Investments in mutual funds will get simpler and safer-- but a bit costlier in some cases-- starting tomorrow as the industry is set to implement some wide-ranging reforms by market regulator Sebi. Among various reform measures taken by Sebi (Securities and Exchange Board of India), the fund houses will have to make more disclosures in the interest of investors. They also have to shift to the one plan per scheme model, moving away from the present practice of cluttering one scheme with numerous plans. At the same time, fund houses will be able to charge their investors a little bit more as incentive for expanding to small cities, but would also have to set aside a small portion of their assets for investor education and awareness. The changes in mutual fund regulations were approved by Sebi's board in its last meeting on August 16 and have been notified over the past few days. Now, these would come into effect from tomorrow, October 1. As per the notifications, the fund houses might charge investment and advisory fee on their schemes, which would have to be fully disclosed in the offer document. In case of a fund of funds scheme, the total expenses of levied on the scheme would be capped at 2.50 per cent of the daily net assets of the scheme. In addition to the total expenses already levied on schemes, Sebi would allow the fund houses to levy brokerage and transaction costs, which is incurred for the purpose of execution of trade and is included
As talks of a possible buyout of Jet Airways by the Abu Dhabi-based Etihad Airways gather steam, this is a good time to look at the reasons why the deal makes sense for both parties.
First Etihad Airways. In a bid to expand its global presence and counter the threat from its neighbours’ fast expanding global airline Qatar Airways and the Dubai-based Emirates, Etihad has, in the last year or so, either acquired or raised its stake in at least three international airlines. In June this year, the airline acquired a four per cent stake in Virgin Australia for close to $35.6 million and indicated that it was keen to raise its holding to 10 per cent.
SIZE MATTERS
This was followed with Etihad raising its stake in Germany’s Air Berlin to 30 per cent, acquiring a 40 per cent holding in Air Seychelles and a three per cent stake in Ireland’s Aer Lingus.
Industry analysts say that the Jet-Etihad match is a perfect one, especially for the cash-strapped Jet Airways. “Should the deal go through, it will be a win-win situation for both the airlines and passengers. The Indian carrier will get access to much-needed funds, a global network, latest technology and best management practices. The global carrier will get access to traffic originating from India’s interiors. Indian passengers will gain from increased competition that is expected to lead to better offerings, seamless travel through code-shares and cheaper airfares,” says Amber Dubey, Partner and Head – Aviation, KPMG.
At the same time, the tie-up will provide Etihad an opportunity to tap into the fast growing Indian outbound market. In addition, it will mean that Etihad will not need to wait for the Indian Government to allow it to operate more flights into India because of a cap on bilateral air service agreements with other countries.
FAMILIAR INVESTORS
The benefits of tapping into the outbound Indian market will be huge for both Etihad and the Indian economy. For instance, a recent Emirates-commissioned study highlighted the economic advantages for the domestic economy if the Government allows it to operate up to 80,000 seats a week from India from its current entitlement of about 57,000.
Many point out that the tie-up, if it happens, will cement old ties that Jet’s promoter, Naresh Goyal, has with the region. When Jet Airways took to the skies, Kuwait Airways and Gulf Air invested in the airline. It was only when policies here changed that Jet purchased those stakes from these two foreign companies. Now that foreign airlines are allowed to invest in Indian carriers, Jet Airways can again turn to this region for the financial support it needs.
Incidentally, Jet is not the only carrier looking to partner with a foreign airline. Low cost flier SpiceJet is also said to be in talks with foreign airlines. It was rumoured that another low cost airline, Air Asia, was eyeing SpiceJet.
CASH INFUSION
The Malaysian airline has, however, said that it is neither in talks nor is it interested in picking up stake in an Indian carrier. SpiceJet had earlier also said it was in talks with airlines in the Gulf region.
There are various reasons why Indian carriers are looking at possible tie-ups with foreign airlines. To begin with, Indian banks are refusing to lend them any more funds. It is expected that the latest policy change will help bring in much-needed funds into the cash-strapped and deep-in-the-red Indian carriers. In Jet Airways’ case, Eithad is expected to be issued fresh shares with the money so raised bolstering the carrier’s finances.
