Passion it up

The 104th Constitution Amendment Bill is dangerous

2006-04-14T15:20:00.000-07:00

The supposedly liberal values that are the driving force behind politics in India -- especially of the United Progressive Alliance government -- are shrinking the public space for autonomy and free association.

The road to hell and to serfdom is paved with good intentions and great slogans. The 104th Constitution Amendment Bill, passed almost unanimously, ostensibly to help the underprivileged, will end up effectively bringing under the control of the government bureaucracy a major portion of the private education sector.

Rather than open more schools and increase the investment in education, the government wants to micromanage private schools.

Educational institutions, whether they receive aid from the government or not, so long as they are supposedly run by those who belong to the 'majority,' will have to set aside half of the seats for people from certain communities.

Watching over their shoulders will be the Big Brother, and one presumes if the ethnic background of students does not satisfy the bureaucrats, the schools would be shut down!

This is an assault on the principles of private initiative and voluntary association. The government is insisting that association even in the privacy of one's own property is disallowed unless this association includes members of certain groups.

Time for reservations in minority institutions

This Amendment also contravenes one of the founding principles of any democracy, that all citizens be treated on the same basis. It creates two classes of citizens: minority and non-minority. The right of voluntary association is maintained for the minority, and denied to the non-minority.

The famous poem by Martin Niem�ller (1892-1984) about accumulation of State power by the targeting of specific groups one at a time captures the slippery slope of the law very well:

First they came for the Communists, and I did not speak out because I was not a Communist.
Then they came for the Socialists, and I did not speak out because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out because I was not a Jew.
Then they came for me, and there was no one left to speak out for me.

Amendment 104 should be seen as further march of a polity that has nationalized temples, taking away the right of free religious expression. It requires legislators to vote as the leader commands, under pain of expulsion if they refuse.

India has no plan to upgrade education!

The liberals and leftists in the Indian polity, who have pushed this constitutional amendment, are in the mold of the 19th century liberals like John Stuart Mill, who spoke of tolerance and the rule of law, but were ardent supporters of European colonization. Mill believed that India like other 'barbarous' nations had 'not got beyond the period during which it is likely to be to their benefit that they should be conquered and held in subjection by foreigners.'

The liberals' embrace of universal human liberty contained a Eurocentric and potentially racist view of what society should be like, and communism was born out of this impulse. It is a strange irony that the only ones holding on to this Eurocentric program are the Indian Marxists and liberals.

The IITian Way of Giving

There is no space for libertarians in Indian polity: no one speaks for the rights to privacy and voluntary association. But guarantee of such privacy is essential in the development of a knowledge society that is to be internationally competitive. Both the Left and the Right have used euphemisms such as 'social control' to increase the power of the State.

The more things change, the more they stay the same. The Indian political system seems to be becoming more and more like the mansabdar system of the Mughals. Then the emperor granted revenue rights to a mansabdar in exchange for promises of soldiers in war-time. Now the leader grants tickets and money to run for political office in exchange for unconditional support later. The mansab was both revocable and non-hereditary exactly like the parliament seat now.

This is the only explanation why there was no real opposition to the passage of the Amendment in both the Lok and Rajya Sabhas, why no one brought up Constitutional questions related to individual freedom and privacy.

If there is a law that needs to be resisted, it is this one.

Subhash Kak

Mandal Redux

2006-04-14T15:17:00.000-07:00

Memories of the turmoil that followed the Mandal Commission were revived when the honorable minister for human resource development suggested that 49.5 per cent of the total seats in IITs, IIMs and central universities be reserved for OBCs, SCs and STs. The blogosphere and the media erupted with stories of students, alumni and faculty of the IITs and IIMs protesting, and expressing their strong opposition to the proposal.

As one would expect, the self appointed standard-bearers of the have-nots decried this as yet another example of the elitist IIT and IIM types protesting a tad too much about a well-deserved comeuppance. The anti-elitists may be well advised to remember the age-old dictum of caveat emptor. The potential impact of the 104th Constitution Amendment bill, which appended Clause 5 to Article 15 of the Constitution, goes beyond the IITs and IIMs, since it brings all private institutions under the purview of the 'Reservations Raj.'

This is not a matter of concern just for the IITs or IIMs, since it potentially impacts all educational institutions, whether public or private, and aided or unaided. Minority run institutions were exempted, since sauce for the goose is clearly not sauce for the gander in India, and woe betide the politician who dare suggest applying laws uniformly across divisions of language or religion.

Subhash Kak's prophetic column titled The 104th Constitution Amendment Bill is dangerous begins to sound very much like another memo famously ignored by Secretary of State Condoleezza Rice.

HRD Minister Arjun Singh has subsequently denied announcing plans for reservations in educational institutions. He told the Election Commission that 'the quota system by itself is not a new announcement' and added that 'the percentage of quota is yet to be decided.' These comments, confusing as they are, are especially intriguing in the context of what he told the press earlier per published reports, that 'the Centre has taken a decision to implement reservation for OBCs as per the Mandal formula in all central educational institutions.'

India undoubtedly needs to do more to uplift the poor and backward classes, and to provide better opportunities for all her citizens. However, the risk in imposing arbitrary quotas on admissions to educational institutions is two fold. Any deterioration in the quality of Indian college graduates can put India's nascent economic growth story at risk. And any subsequent slowdown in the economy will only end up hurting the chances of economic upliftment for the people who are at the bottom of the economic ladder.

India has to focus on developing new and innovative ways of enhancing primary and secondary level education for the backward classes so that they can compete on an equal footing for merit-based admission to Indian universities, which should strive to become truly world-class. But trying to play catch up at the college level, and cramming down quotas on education institutions will help no one, and certainly not the very OBC students whose welfare is ostensibly being sought by the politicians.

The actual results for existing quotas are quite disheartening. The web site of one of the IITs points out that 'as the seats for the SC/ST students are often unfilled because adequate number of students do not qualify JEE with relaxed norms, a further relaxation of JEE norm is made to select students for a one year Preparatory Course.' Even after completing the Prep Course, many of these students are still unprepared for the maelstrom of intense competition and 'grading on a curve' that they get thrown into.

Unless the HRD ministry plans to mandate lowering of grading standards for those who do make it into the IITs and IIMs, the quotas may actually do a disservice to many a promising young SC/ST student who may have thrived in a less competitive institution.

Meanwhile, the demoralising impact on the psyche of the qualified individuals denied admission to these colleges is the other side of the coin. Matters can only get worse once the government starts imposing 49.5 per cent quotas not just on the IITs and IIMs but also on the many other unaided private institutions that have proliferated across the nation.

Speaking of quotas, it is interesting to note that there is no quota for OBCs in Parliament. And many of the same MPs who voted for the 104th Amendment have opposed having a 33 per cent quota for women in Parliament. Evidently, the champions of the 'Reservation Raj' have never showed any interest in applying the concept of quotas to their own institution.

Charity should begin at home, so it would only be appropriate that the government move an amendment to Article 334 of the Constitution to add OBC quotas to the 'reservation of seats for the Scheduled Castes and the Scheduled Tribes and the representation of Anglo-Indian community by nomination in the Lok Sabha and in the Legislative Assemblies of the States.'

Astute readers will have immediately noted a curious anomaly. Article 334 of the Constitution does not have any mention of Other Backward Classes (OBCs). In fact, former Chief Justice of India V N Khare, who presided over the key Pai and Islamic Academy cases, has pointed out that 'the Constitution doesn't define... OBC, it's a government interpretation.' The process for designating OBCs, including the deliciously defined 'creamy-layer' OBCs who are ineligible for reservations, was established following the Supreme Court's Sawhney decision in 1992.

It is important to note that the 104th Amendment was expressly passed to roll back the Inamdar ruling by the Supreme Court, which prohibited state-imposed quotas on unaided educational institutions. However, Chief Justice Khare has also noted that 'another 11 judge bench has to hear the challenge and will decide the validity of this amended provision.' In other words, the jury is still out on whether the 104th Amendment can withstand a PIL (Public Interest Litigation) challenge.

Meanwhile, it is fascinating to take a look at the history of amendments to the Indian Constitution relating to reservations. And it is a long history of amendments, which has already hit the century mark in under sixty years when the much older US Constitution has only managed to reach the paltry figure of twenty-seven.

A honorable Member of Parliament, speaking during the 1999 debate on the 79th Amendment in the XIII Lok Sabha, which extended reservations for SC/STs in the Lok Sabha and Legislative Assemblies for another ten years, said that '... if you want different societies to come together, I think it is time that we decide that the use of the word 'caste' ... be banned in this country.'

