Downgrade of SBI rating: Something to bank on?

On 13^th October 2011, Management Invitation Lecture Series or MILS, the flagship event of Department of Management Studies (DoMS), IIT Madras, invited Mr. M.S. Sundara Rajan, former chairman and managing director of Indian Bank, for a lecture on Moody’s Downgrading of SBI Rating.

Mr. Rajan started with an overview of SBI, emphasizing on its historic value and how it came into existence. He said that it is the no.1 bank in India with over 2 lakh employees and more than 16000 branches and it is also known as the “Big Brother” of the Indian Banking System. The Government holds 59% stake in SBI, making it a Government of India undertaking.

Reasons for Downgrading

Before quoting the reasons, Mr. Rajan presented some facts related to downgrading. The rating was downgraded from C- to D+. He said that the factors that were cited by Moody were low Tier-1 Capital ratio and deteriorating asset quality. Also, rise in bank’s non-performing assets (NPA) made Moody adopt a negative view on SBI.

He said that the reasons for downgrading are a result of two primary concerns, sufficiency of capital and asset quality. He also talked about how restructured assets can partly slip into an NPA and the effect of this slipping on the gross NPA ratio. When it comes to capital adequacy, he stressed on the fact that there is a conservative requirement of 23000 crores, but the government has a budgetary provision of 6000 crores only.

Industry Impacts and Management Response

The ways in which the industry can be impacted were also elucidated. Mr. Rajan said that the SBI may only prefer to lend to highly rated companies and other PSBs may also follow the same path. As a result lower rated borrowers may prefer to move to other lenders which might lead to unstructured borrowing by the companies, he said.

Furthermore, he drew our attention towards the way the SBI management has responded. He quoted that as per SBI, the market is over-reacting and stress is only in a few sectors, namely exports, agriculture and SME, leaving the corporate sector unaffected.

DOs and Don’ts for budding managers

Apart from giving his views on the downgrading, he also emphasized on how budding managers should prepare themselves for the future. He said that as young managers, we should enjoy the work that we do and develop multi-tasking capabilities. He urged the young generation to develop self-belief and confidence. He also stressed on the importance of having a stress-free mind.

Mr. Rajan’s lively and informative speech really captivated the audience.

Contributed by: 

Aditya Ghai

Class of 2013

One Night @ The Students' Activity Centre

The hands moved swiftly and with some kind of a surgical precision. Yet they were effortless. The privilege to see them move that way was extraordinary. The experience to ‘hear’ them move was out of the world! The audience were giving thunderous applause in numerous occasions. It was a magical night of santoor concert by Pandit Shivkumar Sharma on the 19^th of October, 2011 organized by SPIC MACAY (Society for Promotion of Indian Classical Music and Culture Amongst Youth).The Venue was SAC (Students’ Activity Centre) in IIT Madras.

 Pandit Shivkumar Sharma was playing Vachaspati rag in Hindustani style which essentially originated in carnatic form. The music from the santoor and the tabla from Pandit Ram Kumar Mishra was pure bliss. Next Pahadi rag followed accompanied by dadra and teen taal.The change of notes were so very subtle and it made the overwhelming trance of music spread to every nook and corner of the hall. Many admirers sat on the ground just to be close to the santoor maestro who is regarded as one of the most prolific performers of Indian Classical music in modern times. Actually, Pandit Shivkumar Sharma is the one who brought santoor in the Indian classical music sphere. Previously the instrument was widely viewed as folly in conservative quarters. But he persisted, experimented, and popularized his instrument. And In 1967, he teamed up with flautist Hariprasad Chaurasia and Brij Bhushan Kabra to produce a concept album, Call of the Valley (1967) which turned out to be one of the greatest hits in Indian classical music.

Pandit Shivkumar Sharma is the recipient of many national and international awards including the Sangeet Natak Akademi  Award in 1986, the Padma Shri in 1991, and the Padma Vibhushan in 2001.

Contributed by:
Mauryanath Das, DoMS Interface
Class of 2013

Samanvay'11

Well, it’s that time of the year again. You can smell it in the air. You can feel it in the sunshine!! It’s coming!!!NEW SEASON!!!

What! No way!! You get out of the lush campus of IIT Madras and the reality hits you hard! Same hot humid weather! No respite! What kind of new season is this??

Ah!! Correction! It’s a new season inside DoMS, IIT Madras! Simply because……ACHTUNG!! SAMANVAY 2011 is coming! And its bigger too! DoMS completed its glorious 10 years and that adds to the extravaganza!

Now, some information for the uninitiated-SAMANVAY is the 3 day business fest on 9-11 September, 2011 organized by Department of Management Studies, IIT Madras. Samanvay’11 is a grand platform to exchange ideas about current business scenario and a chance to interact with brilliant young budding managers from all over India.And the icing on the cake is the lectures and panel discussions by the who’s who of today’s business world. The theme of SAMANVAY revolves around ‘Corporate Ranneeti’, as an attempt to showcase the complex nuances and intricacies of tomorrow’s corporate world to today’s budding young managers.

Phew!!How does it feel if you are in a restaurant with friends and one of them lectures you all about why you are meeting there instead of checking out the menu? So no more lectures! We check out the menu now!

For starters, let me tell you that there are On-line and On-spot events as well as Corporate sponsored events.The ingredients are as follows-

Online and On spot Events:

Here we have for you an array of simulations, quizzes, strategy games, crosswords, forex market games etc.

