Handling of VIPs at Indian airports: Personal experience

Last week, I had been to Kerala on a personal visit and waiting at one of the smaller airports. I was told at the check-in counter that my Kingfisher flight's departure to Bangalore has been delayed by 15 minutes. Since such delays are normal at most airports in India, I completed the security check & was waiting in the lounge for the boarding call.

The flight was supposed to leave at 15:15 hrs and there was no sign of a boarding call even at 15:00 hrs. Since this was the only flight at that time scheduled for departure, I was a little annoyed at the delay.

At 15:05, I heard a little commotion in the departure lounge outside of the secured area. To my surprise, Mr. L.K Advani walked in with some local entourage (3-4 guys). I was surprised to see him along with his entourage walk through the security check area without being checked! All this while the CISF guys at the security check gate stood and watched. What if any of these guys were carrying arms / ammunition? Mr. Advani & his folks were not only putting their lives in danger, but also all the other folks at the airport who had gone through a thorough security check.

I am really surprised at the attitude of our VIPs who don't want to be checked. Let us assume that their time is more precious than all others. In that case, let them get priority at every counter at the airport including the security check counter. But, not going through the security check is like introducing a loophole in airport security itself. Any terrorist even with limited expertise can take advantage of this loophole & do anything.

I hear Mr. L K Advani give big speeches when it comes to national security. But he himself seems to be unaware of the dangers of the VIP treatment he is getting. Why can't he table a bill in parliament which will remove the exceptions to VIPs when it comes to security checks? I am more than 100% sure that Mr. Advani is well aware of the dangers of this security hole, but I guess, he is like any other VIP in India who likes to enjoy that special treatment.

In summary, as citizens of India we are very much vulnerable to terrorist attacks with gaping security holes like these. Is there any way out of this? May be Anna Hazare has an answer.

Indian corporates: Do they really pay attention to long-term strategic planning?

I have been tracking some of the large and medium-sized Indian corporates for sometime to understand their long-term planning. Initially I used to focus mostly on IT companies, but later started looking at other sectors as well. To my surprise, I found that most of the Indian corporates don't do any strategic long-term planning at all!

Let me take some examples to illustrate my point. In the recent Hero Honda split up, I don't think Hero would have wanted the split. I strongly believe that it would have been initiated by Honda. Why? because, Indian 2-wheeler market has become too big to ignore, for Honda. They would have had limited growth if they stick to Hero. So, they would have initiated the split. Now that it is official, Honda can focus on selling bikes on its own. But what about Hero? If I were Hero group, I would have been ready with my own R&D team by now. I am sure it will take another 4-5 years for Hero group to have a good R&D set-up in place. I have my own doubts if they would seriously invest in R&D at all! In all probability, they would tie up with some chinese manufacturers & continue their business.

Take the case of defense deals which are up for grabs. This has been the situation for a long time now and will continue to be so further. This is completely dominated by overseas firms, absolutely no Indian representation. Indian companies knew this for a very long time. Why didn't they build the required expertise and lobby with the government to open up the defense production for the private sector in India? If we can buy from a foreign company & insist on 30% indigenization clause, why not buy the whole thing from the Indian companies? The plan & simple answer is that no Indian company is yet ready with the required expertise to manufacture such products. Companies like L&T, Tatas, Mahindra & Mahindra have been trying to enter this sector now, but don't seem to have any long-term strategy yet.

None of the Indian IT companies have a well defined India strategy yet, while most of the foreign MNCs have figured out how to take advantage of the Indian IT opportunity. In fact most of the large/key deals from both public & private domains have gone to foreign companies so far. The other day I heard Anand Mahindra tweeting in support of Rajat Gupta while one of his companies (Satyam) has been working with SEC for quick re listing in the US stock exchanges! While HCL & Wipro started making computers much before the entry of foreign MNCs like HP & DELL into India, they never leveraged their early mover advantage.