Just in case you thought that these are the words of a right-wing saffronista, think again. The Member of Parliament saying these thoughtful words was Prakash Y Ambedkar, grandson of Dr Babasaheb Ambedkar, Father of the Indian Constitution. He also added that '... Dr Ambedkar made a demand to the Government to kindly make a process where the reservation is done away because he knew that one day these reservations are going to become in itself a hindrance to development.'

In the same session of Parliament, the erudite lawyer and Minister of Law, Justice and Company Affairs Ram Jethmalani posited that 'there are some people who have the vanity to think that they are persons possessed of merit... I think... that merit itself is not a matter of excellence... I confess my inability to define 'merit'; merit cannot be defined except by your social attitudes.' Bravo, bravissimo!

George Orwell would surely be proud, and we finally came to understand that some of us are more equal in merit than others, because the Government of India says so. Readers may wish to Google for other pearls of wisdom from Mr Jethmalani's speech, but here are some more gems from the same speech... 'Reservations, my friends, are not a system of poverty alleviation; they are a system of compensation for historical wrongs... the present generation, the people of so-called merit... must learn that the present society will have to pay for the sins of our ancestors.'

In spite of the coy denials, HRD Minister Arjun Singh appears keen to establish and enforce a 49.5 per cent quota for OBCs in both public and private educational institutions. Alternatively, the honorable minister wishes to hint with plausible deniability that such a move is likely, until the assembly elections are over. The long and short of it appears to be that Prakash Ambedkar's 'I have a dream' vision of banning the very concept of 'caste' in India is likely to remain a dream in the face of the incessant efforts of politicians aimed at perpetuating divisions along caste lines to maintain their vote banks. Class warfare is clearly alive and well in India. And so is divide and rule.

Ram Kelkar is an alumnus of IIT Bombay. He is an investment professional at a financial firm in Chicago, USA. The views expressed herein are strictly his personal opinions and they do not represent the official positions of any institution.

Merc dreams

2005-07-21T08:21:00.000-07:00

Lessons that Mercedes learnt in India

When it entered India in February 1996, DaimlerChrysler (then Mercedes-Benz) was the first premium car manufacturer to drive on Indian roads. Nine years later, seven international luxury car brands -- from the sporty Porsche to the regal Rolls-Royce -- are fighting for space in the garages of India's rich and famous. But are there enough buyers at the luxury car mart?

There's a big question mark on that. Analysts estimate the Indian premium car market at less than 2,500 cars a year, growing at about 15 per cent a year. Take the smaller and less expensive Mercedes-Benz C-Class out of that list, and the number shrinks to 1,700 units -- less than 2 per cent of the 1.07 million unit passenger car market (source: SIAM).

Luxury at a glance Brand
Price (Rs)
Audi 40-70 lakh
Bentley 41.7-2.5 crore
BMW 45-60 lakh
Rolls-Royce 3 crore
DaimlerChrysler
Marcedes Benz
Maybach
24.2-98 lakh
5.5 crore
Porsche 45 lakh onwards
Jaguar 80 lakh

Considering the cheapest car in the luxury segment (the Mercedes-Benz C 200) costs Rs 24.2 lakh (Rs 2.4 million), going all the way up to Rs 5.5 crore (Maybach), are there enough buyers for these hot wheels? What strategies are the big seven going to adopt in the Indian market? And are there any lessons to be picked up along the way from the Mercedes experience?

Bring on the buyers

Let's set the record straight. There are enough people in India who can afford these high-sticker cars. The 2004 report on the Indian economy by the National Council of Applied Economic Research (NCAER) says that by next year India will have 53,000 households that earn over Rs 1 crore (Rs 10 million) a year. That's up from just 20,000 such households five years ago. So clearly, the list of prospective buyers for premium cars is growing.

Besides, the premium car makers recognise that in India they can't do 0 to 60 in 8 seconds: they're ready for a long haul. DaimlerChrysler (which makes both Mercedes and Maybach) sold 1,815 cars last year, up from 1, 581 the previous year. By 2010, it hopes to sell 4,000 units a year.

Audi's adopted a similar, long-term view. Launched in mid-2004, the German carmaker is aiming to sell just 100-150 units of its A8 and A6 (which compare to the Merc S-Class and the E-Class respectively) in the first year. That places it at a low No. 55 on the company's worldwide sales charts. But Michael Weber, Audi's country manager for India, is convinced of the potential here.

"We think to be here in time is important for positioning the brand," he says. Audi estimates the luxury car market will cross 5,000 units this year -- a huge overestimate according to many analysts, even accounting for imports like Hyundai Tucson and Toyota Land Cruiser. Going by that, it could still take 10 years before every Indian crorepati owns a luxury car. Of course, the number of Rs 1 crore earning households would have increased by then.

A bumpy ride

Has DaimlerChrysler given competitors a ready reckoner to crack the Indian market? When it entered India, everything was in its favour -- from a tremendous brand equity to a virgin market. At the time, the Indian car market was just revving up.

The highest priced cars on Indian roads were Daewoo Cielo (Rs 500,000) and the Peugeot 309 (Rs 500,000-700,000); arch rival BMW was the only other premium car available here, but only through a lone dealership in Thane. In contrast, the first Mercedes-Benz manufacturing unit outside Germany came up at Pune, with investments of close to Rs 600 crore (Rs 6 billion).

But Mercedes' first few years in India were bumpy. From 1,800-odd cars sold in 1996, sales plunged to 734 units in 1999. The trouble -- premium car brands would do well to pay attention -- lay in the product portfolio and the dealer network. Or rather, the lack of both.

Mercedes' opening gambit comprised the E220 and E250 Diesel models, part of the W124 series. Both were dated: the new E Class W210 series was already ready to roll out in Germany. And Indian consumers knew that -- remember, the luxury car buyer is inevitably well-informed about global developments. In their opinion, the W124 was a hand-me-down.

From the company's point of view, the choice of model made sense. "The car was popular globally, hence we were confident that it might work in India," says Suhas Kadlaskar, director for corporate affairs and finance, DaimlerChrysler India.

The E-Class is longer and wider than the C-Class saloon -- important attributes for prospective premium car buyers. It was also pricier: Rs 23-25 lakh (Rs 2.3-2.5 million), compared to the Rs 15-16 lakh (Rs 1.5-Rs 1.6 million) the C-Class would cost. And analysts point out that low-volume models give companies time to set up the sales and service network.

But Mercedes didn't take advantage of that opportunity. Until 1998, the company served customers directly through offices in Delhi, Mumbai and Chennai. It did tie up with the Tata Group to set up the Concorde chain of exclusive showrooms, but that went off track, too. Meanwhile, sales moved to low gear.

The lessons: get the latest models and offer customers variety. In 1997, Mercedes launched the W210 series, followed by the S-Class in 2000; and the C-Class in 2001. Imported CBUs (completely built units) of sports and luxury convertibles came in 2002, while the super luxury brand, the Maybach, hit Indian roads in 2004.

At present, DaimlerChrysler has 12 models for sale in India. Kadlaskar says the variety helps in upselling to existing customers: about 70 per cent of Mercedes buyers in India are repeat customers.

Bring it in

If DaimlerChrysler set up a plant here, other premium car brands are encouraging imports. For some, even setting up an assembly facility did not make sense.

For instance, Rolls-Royce and Bentley churn out just 3,000-5,000 cars every year from the plant in the UK; Porsche makes just 70,000 cars a year. Audi, too, has a conservative approach. Weber says Audi's future strategy depends on the market response.

"If we can achieve economies of scale we might consider manufacturing in India. Till then, importing CBUs is the most appropriate option," he points out.

Of course, CBUs carry their own set of problems, the biggest being the waiting period: from order to delivery can take anywhere from two to seven months. DaimlerChrysler executives believe this gives them an edge: the E-Class, C-Class and the S-Class are put together in India ("made by Mercedes in India"). That's not a widely held view, though. Satya Prakash Bagla, Bentley's dealer in Delhi, argues that customers will wait for exclusivity and customisation.

But even Bentley has picked up a tip or two. Soon after the powerful, two-door GT was launched in India, Bentley realised it needed a four-door luxury limo -- what Mercedes has -- to get the serious numbers in India. The Flying Spur, which was launched last week, is just that, a four-door GT that is less expensive -- Rs 70 lakh (Rs 7 million) less! -- compared to the old-world Continentals.