Now turning the page to main dishes:

5 Samurais: This is the chef speciality (read flagship event).You get in.You get to be a CXO.You run a company like in real life.You train yourself for that ONE BIG DREAM you have. It’s delicious!

La Rascasse: Another ace flagship. The best handpicked condiments coming together-Sports and Management! Emphasis will be on, bringing in the different streams of learning in management under a single canopy - 'Managing a sports franchise'.

Finnix: Extra spicy. Rather disastrously spicy. But you will never be able to get enough of it. It is like this-you have to turn your business back when disaster strikes. Yes-disaster strikes, you strike harder, It’s that simple.

Dot2Dot: Chain Reaction-anyone?? Here you have to build an efficient supply chain model to make your business thrive.

Arco Baleno: Close Encounter of the Human Kind. You get to apply your HR skills in given scenarios.

MARKTacTic: The Unique will always prevail over the obvious. More so in business. Where do you fit in? Well, YOU are the one to market that unique product. Excuisite dish, custom flavoured!!

Biz-Barons: You be the commander of your own dish..er..we mean..Business! You are the chief and you need to carefully deploy your resources to tackle the competition! Entrepreneurship is your thing here! By the way, you get to eat what dish you make!

Seems wonderful, doesn’t it? Come and get the real taste of corporate success recipe. All are welcome!

Admissions 2011 : Delhi

The admission process began with we "Madrasis" going Northwards (read Delhi). The aircraft housing the 10 faculty members and the 7 student coordinators taking off was symbolic of several careers that are about to take off shortly.

The bugle of the GT-PI was sounded through the video being screened at 8 AM at Vishwakarma Buhawan at IIT Delhi. Regiments of bleary-eyed 20 somethings were ready to take on each other in the GT and give the profs a run for their experience in the PI. We the coordinators simply acted as "Sanjays" educating every candidate about the panel's composition and their demeanor. We also doubled up as impromptu astrologers verifying everyone's Janam-Patri (read testimonials). 

Although there were some teething problems to begin with, the process rolled on smoothly for the 2 days. The turnout was tremendous meaning that competition just got tougher! The candidates and us had sweet memories and the realization that the world is indeed small when mutual contacts were discovered. The process ended on a sweet, healthy note with a helping of Tarzan Singh's hand picked fruits.

Hope that we can better the experience in Chennai and Mumbai. After all, PG has added a little more firepower in the candidates' arsenals!

Contributed by,

Bhawik Raja, DoMS Interface

Class of 2011

Hemu Ramaiah: A Landmark Achievement

Dept. Of Management Studies, IIT Madras was proud to host the founder and ex-CEO of Landmark, Ms. Hemu Ramaiah as part of the MBA Invitation Lecture Series on Wed, 9^th Feb 2010. Ms. Ramaiah is presently MD of shop4solutions, a private equity firm. The topic for the lecture was “The Story of Landmark: Innovation, Challenges, and Learnings”.

Ms. Hemu Ramaiah with 33 years of experience in retailing, began by telling us of her younger days, when as a daughter of an army man, she had to get used to frequent change of residence, staying in towns and cities of India and generally growing up in a world where reading books was a pleasurable pastime and sometimes the only source of entertainment. Coming from a family not even remotely connected to business and not much crazy about books either, Ms. Ramaiah did go against the current by deciding early on that her life was going to revolve around the book industry. She began studying literature in Chennai, and went on to begin her career with books by joining the Taj Bookshop. Displaying great determination and foresight, she planned to set up her own bookstore by the time she turned thirty and to preferably exit by the time she turned fifty. Lofty goals for a twenty-something year old, but as she said “otherwise life would just meander along”.

Pretty soon she had established nine hotel book retail shops and was ready to take the leap. In 1987 with a modest capital of Rs. 12 lacs, she set up shop in Nungambakkam, Chennai. The location was the basement of an office building but one which would grow one day to earn the title of the “cult location” of Landmark. She asked the students to be wary of issuing equity early on during ventures as this could be a big compromise.

From the onset the aim was to create a bookstore which would change the way people perceived book shops in India. A bookshop without textbooks. A bookshop with open display. A bookshop where people could walk around, pick up a book, flip through it instead of coldly purchasing it from across a counter. In other words, Ms. Ramaiah converted the act of purchasing a book into an experience. And she went on to enhance this experience by adding on to the initial offering of only books, chocolates, stationery, toys and music.

Ms. Ramaiah described having tried the franchise model, as well as the joint venture in Calcutta. By late 1990s Landmark was a brand to reckon with and it was getting a lot of attention from the right quarters. In 2001, Landmark was invited operate a branch out of Spencer Plaza in Chennai, the first mall in India. Soon word spread and in 2002 it was operating from Forum Mall in Bangalore and what began as a book shop in a basement turned into an all-India phenomenon. Ms. Ramaiah told everyone about the challenges she faced as an entrepreneur – the forex crisis of 1991, the backward and forward integration troubles, the financing woes. But it seems it’s all been worth it when one looks back at the thrill, and satisfaction of having enriched thousands of lives through Landmark. The ‘Landmark Quiz’ became an event that people of all ages would wait for every year.

With the distinction of having made a profit in every year of its existence, Landmark was in an enviable position. However true to herself, Ms. Ramaiah stuck to her plan, and decided move on, when she invited Tata group company, Trent Ltd. to takeover Landmark in 2008.

Ms. Ramaiah cheerfully answered a variety of questions from the audience and left everybody appreciating this truly great achievement of a person with such humility, grace and charm.

Compiled By,

Team DoMS Interface