Saturday, April 20, 2013

BIG DATA ANALYSIS

Internet and technology if used judiciously can create immense potential for an organization to grow despite of many hurdles even fighting with the recessions. Business which is built over several years with diverse business and product segments, having several geographical existences creates huge data which is often ignored while meeting the targets every new financial year. In my own career when I have witnessed that if proper data analysis is being executed particularly in distribution and insurance companies the huge business growth can be achieved from existing data of clients rather than focusing on acquisition of new clients. Understanding the business pattern and clients minds for future business growth data analysis is very important.

The Indian IT industry is now heading for an big change over where data analysis is going to create the next revolution for many industries who dreams to become the leader with every changing times. Earlier is used to be an challenge to store the same data for understanding the changing consumer pattern across geographies and products segment is the key to growth. Internet has reduced the gap of data availability followed with an easy and efficient availability of the data. Just imagine that sitting in a remote place in India one can find out what is happening across the globe within a fraction of seconds.

High value and profitable business can be grown from analysis of the data which would lead to new product innovation. In fact innovation would find the seed of its birth from efficient data analysis. Proper data analysis can help to create lucrative packages for consumers so that business can grow. Gartner an American based technology trend research company states that from 2013 onwards many big companies would enter into the space of data analysis. Since global slowdown as created a dead lock for market expansion hence understanding the old pattern of business and its clients would fetch the sustainability and innovation of new business products and strategies. Bosch Technologies, Mahindra & Mahindra are the several companies who have acted well on these steps and created huge shareholders value in the long term.

From agriculture to toothpaste everywhere big data analysis can be implemented to unlock the huge innovation of products and better pricing. Big data analysis is already used extensively in inventory management but now we need to carry forward the same to more segments is the biggest challenge. As for cost management we need proper data analysis to design the costing structure, in the same way we need to understand the consumer minds and its preference. Innovation of products, services and pricing depends upon the big data analysis. Innovative pricing can only happen when big data analysis is being executed but by an third party and not by the own company. Since often data analysis can turn out to be a disaster if one has predefined objective from the data analysis.

Its not only about Big data analysis but it’s about creating solution and strategies for the business. Well after the debacle of 2008 this has been rising business sustainability strategy. The best way to use Big Data analysis is not to expect what you want to get out of that but to find the unexpected. That the prime or the pivotal point of doing data analysis. Just like innovation labs we need solution provider big data analysis companies. Since if an company applies Big data analysis then it might get into the trap of limited expectation of results hence sit better to pass of the analysis and to find the unexpected business patterns and consumers to the third part analysis companies.

Social networking sites also plays and creates huge potentiality of big data analysis and hence we need to come up fats with companies where experienced industry analysts would help to create the solutions. Experienced industry experts are the best candidates to open third party big data analyst companies. Their diverse business experience would help to create the solution. The future of the industrial revolution is dependent on big data analysis. But avoid the death trap of predefined objective based big data analysis.

Friday, April 19, 2013

ONLINE RETAIL...SAME DAY DELIVERY

The growing demand of the Smart phone segment has created a revolution among various small and medium industries to expand their business. In this research article I find a substantial growth opportunity where the retail market of any economy can expand without having the burden of increasing cost. Moreover I find that a substantial investments needs to be made for distribution for expanding the retail business. Smartphone and laptops plays a pivotal role behind the growth of the online retail industry.

In my research finding from tow well developed economies I find that there is tremendous growth opportunity taking shape. As we all know that Chinese economy is shifting from an export driven economy into an internal driven consumer based economy. This leads to a stupendous growth for the online retail industry of china. Smart phone and updated technology is 1000 time advanced in china as compared to India hence the growth of the business is stupendous.

