotion and also as a premium soap.

The brand celebrated its 75 years by reinforcing the germ killing positioning and the tagline " Be 100% sure ". The brand is currently running a campaign highlighting the efficiency and the multi-uses of the product.

In marketing theory , it is taught that one of the strategy for a brand which has reached the maturity stage of PLC is to find new uses for the product. The Dettol brand is currently in the process of discovering those new uses for the product. When the consumer uses the product for different purposes, the sales naturally increases.

A classic case that is used in most marketing textbook is that of the Baking Soda brand Arms & Hammer. The brand found that consumers use baking soda as a refrigerator deodorant. Arms & Hammer ran a series of promotions to encourage consumers to place an open box of Arms & Hammer in their fridge. The brand later extended itself into various products like toothpaste and antiperspirant . ( Marketing Management, Kotler, Keller 13ed)


The best way to find the new uses for the product is to ask the consumers. Dettol did just that. It ran a series of promotions asking consumers to tell the company , how they used Dettol.

Watch the commercial here : Dettol new uses
The brand asked the consumers to contact them and tell the company on the multiple uses of the product and thus gained lot of insights into the various uses of the brand.

The brand later came out with a series of campaign highlighting the various uses of this antiseptic. Dettol now taken the platform of a multi-use antiseptic which can be used during bath, to clean wounds, to sterilize clothes, floor etc.

Although homemakers has been using Dettol for all these, the company has now taken these uses as a part of the core product. The brand is trying to break the image of Dettol as an antiseptic which is used for cleaning wounds.

Along with this initiative, the brand also reinforced its commitment towards hygiene. The brand has selected hygiene as the core brand value and theme which it will fight for.

In 2008, the brand conducted a study which showed that 78% of frequently touched surfaces in a household is highly contaminated. The brand then conducted a series of awareness campaign to promote better hygiene using Dettol.

Using hygiene as the major theme, Dettol is trying to increase the usage of the product among the households. Because of the excellent brand equity, Dettol is in a position to ride this wave.

Regarding the distribution, recently I wanted to buy this brand from my nearest grocery store but was surprised to find that the product was not stocked there. He told me that Dettol is available only in medical shops. A major super market is also not stocking this brand. I am not sure whether Dettol has stopped selling through OTC . If it is so, then the brand is in for trouble.

RE BRANDING EXERCISES BY TATA INDICA

ndica is a brand that is an epitome of persistence. Tata Motors through Indica has demonstrated how to manage product lifecycle effectively. The brand which was launched in 1998 has passed through many hurdles. The brand successfully transcended the initial flaws, bad customer /expert reviews and brickbats to become one of the largest selling cars in the Indian auto industry.

The brand survived and thrived because of the constant focus of Tata Motors to improve the product continuously. More than the product innovation, it was the value proposition that forced customers to choose Indica despite all those nagging troubles. You can see lot of Indica customers cribbing about the bad service and constant trip to the service centers but sticking to the brand because of the value proposition. You cannot get a diesel car with that much space at the price at which Indica is selling ( so far).

Tata Motors has been continuously tweaking the brand over these years sometimes making quantum leap in the quality and refinement of the product. A snapshot of the brand's evolution is given below

1998 - Indica announced
2001 - Indica V2
2004 - Rejuvenated Indica V2
2005- Indica V2 Turbo Diesel
2006- Indica Xeta
2008 - Indica Vista

The brand made a quantum leap in 2008 with the launch of Indica Vista. The entire brand personality changed with the launch of Vista. The product's looks and feel had changed completely and it was a rebirth for Indica.
The changes in the product was not limited to exteriors. Indica began sporting different types of engines from Fiat which gave a new perception of quality to the brand.

At the pricing also, Tata Motors consciously raised the Vista brand to a higher level . The Vista is pricier than the original V2 thus reducing the attractiveness of the brand to the Taxi segment. At a price range of Rs 4 - Rs 5 Lakh, Indica Vista is not a cheap diesel car. It was an upward stretch by the brand.