This is not to say that there are no exceptions. Bharti Airtel is one such exception. They not-only came up with lot of business model innovations which set the trend in the Indian telecom space, but what they did made the foreign telecom MNCs sit back and take notice.

In summary, it looks like most Indian corporates don't do long-term strategic planning. This will mean that they will always remain followers of foreign MNCs when it comes to business model innovation. So far, it is the foreign MNCs which are well placed to reap the benefits of the India story and not the Indian corporates. I am sure the Indian corporate realize it soon and start paying attention to long-term strategic planning.

Aruna Shanbaug's case: What really got missed out

For the last couple of weeks, Pinki Virani's euthanasia plea for Aruna Shanbaug managed to catch media's attention. The judges did the right thing. They elicited medical opinion about Aruna and then passed the judgment that Aruna should not be forcibly put to sleep. I completely agree with the court's argument that no one has the right to take Aruna's life. In fact, our system has failed to protect her and that is why she is in that state. Hence, we (read government) need to ensure that she does not suffer from inadequate medical attention, whatever be the cost. Since the nurses at KEM are taking good care of her since 38 years, let the same arrangement continue as long as she lives.

The judges who passed the judgment in Aruna's case, ignored one important aspect in the Indian laws which is crying for attention. That is about the inadequate quantum of punishment in such cases. This case had provided the right opportunity to bring it into focus and have the government change the laws accordingly. Without very hard punishment, the Sohan Lals who ruined Aruna's life would continue their acts without much deterrance.

Let us take Aruna's case itself. Sohan Lal, the sweeper, managed to ruin Aruna's life forever by his heinous act. If this incident had not happened Aruna's life would have been a great. But, for ruining her life forever, what punishment did he get? Just seven years in jail. In fact it was stupid for the judges to allow 2 7-year terms to run in parallel, in his case. In fact, our laws should discontinue this practice which is unfair to the victim. For the crime that Sohan Lal committed, the magnitude of punishment must have ruined his life. That is when I would say Aruna got justice. The judges did not focus on this aspect of the case at all.

In India, every day, there are so many cases of rape, acid throwing and so many other heinous crimes committed, but the perpetrators of crime get away with very short life terms for ruining someone's life. If you ask me, the cases of rape do much more damage to the victim than a murder. Thus, the laws should get changed accordingly. I would have been thankful to Pinky Virani if she had brought this aspect out in her case instead of assisted suicide. That would have changed the system for good. The court did not have to allow passive euthanasia in any case. It was already being practiced in different forms by the medical fraternity.

In summary, the Indian penal code needs a lot of urgent amendments to make it more effective. This includes de-criminalizing suicide attempts, but unless it addresses the root cause which is the quantum of punishment in various heinous crimes, the suffering of the people would continue unabated which Sohan Lals continue with their crimes.

India's obsession with cricket

India's obsession with cricket has reached gigantic proportions. The recent lathi charge at Bangalore of ticket-seekers goes to show the extent to which the people are ready to go to cheer the team in the stadium. The iconic status enjoyed by the Indian team in general and folks like Sachin Tendulkar is tending to go beyond abnormal behavior.

No one in our cricket fraternity in India dares to make any negative comment about him even when it is warranted. For example when Dhoni made a statement that the team will win the world cup for Sachin, no one in India made any comment. The Indian team is represents India and not Sachin Tendulkar. But no one had the spine to make this statement. It was Waseem Akram who made a fair statement on this. So far, I have not heard any Indian comment on this one. It is also a known fact (statistics can prove it) that whenever Sachin has scored well, in majority of the cases, the Indian team has lost the match. Does someone like Harsha Bogle have the guts to talk on these lines? Never.

The lure of the IPL money and the clout that BCCI has on International cricket has made things worse. A batsman of high potential like Manish Pandey gets signed for a paltry 20 Lakhs while some one like Virat Kohli who has played just a couple of matches for India gets crores. These kind of discrepancies will induce a lot of corruption in the team selection in a country like India. I would be surprised if it is not true already. Even in the current team that is playing the world cup, there are many players who should not have been there in the team if the selectors were fair in their selection procedure.

