Thursday, April 05, 2007

Clash of Cultures - Greg Chappell Quits

Today most Indian Newspapers carried the headline "Chappell Quits as Coach". While this was not a surprise for most Indians, there is a very good lesson to learn for expats who are working and living in India.

Greg Chappell was appointed as coach of Indian Cricket team in 2005. Since then he has been through one big roller-coaster ride. As a coach he took Indian cricket to new heights - a world record of 17 wins in a row - while chasing, first ever test series win in West Indies, but he also had his share of lows - a disastrous tour of South Africa, and an early exit from the world cup 2007.

Greg Chappell, an Australian was appointed as coach of Indian team with a certain expectations in mind - mainly to infuse the Australian sense of professionalism into India cricket. Greg Chappell was ideal for this job. He has an excellent record as Australian captian and is known to be tough coach. Greg Chappell has all the qualities of a good coach and he had demonstrated success with Indian team - but in the end he failed to understand the Indian culture and that caused his downfall.

Indian culture is vastly different than the Australian culture. Greg Chappell tried to enforce the Australian norms on performance on Indian team - which was very much resented by the team members and the public. To begin with, Greg asked Ganguly to take a break - and use the time to regain his form. The Indian Public and Ganguly reacted to this suggestion as unwanted interference by the coach. Public protested at Greg Chappell when he visited Kolkata - and the decision to drop Ganguly did not go well with a section of cricket adminstrators and public. ( though the decision to drop Ganguly was eventually proved right, Indian public still does not appreciate it)

After the defeat in cricket worldcup, the actions of the coach came under severe public review - and Greg's comments on Senior members of the team did not help either. In the end, Greg Chappell had to resign.

Admist all this, there are a number of lessons for other expats working in India. Some of these lessons can be summarised as:

  1. Power & position/status is more important than performance.
    Indians tend to respect power/position/status of a person more than his current performance. But to get that position, one must have displayed great performance in the past.
  2. Continious back-to-back failures will not be tolerated for long.
    Indian tend to forget failures only when it is followed up with a big success. Continious failures will not be tolerated - this applies universally to all Indians and foreigners. One can also say that Indians can tolerate a few failures - but one must show success. Indians do not tend to discriminate between natives and foreigners when it comes to rewarding/punishing success or failures.
  3. Do not criticise others in Public
    This aspect of culture can be seen throughout the history. Chanakya has documented this feature as a key political techique in his book: "Arthashastra". One must take care not to criticise others in public - Indians will tolerate criticism if it is done in private. But any form of public criticism will be met with a brutal backlash.
  4. Indians aspire to be world leaders and will not tolerate any discrimination
    People from US & Europe in particular tend to think of India and Indians as third world country and as a backward nation. Many times this thinking is reflected in their actions and words. I recall once an European said to me "I will be visiting your wretched nation in April". Making such statements will be meet with deep resentment - and the person who made such a statement will be "blacklisted".
    As a rule of thumb - never criticise India or anything related to India when speaking to an Indian - even if it were to be meant as a joke.
  5. Shower praises when it is deserved
    Indians tend to build good relationship with people who praise them. So when a person has done a good job reward it with a praise.

Greg Chappell was an excellent coach, but he missed reading the finer points on Indian culture and that caused his downfall. In the end, It is just another story of an highly accomplished expat failing in a foreign location.

Wednesday, January 31, 2007

Why Invest in India - Natural Gas Distribution


Natural gas is a fossil fuel of choice for domestic use: heating & cooking, for generating electricity and for industries in the USA & Europe. But in India, the use of natural gas has lagged behind the demand for decades. Mainly due to government monopoly over Natural gas distribution through GAIL. Due to this monopoly, gas fields in India are undeveloped and natural gas is under used in all segments of economic activity. The map shows how little the government has developed the gas transportation network - the current network touches only 10-15% of the total customer base.
The use of this clean burning fuel has so much latent demand - that new investors can tap easily into this demand and reap rich benefits.

The fast paced growth of Indian economy and the need for energy has led to deregulation of gas distribution business. The state monopoly has been dismantled by allowing private companies to setup new pipelines. Reliance Industries Limited is now building an East-West pipeline to transport the gas from its gas fields in the east coast of India to Gujrat and Northern India. RPL is also building a pipeline to connect its gas fields to the southern city of Chennai.

Government is also considering private investments to build pipelines from Russia, Central Asia, Iran to India. Another proposal is to build pipeline to ship gas from Myanmar to India and another pipeline to transport gas from Bangaldesh to India. Tata’s were in talks to build this pipeline - but it later withdrew from the negotiations owing to political bickering in Bangladesh and the local Anti-India stance of Bangladeshi politicians.