The Indica Brand portfolio is given below.

















The Indica brand portfolio consists now of three sub-brands V2, Vista and Xeta.

V2 is the most economical of the lot and is the original Indica. This product is retained because there is still huge demand for V2 at that price point. Within the V2 range, there are three variants which includes the Indicab which is for the Taxi segment. Price of this sub-brand ranges from Rs 3,50,000 - Rs 3,95,000

Next sub-brand is the Vista. Vista is the new generation Indica and Tata Motors would like this brand to take over the leadership position from V2 in future. The brand is targeting the discerning Indian consumer with its value proposition and good looks.Vista has lot of variants satisfying the various needs of the customer. The Indica Vista Aura is the premium range that sports many goodies that premium brands claim like ABS, Airbags etc. Vista also comes in Petrol version sporting the Saphire engine. Prices range from Rs 3,90,000 - Rs 4,90,000 ( apprx). Within the Vista range, customers are given lot of engine option including engines from Fiat.

Xeta is the petrol variant of Indica V2. I am not sure about the future of Xeta since the petrol segment is heavily competitive and compared to Maruti and Hyundai, Indica Xeta's value proposition is not that attractive as the diesel option. Prices range from Rs 2,72,000- Rs 3,00,000).

The positioning across the brand portfolio remains the same. All the brands focus on the value proposition. But these sub- brands sports different taglines

Indica V2- More car per car
Indica Vista- Changes Everything ( Surprise Yourself is the new tagline)
Indica Xeta - Makes much more car sense.

Vista recently relaunched itself with Drivetech 4 technology and is now sporting a new tagline Surprise Yourself .

Indica in a way is an example of good marketing practice. The brand continues to evolve and is a pleasure to watch.

Volkswagen launches lighter, more fuel-efficient Golf

Volkswagen is rolling out the latest version of its mainstay Golf hatchback in a key test of its ability to widen its lead over other mass market carmakers in Europe, lower manufacturing costs and overtake Toyota as the world's biggest carmaker. 

The new Golf looks much like the old one, but the key differences are on the inside. The car has been completely redesigned, based on a new common mechanical structure for the chassis, engine and other basic parts. 

The new Golf is ``the acid test'' of VW's effort to ramp up mass production of the new common platform and achieve lower costs while maintaining quality standards, according to Marc-Rene Tonn, analyst at Warburg Research. The car is the company's mass-market flagship, having sold 29 million since it was introduced in 1974.

The common structure will underpin not just the Golf, but other Volkswagen vehicles. Savings from sharing parts should make the company's cars cheaper to build, analysts say.


Guests check the new Volkswagen Golf model during the launch ceremony in Berlin on September 4, 2012. (REUTERS)
Those savings in turn will help VW add on more environmental, safety and energy-saving features that will boost the car's perceived value to consumers. And that, in turn, should let Volkswagen charge more and reap higher profit margins.

The dashboard, steering wheel and the navigation system are pictured inside the new Volkswagen Golf model during the launch ceremony in Berlin September 4, 2012. (REUTERS)
The common structure, with the jawbreaker name of modular transversal toolkit, or MBQ from its German abbreviation, will eventually underpin the Polo, Golf and Passat models as well as some Skoda, Audi and SEAT models. It actually debuted with the Audi A3 in June, but the Golf represents much bigger manufacturing volume.
he company said on Wednesday that the new Golf will go on sale Nov. 10 in Germany, and orders are being taken now. The basic model starts at (euro) 16,975 ($21,353), same as the old one. A model with a 150-horespower engine runs (euro) 27,100. The company is not saying when the new version will make it to the other markets such as the United States.

The engine of the new Volkswagen Golf model is on display during the launch ceremony in Berlin on September 4, 2012. (REUTERS)
The MBQ common structure will mean that 40 percent to 50 percent of parts could be shared based on value. Volkswagen is telling analysts it will mean 20 percent savings in manufacturing costs and similar savings on the heavy fixed costs of developing new versions. By 2018, vehicles using the platform may represent two-thirds of VW's global output. 