In china the consumption pattern among the middle class is changing which means that now they purchase more of a symbol of affluence and wealth than necessity. They buying online and this online retail industry have lead to a revolution for the industry to grow. China's Ministry of Commerce reported last year that online retail sales in 2011 totaled 782.56 billion yuan ($125.9 billion). If the same is compared in U.S. online retail sales it grew to 15.8% in 2012 to $225.5 billion, according to the U.S. Commerce Department. According to Macquarie Group Ltd., part of Australia-based financial services firm Macquarie Group Ltd china's e-retail sales will reach $258.2 billion in 2013 and $331.7 billion in 2014. Customer loyalty will only increase only with price since price competition is the key driving force for the online retailer business.

Drilling further we find that there are 570 million Internet users, 42% of the population of 1.354 billion, and 220 million online shoppers in China, according to eMarketer a U.S. based market research firm. With the growth of the Chinese middle class followed with several small towns and villages getting developed the demand of retail keeps amplifying. Simply by creating an online smooth well streamed online business portal would spook up the consumption pattern as well as bridges the gap between long distance shopping. The best example in Indian context is the Flipkart type of companies.

If we drill further I picked out some companies in china which will reveal the type of growth the retail space achieves through e-commerce. Alibaba's the online retailer whose only two marketplaces account for more than 80% of e-commerce sales in China. Alibaba reported in December 2012 that it has surpassed 1 trillion yuan ($160 billion) in sales on its two marketplaces in the first 11 months of 2012. Same story is being found with Tmall whose sales for 2012 totaled 200 billion yuan ($32 billion), double its 2011 sales. Hence there is a flood of online retailers or ecommerce business in china which gives substantial opportunity for the industry to tap the IPO market in china. Since online space is not sufficient alone to keep the competition alive efficient distribution is equally to make the goods reach to the dirtiest remote places. Another prominent form of online retail business in Indian context is the advertisements which are being given in TATA Sky TV. Well those who have TATA Sky they know this better than me.

The days of shops are now being replaced with online retailers but the gap of distribution is also being taken very seriously by the e-commerce segment. While doing research in US I found that many companies are trying to deliver goods on the same day. They have taken substantial investments in distribution network since only getting more orders would not replace the hard core traditional shops competitions.

In my research I found that Since last October 2012 , Wal-Mart Stores Inc. has offered Walmart to Go, using its own trucks to deliver online orders the day they're placed by picking up goods from Wal-Mart stores in five metro areas—Northern Virginia, Philadelphia, Minneapolis, San Jose/San Francisco and Denver.

Also in October, eBay Inc. rolled out eBay now, a mobile app for managing local courier pick-up and delivery services that retailers such as Target Corp., Macy's Inc. and Best Buy Co. Inc. are testing their models in New York and San Francisco. For India it’s far from imagination to deliver goods on the same day. We are just now in the initial phase of purchasing goods through Flipkart and other websites.The concept of same delivery in online retail business is going to be a proven strategy for winning customers or boosting profits. Participating in a same-day delivery service requires the retailer to extend its inventory updates beyond its own network to the couriers who will make the deliveries.

Most of the orders in these countries are being placed by the working class followed with smart phone since orders are being placed while one is on the street. In my research I find that 28% of marketing e-mails were opened on a smart phone in November 2012, according to a study of 2.85 million e-mails by mobile marketing firm Knotice Ltd. The web accounts for 8.1% of total retail sales in China, according to the Internet Retailer Asia 500 guide, compared to 5.2% in the United States. Online retail market followed with smart phone and same day delivery model has created a revolution for the online retail business.

Many IPO would come up in the Chinese market and also in the US since online retail market is now under tremendous revolution.In India also we are about to witness such an revolution and that day is not so far when companies like FlipKart and other will come up with an IPO.

GOLD....BILLIONS MADE

Gold prices made a surprising correction but in my research I find it that billions made from the crash of gold prices and recession in the wings.

Gold prices correction and its fall were well planned in advance by the big giants of the financial market. Hedge funds made the billions by simply doing short sell and spreading research reports that they are deriving low valuation for the yellow metal. There research reports created the short positions which they finally triggered during this time. A couple of short news being spread are as follows In February, Credit Suisse ‘predicted’ that the gold market had peaked, SocGen acclaimed the end of the gold era was upon us, and recently Goldman Sachs told everyone to short the metal. The big father George Soros sold down his GLD position by about 55% as of the end of 2012 and had just 600,000 shares remaining. Well this "smartest guy in the room" locking in a profit after a 12 year bull market.