A look at the latest finances of Jet and other listed carriers shows why such tie-ups are essential. Jet Airways’ net loss shrunk to Rs 100 crore in the September quarter from Rs 714 crore in the year ago period backed by a forex gain of Rs 70 crore and a jump in operating income. Similarly, SpiceJet posted a net loss of Rs 163.52 crore for the quarter ended September 30 against a loss of Rs 240 crore in the comparable previous year period. Incidentally, after five consecutive quarters, all Indian airlines posted a net profit of Rs 56 crore in the first quarter of the current financial year. Though these are positive signs, they still have a long way to go before they start making money.
THE PUBLIC GOOD
Of course, the fit between an Indian carrier and a foreign one has to be perfect. This is why many feel that unlike the Jet-Etihad tie-up, the one between SpiceJet and Air Asia would not have worked. “The operating model of the two airlines is different. Air Asia deploys a single aircraft fleet while SpiceJet has a two-aircraft fleet. Besides with the current financial health of SpiceJet, this might not be the right time for Air Asia to invest in it,” said an aviation analyst.
Government officials further point out that any stake sale is unlikely to provide any immediate benefit for the flying public. “The reason behind the policy change was to provide some comfort to the airlines. It is hoped that with the policy change the airlines will not only get access to funds but will also be able to tap in to international airlines’ management expertise,” said a senior Government official. Of course, it will be a while before all this translates into any benefits for flyers.
Aspen travelers seeing fewer airline seats Aspen Times ASPEN — With Frontier Airlines out of Aspen's air-service picture, the overall number of airlineseats coming into the Aspen-Pitkin County Airport this winter will be down 20 percent. That said, there is room to move as many passengers in and out of ... See all stories on this topic »
Amtrak, airlines took Hurricane Sandy hit Daily Press But at least two airlines with Peninsula service and Amtrak's passenger rail line incurred serious losses. In a U.S. Securities and Exchange Commission filing, dated Nov. 26, US Airways Group, Inc., gave notice the company estimates a $30 million ... See all stories on this topic »
Jet seeks govt nod to lease two A330s Business Standard ... two Airbus 330-300s to deploy them on the Mumbai-Newark (US) route as part of its A330s fleet replacement plans. The airline has written to the government to allow it to lease two Airbus A330s to induct in its fleet, chief executive Nikos Kardassis ... See all stories on this topic »
Great Year-End Travel Deals By Malaysia Airlines Bernama KUALA LUMPUR, Dec 2 (Bernama) -- Malaysia Airlines is offering exciting airfares through its Year End Sale (YES) from Dec 3, 2012, Dec 17, 2012 for travel from Dec 5 this year till Sept 30 next year. This is a great opportunity for travellers to start ... See all stories on this topic »
100% Recession Risks – A Follow On Forex Pros Professor Piger updated his recession probability model that caused so much attention early November (See “Debunking 100% probability of recession“). As we forecast last month, the probability index undertook a “revision” of epic proportions as ... See all stories on this topic »
For Amazon Web Services Chief Data Scientist Matt Wood, the day isn’t filled performing data alchemy on behalf of his employer; he’s entertaining its customers. Wood helps AWS users build big data architectures that use the company’s cloud computing resources, and then take what he learns about those users’ needs and turn them into products — such as the Data Pipeline Service and Redshift data warehouse AWS announced this week.
He and I sat down this week at AWS’s inaugural Re: Invent conference and talked about many things, including what he’s seen in the field and where cloud-based big data efforts are headed. Here are the highlights.
The end of contstraint-based thinking
Not so long ago, computer scientists understood many of the concepts that we now call data science, but limited resources meant they were hamstrung in the types of analysis they could attempt to do. “That can be very limiting, very constraining when you’re working with data,” Wood said.
Now, however, data storage and processing resources are relatively inexpensive and abundant — so much so that they’ve actually made the concept of big data possible. Cloud computing has only made those resources cheaper and more abundant. The result, Wood said, is that people working with data are undergoing a shift from that mindset of limiting their data analysis to the resources they have available to one where they think about business needs first.
If they’re able to get past traditional notions of sampling and days-long processing times, he added, individuals can focus their attention on what they can do because they have so many resources available. He noted how Yelp gave developers relatively free rein early on the use of Elastic MapReduce, saving them from having to formally request resources just “to see if the crazy idea [someone] had over coffee is going to play out.” Yelp was able to spot a shift in mobile traffic volume years ago and get a headstart on its mobile efforts because of that, Wood added.
