Staying put: For an increasing number of B-school grads, the West no longer shines

At IIM Ahmedabad, 11 students turned down international postings, says P.K. Sinha, Chairman of the Placement Committee. "Many MNCs like Deutsche Bank are setting up offices in India and that's encouraging students to stay back. Also, the support structure and advantage of working in your homeland is very alluring," he explains. Apart from the booming market, there may be other reasons why these bright young people are shying away from global placements. "Even as international recruitments across campuses appeared to be going down in anticipation of a weakening in the global markets, recruitments at IIM-A bore out the fact that high quality managers are essential irrespective of business cycles," says Major (Retd) Devashish Chakravarty, Coordinator of the Student Placement Committee, IIM-A. Unlike other institutes, the entrepreneurship bug also kept students away from plum overseas postings. At least 20-25 IIM-A grads took this route.

At IIM Bangalore, Manasi Prasad spurned a Rs 1 crore-plus global offer from Lehman Brothers, and chose, instead to stay in India with Standard Chartered. "I wanted to stay in India. My choice wasn't a compromise, since Standard Chartered offered me a competitive position here," says Prasad, who plans to find time out of her hectic corporate schedule to pursue music. Jatin Mamtani, an IIM-A grad, spurned a $200,000 (Rs 88 lakh including bonus) New York-based job with a global investment bank and opted for a Rs 20-lakh job with a consulting firm in Delhi. Why? "First, I was more interested in consulting than in banking. Secondly, I felt, this is the right time to operate out of India," he says, adding that his ambition is to set up his own venture in India. Adds Vishal Julka, from IIM-L, who will join HSBC's commercial banking division in Mumbai soon: "I see IIM graduates asserting personal choices rather than going by what others are doing." Sourav Mukherji, Associate Professor (Organisational Behaviour) and Chairperson (Placements), IIM-B, reckons that up to half a dozen students from his institute have given up global placements to stay at home.

This trend, of hunting for India-based jobs, wasn't restricted to the IIMs. "This is an exciting time to be in India," says Ali Potia, 28, from the Indian School of Business, Hyderabad. He declined an overseas offer from an international consulting firm to work out of India. This (without factoring in the purchasing power parity), however, meant taking a 75 per cent cut in the compensation package.

Meanwhile, an overdose of media attention meant that no one was willing to talk salaries (after all the attention grabbed by the $193,000 or Rs 84.92 lakh offer last year), officials did say that "on average, salaries are much higher than this year."

-Additional reporting by E. Kumar Sharma, Kapil Bajaj, T.V. Mahalingam and Ritwik Mukherjee

INSTAN TIP
The fortnight's burning question.

Will the government's agreement with cement companies on holding prices for a year distort the price discovery mechanism?

No. A.K. Saraogi, Chief Financial Officer, JK Cement

The agreement reflects cement manufacturers' appreciation of the government's concern over price increases. If there is any major increase in input costs, we will approach the government and do what is necessary through mutual consultations.

Yes. Gurcharan Das, Consultant and Author, India Unbound

Any government intervention of this kind inevitably distorts the market. I don't know how much a one-year freeze will distort the market, but such steps, in general, squeeze supplies and damage both producers and consumers alike. This is a retrograde and counter-productive measure.

No. Kunal Banerjee, Vice President (Marketing), Ansal API

It may be going against the prevailing economic wisdom, but I do believe that this measure will steady the market. The construction sector is in correction mode and this intervention can be justified because the industry is such a vital factor in the country's economic growth.

-Compiled by Kapil Bajaj

Q&A
"India is a key hub for GE Healthcare"

Why is India an important market for you?

India is a key hub for GE Healthcare not just for engineering and manufacturing, but also as a growing market for cost-effective solutions. We have around 2,200 employees in India, spread across engineering and manufacturing, and we expect this to rapidly increase over the next couple of years.

How will you expand your presence here?

Our India operations already generate revenues of $450 million (Rs 1,980 crore). There are several growth opportunities here-in chemical engineering and basic research in physics.

What are the challenges of operating in India?

I've noticed on every visit that traffic has increased in Bangalore; so that's a clear sign of development and, for our people here, a daily challenge. We have invested over $100 million (Rs 440 crore) in India but the attrition in the industry is something we have to learn to cope with. The healthcare market is very competitive both in India and globally, so we have to be ahead of the market with innovation.

Savings, Investment Rates are Up

India's savings rate has increased substantially over the last couple of years. Traditional economics says the higher the savings rate, the higher the propensity to invest. And unsurprisingly, the investment rate in India has also risen from 22.9 per cent of GDP at the beginning of the decade to 33.8 per cent last fiscal, even as the savings rate has gone up from 23.5 per cent five years ago to 32.4 per cent.

The reasons? Shifting demographics and rapid economic growth has led to improved public sector finances and corporate profitability. "It (the increase) is part cyclical and part structural," says Suman Bery of NCAER.

The fact that these indicators are backed by structural changes points to the sustainability of the surge. Prime Minister Manmohan Singh believes that the savings and investment rates in India will go up by another 5 percentage points over the next five-to-six years.

The implications: economists believe that this will fundamentally change India's growth path by providing a huge pool of cheap capital. "Once the current bout of inflation has been contained, the deployment of this pipeline of capital will lead to rapid growth of the financial system and will fund massive expansions in infrastructure and manufacturing capabilities," says Deutsche Bank's Sanjeev Sanyal, adding that India will soon shift from a high-skills growth path to one that is very similar to the Chinese pattern.