Porsche, which entered India in 2004, had a similar experience. Bagla -- whose Exclusive Motors also handles the Delhi dealership for Porsche -- says it is targeting a younger customer for the Boxster 911 and the sports utility vehicle, Cayenne.

Dealers say sales of the Cayenne are already picking up speed, compared to the 911, and auto analysts aren't surprised: the state of Indian roads don't do justice to a sports coupe (like the 911). Says an expert: "Porsche sensibly waited for the international launch of the Cayenne before entering India."

Serve the rich

Customers paying top dollar for fancy cars expect fancy service too. Premium car makers will find that while it's easy to serve the metro car buyer, those in the hinterland are a different proposition. And there are plenty of them there. A peek into the NCAER report only emphasises the need for an efficient service network: one in four households that earn over Rs 1 crore a year is based in small towns and rural areas.

DaimlerChrysler's found that out for itself: demand for the Rs 65-lakh (Rs 6.5 million) S-Class comes from such unlikely places as Ludhiana and Bhiwandi. From 15 service centres in 2000, it now has 22 dealer.

The others, though, are still sticking to Delhi, Mumbai and (in some cases) Bangalore. Audi will open its third sales outlet in Bangalore by the end of the year; BMW is already present there. An analyst says brands like Toyota reach where the Audis and BMWs have not yet cast their net.

He adds, "An established sales and service network can make a real difference. Which is why the Toyota Camry and Land Cruiser eat into the sales of others."

Bentley, though, has found a way out that also works as a subtle brand builder: at Rs 1.7 crore (Rs 17 million) a car, it does not -- should not -- need much after-sales support. So, when it does, Bentley simply sends the mechanic over for a house call.

That's something Mercedes and the other players in the luxury market could emulate. Perhaps the learning process could work both ways.

On a roll

Back in the 1930s, Bentley and Rolls-Royce competed with each other -- Bentley made sporty cars that won races at Le Mans and the Rolls was the luxury car of the rich and royal. Then in 1938, Rolls-Royce bought over cash-strapped Bentley and owned the company until 1999.

During this period, Bentleys -- even the Continental, which was launched in India -- were actually Rolls-Royces under the hood, since they shared most of the mechanicals. As a result, the car did not have a distinct personality. In 1999, BMW and Volkswagen engaged in a fierce bidding battle for Rolls-Royce and Bentley.

After it was bought over by Volkswagen, the new series of Bentley cars started building a presence on the roads. The Flying Spur, which was launched last week in India, is one such example.

BMW lost out on the bid for the Rolls-Royce and Bentley car plant, but did land the Rolls-Royce brand. BMW set up a greenfield facility in UK to build an all new Rolls from scratch -- the Phantom. The Allies may have won the World War, but the Germans won the battle for the cars.

History lessons :) Jinnah Speech in newly created Pakistan

2005-06-07T06:50:00.000-07:00

Mr President, ladies and gentlemen

I cordially thank you, with the utmost sincerity, for the honour you have conferred upon me -- the greatest honour that is possible to confer -- by electing me as your first President. I also thank those leaders who have spoken in appreciation of my services and their personal references to me. I sincerely hope that with your support and your co-operation we shall make this Constituent Assembly an example to the world.

The Constituent Assembly has got two main functions to perform. The first is the very onerous and responsible task of framing the future constitution of Pakistan and the second of functioning as a full and complete sovereign body as the Federal Legislature of Pakistan. We have to do the best we can in adopting a provisional constitution for the Federal Legislature of Pakistan. You know really that not only we ourselves are wondering but, I think, the whole world is wondering at this unprecedented cyclonic revolution which has brought about the clan of creating and establishing two independent sovereign Dominions in this subcontinent. As it is, it has been unprecedented; there is no parallel in the history of the world. This mighty subcontinent with all kinds of inhabitants has been brought under a plan which is titanic, unknown, unparalleled. And what is very important with regards to it is that we have achieved it peacefully and by means of an evolution of the greatest possible character.

Dealing with our first function in this Assembly, I cannot make any well-considered pronouncement at this moment, but I shall say a few things as they occur to me. The first and the foremost thing that I would like to emphasize is this: remember that you are now a sovereign legislative body and you have got all the powers. It, therefore, places on you the gravest responsibility as to how you should take your decisions. The first observation that I would like to make is this: You will no doubt agree with me that the first duty of a government is to maintain law and order, so that the life, property and religious beliefs of its subjects are fully protected by the State.

The second thing that occurs to me is this: One of the biggest curses from which India is suffering -- I do not say that other countries are free from it, but, I think our condition is much worse -- is bribery and corruption. That really is a poison. We must put that down with an iron hand and I hope that you will take adequate measures as soon as it is possible for this Assembly to do so.

Black-marketing is another curse. Well, I know that blackmarketeers are frequently caught and punished. Judicial sentences are passed or sometimes fines only are imposed. Now you have to tackle this monster, which today is a colossal crime against society, in our distressed conditions, when we constantly face shortage of food and other essential commodities of life. A citizen who does black-marketing commits, I think, a greater crime than the biggest and most grievous of crimes. These blackmarketeers are really knowing, intelligent and ordinarily responsible people, and when they indulge in black-marketing, I think they ought to be very severely punished, because the entire system of control and regulation of foodstuffs and essential commodities, and cause wholesale starvation and want and even death.

The next thing that strikes me is this: Here again it is a legacy which has been passed on to us. Along with many other things, good and bad, has arrived this great evil, the evil of nepotism and jobbery. I want to make it quite clear that I shall never tolerate any kind of jobbery, nepotism or any any influence directly of indirectly brought to bear upon me. Whenever I will find that such a practice is in vogue or is continuing anywhere, low or high, I shall certainly not countenance it.

I know there are people who do not quite agree with the division of India and the partition of the Punjab and Bengal. Much has been said against it, but now that it has been accepted, it is the duty of everyone of us to loyally abide by it and honourably act according to the agreement which is now final and binding on all. But you must remember, as I have said, that this mighty revolution that has taken place is unprecedented. One can quite understand the feeling that exists between the two communities wherever one community is in majority and the other is in minority. But the question is, whether it was possible or practicable to act otherwise than what has been done, A division had to take place. On both sides, in Hindustan and Pakistan, there are sections of people who may not agree with it, who may not like it, but in my judgement there was no other solution and I am sure future history will record is verdict in favour of it. And what is more, it will be proved by actual experience as we go on that was the only solution of India's constitutional problem. Any idea of a united India could never have worked and in my judgement it would have led us to terrific disaster. Maybe that view is correct; maybe it is not; that remains to be seen.

All the same, in this division it was impossible to avoid the question of minorities being in one Dominion or the other. Now that was unavoidable. There is no other solution. Now what shall we do? Now, if we want to make this great State of Pakistan happy and prosperous, we should wholly and solely concentrate on the wellbeing of the people, and especially of the masses and the poor. If you will work in co-operation, forgetting the past, burying the hatchet, you are bound to succeed. If you change your past and work together in a spirit that everyone of you, no matter to what community he belongs, no matter what relations he had with you in the past, no matter what is his colour, caste or creed, is first, second and last a citizen of this State with equal rights, privileges, and obligations, there will be on end to the progress you will make.

I cannot emphasize it too much. We should begin to work in that spirit and in course of time all these angularities of the majority and minority communities, the Hindu community and the Muslim community, because even as regards Muslims you have Pathans, Punjabis, Shias, Sunnis and so on, and among the Hindus you have Brahmins, Vaishnavas, Khatris, also Bengalis, Madrasis and so on, will vanish. Indeed if you ask me, this has been the biggest hindrance in the way of India to attain the freedom and independence and but for this we would have been free people long long ago. No power can hold another nation, and specially a nation of 400 million souls in subjection; nobody could have conquered you, and even if it had happened, nobody could have continued its hold on you for any length of time, but for this. Therefore, we must learn a lesson from this.

You are free; you are free to go to your temples, you are free to go to your mosques or to any other place or worship in this State of Pakistan. You may belong to any religion or caste or creed that has nothing to do with the business of the State. As you know, history shows that in England, conditions, some time ago, were much worse than those prevailing in India today. The Roman Catholics and the Protestants persecuted each other. Even now there are some States in existence where there are discriminations made and bars imposed against a particular class. Thank God, we are not starting in those days. We are starting in the days where there is no discrimination, no distinction between one community and another, no discrimination between one caste or creed and another. We are starting with this fundamental principle that we are all citizens and equal citizens of one State. The people of England in course of time had to face the realities of the situation and had to discharge the responsibilities and burdens placed upon them by the government of their country and they went through that fire step by step. Today, you might say with justice that Roman Catholics and Protestants do not exist; what exists now is that every man is a citizen, an equal citizen of Great Britain and they are all members of the Nation.