Where is it headed? In my view, a time will come very soon when the Indian team will start losing against most good teams. I am assuming that the matches will not be fixed. When the team gets into a losing streak, then, at-least a good number of fans will lose interest. That is the time when I propose that some corporates with deep pockets do the unthinkable. i.e start promoting other sports which can really make a difference to India. Some of these include Gymnastics, Badminton, Athletics & Football. In Badminton & Athletics, we have already seen some stars and hence there is some momentum already, but in the other two, the momentum has to be built up. This would ensure that India's obsession with Cricket comes to an end, sometime in the near future.

Indian Railways: Wasted opportunity?

A couple of days ago, we had another railway budget. As expected, the monister had no clue how to prioritize things for the railways. It looked like a tamasha. Like a Raja giving away dole to his constituents. In this case, the constituents happened to be the state going to the polls which included the railway minister's home state as well. How long this tamasha should go on? Shouldn't there be an end to all this very soon? In fact, Railways is also one of the important pieces of the infrastructure puzzle which is very much essential to achieve the 9% growth that we everyone is talking about.

To understand the mess that the railways is in, let us atke some examples. Every year, more passenger trains are introduced in the northern & eastern sectors and not southers & western. It is a known fact that less than 10% people buy ticket in the sectors which Railways is prioritizing whereas in sectors which are not getting any attention, most people buy tickets and exceptions are few and far in-between. For example, in Karnataka, there is so much traffic between Bangalore-Mysore, Bangalore-Hubli & Bangalore-Mangalore sectors. If I was running railways, I would have laid 3-4 lines in these sectors and run superfast trains. But, the reality is that each of these sectors have only one railways line built very long ago. I would have built a lot of lines from various mineral ruch areas of Karnataka to Mangalore port to cash-in on the freight traffic.

What needs to be done so that Indian Railways can not only be run efficiently, but also stop its dependency on the government? To start with, it should be converted into a corporation, like SBI or BHEL and allow it to be run by a professional like Sreedharan who is running DMRC. This would ensure that the finances of Railways becomes more transparent and we would atleast know where it stands in terms of its assets & liabilities. Otherwise, it will be Mamatha's word against Laloo's. Someone like Sreedharan who knows how railways works can work out a suitable corporate structure for railways. He may need external help, but this needs to be the first step.

After Railways becomes a corporation with its own CEO & board of directors, the government can slowly start diversting its equity like it did for other PSU's and ultimately make it a completely professional run corporation like L&T. Since Railways operates in a space where having more than one corporation does not make sense, we cannot allow private operators. We just need to ensure that the existing corporation is run efficiently without any government interference. Competition with Airlines & road transport will make it more efficient in the long run, but only if it is not under government clutches.

In summary, Railways needs to come out of government clutches for it be a real partner in the India growth story. Otherwise, its contribution will be as dismal as Air India.

Air India: What should the government do?

Air India is the best example for a government-run business. Like most government-run businesses even Air India is not run efficiently. It is still buying planes when its debt burden is mounting. If given a free hand, I am sure Air India management would have cancelled their orders, may be reduced its fleet size, let some employees go and many more actions which would have helped them turn around the airline's fortunes. But the government does not care. The results are there for everyone to see. Still we (tax-payers) keep throwing good money after a business in which I don't foresee any possibility of a turn-around. What is the best way out for Air India at this point? Before we get into answers, we need to set some context.

Air India (along with Indian Airlines) was the only carrier in India for a very long time till government decided to open up the aviation sector for private operators. When Air India had the monopoly over Indian skies, its efficiency of operation did not matter so much as it is now. When the government decided to open up the aviation sector for private operators, Air India along with Indian Airlines should have been sold to a private enterprise. In fact this is what the government did with VSNL before it allowed private operators into long-distance telephony. A lot of private enterprises would have been interested in buying into a monopoly even though it meant taking over government employees of Air India and Indian Airlines. An attempt was made in 2001 to sell, but it fell through for lack of buyers. I am sure even now the situation will be the same if an attempt is made to sell it.