That platform system will also mean VW can tailor models to individual markets, as parts can be swapped in and out of the design.

The new Volkswagen Golf model is on display during the launch ceremony in Berlin on September 4, 2012. (REUTERS)

``The flexibility with regard to design of the vehicles at substantial economies of scale...should enable VW to step into new markets and niches faster and more easily than before,'' analyst Tonn wrote in a note to investors. ``With the new toolkit being rolled out, VW will substantially improve its comparative position within the volume car manufacturing industry.

Euro zone likely back in recession as PMIs slump: Survey

he euro zone is likely to have slipped back into recession in the current quarter, according to a survey published on Wednesday that showed a seventh month of contraction for the bloc's private sector as new orders dwindled.

The Purchasing Managers' Index (PMI), published by Markit, showed the economic rot that began in smaller periphery members of the 17-nation bloc is now taking hold even in Germany, the region's largest and strongest economy.

August's composite PMI, which measures manufacturing and services together, fell to 46.3, revised down from a flash reading of 46.6 and below July's 46.5.

"The final August PMI came in only slightly below its earlier flash estimate, leaving the euro zone economy on course to fall back into technical recession in the third quarter," said Rob Dobson, senior economist at data compiler Markit.

"The looming concern is the increasing signs of weakness coming out of Germany, the nation others were looking to as a pillar to prop up growth in the broader currency region."

Germany's composite PMI fell to 47.0, chalking up its lowest reading since June 2009 when the euro zone was in the middle of the worst recession since World War Two.

A Reuters poll published last month predicted the bloc would contract 0.2 percent in the three months to September but Dobson said the PMIs suggested the downturn could be far worse and that the economy would contract 0.5-0.6 percent.

The euro zone economy shrank 0.2 percent in the three months to June, according to official data. A second quarter of contraction would meet the technical definition of recession.

RATE DEBATE 

A sovereign debt crisis which began in the euro zone's smaller economies is now hammering business and consumer confidence across the bloc, putting pressure on policymakers to take radical steps to help vulnerable countries such as Spain and Italy.

European Central Bank President Mario Draghi is expected to flesh out his plans on Thursday for a bond-buying programme he announced in August, although few economists polled by Reuters expect he will reveal its innermost workings.

Economists in the Reuters poll were divided, though, over whether the bank will cut its main refinancing rate from 0.75 percent to a new record low of 0.5 percent this week. An October rate cut instead looked equally likely.

Heaping further pressure on policymakers and likely adding to expectations for a cut, the PMI for the region's dominant services sector fell to 47.2 from July's 47.9, below a flash 47.5. It has only been above 50 once in the past year.

New business has declined for a year, despite firms cutting prices for the ninth straight month, with the sub index coming in at 44.7 - just above 44.5 in July but revised down from a flash 45.0.

As the downturn intensifies, firms reduced their workforce again in August, with the composite employment index registering 47.5, above July's reading of 47.2. The index has been below 50 since the turn of the year.

How Purchasing Insights Can Prove Beneficial in B2B Sales

Applying proven B2C marketing techniques to the B2B sales and marketing process

by: Jim Swift

A woman is expecting a baby, therefore the family is probably in search of more space, a family car or minivan, etc. A man takes a new job in a new city, therefore he is probably looking to buy a new condo or house, switch his insurance provider, etc. Identifying patterns like these and using them to predict behavior has been the foundation of consumer marketing for decades; life events dictate the types of products people buy.

While the science of customer purchasing behaviors has been around since the dawn of commerce, these principles have not been applied to the B2B space. Times are changing, and when it comes to adopting such successful B2C marketing techniques within the B2B space, the time is now.