The big players of the world market and the bullion banks made billions by building short position on the yellow metal. But far from making billions I am more concerned about the recession fears which are looming around the corner. Crude prices are trailing at the lowest levels and Gold prices are also at the lowest. Commodity prices on the other hand are trailing at the lowest levels too. Commodity is a demand and supply driven formula. During 2008 we witnessed the same rally of Gold and crude plummeting followed with a commodity prices coming downwards.

Posted below is a chart that shows what has happened to the price of gold since the late 1960s. As you will notice, whenever the price of gold rises dramatically and then crashes, a recession usually follows. It happened in 1980, it happened in 2008, and it is happening again. Demand is falling and supply is abundant.

My concern of recession takes birth from the slowdown of the demand despite of the stories of growth picking up around US and other economies. Crude is the biggest indicator of the demand and inflation to pick up. But the story of oversupply has shadowed the stories of falling demand. Increase in crude price is the metric of inflation and economic growth picking up in an economy.

Moreover we are being hearing that as gold has underperformed over the last couple of years and equity market is picking up and hence it would be prudent to shift the funds or rather book profits and move to equity markets. But 14000 levels of the Dowjones are quite risky for investments and further climbing form here doubles the risk of fall. The short selling of gold made billions for the bullion banks and players and now they are creating the hype that it’s time for equity investments. I find that they are in the way of creating another billions by short selling the equity markets in the later stage so that by this time the common people will built their trust on the equity market and will built their positions.

Well the gold price fall was something beyond creativity. The following instances would make my testimony and research very productive.

1. The gold futures markets opened in New York on Friday 12th April to a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract (see below) in what proved to be only an opening shot.

2. Two hours later the initial selling rumored to have been routed through Merrill Lynch's hit the market by a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading.

The whole game is to drive the investors into equity markets since they stakes over there has reached to an optimum levels and a significant sell off might be in the wings. One of another interesting fact is that ETF redemption of gold has lead to invest into physical gold. Hence it’s clear that valuation of the gold has been kept locked in the volt only the shape or the structure of holding the same have been changed. The prime reason for such an act is the Cyprus deal where the valuation of the holding in e-paper currency format has lead to huge collapse for the economy. Hence a huge lesson has been taken by the investors which have spooked the ETF sell off too. In simple terms it is paper-gold liquidation which has begun.

The biggest surprise among all these is that the Big money was shifting from the paper gold to physical gold and not the retail money. Since gold-ETF’s are structured to only make it possible for large unit-holders to “take delivery” in this manner. Small gold-holders are unable to access the Comex “physical” inventories hence it crystal-clear that the Big Money is on the move.

Hence those who have taken gold for an negative toss, a simple request invest and buy gold and for reasons of investing gold read the article again.

Saturday, April 6, 2013

INDIAN POWER SECTOR UNDER DEVELOPED


The future power industry is solar power which was identified by many but implemented less in India. In the developed and emerging nations we find solar power existing in an great form where as in India we find street lights to be under coal based power supply. Power cost has finally taken an toll over the rising cost of household expenses. People in Delhi are now feeling the heat of rising cost followed with an inflation of around 7% to 9% range.

The cost of coal has gone up significantly as well as the cost of production of power. According to some estimates, the country will see a shortfall of about 70 million tonnes of coal this year. More than coal price the current problem is the high cost of coal due to import of the same, Indian government has become supporters of the import of coal. Coal supply is not only acted as a constraint but also as an problems for new power companies too. No new investments are coming into the power sector due to increase cost of production of power. Imported coal has eradicated the cash flow projections of the power projects.
The reason behind the failure of solar based power system in mass basis in India is that imported coal and domestic coal based power supply engages thousands of middlemen to make money. More over the Indian political system makes billions out of coal based power supply system. In solar system one doesn’t find such an recurring income based business process. This is one of the reasons why Indian economy fails to develop at public sector point.