While the cross-border pipelines carry high political risks, they also promise a very high returns. This kind of investments are ideally fit for Fortune-50 type(Exxon-Mobil, Shell, British Gas, Texaco etc) companies who can leverage the influence of US/UK governments to protect their investments.


Local Demand

The local demand for natural gas is very high - provided the costs of transportation is worked out. The use of natural gas as fuel for automobiles, cooking and industries in cities is a huge untapped demand. The key to tap into this untapped market is to build a city distribution pipeline. Large metropolitan cities of India: Ahmedabad, Hyderabad, Chennai, Delhi, Kolkata and Pune will be connected with transportation pipelines. Additional investments in a city distribution pipelines will enable companies to tap into this huge untapped demand.


Another potential latent customer is the electricity generation units - basically new units which will be setup in the coming years. Since India is poised to setup power plants to generate 100,000MW - the demand from such plants will be huge. Existing industries such as metals, fertilizers, chemicals etc are also potential customers.


Closing Thoughts

Investing in gas distribution and transportation business brings huge returns. But this also involves building an influential lobby with the government and tie ups with the production companies - ONGC, Crain, RIL, GSPC, Essar etc. For global energy players (Shell, British Gas, Texaco, etc), a JV with an existing company which has proven gas reserves will create a synergy for both entities to reap rich dividends.
Also See:

Why Invest in India - Electric Power Infrastructure



In my previous blog I had written about the opportunities for investors in Electric power generation sector. The Government of India has woken up to the need for investments in power distribution and transmission sector as well. As a first step, the government plans to disinvest 5% of its equity in three power distribution companies: Power Grid Corporation, Rural Electrification Corporation, and National Hydroelectric Power corporation.

This is a very significant move by the government. This implies that the workings of these public sector companies will now come under the scrutiny of the private share holders and eventually private participation in management of these companies will be seen.

Realizing the need for private investments in power generation, transmission and distribution, the government of India is ending the monopoly of its power distribution business in April 2007.

Taking an early lead in exploiting the reforms in power transmission & distribution sector, Areva T&D India Ltd has worked with NTPC to setup a 765KV switchyard for 3000 MW power plant at Sipat in Chhattisgarh. Areva T&D India Ltd partnered with NTPC in constructing and maintaining a cutting edge technology switchyard.

This collaboration is an important milestone. This signifies how private sector can work in the power generation, transmission and distribution business in India. As India continues on the reforms path in electric power, more opportunities will open up for private investors to tap into the growing market for electric energy in India.

Tuesday, January 30, 2007

Why Invest in India - Aviation Sector

In my earlier blog I had written about the opportunity for investors in Indian aviation. The rapid growth in the number of air travel - has caught the attention of the civil aviation ministry. Privatization of airports, creation of SEZ (Special Economic Zones) dedicated for civil aviation sector and liberalization of foreign investment policies - all points towards the growing opportunities.

This message has been seriously taken by the global leaders in civil aviation. Boeing and Airbus Industries are establishing Maintenance, Repair and Overhaul (MRO) facilities in India. Boeing is setting up a center in Nagpur, while Airbus is setting up a MRO in Nasik. Both the companies are negotiating with HAL for setting up manufacturing/assembly facility in Bangalore. The state government has announced a creation of SEZ in Bangalore - which has an exclusive focus on aviation. GE Aircraft Engines, Pratt & Witney, Bell Helicopters, ATR will be setting up manufacturing facilities, R&D centers, and maintenance centers in India - probably in Bangalore.

The rapid growth in Indian civil aviation has created huge opportunities for support services. Indian Airlines is planning to offer ground handling and engineering services to other private airlines as well. Kingfisher Airlines has outsourced its ground handling and engineering services to Indian Airlines for a period of two years. This implies that other service providers in USA and Europe etc., can invest in India to tap into this service segment - and offer MRO services to all other airlines in the South Asian region - from Singapore, Indonesia, Malaysia, Sri Lanka to Kazakhstan. This market potential is huge.

The growth in air travel has now created a huge demand for other forms are air travel and business: Charter planes, Charter helicopters, sea planes, Cargo operations, etc. Government of India is in the process of changing the rules which will encourage foreign investors to enter into the other aviation business of charter services, part ownership of private planes, aviation training centers etc. With the growth in American and European air travel being stagnant (or negative), Foreign companies are eagerly looking into Indian skies. Lufthansa has already announced an aggressive investment plan in India - and wants to expand its range of services in India. British Airways and Virgin are also actively looking at ways to expand the range of services that they can offer in India.