In the B2B world, the entire basis of marketing is underdeveloped, relying solely on less accurate evaluation methods such as demographic information (SIC codes, number of employees, revenue estimates) and risk scores to profile and target businesses. You can have two companies with the exact same SIC code, with the exact same revenue, but they’re totally different entities and their financial situations are completely different. On the surface both organizations may appear to have a lot of similarities but a deeper look reveals they are coming from two different places and going in two entirely different directions. When customers and prospects are viewed through this traditional marketing database lens, these customers and prospects all look the same, which results in generic marketing results. When these same customers and prospects are viewed through a purchasing behavior lens, however, we gain much deeper insights about their size, growth, and most importantly, what they buy. This level of knowledge enables businesses to target the right companies at the right time with the right marketing offer that is relevant to their specific goals and needs.

From a sales and marketing standpoint, purchasing insights acts as a tool for forecasting future spending behavior, enabling businesses to predict their customers’ and prospects’ next move. By understanding purchasing patterns, businesses are positioned to build customer loyalty and focus sales efforts simply by knowing where and how prospects or existing customers are moving and capitalizing on such information.

Purchasing business intelligence geared towards spending behavior not only acts as a catalyst to land that prospect as a customer, it also helps ensure businesses retain that customer through its power of personalization. If a business notices a customer is growing, use that as an opportunity to deliver smarter pricing. For instance, say something like, “I know your company is growing fast. Here’s a plan we can work out. I’m going to reduce your rates over time on a unit basis based on these growth projections we see for you.” In that brief conversation, you just won over that customer for the long run. By adjusting the pricing terms to fit that customer’s specific growth plan, you have locked that client into something longer term. It is all about anticipating their needs and understanding what they need to accomplish next. And in the process, you make that customer feel proud about their business and impressed that you recognize they are on the track towards growth. You are personalizing that relationship and sealing them up as a long-term customer. A win-win.

Using purchase behavior insights is more than just sales and marketing. It’s about retention. It’s about loyalty. It’s about singular attention toward your customer and improved customer relationship management. All of this translates into more revenue and profit for you. That’s the power of leveraging insightful data.

Jim Swift is CEO of Cortera, a provider of comprehensive business-to-business payment and purchase behavior insights on public and private companies. The company tracks $1.6 trillion in business-to-business purchases across 45 spend categories to deliver insights on 20 million U.S. business locations.

Buying power of US Dollar vs. Rupee. Price of Food, Clothes, Inflation

When I call my parents in India, my Mom asks about prices of vegetables, clothes and other stuff in US. I tell the price in dollars…when I complain about prices of few things in America, she replies saying, “for you guys living in America, one dollar is equal to one rupee…so it is ok…” I right away reply to my mom, “A dollar is never equal to rupee…the buying power of one Dollar is much higher than a rupee in India.” I quote an example saying, “in America, people can get a cheap cheese burger for a dollar or even cheaper taco in taco bell for 80 cents or so…but, what can you buy for a rupee in India…Nothing ! ”. In general, it is not logical to compare both currencies as their value is different, but just trying to explain the perceptions of people about currency. This article is part of the series Settle in US or  India and will focus on inflation, cost of various things and how things are changing in America vs. India.

Inflation of USA vs India, Economy growth rate.

If you look at both of these graphs, you get a clear idea of the inflation rates based on consumer price index. In India, the inflation rate is over 10% or hovering around there…whereas in America, the inflation is under 2% and there was deflation in USA during recession.  Logically, what is happening is, due to inflation in India prices are going up crazy and the effective buying power of a rupee is decreasing.  People who work in IT companies in India, get Salary hikes ranging from 15% to 30% every year, where as in America the average hike per year in salary is around 3%. The logical reason for the disparity in the hike is the inflation. Also,  Indian economy is a growth phase and we can expect to have the inflation for the new decade or so…who knows…