Coal India is the biggest supplier of coal in India. According to Coal India's production target, it will only be able to supply 65% of the requirement for plants that have come up after December 2009. This effectively means that power units will be able to operate only at 55% plant load factor and will need imported coal to enhance capacity utilization. Hence there will be massive power shortages or otherwise there will be high cost of tariff for power companies.
As mentioned earlier any shortage in coal will be met from import but we find the cost of import has also significantly gone up by around 15% to 25% range. For example Indonesia has imposed a 25% export tax on coal. Earlier it was found About 9,000 megawatts, nearly 10 percent of India's total coal-fired capacity, became unviable last year after Indonesia changed rules on coal prices.

India imports about 12 percent of its coal requirements and sources 70% of that from Indonesia, the world's largest thermal coal exporter. Hence this is one of the prime reasons for the sudden upward spike in power tarrifs.
One will be shocked to find that power tariffs will rise by 50% from the present price levels within the next 5 years. The only logic behind is that coal fuels will comprise more than half of India's power capacity of 191,000 MW and will be required for 85% of the 76,000 MW additional capacity targeted in the next five years. It is further being blessed by our Environmental Practices and its law. Slow environmental clearances and land acquisition have led to stagnating coal output in the country and have increased our dependence on imports. At the same time it will illogical to pass the blame of not getting domestic clearance for mining. What will happen if after mining the coal blocks you find there is no coal within the blocks?
Thanks to the GDP of India that currently it is under slow growth phase. If Indian economy should have grown at 8% then the power companies should have went for an wild cry. Currently all power cost has gone up and in the near future it is being expected that the coal prices would remain the bottle neck for the power companies. Increasing cost of imported coal is only going to increase the prices of power to the end user. I fail to make an calculation about the future price level of power which we consumers have to pay.

But once Indian economy gets back on its feet the demand of power and cost of power to the end user will increase to create a history in the Indian economy. I find we the common people have become dumb and have created a mindset where we easily adopt to any price hike without any other way out. More over in this power game we don’t have an alternative product or solution just like we got when the gas prices went up we immediately found a substantial jump in purchasing induction cookers. Again that cooker also runs on the power of electricity.
I can’t calculate where the gas prices and power prices will head in the coming days. India being a high population economy should have low prices so that volume based and mass based consumption can happen. Hence that leads to drop in prices which are according to the economic principles but we only find high prices and less consumption.
Power distribution companies are burning their hands due to high cost of power. Kit has been found that state governments are refusing to raise tariffs, unwilling to increase the burden on distribution utilities, which are mostly controlled by state governments. They probably lost around 800 billion Indian rupees ($15.8 billion) in 2011/12, higher than 635 billion rupees in 2009/10, rating agency ICRA estimates.
Now when coal prices are rising up we find there are two solutions for the Indian government either subsidies or pass on the price to consumer. At the present moment India is having an fiscal deficit of 6.7%% hence there are negligible chances for the government to press the button of subsidy hence tariffs took the call. In the coming days and years we find less probability of power tariffs to climb down, it will only increase and within the next 5 years it will increase by 50%.
In these situations we find alternative energy like solar energy which can be easily placed in the urban society will give relief from the rising household budgets. In India it has been noticed that we don’t pay any value to any thing which we get easily. Only when a price is being tagged with an product then only we identify the true value. Strange but true. We find that now we Indians should understand the real value of power and should opt for solar energy based power systems so that both money and natural resources are being saved.

In India the summer seasons are behind torture for any one which needs no explanations. We find that whole of India burns with an heat degree with a range between 40 to 55 degree centigrade with an time frame of 6 months on an average in an calendar year. Hence India has a huge potential climate for solar power but the focus of the government and also of the common man of India is very poor and dim towards the potentiality about solar energy based power consumption.