Data problems aren’t just about scale
Generally speaking, Wood said, solving customers’ data problems isn’t just about figuring out how to store ever greater volumes for every cheaper prices. “You don’t have to be at a petabyte scale in order to get some insight on who’s using your social game,” he said.
In fact, access to limitless storage and processing is a solution to one problem that actually creates another. Companies want to keep all the data they generate, and that creates complexity, Wood explained. As that data piles up in various repositories — perhaps in Amazon’s S3 and DynamoDB services, as well as on some physical machines with a company’s data center — moving it from place to place in order to reuse it becomes a difficult process.
Wood said AWS built its new Data Pipeline Service in order to address this problem. Pipelines can be “arbitrarily complex,” he explained — from running a simple piece of business logic against data to running whole batches through Elastic MapReduce — but the idea is to automate the movement and processing so users don’t have to build these flows themselves and then manually run them.
The cloud isn’t just for storing tweets
People sometimes question the relevance of cloud computing for big data workloads, if only because any data generated on in-house systems has to make its way to the cloud over inherently slow connections. The bigger the dataset, the longer the upload time.
Wood said AWS is trying hard to alleviate these problems. For example, partners such as Aspera and even some open source projects enable customers to move large files at fast speeds over the internet (Wood said he’s seen consistent speeds of 700 megabits per second). This is also why AWS has eliminated data-transfer fees for inbound data, has turned on parallel uploads for large files and created its Direct Connect program with data center operators that provide dedicated connections to AWS facilities.
And if datasets are too large for all those methods, customers can just send AWS their physical disks. “We definitely receive hard drives,” Wood said.
Collaboration is the future
Once data makes its way to the cloud, it opens up entirely new methods of collaboration where researchers or even entire industries can access and work together on shared datasets too big to move around. “This sort of data space is something that’s becoming common in fields where there are very large datasets,” Wood said, citing as an example the 1000 Genomes project dataset that AWS houses.
DNAnexus’s cloud-based architecture
As we’ve covered recently, the genetics space is drooling over the promise of cloud computing. The 1000 Genomes database is only 200TB, Wood explained, but very few project leads could get the budget to store that much data and make it accessible to their peers, much less the computation power required to process it. And even in fields such as pharmaceuticals, Amazon CTO Werner Vogels told me during an earlier interview, companies are using the cloud to collaborate on certain datasets so companies don’t have to spend time and money reinventing the wheel.
No more supercomputers?
Wood seemed very impressed with the work that AWS’s high-performance computing customers have been doing on the platform — work that previously would have been done on supercomputers or other physical systems. Thanks to AWS partner Cycle Computing, he noted, the Morgridge Institute at the University of Wisconsin was able to perform 116 years worth of computing in just one week. In the past, access to that kind of power would have required waiting in line until resources opened up on a supercomputer somewhere.
The collaborative efforts Wood discussed certainly facilitate this type of extreme computation, as does AWS’s continuous efforts to beef up its instances with more and more power. Whatever users might need, from the new 250GB RAM on-demand instances to GPU-powered Cluster Compute Instances, Wood said AWS will try to provide it. Because cost sometimes matters, AWS has opened Cluster Compute Instances and Elastic MapReduce to its spot market for buying capacity on the cheap.
But whatever data-intensive workloads organizations want to run, many will always look to the cloud now. Because cloud computing and big data — Hadoop, especially — have come of age roughly in parallel with each other, Wood hypothesized, they often go hand-in-hand in people’s minds.
What is cloud computing? ihotdesk - IT News Cloud computing is a term which has been banded around in almost all circles in recent years, but many firms still fail to grasp what it really is and how it can be beneficial to them. Put simply cloud computing is a system where data and applications ... See all stories on this topic »
A Foot in the Cloud www.waterstechnology.com This past week, at Telx Marketplace, a conference for data center services providers and their customers, experts on cloud computing strategies pointed to developments and opportunities in the cloud that can affect how reference data will be handled ... See all stories on this topic »
Indra K. Nooyi is the president and chief financial officer of PepsiCo. Best known for its Pepsi soft drinks, the international powerhouse that Nooyi oversees is actually one of the world's largest snack-food companies. It makes and sells dozens of other products, including Doritos-brand chips, the Tropicana juice line, and Quaker Oats cereals. Nooyi is one of the top female executives in the United States, and is also believed to be the highest-ranking woman of Indian heritage in corporate America.