You can get good branded clothes in US for relatively less price, depending on sale or time of season….I took out few friends, who came from India few weeks ago, to shopping malls and outlet malls to buy clothes and shoes…they were surprised by the price of clothes and shoes in America….they said US prices were relatively cheap for the good brands they were buying….to add more, food is relatively cheap in America when compared to price of the food with India…Just a note, I am talking about the upper middle class people in India who have an IT job or a well paying job leading a lifestyle of spending money in Malls, multiplexes, etc…

Decision to Live in India vs. USA based on  Inflation

On a macro level, based on the inflation data presented above and the continuing growth rate of Indian economy, it is a good idea to stay in America for next decade or so until the Indian economy stabilizes….the sole point of staying in US is based on stable economy and less inflation… If you stay in India and save money, unless you get over 10% interest rate on your savings, your savings money is not enough to meet inflation and it is worth nothing.…Also, you would have to pay lot more money for house interest rates and other stuff…there are so many things, I am just talking on a very high level…

What do you think about Inflation India vs. America ?

Coal India to spend Rs 59,400 cr on capex over 5 yrs

 

State-owned miner Coal India (CIL) has chalked out a whopping Rs 59,400 crore capex programme for the current Five Year Plan period ending March, 2017 including Rs 25,000 crore for overseas acquisitions.

”...the envisaged capital investment in the XII (12th) Plan of CIL is Rs 24,400 crore for the period 2012-17, in addition an amount of Rs 25,000 crore is also envisaged for acquisition of assets abroad and Rs 10,000 crore for development of coal block in Mozambique,” Minister of State for Coal Prakashbabu Patil said in Rajya Sabha.

Patil said that as per the approved Budget Estimates for the Annual Plan 2012-13, the capital investment of CIL is Rs 4,275 crore for achieving a coal production target of 464.10 million tonnes and dispatch target of 470 million tonnes.

“In addition, a budget provision of Rs 5,000 crore has been made for acquisition of assets abroad and Rs 500 crore development of coal block in Mozambique (for 2012-13),” he said.

To a separate question, Patil said though CIL does not hand-over the responsibility of coal production to private companies, some production-related operations are carried out through hiring of equipment by CIL and its subsidiary.

‘Brand Infy still creates a buzz on campuses’

nfosys Technologies says its brand equity in campuses has not diminished.

“There was a recent survey that said that IBM and Infosys are the number 1 and 2 in the campus. That buzz has not reduced,” said Kris Gopalakrishnan, Executive Co-Chairman, in an exclusive interaction with Business Line and The Hindu. He was joined by CEO and Managing Director S. D. Shibulal. Excerpts:

On campus hiring this year

Shibulal: Usually, we let campus hires join us between July and December; this year we have allowed them to join between July and March. We spread it out to nine months, from six months before. We can’t have everybody joining at the same time. Around 26,000 offers were made. We are expecting 22,000 people to join. We are not seeing any drop in conversion rate.

On Chinese competition

Gopalakrishnan: Chinese competition will come in the future. It is not a big factor today. Many of the Chinese companies are system integrators whereas large Indian companies are all services companies. China may become a big competitor in 3-5 years as it is trying hard to shift from a manufacturing to a services economy.

Shibulal: We have committed to building a $100-million centre in Shanghai.

On the Palmer case

Gopalakrishnan: It is a whistleblower case. Judgment said there was no validity in it.

Shibulal: It is a retaliation claim. The judge has taken a view this case does not merit going into trial itself as evidences don’t show it. It vindicated our view that we never retaliated.

On e-governance initiatives

Gopalakrishnan: One report says the Government plans to spend Rs 27,000 crore in 3-5 years on e-governance projects. We are in some of the large projects such as income-tax project and post-office banking.

On State projects

Gopalakrishnan: We are doing a smart grid project for the Karnataka Government. Different governments have different priorities: Land records are doing well in Karnataka and Tamil Nadu, Karnataka did well in smart grid, Andhra did the e-governance services portal.

