Indian Aviation completes it’s full circle.

In 1995, Singapore Airlines and Tatas came together and proposed to start domestic airline. The idea was to invest jointly and have few airplanes to begin with, and expand eventually.

But this idea ran in to troubled waters as both home grown domestic players and government opposed this idea. The reason; the international carriers (Like Singapore airlines) have deep pockets and world class experience and domestic carriers can’t compete with them.

Fast forward fourteen years; Indian aviation seems to have completed its circle. With recent FDI changes, government has proposed to open investments from foreign airlines; which was being pushed by domestic airlines for some time now.

The reason seems to be obvious. Private carriers, without any foreign airline competition; have been burning the cash. The cumulative looses of these private players sums up to about $2 Billion. And they are in need of additional funding to keep the things moving. Given the global market situation; it is impossible to raise fresh funds; so these players are desperate for funding.

With most of the airports being run by private operators, who have collaboration with international players, it doesn’t make sense to draw the line. In case of airport operators, even 100% direct investment is allowed.

More importantly; in the recent part, almost all countries have opened up the direct investment in airlines industry. One of the arguments in 1995 was that not most of the countries have this liberalized policy.

I tend to draw parallels between aviation and telecom sectors in India. Kind of telecom revolution we are experiencing was possible mainly because of international players like SingTel and Vadafone among others, who took equity stakes in Indian players and helped the industry grow. Telecom has 74% direct investment policy.

Lets hope direct investment in India in aviation sector brings up required competition and revolution; so that common people like you and me can fly easily, without hurting the purse!

End of Indian Retail??

Subhiksha, one of the leading Indian retail stores, which re-invented the retail business model with its no-frill store formats, is in news in recent months/weeks. It has not paid salary to its employees since October, vendors have not been paid and the operation is standstill.

With absolutely no encouraging news from any of Indian retail stores (Future group has been better comparatively) many have already started writing off Indian retail phenomenon. In my opinion it is not a correct thing to do, and we need to keep some fundamental things in mind before we re-evaluate Indian retail opportunity.

Firstly, India is still experiencing strongest economic growth since last 60 years, with 7 percent GDP in 2008-09 and perhaps between 6 to 7 in 2009-10. This growing economy throws many new opportunities. Secondly, modern retain still accounts only around 7 per cent of the total retail channel in India, still dominated by pop-and-mom stores. Thirdly, the consumer spending pattern is consistently shifting and mall mania has started creeping in. So Indian retail story is intact.

Having these factors; why Subhiksha (And by large retail players) ran in to problems?

Though, Subhiksha had tailor made business plan, but the biggest mistake probably was not building efficient supply chain and super-efficient retail operations organization. This is pretty much required to compete with next door Kirana shops and more even it is margin game. There was no financial and management investment in this area.

Also, Subhiksha tried to grow very fast. In this quest of growth, the basic paradigm of retail seems to be forgotten. Be it supply chain efficiency, optimized store location, store rentals or enhanced customer service which makes customers loyal.

I will go back to basic of what has been taught in B-school, keeping the fundamentals correct in business. There should be a close co-relation between operation and expansion and if we try to focus on only one thing at any given point in time, it is for sure we will run in to troubled waters.

A tiring tale

It has been really a tiring week, last two weekends I have been traveling, which added to my physical tiring. This week has been an emotional roller coaster as well.

Tough times through up great challenges and really tests you are a leader and mentor. No, I am not only talking about your life in business, but it checks in your personal life as well.

Question is, how you can lead your family, who look at you as source of inspiration, in difficult times? How you can continue being an encouragement source for your kid?

Point is to look at positive things of life and wait for correct time.