Joined Rock Band
Nooyi was born in Madras, India, in 1955, and was a bit of a rule breaker in her conservative, middle-class world as she grew up. In an era in India where it was considered unseemly for young women to exert themselves, she joined an all-girls' cricket team. She even played guitar in an all-female rock band while studying at Madras Christian College. After earning her undergraduate degree in chemistry, physics, and math, she went on to enroll in the Indian Institute of Management in Calcutta. At the time, it was one of just two schools in the country that offered a master's in business administration degree, or M.B.A.
Nooyi's first job after earning her degree was with Tootal, a British textile company. It had had been founded in Manchester, England, in 1799, but had extensive holdings in India. After that, Nooyi was hired as a brand manager at the Bombay offices of Johnson & Johnson, the personal-care products maker. She was given the Stayfree account, which might have proved a major challenge for even an experienced marketing executive. The line had just been introduced on the market in India, and struggled to create an identity with its target customers. "It was a fascinating experience because you couldn't advertise personal protection in India," she recalled in an interview with the Financial Times 's Sarah Murray.
Nooyi began to feel that perhaps she was underprepared for the business world. Determined to study in the United States, she applied to and was accepted by Yale University's Graduate School of Management in New Haven, Connecticut. Much to her surprise, her parents agreed to let her move to America. The year was 1978. "It was unheard of for a good, conservative, south Indian Brahmin girl to do this," she explained to Murray in the Financial Times. "It would make her an absolutely unmarriageable commodity after that."
"Behind my cool logic lies a very emotional person."
Could Not Afford Suit
Nooyi quickly settled into her new life, but struggled to make ends meet over the next two years. Though she received financial aid from Yale, she also had to work as an overnight receptionist to make ends meet. "My whole summer job was done in a sari because I had no money to buy clothes," she told Murray. Even when she went for an interview at the prestigious business-consulting firms that hired business-school students, she wore her sari, since she could not afford a business suit. Recalling that the Graduate School of Management required all first-year students to take—and pass—a course in effective communications, she said in the Financial Times interview that what she learned in it "was invaluable for someone who came from a culture where communication wasn't perhaps the most important aspect of business at least in my time."
Pepsi v. Coke
The rivalry between Pepsi, the flagship product of Indra Nooyi's company, and its Atlanta, Georgia-based competitor, Coca-Cola, is one of corporate America's longest-running marketing battles. In the United States alone, the soft-drink industry is a $60 billion one, with the average American consuming a staggering fifty-three gallons of carbonated soft drinks every year.
The battle between Coke and Pepsi dates back almost as long as each company's history. Both emerged as key players in early decades of the twentieth century, when soft drinks first came on the market in the United States. In the 1920s, Coca-Cola began moving aggressively into overseas markets, and even opened bottling plants near to places where U.S. service personnel were stationed during World War II. Pepsi only moved into international territory in the 1950s, but scored a major coup in 1972 when it inked a deal with the Soviet Union. With this deal, Pepsi became the first Western product ever sold to Soviet consumers.
The battle for market share heated up after 1975, when both companies stepped up their already lavishly financed marketing campaigns to win new customers. Pepsi's standard cola products had a slightly sweeter taste, which prompted one of the biggest corporate-strategy blunders in U.S. business history: in 1985, Coca-Cola launched "New Coke," which had a slightly sweeter formulation. Coke consumers were outraged. The old formula was still available under the name "Coca-Cola Classic," but the New Coke idea was quickly shelved. This incident is often studied by business-school curriculums in the United States and elsewhere, along with many other aspects of what is known as "the cola wars."
Coke is the leader in market share for carbonated colas, but soft drinks remain its core business. Pepsi, on the other hand, began acquiring other businesses in 1965 when it bought the Texas-based Frito-Lay company, and has a larger stake in the food industry.