Now I think we should keep that in front of us as our ideal and you will find that in course of time Hindus would cease to be Hindus and Muslims would cease to be Muslims, not in the religious sense, because that is the personal faith of each individual, but in the political sense as citizens of the State.

Well, gentlemen, I do not wish to take up any more of your time and thank you again for the honour you have done to me. I shall always be guided by the principles of justice and fairplay without any, as is put in the political language, prejudice or ill-will, in other words, partiality or favouritism. My guiding principle will be justice and complete impartiality, and I am sure that with your support and co-operation, I can look forward to Pakistan becoming one of the greatest nations of the world.

I have received a message from the United States of America addressed to me. It reads:

I have the honour to communicate to you, in Your Excellency's capacity as President of the Constituent Assembly of Pakistan, the following message which I have just received from the Secretary of State of the United States:
On the occasion of of the first meeting of the Constituent Assembly for Pakistan, I extend to you and to the members of the Assembly, the best wishes of the Government and the people of the United States for the successful conclusion of the great work you are about to undertake.

7 steps to success

2005-05-15T09:42:00.000-07:00

We assume that the easiest way to build a leading practice is to replicate the best practices of leading firms. "Not so," says Ashok Wadhwa, CEO of Ambit Corporate Finance. "Trust your instinct and protect your clients' interests. Be bold and experiment in the face of competition."

In October 1997, nobody dreamt, not even Ashok Wadhwa who worked there, that the Andersen brand, one of the most recognised names in business circles the world over, would be wiped out of corporate memory in less than 50 months.

That month, peers and colleagues wondered why he quit one of the most prestigious jobs in the country to do his own thing.

By 2003, it's a no brainer: Ambit Corporate Finance Pte Ltd, the company he founded with a small group of specialists, is clearly recognised as one of the front running investment banks in India. In Bloomberg's latest M&A league tables, Ambit tied in third place with Citigroup, after Ernst & Young and Merrill Lynch.

The journey was not as easy as it sounds. In mid-2001, Tehelka.com, a Web site run by a group of investigative journalists, exposed a scandal in the ministry of defence. While Ambit's only involvement was a valuation of the media company, the resultant mega publicity did not exactly generate the right kind of headlines, which would help a fledging firm in the conservative financial services arena.

Undeterred, Wadhwa ploughed on, investing in a slew of interesting new ventures, encouraging unlikely managers to become entrepreneurs. He joined hands with a former chairman of GE Capital to launch an asset management fund in India; and a former CEO of Coca-Cola to start an e-commerce portal.

Even as Cineblitz covered the launch of an Ambit-sponsored Hrithik Roshan Web site, the Shanghai Star caught up with Wadhwa in China warning the locals. "Indian founders are good businessmen and tough negotiators, and that's a pretty lethal combination," he was quoted. Ambit was all over the place.

Ambit's success and Wadhwa's own achievements inevitably beg the question, what drives excellence in a professional services firm?

The fact that he has worked both in a large, well established multinational as well as a small start-up begs the second question: are the parameters for excellence different in the two types of organisations?

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The need for excellence in professional services seems to be becoming more and more relevant. The paradigm of excellence has also evolved over the years, yet I believe that some tenets are constant and these have sustained me through double-digit decades and the different types of professional services firms where I have worked.

It has been an amazing journey filled with experiences and discoveries of interesting aspects. At the very outset and without any hesitation, I must admit that the most crucial element that makes a successful professional service firm is excellence: be it client service, people skills, organisation policy, ethics, etc.

From the day I began my career at Arthur Andersen as its first employee in India way back in 1983, the metamorphosis of professional services has been dramatic.

In fact, building the practice at Arthur Andersen and later founding our firm, which I shall discuss later, have provided valuable lessons in excellence. Beginning with getting clients to accept and value our services, to attracting the best available talent in the business, the need to excel in every sphere has been an ongoing commitment and it did not come easy.

Seven steps to excellence

I believe excellence has many similarities to a person's character. One has to constantly nurture it, protect it and in testing times, prove its mettle to withstand the litmus test.

When clients share sensitive information on their strategy or acquisition plans, strength of a person's character is demonstrated in the manner one conducts oneself.

In fact, I believe seven key aspects have sustained me all these years and worked wonderfully for me:

1. Honesty: Be it doing corporate deals or advising, an honest approach is essential.
2. Reputation risk: It's what keeps you in the business.
3. Service delivery: It's why clients come to a firm and stay on.
4. Innovation: Have enough 'fire in the belly' to be the best in providing solutions.
5. People: Make your peers and subordinates feel they are part of a family.
6. Empowerment: So your team members can think for themselves.
7. Entrepreneurial: Enable every member to contribute to the firm's success.
In the 1980s, the business environment in India was still nascent for a professional services firm. The traditional services offered revolved around auditing and tax services. However, as established Indian business houses showed increased interest in entering new businesses and enhancing value for stakeholders, the profile of professional services took an upward turn.

I recollect those days when it was difficult to get the head of a traditional family run business to accept the fact that the firm would be his advisor, rather than any specific individual. As it turns out, this was an important learning in establishing an institution.

Clients need to have faith in the institution that they consult with, and be secure that they will get the best advice irrespective of the partner or the employee with whom they deal with.

I have a dream

With the activity levels increasing in India in the mid 1990s, India offered tremendous opportunities for new niche service providers. Frankly, I have always thought of myself as an entrepreneur.

It is one of my strengths or weaknesses, depending on how you look at it. But the idea of establishing a global firm like Andersen came about quite by chance.

I was trying to recruit someone to join Arthur Andersen and instead of saying yes or no, he asked instead, "Do you think you can create an organisation as effective as the one you head today?"

I kept thinking about that challenge for a long time after he had left my room.

That was the pull factor. Push came because Arthur Andersen were restructuring their business in India and part of that restructuring involved my moving to Hong Kong whereas my priorities, my strengths, my commitments required me to be in India.

A small team and I ventured out to build a firm that could be regarded as a trusted advisor for clients. When we founded Ambit Corporate Finance and RSM & Co in 1997, we cherished a dream to be amongst one of the best professional services firm in India.

For the second time, I had to realise how difficult it is to build an institution. On the personal side, the biggest lesson was that many whom I considered to be my friends, who had assured me that their organisations would back me, backed off.

Some even stopped accepting my calls. I had relied on them and their assurances and suddenly they were not around. At the same time, there were people with whom I did not even have a relationship, yet they wholeheartedly supported the new endeavor.

This taught me who my real friends were, where they came from. It also taught me who to rely on, who not to.

Building leaders

In building an institution that takes pride in excellence, the biggest challenge is actually to get everyone to share the vision and motivate them to deliver results to clients on a consistent basis. I have seen organisations falter when they feel it is only the top management who are responsible for delivering results.

I believe the organisation culture and environment should enable employees to imbibe in them the ability to take ownership for clients and feel responsible for their own actions.

My personal experience is that firms derive enormous results out of such an exercise and this also enables top management to build future leaders. I believe this is one of the most important elements that have enabled us to successfully build the practice at Ambit and RSM.

Clients who came to us not only relied upon our ability to deliver the best quality service but also wanted us to ensure that we did not undermine their trust. In short, we never had the benefit of relying on a global brand, global knowledge base or resources.

We had to continuously innovate and think out-of-the-box to ensure that clients got value for their money. What this did was to build a basket of brilliant technical professionals within the industry who were regarded for their intellect.

Like a virtuous cycle spiraling upwards, this basket in turn enabled us to attract the best talent to a relatively small and new player in the industry.

Trust your instincts

I must share another instance about our learnings at this stage. We were working with a client on an acquisition, and it was proving difficult to convey the need for the target company to accept the terms of the acquirer.

All efforts to deliver the best possible solution seemed to be heading nowhere, till I realised that the negotiations were not so much a matter of the terms discussed, but related to the loss of control and egos of the existing management. In such a situation, I have seen that subordinating one's ego and handling the situation with humility helped us to the desired results.

I had expected that the Indian firms which knew us so well would support us and the multinationals would not. Exactly the opposite happened. Multinationals believe in quality work, they do not care if you have a big brand name or not. This was a pleasant surprise for me and changed my entire way of thinking.