But among all these draw backs there are two states in India made an huge turn around in by identifying the potentiality of solar power they are Gujarat and Rajasthan.. Gujarat has dominated the solar power movement in India by contributing two-third of the 900 mw of total solar power generation. The state has the country’s biggest solar park in Charanka village, which generates 214 mw of solar power out of its total capacity of 500 mw. The park has been recently awarded for being both innovative and environment-friendly by Confederation of Indian Industry (CII).

Rajasthan comes second after Gujarat in terms of solar power generation in India. Being the sunniest state of India, it has tremendous solar power potential. According to Bloomberg, Reliance Power insta lled 40 mw solar power at the Dhirubhai Ambani Solar Park in April this year. Furthermore, according to Tip News, a 250 mw “compact linear fresnel reflector (CLFR)” plant is under construction by French energy group Areva for Reliance Power in Rajasthan (targeted for a May, 2013 start).

But the questions comes in mind why only two states in India has adopted this where as remaining other 27 states are out of the game plan.
One of the wildest things is that when the power companies laid out the power project cash flow they took domestic coal supply into the account but in the last 3 years the picture has turned upside down. Now imported cola has increased the cost of production which has affected the ROI and ROA followed with the profitability of the power companies. Why doesn’t the street lights don’t get power based on solar and why based on coal. The change would lead to an substantial savings for the state and central governments. Well that’ is because Indian political system is very much intricate into the corporate business.

CHINA AFRICA RELATION SERIES 1

My readers have been asking me for a long time that why I write so extensively about a Chinese economy. Well the true answer is yet to be found within my minds all I can say that I have fallen love with their economic investments policies. China pulled out the Asian economy and BRIC economy from the recession of 2008 through its extensive monetary policies.

China has been extensively investing across the world in various economic projects for its growth of its foreign reserves as well as a strategy to diversify the foreign reserves. Chinese polices have always been a win-win proposal for the every economy, where it went for extensive deals.

According to the Statistics I find that Chinese investment in Africa reached $40 billion by the end of 2010, of which $13 billion came as direct investment. Apart from this the contracts of China with Africa has been around $218.9 billion, with a turnover of $132.5 billion. The investment in Africa has lead to employment creation for the economy which has lead to increase in revenue of the African economy. According to statistics, the ratio of African employees to their Chinese counterparts in Chinese companies' projects in Africa has hit 13:1.

Further the trade deals have also increased between the two nations. In 2012, exports from South Africa to China amounted to R89bn ($9.6bn) – predominantly raw materials – while imports from China into South Africa totalled R112bn. Annual trade between Africa and China has doubled since 2007 to more than $200 billion (R1.85 trillion) and Chinese investment stands at $20bn, according to Standard Bank.

China has become an opportunist since Europe is giving less focus on investments to other nations. Another factor which helps china is the huge forex reserves which it holds compared to any other nation on this earth. This has given a milestone advantage for Chinese investments.

But above all these rationales behind investment the real growth of investments turns out to be economic investment without political engagement. This has been biggest boon for every investments of china into African economy. Well readers of India can easily envisage the investment scenario hurdles in India. I am sure that everyone will say that if we in India get any investment opportunity without any political interface then Indian economy would surpass the growth of china over the next 5 years. Well this will remain a distant dream.

China has decided in 2012 that pledge to provide $20 billion in loans over three years for African infrastructure development, agriculture and businesses. The investments are being directed towards making major inroads into Africa, where there is a complete lack of rail networks, highways, airports, factories, power plants and oil refineries has slowed the continent's economic development.

Many of my friends would be claiming that in between all these investments china is planning or rather building the way for its own mineral resources supply form the lands of Africa.

Well this would be an excruciating remark on china. In India we are asking FDI and Private investments to build our roads and infrastructure in same way china is doing aggressive investments in Africa. Today we are discussing about Africa, did we ever thought about this economy in the last several decades.

Well there is no free lunch anywhere on this earth. Today the African society and young generation is trying hard to shrug off the painful miseries of their lives and at that moment we are raising our voices that china is exploiting Africa. Even if china exploits Africa still at the cost of exploitation African economy and its infrastructure will grow.

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