Nooyi did not earn a second M.B.A. from Yale. Instead, her degree was a master of public and private management, which she finished in 1980. After commencement, she went to work at the Boston Consulting Group, a prestigious consulting firm. For the next six years she worked on a variety of international corporate-strategy projects, and went over to Motorola in 1986 as a senior executive. She remained there for four years, leaving in 1990 to join Asea Brown Boveri Inc. as its head of strategy. ABB, as the company was known, was a $6 billion Swiss-Swedish conglomerate that made industrial equipment and constructed power plants around the world.
Nooyi's skill in helping ABB find its direction in North America came to the attention of Jack Welch, the head of General Electric. He offered her a job in 1994, but so did PepsiCo chief executive officer Wayne Calloway. As she told a writer for Business Week, the two men knew one another, but Calloway made an appealing pitch for Nooyi's talent. He told her, she recalled, that "'Welch is the best CEO I know.... But I have a need for someone like you, and I would make PepsiCo a special place for you.'"
Nooyi chose the soft-drink maker, and became its chief strategist. Soon, she was urging PepsiCo to reshape its brand identity and assets, and became influential in a number of important decisions. She was also a lead negotiator on the high-level deals that followed. The company decided to spin off its restaurant division in 1997, for example, which made its KFC, Pizza Hut, and Taco Bell holdings into a separate company. She also looked at the successful plan by Pepsi rival Coca-Cola, which had sold of its bottling operations a decade earlier, and had been rewarded with impressive profit margins on its stock performance. Pepsi followed suit, and the 1999 initial public offering of the Pepsi bottling operations was valued at $2.3 billion. The company kept a large share of stock in it, however.
Pointed Pepsi in the Right Direction
At PepsiCo, Nooyi has been the chief dealmaker for two of its most important acquisitions: she put together the $3.3 billion-dollar-deal for the purchase of the Tropicana orange-juice brand in 1998, and two years later was part of the team that secured Quaker Oats for $14 billion. That became one of the biggest food deals in corporate history, and added a huge range of cereals and snack-food products to the PepsiCo empire. She also helped acquire the edgy beverage maker SoBe for $337 million, and her deal beat the one submitted by Coca-Cola.
For her impressive dealmaking talents, Nooyi was promoted to the job of chief financial officer at PepsiCo in February of 2000. It made her the highest-ranking Indian-born woman among the ranks of corporate America. A year later, she was given the title of president as well, when her longtime colleague, Steven S. Reinemund, advanced to the position of board chair and chief executive officer. Reinemund had said he would only take the job only if Nooyi came onboard as his second in command. "'I can't do it unless I have you with me,'" she recalled him telling her, according to Business Week.
Upon taking over as president and chief financial officer in May of 2001, Nooyi worked to keep the company on track with her vision: "For any part of the day we will have a little snack for you," she told Business Week in 2001. The company sold a dazzling range of snack foods and beverages, from Mountain Dew to Rice-a-Roni, from Captain Crunch cereal to Gatorade-brand sports drinks. It also owned the makers of Doritos-brand snacks and Aquafina bottled water.
One of Corporate America's Top Visionaries
Nooyi's success in the business world landed her on Time magazine's list of "Contenders" for its Global Business Influentials rankings in 2003. Many watchers predict that she will someday head one of the company's divisions, such as Frito-Lay, or its core brand, PepsiCo Beverages North America. In early 2004, there were mentions in the press that Nooyi, who still wears the occasional sari to work, was being considered for the top job at the Gucci Group, but she denied rumors that she had been talking with the Italian luxury-goods giant.
Nooyi serves on the board of trustees at the Yale Corporation, the governing board of Yale University. She lives in Greenwich, Connecticut, not far from PepsiCo's headquarters across the state line in Purchase, New York. At home, she maintains a puja, or traditional Hindu shrine, and once she flew to Pittsburgh after a tough session with Quaker Oats executives to pray at a shrine there to her family's deity. Her predictions that her American graduate education would hamper her marriage prospects proved untrue, for she married an Indian man, Raj, who works as a management consultant. They have two daughters who are nearly a decade apart in ages, and Nooyi occasionally brings her younger child to work. The former rock guitarist is still known to take the stage at company functions to sing. Her job, however, remains a top priority. She watches championship-game replays of the Chicago Bulls to study teamwork concepts, for example, and admitted to Forbes journalist Melanie Wells that she strategizes 24-7 sometimes. "I wake up in the middle of the night," she told the magazine, "and write different versions of PepsiCo on a sheet of paper."