On Narayana Murthy’s shadow over Infy

Gopalakrishnan: When you have somebody of Narayana Murthy’s stature, the shadow will be there for some time. Like Steve Jobs and Bill Gates. He is always there for advice. But operationally or from a board perspective, he is not there.

On the next CEO for Infy

Gopalakrishnan: One of our biggest responsibilities as founders is to identify and groom the next generation of leaders. Any good company must be able to generate its own leaders. Employees are working hard and it is only fair they get a chance. If you go outside, it only means you don’t have good leaders within.

On creating Infy millionaires and being part of corporate folklore

Gopalakrishnan: It is very humbling and satisfying. Humbling in the sense we never imagined. Satisfying because we made an impact. There is also a sense of responsibility. We have to show the legacy is beyond the company. We have created an amazing platform because it can be used for anything. We are building 10,000 toilets in northern Karnataka; 5,000 are already delivered. We trained 73 autoworkers in Detroit. These were non-computer science workers; we trained them as we do in Mysore (Infy training facility) and 27 have found jobs in the IT industry.

Mortgage and its Types

A mortgage is an agreement to give up an interest in something if you fail to perform some duty. In many cases, it means that you’ll give up your home if you fail to repay your home loan as agreed. You can use mortgage as a verb, meaning “to pledge”.

Mortgage and “home loan” are often used interchangeably. However, the mortgage is really the agreement that makes your home loan work — the bank wouldn’t lend you hundreds of thousands of dollars unless they knew they could claim your home in the event of your default. Mortgage is a loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan. The mortgagor’s lien on the property expires when the mortgage is paid off in full.

Mortage and Home Loan

There are several types of Mortgage loans which are Fixed Rate Mortgage, Adjustable Rate of Mortgage, Jumbo Mortgage, Equity mortgage finance, Convertible Adjustable Mortgage, Blanket mortgage, lease purchased mortgage, Shared Appreciation mortgage, balloon mortgage, Graduated payment mortgageandSub Prime mortgageetc. These mortgage loans types have different characteristics and each one has its own parameters. However, it is the duty of borrowers to find out the most suitable mortgage loan that not only fulfill their needs but also easy to carry on.

Fixed Rate Mortgage is very famous and best mortgage loan types. In this mortgage, mark up rate is fixed for the entire loan life. Usually lender charges high rate of mark up in order to mitigate the risk of increase in mark up rates in future.

Adjustable rate of Mortgage is often called ARM. In ARM, mark up rate is not fixed but in contrast, it changes after the initial period. The review of mark up rate is mutually decided by lender and borrower.

Jumbo mortgage is specially designed to help high net worth individuals to purchase luxury homes. It comes with higher interest rate and usually starts from 5,500. Below that amount, normal mainstream financing is treated.

In Equity Mortgage, borrower obtains loan against residential property. It is simply called credit limit account. Commercial banks usually allow their tested clients to avail this facility.

Convertible adjustable rate mortgage is that in which borrower can adjust mark up from adjustable rate to fixed rate. Usually borrower can only exercise this option after completing a specific period of time as set by lender.

In Blanket mortgage, lender accepts two properties as collateral. This is usually very secure finance and comes with lower pricing. Purpose behind this finance is to secure the loan by taking extra property.

Lease Purchase mortgage loan is alternative way to obtain loan. The purpose behind this mortgage loan is to give lower and middle level income borrowers the right to obtain mortgage at the end of tenor by making extra amount.

Shared Appreciation mortgage is commonly called as SAM. In SAM, lender or third party involved in loan to share in property in future appreciated value. In return, borrower is offered lower mark up pricing rate.

Balloon Mortgage is also a type of mortgage loan where lenders allow the borrowers to pay installments at start of loan and in the end, pay equity or down payment portion. In Graduated payment mortgage which is also called GPM, payments of installment increases for a specific period of time and then level off. This is the only mortgage loan which is built on negative amortization.

Sub Prime Mortgage allows lender to finance even borrower has bad credit score or history of foreclosure. This is high rate of mortgage and very easy to avail.