The jobs that bring in money are not necessarily the ones that give maximum satisfaction or pride. On the satisfaction side, achievements are always more intangible. In my opinion, my single most important professional achievement is attracting and continuing to retain the finest professional talent available and making it realise its true potential. I never thought we could bond so many quality people together and create an institution like this.

There's another critical lesson I keep reminding myself, and it was learnt the hard way. We had won the mandate to sell off a business. The deal was at the due diligence stage when the acquirer, who had trusted us implicitly till then, discovered that actual losses in the business were many more times over what had been declared by the seller.

This left us in a rather poor situation. It taught us never to accept any mandate till we have done our own due diligence. And to deal only with people with integrity and honor.

Be bold, and experiment

A belief that I strongly disagree with is that the assumption that the easiest way to build a leading practice is to replicate the best practices of leading firms. However, my own experience with our firm is that a lot depends on each individual's ability to demonstrate the seven aspects that I talked about earlier.

We had to trust our instinct, work extremely hard to win a mandate and provide comfort to clients that their interests are protected. In fact, our idea of proving our excellence was quite straight. Our 'standard' message was a cry for boldness and experimentation in the face of unprecedented competition.

While our belief in being the trusted partner for our clients is key, it is also extremely important for the people in the organisation to know that they are critical to the institution.

We have in our organisation an advisory team that is represented by personnel across different levels and it is their responsibility to ensure that the management gets to act on some of the most important issues or concerns that impact the larger organisation.

I have seen that in a playoff, the talent level is really high and emotions run high. It is important for organisations to be cognizant about the aspirational needs of its resources and canalise the collective energy and enthusiasm towards common goals.

Given my liking for cricket, it is something akin to the entire team preparing and playing the game with passion to bowl the best or score the century or take a brilliant catch. It is the entire team effort that make winning the match worth it.

Success creates success

In retrospect, the past six years since we founded our firm have been hugely exciting and satisfying, and the fire to build a quality firm lives on. That is what being an entrepreneur is all about.

Everyday is a challenge to contribute and better your efforts of the previous day. In fact recently, when we started feeling that we had achieved adequate scale and success, it was time to seek new opportunities.

So when I heard that three senior executives from Lazard were planning to set up their own firm, I invited them to join hands with us. Such a move could provide them the platform they sought, and at the same time providing the firm with its next leg of growth.

The decision of the three Lazard senior managers was a manifestation of two aspects of our organisation: we could provide seasoned professionals with a entrepreneurial platform; and second, the objective we had initially set out with seemed still to be on track.

An individual's passion and ability to dream big enables one to excel in a professional services firm. In essence, I believe excellence is an ongoing goal for any professional services firm.

Extra ordinary story of an ordinary Mittal

2005-04-01T13:44:00.000-08:00

London-based Ispat International (now Mittal Steel) and its founder Lakshmi Niwas Mittal recently became the world's biggest steel maker, and has been named by Forbes magazine as the world's third richest man.

How does Mittal transform poor performing steel mills into power-packed profit centers?

We bring to you an inside account written by written Gita Piramal and late Prof Sumantra Ghoshal. Sumantra Ghoshal was a leading management guru. Gita Piramal is managing editor, The Smart Manager. The two also co-authored a book: Managing Radical Change.

Acquisitions is one of the three major routes for business expansion, the other two being organic growth and strategic alliances.

But why choose acquisition as a growth strategy? When is this strategy more appropriate? And, if you have chosen this strategy, what are the main do's and don'ts for managing it well?

While not quite an Indian company -- incorporated in Holland and headquartered in London -- Ispat International N.V. (now called Mittal Steel) is Indian in both its spirit and management. In less that a decade, Lakshmi Niwas Mittal has spectacularly expanded the company from a wire rod manufacturer in Indonesia to the largest steel producer in the world, largely through an acquisitive strategy.

In 1992, Mittal acquired a Mexican steel mill. From this case study, it is possible to distil some simple lessons about how to manage acquisitive growth.

There are, of course, some variations depending on the nature of the industry, the history of the acquiring company, and the specific circumstances of each individual acquisition case. But, overall, there is a certain commonality in the pre- and the post-acquisition phases.

The story of Ispat Mexicana (Imexa)

Lakshmi Niwas Mittal's (widely referred to as 'LN' both inside and outside the company) faith in DRI (direct reduced iron) technology governed his choice of acquisitions. He believed in its future long before others.

"This has spelt success for so many of my plants," he says. Starting in Indonesia in 1976, he bought mini steel mills using the DRI route in various countries and turned them around. Eventually in January 1995 Mittal acquired Hamburg Stahlwerke, the originator of DRI technology on which almost all LN's plants depend.

According to Peter F Marcus, director of Paine Webber: "Lakshmi Mittal championed the practice of mini mills becoming integrated producers through the use of scrap alternatives."

This faith created 'the only true global steel company,' according to the Financial Times, and Mittal's reputation as a doctor of sick steel mills. In 1991, this reputation brought the Mexican government knocking at his door.

In the early 1980s, the Mexican government decided to build a new steel mill -- Sicartsa II -- adjacent to its existing Sicartsa facility located in Lazaro Cardenas.

They invested $2.2 billion in a state-of-the-art facility, which included a pelletizer plant to produce iron pellets from ore, the first DRI plant in the world using the HyL III technology, electric arc furnaces, casters to roll molten steel into flat slabs and a mill to convert these slabs into plates to produce pipes for the then-booming oil industry.

Before the factory was completed, however, the end of the oil boom coincided with a faltering economy which forced Mexico to devalue the peso. The government curtailed investment in the planned pelletizer plant, which forced Sicartsa management to source high cost iron pellets on the open market.

The government also abandoned the planned plate mill, forcing the plant to sell steel slabs -- an intermediate product -- rather than finished steel plates. Three years after opening, the plant operated well below its capacity of two million tons per year and incurred significant operating losses.

Mexican government officials publicly blamed the management and employees of the factory for the losses, and decided to privatize both Sicartsa factories in 1991. Based on Ispat's reputation for turning around Iscoot, a steel mill in Trinidad, the Mexican government invited Ispat to join two other steel companies in bidding for Sicartsa.

The pre-acquisition negotiation process

The team: Mittal sent a due diligence team consisting of twenty managers representing all line and staff functions chosen from Ispat's Trinidad and Indonesian plants and instructed them to develop plans to turn around the plant.

Mittal also explained that some members of the due diligence team would have an opportunity to remain in Mexico if Ispat acquired the facility. There were no merchant bankers.

The team was divided into sub-units to look at specific are as such as finance, marketing, management and costs. Each team had to make specific recommendations.

"These had to be solid and do-able as the person making the recommendation could easily be called upon to implement it," said one manager. "This eliminates consultants and their ivory tower analyses. After this process, targets are fixed and LN largely steps out of the picture."

Each team's report provided a valuable check on the other's to eliminate biases and oversight.

The team's due diligence revealed a factory plagued by technical problems, running at 20% of capacity, producing low quality slabs and manned by a dispirited workforce. The Ispat team was impressed, however, by the recent vintage of the assets, a young workforce with an average age of 27 years, and the supporting infrastructure.

The team recommended bidding for the plant, and developed a turn around plan.

The bid: Ispat proposed acquiring all the Sicartsa II factory's assets and liabilities, excluding contingent environmental liabilities.

Ispat also bid for 50% equity stakes in several of the businesses that supported the Sicartsa II plant, including PMT, a producer of welded pipes, Pena Colorada, which provided the factory with iron pellets and Sersiin, which managed the deep water port facilities and distributed electricity. It took eight months to sew up the contract.

Ispat proposed a total consideration of $220 million, consisting of $25 million in cash and $19 million n in ten year bonds (at 15% interest) issued by the Mexican government and secured by a warrant for 49% of Imexsa (not Ispat) equity. Of the cash component, $5 million was a loan from Trinidad and $20mn came from LN's personal resources.

Ispat's bid outlined the company's five-year plan for improving Sicartsa's operations, and included a commitment to invest an additional $350mn, with a $50mn penalty if the company failed to follow through on its promised capital spending.

Ispat's proposal also included a clause capping the number of employees it would lay off at 100 of the 1,050 workers. Impressed by the business plan, the Mexican government selected Ispat's bid. Ten members of the due diligence team remained in Mexico to run various departments, including Dr Johannes Sittard the former head of Iscoot, who served as the managing director of Imexsa from 1991 to 1993.

The post-acquisition integration process

Stopping the bleeding: Ispat took control of Imexsa on January 1st 1992 in the midst of a global recession in the steel industry, and had to briefly shut down the furnaces because there were no orders for the steel and no place to store the finished slabs.