The government allowing private operators and retaining control of Air India & Indian Airlines dealt a double whammy for both these carrier. The government control meant that most major decisions required government approval and this literally killed the airline while the private operators thrived. The private operators not only ate into Air India's market share, but also managed to attract performing employees from Air India. Left with mostly employees with not enough motivation to perform, Air India has been losing market share. I would not be surprised if it becomes bankrupt very soon.

What can be done now so that the tax-payer money does not keep going down the drain any more? The best option is to put it on the block and give incentives for the buyer. Without incentives no one will come forward to buy a sick government controlled business with so many demotivated employees as carry-on baggage. The incentives list should include some kind of debt-restructuring / write-off, a tax-holiday and a free-hand for the new owners to let go non-performing employees. With 40,000 Crore debt, no one will be ready to buy Air India. At the rate that Air India is losing money, as a tax-payer, I would be happy if I don't have to pay for keeping Air India afloat. Imagine what would have been the state of Satyam if government had continued to run it instead of giving it off to Mahindras for a pittance.

It is high-time the government gets out of running businesses and focuses on regulating them well. Whether it is oil or steel or telecom, it is a well-known fact that governments cannot run businesses efficiently. The government may have strong reasons to control some businesses but it should exit all services-centric businesses.

In summary, Air India should be handed over to private management as quickly as possible before the losses mount any further. Tech Mahindra bought Satyam because the pricing was attractive. Otherwise, with the kind of risks involved, no one would have dared buying Satyam at that point. Air India has vast assets which includes landing rights at key airports of the world and any good private businessman can run it profitably and this in turn will get money to the government by means of taxes.

Patni Computers: Is the marriage with iGate really worth it?

Patni Computers is one of the first IT companies to start business in India. While the ones like Infosys, TCS & Wipro, which started at the same time or later have grown quickly into multi-billion dollar businesses, Patni is yet to reach the one billion dollar mark. The reasons are obvious. The promoters were never really serious in growing the business either organically or inorganically. For the last few years, it has been on the block and finally, it looks like Patni has found a suitor in the consortium led by iGate (or is it really APAX partners?). Is this partnership good for Patni in the long run? May be.

In a typical M&A deal, three things matter for the deal to succeed,

1. The company being bought either has a business of complementary nature or helps the buyer to add scale: Patni is helping iGate in only adding scale. In return, Patni is getting aggressive management which was the only ingredient impeding Patni's growth so far.

2. The company work cultures are compatible: On this front, I don't see too much of a problem either since both of them have not reached a size to be called full-fledged IT service providers in the league of TCS & Wipro. I would classify both of them to be operating at the low end of the value chain.

3. Timing: In my view, this is very important. After Tata Steel bought Corus, the steel cycle turned negative and without the deep pockets of the Tatas, it would have been a disaster. In this aspect, if we hit another 2008-kind of situation in the near future, the deal will mean trouble for both iGate & Patni since the PE players will not keep throwing money, but may want to sell off the company in bits & pieces & exit. In this aspect, someone like Fujitsu would have been a better fit for Patni.

Now that iGate has pulled off the deal, it has to focus on completing the formalities quickly and start getting into the details.Here is how I think iGate can make this deal work:

1. Pay enough attention on employee integration, especially retaining key employees.

2. Focus on retaining key customers of Patni. This should not be an issue given the fact that long-term IT contracts are not cancelled /transferred just because of top management change. But the new management must spend time to assure them that they are in safe hands. Phaneesh has a very tough task ahead on this front.

3. Keep a tab on the cash-flow. This may look like a no-brainer for an IT services company. But any serious issue on this front can get the merged company into a lot of trouble. With both iGate & Patni being highly leveraged because of this merger and the presence of a PE player with a significant stake in the merged entity, Phaneesh should tread carefully.

As things stand now, it looks like Phaneesh may just be able to pull it off.