Reliance fresh costly....

Reliance fresh is celebrating the 2nd anniversary, but are the consumers happy? thats the big question. It has around 600 + centres in India and operating on this scale should give it a reasonable competitve advantage. Reliance is looking to backward integrate and produce vegetables and friuts and also having tieups with the farmers, but is this value being forwarded to the consumer?

I have done a small research on the prices and quality of vegetables and fruits in reliance fresh centers in vizag and the neighboring kirana and vegetables mandi's. The results are astonishing the prices in reliance fresh in some case are as high as 70% than the mandis. The price of potatoes was Rs. 8 in the kirana shop and astonishingly it was Rs.14 in the reliance fresh.The quality of the vegetables was also that good compared to the mandis.

The same was in the case of friuts with apples costing not less than Rs.130 in the reliance fresh. The Ambience is also not good with the cartons being stocked in the entrance.

Reliance fresh has to change its strategy otherwise the Indian consumer is not going to buy into it for long.

FED to cut rates this week

U.S fed is looking to cut the CRR rate by a minimum of 25bps to 1.25, the rate cut can also be upto 50 bps, this is to spur the economy. Because of the recent economic crisis the oil prices have dropped and the inemploymeny in the US has increased to a record high of 6.5% and expected to touch 7.5% by the year end.

with the christmas season coming the economic downturn is going to effect the company revenues and the growth of the country. This festival season as experienced by the Indian diwali which was a mere mediocre in the celebrations because of the soring prices and the economic uncertainity.

The Standard & Poor's/Case-Shiller 20-city housing index released Tuesday showed a drop of 16.6 per cent in August from the year ago, the largest on record going back to 2000. The smaller, 10-city index, fell 17.7 per cent, the biggest decline in its 21-year history.

The fed cut is also expected to spur rally in the oil prices, with the OPEC cutting the production and planning to cut production further. According to me the oil prices are to stabilise around $75 by the year end.

Frame work to evaluate poverty in India

According to Professor Aasha Kapur the poverty evaluation done in India is not done properly she has come up with a frame work with drivers, maintainers, interrupters weighted framework

Drivers: What propels people into poverty?

High healthcare costs

Adverse market conditions

Loss of assets

High interest loans from moneylenders

Social expenses, deaths

Crop Failure

Maintainers: What keeps people stuck in poverty?

Casual agricultural labour

Landless households

Illiterate households

Larger households with more children

Interrupters: What helps escape from poverty?

More income earning opportunities

Proximity to urban areas

Improved Infrastructure

Initial literacy status of household head

Income from physical assets: cropland, livestock, house

Another important finding is that while more people among the Scheduled Castes had been able to escape poverty, fewer among Scheduled Tribes had.

Taken from www.ndtv.com

Japan set to be Indian IT's next big Market

With the economic meltdown in US the Indian IT companies are suffering a lot due to the loss of the clients. The share of financial sector as the client percentage in the Indian IT sector is about 1/3rd. The crisis has made it essential to the Indian IT companies to look beyond US, Europe too being in the financial crunch Japan looks to be good market.

The Indian IT exports to Japan stand at a mere 4 2 billion as of now. With a huge market availability due to the opportunities in the market, it also comes up with the threats that the Indian IT companies have to face.



Opportunities:

1. Second biggest economy:Japan is the worlds second biggest economy after US. Japans economy is highly technology dependent, giving a good chance for the companies to develop the market.
2. Application Development: Japan has low overall IT spending with spend/sales ratio being around 1-1.5 per cent for most industries as compared to around 3.5- 4 per cent in the US. BFSI and manufacturing are the highest spenders amongst all industries. Embedded systems development and engineering and R&D services are the prospective quick win service offerings for Indian vendors. Application development and maintenance are the next big opportunities.
3. Application implementation : Japanese companies are still working on the legacy systems so the Indian IT companies can help them implement new applications like SAP, Finnacle.
4. Shortage of Human resources: Japanese population is fast aging creating a shortage in the manpower, this is forcing companies to look out for alternatives in the emerging markets.

Challenges:

1. China:China is the biggest off shoring partner of japan. China has an advantage of having the cultural similarity with japan.But recently their have been problems due to off shoring to China.
2. Keiretsu model: The Japanese service industry is based on the keiretsu model, where in the supply chain in vertically integrated. The Oligopolistic control on the vendors and clients is high in the japanese IT sector.

Japan should be seen as along term partner and investment and not as the temporary solution to the present economic crisis in the west.

India should be prepared for temporary slowdown

Speaking in the parliament P.M. Manmohan singh said "India like other developing economies is feeling the ripple effect of the crisis. Several financial institutions are in trouble and on the brink of solvency."

He also reacting to the steps taken by RBI "Number of unconventional steps are being taken by the government to stem the tide, which is causing a steep decline in the stock markets. It is the worst crisis since the Great Depression and we have taken a number of steps to minimize the impact,"

The Prime Minister, however, assured that all the bank deposits are safe.

He also assured the investors that India has a financially sound system so no fear should be there.

"We are taking steps to combat the liquidity crisis. The RBI has released Rs 25,000 cr for the banking sector. It has also cut 100 basis points in the repo rate to minimize the effect," he said.

Prime minister that the global meltdown will have an indirect impact on the Indian economy which will lead to the temporary slowdown in the Indian growth curve.

The PM also said that India's growth could come down to 7 per cent.



The ripple effect as said by the prime minister has spread like a wild fire with the majority of the industries like I.T., aviation, manufacturing ( alarming IIP of 1.3% ) showing signs of significant slowdown.

The consumers are very vary at the moment because of the double digit inflation and the liquidity crisis hitting the middle class in the form of salary cut and job losses. An increase in home and car loan interests have meant that many middle income families have to cut their festival budgets.

Marketers can expect the sales for the coming festival season the be down if the present crisis worsens.

Nandan Nilekani CEO of Infosys said that the companies can handle the crisis by using strategy.