Despite the shut-down, Imexsa laid off only seventy people -- thirty fewer than the agreed-upon limit -- and ultimately hired an additional 270 employees.

The $220 million consideration which Ispat had committed to more than halved almost instantly. The plate mill which had been lying abandoned -- still packed in crates -- was shipped to a Korean company.

"Our focus is slabs and we didn't need the plate mill," RR Mehta, Imexsa's executive director told Business India. The deal brought in $135 million -- much of this went towards upgrading facilities.

Mittal recalled his first steps at Imexsa: "In Mexico we did what we do with every business . . . we sat down with management of the acquired company to discuss various options for improvement and we developed the business plan. We sat down with each of the departments to understand their problems and viewpoints and gave our input based on international experience and our due diligence."

"Together we set very aggressive targets because we don't benchmark companies based on local standards, but on international standards. If the management of the acquired company is willing to commit to these targets, they stay. If they have any problems following our business plan and vision, they go. The Imexsa managers stayed," he added.

Production Planning Manager Oscar Vasquez recalled his first meeting with Mittal: "In our first meeting, we presented two alternative production plans, one for 600,000 tons -- it was conservative and based on our past experience -- and another plan for 1.2 million tons. Mr Mittal saw both and said, 'forget the small plan, just let me know what you need to implement the second plan.' We expressed concern that we might not find a market for the additional slabs, but Mr Mittal said, 'You will have the volume because I'm going to take care of that for you'."

Mittal used Ispat Indo's sales network to identify Asian customers for Imexsa's slabs, including a contract for 400,000 tons per year with a Taiwanese steel manufacturer. Although these orders provided low margins, they allowed Imexsa to increase capacity utilization while improving quality to win more profitable business.

Imexsa also reduced costs by switching to suppliers willing to match the lowest costs provided at Ispat's Trinidad and Indonesia plants.

The next step was to quickly develop cost-consciousness and discipline among the Imexsa management team. Jai K Saraf, Ispat International's finance director, and Sittard instituted a daily meeting of the heads of each department in the plant, which began after the day shift ended at 5:00 p.m. and generally ran until 9:00 or 10:00 at night.

The team evaluated the previous day's cost, volume, productivity and quality performance, discussed the current day's results, and agreed on detailed targets by department for the following day.

Om Mandhana, purchase director, described the purpose of the daily meeting: "The idea of the daily meeting was to cut red tape. You got together all of the people involved to talk through any issues, and as a means of coordinating and resolving day to day problems. The idea was to take a decision then and there rather than refer to committees."

Raul Torres, melt shop director, recalled his first impressions of the meetings: "Before Ispat bought the plant, the boss just told us how we should do things, but the daily meetings were nothing like that. Dr Sittard asked a lot of detailed technical questions to force us to think through problems to their root causes."

"If we were consuming too much steel in the electric arc furnaces, for instance, Dr Sittard would ask: 'Why are you consuming this amount of steel? Is there leakage? Why do you have this amount of leakage? Are you losing steel in the slag? How do you plan to improve this? Is that the cheapest way in the world? Who does this best in the world? Can we adopt their technology?'"

"We had open and sometimes heated discussions, but once we agreed on the right thing to do, it was easy to get Dr Sittard's approval and any resources you needed to make it happen. But you had to commit to improvements -- how much you were going to achieve and by when, and the entire team monitored how you did against the promised target."

"And Dr Sittard was always asking for higher targets -- he always kept the pressure on us to increase volume and quality and cut costs."

Imexsa's existing cost accounting system reported only aggregate production costs on a monthly basis, and was first available three weeks after the previous month ended. One of the first things the new management team did was to implement Ispat's daily reporting system which provided overall figures for each day's operations by the next morning.

Led by Saraf, Imexsa's accounting department began collecting detailed volume, cost, quality and productivity data for each step in the production process on a daily basis.

Initially, Imexsa's accountants collected these data themselves every day, and analysed it by hand. To monitor raw material usage, for example, the accountants asked warehouse workers to track the volume of materials leaving the storeroom each day.

As the discipline steeped in, kudos flowed back. A JP Morgan report hailed Imexsa as the lowest-cost slab producer in the world, while Credit Suisse First Boston reported, 'At Imexsa, Ispat makes Nucor's cost position look almost amateurish.'

Imexsa could land a slab in the middle of American at $35 a ton below Nucor's cash cost of production of $210 a ton. And Nucor founder Kenneth Iverson acknowledged, "Ispat comes in and runs the operations very well. They control costs very very closely."

In 1992 -- the first year under Ispat ownership -- Imexsa increased shipments from 528,000 tons to 929,000 tons, decreased the cash cost per ton produced from $253 to $178, and earned a small profit.

From 1992 to 1998 Imexsa increased annual steel shipments from 929,000 tons to over 3mn tons, and improved productivity from 2.62 to 0.97 man-hours per ton.

Antonio Gonzales, the Pelletizing Plant Supervisor observed, "There is no feeling of having finished the turnaround . . . we keep resetting the targets, and now we are aiming for 4 million tons per year -- that's double our rated capacity."

In 1997, MRR Nair joined Imexsa as managing director from the Steel Authority of India, the seventh largest steel company in the world, where he had served as chairman and CEO and had been awarded the Best CEO in India award.

Nair cited four mechanisms for maintaining constant improvement at Imexsa -- i.e. daily meetings and reports, quality programmes, global integration and stretch goals.

01. Daily meeting and daily report: The daily meeting, now held each morning for one or two hours, continued to play a pivotal role at Imexsa. A typical meeting (in March 1998) was attended by representatives from each of the departments, most of whom wore the khaki Imexsa uniform.

A few of the managers however wore red Imexsa jackets awarded to recognize achievement of ambitious goals, such as increasing one of the DRI facility's production nearly 50% above its rated capacity.

On several occasions during the meeting, participants jokingly asked whether their targets were ambitious enough to earn a jacket. Nair guided the meeting with a series of questions, inquiring about the results of previous experiments to improve performance, asking what level of performance was budgeted for the following month, and probing why targets were not higher.

Nair left the room for extended periods on two occasions during the meeting, but the discussion continued with the members of the different departments discussing targets and experiments among themselves.

The participants frequently referred to the daily report which provided detailed data on cost, productivity, volume and quality for each of the departments.

02. Quality programmes: In 1998, Imexsa used standard quality tools, such as ISO methods, to describe existing processes. Imexsa's quality efforts won numerous international awards and earned it the British Standards Institute's prestigious Company Wide Recognition, one of only two steel companies in the world so honoured (Iscoot was the other).

More importantly, Imexsa's quality initiatives helped the company upgrade its products to serve more demanding customers.

Imexsa enhanced its product mix from 97% low grade steel sold into construction applications in 1992 to 47% of slabs sold for demanding automotive and coated plate applications in 1997.

Despite Imexsa's success, Quality Director Rafael Mendoza wanted more:

"Traditional quality programmes such as ISO 9000 provide excellent statistical tools for documenting your current processes, but they are not as useful in accelerating continuous improvement. For this we introduced benchmarking, Top 10s and internal agreements."

In benchmarking operating processes, quality team members looked at best practices within the Ispat network, the steel industry as a whole and also identified and studied related processes at global leaders such as Ericsson and General Electric.

When Imexsa management wanted to improve cafeteria service during the busy lunch hour, for example, a quality team studied the restaurant in a busy soccer stadium renowned for serving large quantities of excellent food quickly during half time.

Imexsa would only work with customers and technology suppliers who agreed to openly share information on new technological developments and applications, and in turn agreed to open their plants for benchmarking.

Mendoza was not worried that Imexsa would surrender competitive advantage by allowing other companies to benchmark the plant:

"In the steel industry these days, all companies have access to good ideas through customers, suppliers and consultants. The difference is who can implement them successfully."

In the Top 10 programme, each department identified projects to either cut costs or improve quality, quantified each project's financial impact (in US dollars per year), and rank ordered the projects from one to ten based on their bottomline impact.

Each project was assigned to a project owner charged with selecting a multi-disciplinary team to quantify the benefits of the project, develop an action plan and monitor progress against agreed process milestones.

In Mendoza's view, the Top 10 programme introduced a consistent discipline in translating proposed projects into financial results and allowed each department to prioritize its own projects for improvement.

In 1996 Imexsa initiated a systematic program for making internal service agreements between Imexsa's departments and monitoring service delivery levels against these agreements.