Closing Thoughts

The world’s interest in Indian aviation can be gauged by the number of companies coming to India for "Aero 2007". This trade event is the biggest air show in Asia, and the second largest air show in the world! If the air show grows in popularity at the same rate, Aero 2009 will be the world’s largest aviation trade fair in the world - and by then India would have truly emerged as a global power in the world of aviation.

Also See:

Why Invest in India - Power Generation Infrastructure
Why Invest in India: Innovation & Creativity
The Great Indian Renaissance. Written by Dr Manmohan Singh
Why Invest in India: Resurgent Economic Growth in 2007
Why Invest in India - Banking
Why Invest in India: Booming Air Travel Industry
Why Invest in India?

IPR Dispute and Improper conduct by Indian Government

The recent dispute between Ministry of Information & Broadcasting and Nimbus a.k.a Neosports over the broadcasting rights sets a bad example - and shows India in a very negative light when it comes of protecting Intellectual Property.

As per the business contracts under the Company law of India, Nimbus had won the broadcasting rights for all cricket matches played in India for an amount of $612 million from BCCI. Now that Nimbus has won the telecasting rights, Nimbus should be allowed to do its business. But the Indian government has succumbed to playing popular politics and forcing Nimbus to share its broadcasting rights with the government broadcaster - Doordarshan for free!!

In return for sharing the broadcasting rights, Nimbus gets nothing - not even share of revenue generated by Doordarshan be selling advertisements during the cricket match. This implies that the government is stealing the IP rights of Nimbus - wherein the government of India has the moral responsibility to protect IP rights of individuals and companies. This act of stealing an IP is further justified by the courts in the name of protecting "public interest".

Some Inferences

This gross violation of intellectual property rights by the government of India shows a few interesting facets of Indian life.

  • Firstly, government and ministers do not care about WTO rules on IP protection and are willing to play with the public sentiments - to garner votes. Ministers and politicians will not protect IP if it goes against their interests.

  • Secondly, Indian public and society in general is not ready for the western kind of IP protection laws in India. The average citizen on the street was always supporting Ministry of Information & Broadcasting so that he/she can view the match for free on television - their rational is that BCCI and Indian cricket team is a government funded organization and the event is taking place in India - thus the public as tax payers have right to view the matches.

  • Thirdly, the Indian culture of protecting IP does not exist, in India, people tend to believe that an IP once created should be used for public benefit. Since BCCI is/was funded by tax payers money, the IP created by BCCI is now a public good.

  • Fourthly, BCCI which is a government funded organization - and a monopoly to represent the game of Cricket in India is not a public organization. The recent incident showed that BCCI, which is ironically led by another politician Sharad Pawar to be a money minded profit seeking organization. BCCI has done nothing wrong by selling the broadcasting rights to Nimbus. But then BCCI has done nothing to protect the IP rights of Nimbus either.
All this shows India is a very bad light when it comes to IP protection. Government of India is now violating the very laws it is supposed to protect. This case is akin to having a police force which resorts to robbing Paul to please Peter. History does show that whenever the government violates its own laws bad things happen. In the past, Indian government nationalize several industries under the leadership of Indra Gandhi - this led to two decades of slow economic growth and rapid increase in poverty. ( I guess more Indians died of poverty caused by Indra Gandhi’s government - than those killed by Pakistani soldiers in three wars with India). Both French & Russian Revolution happened when the kings violated the established laws of the country.

In this case, I guess there will be no revolutions but Indian sports will be starved of funds - as other private cable and broadcasters will now stay away from buying broadcasting rights for any sporting events in India.

Closing Thoughts

If the courts side with the Ministry if Information and Broadcasting, then the recent revival of Indian sports will be a short lived one, and Indian sports will enter a prolonged phase of decline and decay. The bigger impact of this could be that India will lose its standing in International trade and will lose face in WTO negotiations when it comes to IP protection and IP related trade issues.

Perhaps the deepest impact will be seen in Pharama and aviation sector where foreign companies are eager to invest in manufacturing and R&D centers in India. If these companies feel that India does not offer good protection to IP rights, then they may opt out of investing in India.

But in the final ray of hope, I expect the courts of India to uphold the IP rights of Nimbus and force Doordarshan to pay for sharing the broadcasting rights. Fortunately, the judiciary in India is independent of the legislature and the courts have a long history of challenging the ministers and upholding the law.

Also See:

Indian Style of Innovation
Why Invest in India: Innovation & Creativity
Knowledge Management - The blood & lifeline of any company
Creating a Culture for Innovation and Protecting Intellectual Property - Part 1
Creating a Culture for Innovation and Protecting Intellectual Property - Part 2
Protecting IP Assets of an Organization
Types of Intellectual Property
Business Creativity and Innovation