However, an essential precursor to that scenario is financial sector reforms (think pensions and insurance) that will allow efficient allocation of financial resources.

-Shalini S. Dagar

SELF WORTH/KRISHNAN GANESH/ CEO/ TUTOR VISTA
Four Times Lucky, and Still Counting

Ganesh, a mechanical engineer, began his professional life in 1982 at Tata Motor's (then Telco's) Jamshedpur plant on the shop floor, but soon realised that he wanted to expand his horizons. This led him to IIM-C and a five-year stint with HCL. In 1990, Ganesh became a first-generation entrepreneur; he set up IT&T, a third party it maintenance and services firm, with two friends and a total capital of Rs 90,000. "Remember, this was the era when PCs from different companies could not work with or 'talk' to each other. Our job was to make them work seamlessly," he says. By 1998, IT&T had revenues of Rs 30 crore and was making good money, but Ganesh was bored. "Once something stabilises, work gets repetitive and I get restless. I like the thrill of the next new thing," says Ganesh, explaining why he quit IT&T even though he continued to retain a stake.

Even as he was contemplating his next move, good friend Sunil Bharti Mittal, Chairman of Bharti Enterprises, requested his help to manage Bharti BT, a JV with British Telecom (BT), which had run up losses of Rs 16 crore on a turnover of Rs 4 crore. Mittal wanted a capable person to run the show. Ganesh turned the company around in two years. "What I liked about the stint was that the six people who were reporting to me on the day I joined were the same people who bid me farewell. This shows that if people are motivated and given freedom, anything is possible," says Ganesh.

Then came the dotcom boom around 2000. Ganesh, like several others, realised that Indian resources could be deployed to serve global markets. Scouting for a customer who could also invest in his venture, he came across SoftBank, which had several online properties like eloan.com and buy.com, whose customer interactions could be handled from India. Ganesh set up CustomerAsset.com (it was a good thing to add .com at the end of every name then, chuckles Ganesh) first as an e-mail services provider and then, when the dotcom bubble burst, as a voice services provider. By 2003, it had 2,000 employees but Ganesh realised that BPO is a capital-intensive business. He sold out to ICICI Bank, but stayed on for a year to scale up operations to 4,000 people. "When I got the cheque, one of the first things I did was to go out and buy a Mercedes Benz-probably a hangover from the dreams I had while working at Telco," says Ganesh. That same year, he made another neat packet when IT&T was acquired by iGate.

He made another tidy packet when WNS announced on March 10 that it was acquiring Marketics, in which he was an investor, for $65 million (Rs 286 crore). Ganesh won't say how big his pay-off was. "After your first flush of success, money can never be a motivating factor. Just because I got a couple of million dollars, doesn't mean I will start eating more from tomorrow, does it? The joy is in creating new things," he says.

-Venkatesha Babu

Budgeting for Guests

Given that land accounts for at least 60 per cent of the project cost, how do these hotels intend to redeem their pledge? "Well, one option is to go in for mixed use projects. We can lease the ground floor out as a mall and use the upper floors as guest rooms. That will partially offset my land acquisition costs," says Patu Keswani, CMD, Lemon Tree Hotel Company.

That, however, doesn't appeal to Uttam Dave, President and CEO, Interglobe Hotels, and Head of Development, Accor Hotels India, which is coming in with the Ibis brand. "Going in for mixed use will only provide marginal benefits, given the exorbitant prices of land in Delhi and the NCR," he says. Dave's strategy for Accor is, therefore, to go in for a management contract model. He expects to price his rooms at 40 per cent of the tariffs charged by five-star deluxe properties. "This is a standard model for pricing budget hotel rooms the world over," he says.

Roots Corporation's Ginger Hotels-part of the Indian Hotels Company-however, is non-committal on its pricing plans. "We definitely want to hold the price line, but I don't think it will be right to comment on it. We will take a call when we are ready to start operations," says Prabhat Pane, coo, Roots Corporation. Of course, one way it plans to sell rooms at under Rs 1,000 is to go for existing properties and refurbish them.

Others, like Berggruen's Keys Hotels, which will be opening 38 hotels over the next five years, are looking at maximising rooms available per available unit of land. So, in Delhi, where it is planning hotels in Dwarka and Rohini, the group will go in for a 200-room hotel over a land area typically measuring 0.8 acres; in smaller cities, a half-acre plot will have 100 rooms.

Will these strategies work? Watch this space.

-Tejeesh N.S. Behl

Consumer Credit Growth: Sanity Returns

What goes up must come down. Consumer credit has grown at a scorching pace since March 2002, rising almost 200 per cent from Rs 1,14,707 crore to Rs 3,53,777 crore in March 2006. Bankers feel the figure has crossed the Rs 4,00,000-crore mark in 2006-07. Since latest industry-wide figures aren't available, the accompanying graphic uses figures for ICICI Bank as a proxy for the industry. But the inflationary pressure in the domestic economy, fuelled by supply side constraints and surplus liquidity, is changing the domestic consumer credit script. Interest rates, which have risen by over 2 percentage points over the last year, are also playing spoilsport.

"Rising rates affect the consumer's ability to borrow and spend," says Naina Lal Kidwai, Country Head and CEO, HSBC India. S. Sambamurthy, Chairman of Corporation Bank, adds: "Consumer credit is definitely expected to 'pause' in the medium term." Is there, then, the possibility of a slowdown in the domestic economy? "The growth in consumer credit may slow down, but we are still expecting it to expand at 20-25 per cent growth," says V. Vaidyanathan, ED, ICICI Bank.

-Anand Adhikari