The head of the department receiving a service would meet once a year with each internal supplier to articulate their key requirements and agree on targets and concrete measures of service delivery. Before agreeing to target service levels, a service provider could request any prerequisites necessary to guarantee delivery.

The maintenance department might agree to provide preventive maintenance on time, for instance, provided that they were notified at least one week in advance of the scheduled downtime.

The head of the department providing the service was responsible for monitoring performance on a daily basis and reporting to the head of the internal customer on a monthly basis, who would sign off on the performance evaluation.

If a service provider repeatedly failed to meet goals, the failure would be elevated for discussion in the daily meeting, but this had occurred only once in the programme's first two years.

In 1998 Imexsa had 140 internal service agreements across 28 production and service departments and sub-departments in the plant. 70% of the agreements fulfilled 100% of the requirements, 11% of the agreements met between 95% and 99%, with the remainder fulfilling less than 95%. These internal agreements yielded significant improvements in operations.

03. Knowledge integration programme: The Knowledge Integration Program (KIP) was an Ispat corporate initiative designed by Mittal to "keep stirring the whole organisation."

A few representatives from each operating and staff function (twelve in total) at each Ispat plant would meet twice each year. These KIP meetings lasted two to four days, and rotated among the plants in the Ispat network.

Prior to the meeting, the department heads would send their suggestions for discussion topics to Ispat group headquarters in London, where the agenda would be set and then distributed to each of the participants in advance.

During the meeting, the participants would review their performance against targets, including major accomplishments and disappointments, discuss common technical problems, update each other on developments in their plant and commit to future targets. The participants also communicated between KIP meetings, as Torres described:

"If I have a question, I don't have to wait until the next KIP meeting. I can make a phone call or send an email to Canada or Trinidad. I probably exchange at least one email every week with them."

04. Stretch goals: Each department in Imexsa committed to annual targets for production volume, productivity and costs, and presented their plan for achieving these goals. The process was based on a firm philosophy of Ispat.

As described by Nair, "Senior managers should ask the departments what they plan to do, rather than telling them what to do."

At the same time, however, it was not a laissez fair. Nair and his team asked a lot of questions on the plans that were presented. "You achieved this level last year, why can't you do it again? They can achieve the level at another factory, what prevents you from doing the same? What can we do to help you achieve more?"

At the end of such discussions, while the targets were very demanding, they were owned by the departments instead of being perceived as coerced from above.

As Raul Torres described: "I feel the need to constantly improve performance every day, but its not forced on me by management. I'm not fighting against somebody else's budgets -- I agreed to the goal, and the best way to reach a goal is not with a big gun to your head. I set stretch goals because I want Imexsa to win."

"At first, I wanted Imexsa to be the best steel plant in Lazaro Cardenas, then the best steel plant in Mexico, but now I ask 'why can't we be the best steel plant in the world?' We always wanted to be the best, but we couldn't because the old management put up too many limitations."

Commandments for PI

2005-04-01T13:43:00.000-08:00

ou have fared well in the written test and the group discussion.

You are just a step away from admission to your dream programme -- the personal interview.

A panel of management experts, a battery of questions. Are you perspiring already?

Well, a personal interview could actually be challenging and fun if you just relax and remain focused. Think of it as a conversation between the interview panel and yourself, so enjoy it thoroughly.

To begin with, there are four main focus areas in any personal interview:

Personal details
Academic details
Your background
Current affairs
Key GD tips, revealed!

Commandments for every personal interview

Even after months of preparation, some candidates do not perform well inside the interview room.

The trick is to follow the below commandments practice them during mock interview sessions diligently. You are sure to crack the personal interview.

1. Whenever the interviewer asks any questions, listen carefully. Do not interrupt him midway. Ask for a clarification if the question is not clear. Wait a second or two before you answer. And don't dive into the answer!

2. Speak clearly. Don't speak very slowly. Be loud enough so that the interviewers don't have to strain their ears.

3. Brevity is the hallmark of a good communicator. An over-talkative or verbose person is disliked and misjudged instantly, so keep it short.

4. If you don't know an answer, be honest. The interviewer will respect your integrity and honesty. Never exaggerate.

5. Never boast about your achievements. Don't be overconfident -- it is often misinterpreted by interviewers for arrogance.

6. Don't get into an argument with the interviewer on any topic. Restrain yourself, please!

7. Remember your manners. Project an air of humility and be polite.

8. Project enthusiasm. The interviewer usually pays more attention if you display enthusiasm in whatever you say.

9. Maintain a cheerful disposition throughout the interview, because a pleasant countenance holds the interviewers' interest.

10. Maintain perfect eye contact with all panel members; make sure you address them all. This shows your self-confidence and honesty.

11. Avoid using slang. It may not be understood and will certainly not be appreciated.

12. Avoid frequent use of words and phrases like, 'I mean'; 'You know'; 'I know'; 'Well'; 'As such'; 'Fine'; 'Basically', etc.

13. When questions are asked in English, reply in English only. Do not use Hindi or any other languages. Avoid using Hindi words like matlab, ki, maine, etc.

14. Feel free to ask questions if necessary. It is quite in order and much appreciated by interviewers.

15. Last but not the least, be natural. Many interviewees adopt a stance that is not their natural self. Interviewers find it amusing when a candidate launches into a new accent that s/he cannot sustain consistently through the interview or adopts a mannerism that is inconsistent with their own personality.

It is best to talk naturally. You come across as genuine.

Are you good at group discussions?

Mind your body language!

1. Do not keep shifting your position.

2. Your posture during the interview adds to or diminishes your personality. Be a little conscious of your posture and gestures. They convey a lot about your personality.

3. Sit straight. Keep your body still. You may, of course, use your hand gestures freely.

4. Avoid these mannerisms at all costs:

Playing with your tie
Theatrical gestures
Shaking legs
Sitting with your arms slung over the back of the adjoining chair

Post interview etiquette

1. Make sure you thank the interviewers as a mark of respect for the time they have spared for you.

2. As you rise and are about to leave, make sure you collect up your pen/ pencil/ all other stationery.

3. After getting up, place your chair in its original position.

The last word

1. Some institutes (like the Faculty of Management Studies) ask you to deliver an extempore speech suddenly while the interview is going on. Be mentally prepared for the same.

2. Competition will be very tough. Every mistake you commit will turn into an advantage for the other candidates. Hence, be very particular about your preparation. Do not leave anything to chance or the last minute.

3. Remember you have to sell yourself in an interview.

4. Be very particular about what you write in your resume. Check and re-check your resume for facts, spelling errors, etc. Ensure that there are no grammatical errors in the descriptive type questions in the sheet.

Use these hints, and say goodbye to your interview phobia!

Is the Patent Bill good for us

2005-04-01T13:41:00.000-08:00

The crucial Patents (Amendment) Bill was passed in the Lok Sabha on Tuesday after Commerce and Industry Minister Kamal Nath assured the House that adequate safeguards have been provided in the Bill to protect the interest of the Indian pharma industry and the poor people.

As India moves towards granting of product patents, even experts can't agree on the likely impact.

A big hue and cry is being made about the new Patent Act; even the western media has joined the bandwagon and is citing diseases like HIV and AIDS and so on to draw public attention and create misinformation and undue panic.

Whether the Bill is a sell out or a deep-rooted game plan to isolate India at the WTO, needs to be analysed threadbare.

Ironically, while select Indian companies seek extra protection against patents, these pharma majors are doing roaring business in the very countries where patent laws are strictly in force!

The global drugs market is estimated to be over $300 billion, of which the US alone accounts for $150 billion. It is the threat of losing this market share that is beginning to hound the MNCs.

Lapsing of the Patent Bill could come as a blessing in disguise. A new drug costs up to $1.7 billion abroad. India, leveraging on low cost, high quality, speed and a large patient profile can produce drugs at the cost of $50 million.

In addition, we have the largest number of USFDA-approved drug plants outside the US that are capable of producing high quality drugs at the lowest of costs.

While this provides us with an ideal concoction to steal a march over competition, it is worrying the policy makers in the West.

With over 90 per cent of drugs becoming off patent in the coming years, induction of cheaper generic versions of patented drugs is here to stay. The Patents Bill can do nothing to change this reality.

As a consequence, many Indian pharma companies are beginning to set shops in Mexico, Canada and Latin America in order to utilise NAFTA and make inroads into the all-important US market.

Cross-border alliances will also increase dramatically if the Bill is passed by the Parliament. China is already ahead, having a strong patent act as well as data protection laws.

India needs to shift its mindset from becoming a leader of developing countries to taking its place at the table of developed nations. It is China and Korea that will be India's real competitors and not the small countries in sub-Saharan Africa.

Contract research alone is a $30-billion pie, a substantial share of which could fall into our lap in the coming decade. In addition, TRIPS compliance could add to the contract-manufacturing kitty that is estimated at over $50 billion.

In fact, Nicholas Piramal was amongst the first to bag large contracts from US pharma giants after India's positive stand on patent bill became public.

Clinical research, worth $20 billion, could further help our scientists in focusing on the rapidly expanding sub-continent disease profile. Without the patent laws in force, no company will risk transferring confidential data.

And that could mean enormous loss of revenue and growth.

There's a wrong impression that in its present form, the Patent Bill will promote evergreening and monopolies, and ruin the least-developed countries' interest.

While India stands firmly against evergreening, LDCs are out of the patent laws purview till 2014. The all-important "Compulsory License" clause further empowers all nations to bring out the generic version of any patented drug. Intellectual property is a journey and will evolve over time.

What India lacks is effective delivery machinery and a strong autonomous regulator. We have invested huge sums in tertiary education and public research institutions.

It would be a pity if these went to waste by those who may have an interest on not letting India's knowledge economy to flower. In the short run, not having patents would indeed help some companies in copying products.

But in the next five years, India is poised to become a world leader in pharma research, bringing out new drugs at an affordable cost and serving globally those five billion who a re at the bottom of the pyramid.

These people might not have an access to medicines today but stand a great chance of using high technology, affordable "Made in India" drugs in the future.

D G Shah, Secretary General, Indian Pharmaceutical Alliance

The option of not granting product patents for medicines is no longer available. But we have the option, under TRIPS, to choose the type of patent regime that suits us.

The issue is whether India should forego the flexibilities it sought under the 1994 Uruguay Round, or should it make full use of what was achieved with the support and co-operation of developing countries and address their concerns about access to medicines?

Foregoing the flexibilities would mean adopting the US-style patent system as advocated by the foreign drug MNCs and denying access to medicines that are being produced by the domestic companies.

India will then end up encouraging monopoly of big pharma firms. This would mean greater reliance on imports of medicines than indigenous manufacturing.

There is an expectation that the US-style patent regime would attract substantial investment by MNCs in India. But this is devoid of realities and has significant downsides -- not only will the prices of many currently marketed medicines go up, their availability will become an issue, too.

The Ordinance introduced earlier had not only erred on several key provisions, but had gone beyond India's obligations under the TRIPS Agreement.

If the government's intention was not to default on its commitment to the WTO, all it had to do was amend Section 5 of Patent Act, 1970, to enable product patents for pharmaceuticals and food from January 1, 2005.

It could have made provisions for the August 30 Decision of the TRIPS Council to allow exports to countries with no or insufficient manufacturing capacity.

Instead, it chose to rewrite the whole Act through an ordinance. The Ordinance reversed some of the recommendations of the joint Parliamentary committee implemented by the Patents (Second Amendment) Act, 2002.

Some provisions in the Ordinance could have a crippling effect on the domestic pharma industry. They are: Sections 11A, 25, 39, and 104, which deal with early publication, provision for payment of damages from the date of publication of the patent application, dilution of the pre-grant opposition-provision, prohibition to apply for patents outside India, and the reversal of the burden of proof.

Even the flexibilities available in TRIPS Articles 30 and 31 relating to compulsory licensing are not fully availed. This will hurt India's allies at the WTO negotiations.

Many of them have questioned India's intentions and wondered why India has opted to let its people die.

The Parliament should, therefore, consider whether India should retain its ties with other like-minded developing countries in the ongoing Doha Round of multilateral trade negotiations, or align itself with the developed countries and promote the interests of their multinational drug firms.

Another issue is the criteria for patentability. There must be consideration on how to structure it to India's advantage while conforming to TRIPS, keeping in view the 6,989 pharmaceutical patent applications filed during 1995-2004 by MNCs.

Out of these, only 250 applications related to the new drugs developed during this period. All others relate to what is known as evergreening, trivial changes intended to delay entry of generics competition.

These applications could block manufacturing and marketing by the domestic companies of drugs that were invented before 1995. Few domestic companies have the means to fight the protracted legal battles with MNCs.

The Parliament can prevent these problems by "allowing patents only for new chemical entities and for modifications to these entities that have clinically demonstrated to show a significant therapeutic improvement over any previously patented form of the medicine."

This piece was written before the government introduced the Patents Bill in Parliament with changes

F1 on roads

2005-04-01T13:40:00.000-08:00

All about Formula One racing

Now that an Indian will be seen in Formula One, it is time for one to sharpen the database on the elite motorsport event.

Here are some of the words that will ring in the ears on Sundays as one reclines on the sofa to catch Narain Karthikeyan on the telly.

Names:

FIA: The Federation International d'Automobile, the ruling body of motorsport based in Switzerland.

Scuderia Ferrari: The racing division of Ferrari automobile company. It is Italian for "Ferrari Stable," or "Team Ferrari", founded by Enzo Ferrari in 1929 as a sponsor for amateur drivers.

Maranello: A town in northern Italy near Modena with a tiny population of about 15,000, best known as the home of Ferrari motorcars and Scuderia Ferrari.

Silverstone: In Northamptonshire in England, venue of first Formula One Grand Prix in 1950. Though motor racing has been on before, this British Grand Prix marks the start of F1 championship era.

Dates:

1950 - First modern day Formula One championship. Giuseppe Farina and Juan Manuel Fangio share the title.

1957 - Fangio, driving a Maserati, races to his fifth and final title by winning four of the five races.

1959 - Australian Jack Brabham wins with a rear-engined car, Cooper.

1964 - John Surtee becomes the first World Champion on both two wheels and four.

1970 - Jochen Rindt, driving for Lotus, becomes the first, and hopefully the last, posthumous champion.

1972 - Emerson Fittipaldi becomes the youngest world champion ever in a Lotus.

1974 - McLaren claim their first title with Fittipaldi driving for them.

1975 - Nikki Lauda win his first title. He would go on to win another two years later but not before bouncing back from a terrible accident at the Nurburgring in 1976.

1985 - Alain Prost finally wins title with McLaren after 10 years of promise and toil.

1988 - Ayrton Senna win his first title, winning eight races as against McLaren teammate Prost's seven, marking one of the fiercest rivalries in F1 history.

1991 - Senna's third title, while Michael Schumacher debuts in a Jordan.

1992 - Nigel Mansell wins nine races to realise his dream of becoming world champion.

1994 - Senna is killed after hitting a wall in Imola. Schumacher claims his first title driving for Benetton.

2000 - Dawn of Ferrari domination as Schumacher wins the first title for the Scuderia since Jody Scheckter in 1979.

2004 - Schumacher becomes the first to claim seven titles.

Glossary of technical terms:

Aerodynamic force: The force created by a vehicle's movement through the air. It is the combination of aerodynamic drag and aerodynamic lift.

Downforce: The opposite of aerodynamic lift, sometimes referred to as negative lift. The force caused by the air over the wings to push the car into the ground, increasing grip and cornering speeds.

G-Force: The apparent increase in weight of an object due to gravitational forces. Centrifugal force is a type of G-force which keeps your clothes stuck to the outside of a spinning washing machine. In racing cars, it is the force pulling the drivers head to one side as the car corners.

Launch control: A form of traction control used at the start of the race for the best get-away. Parameters include start-finish line gradient, starting line grip, distance to first corner and clutch biting point.

Traction control: A means of electronically reducing the power to the driving wheels, to minimise wheel-spin, and maximise traction. This is usually done by matching the speed of the rear wheels to that of the front wheels by reducing the voltage to the spark plugs.

Apex: The inside part of a corner that is on the racing line.

Racing line: An imaginary line around a circuit that provides the quickest lap time. When turning into a right-handed corner, the quickest line is to enter on the left side of the track, turn in and 'touch' the apex and ease back out to the left side of the track. Opposite for left-handers.

Oversteer: Occurs when the wheels are turned, and the car does not turn at the same rate. Causes the rear of the car to take a wider apex, causing the car to spin in extreme conditions. Also called loose in the US.

Understeer: Occurs when the wheels are turned, and the car does not turn at the same rate. Causes the front of the car to take a wider apex than the driver's steering lock requires. Also called push, or tight in the US. Can be corrected by adding more front downforce, softening springs and rollbar, or reducing front tyre pressure. Extreme conditions cause a car to go straight on instead of turning for a corner.