Enter the 400 pound gorilla!!

2 events of last week could potentially disrupt the way the respective industries function.

1. Merger of Myntra with Flipkart

2. Reliance Industries taking over Network 18 group

One is in response to the entry of a giant in online retailing segment and the other directly gives entry to another giant in the media sector. 

1. Myntra & Flipkart merger: No one would understand better the disruptive force of the entry of a giant like Amazon.com in India than former Amazon.com employees themselves. In December last year, Amazon introduced the ‘same day delivery service’ on the products covered under ‘Fulfilled by Amazon’ category in the metros. This was followed by an intense advertising campaign highlighting it. In the ‘me too’ Indian online retailing sector, this had the potential of taking market share away from the leader ‘Flipkart’ as consumers in their desire to get their hands on the products earliest might have just veered towards Amazon. Not surprisingly, Flipkart followed suit with its own version of same day delivery ‘In – a – day guarantee’ delivery for a nominal charge. This too was launched in metros and for a nominal charge.    

Flipkart with its ‘Cash on Delivery’ offering is the undisputed leader with GMV of $ 1 billion. The overall e-tail market is estimated at $ 2 billion. Thus, Flipkart has a 50% market share. Further, the organised retailing market in India is estimated at $ 40 billion. The e-tail space itself is expected to grow 10x to $ 20 billion in the next few years by some estimates. 

Last week, Flipkart announced the merger of Myntra with itself. Myntra is the leader in the online fashion and apparel segment. With Sales of ~ Rs 1000 Cr its one of the biggest fashion and lifestyle retailers alonside Jabong.  The deal prima facie seems a ‘win win’ for both with Flipkart getting access to the fashion prowess of Myntra and likewise for Myntra it gets the the logistical backup to scale up. Myntra being fashion focused has a lower base of customers whereas the universe of Flipkart consumers is pretty large. Myntra also has to focus on the customer experience while retailing which Flipkart doesnt and cant since it retails a wider category of products. 

Amazon is making its presence felt across product categories. 

As a result, its imperative to grow rapidly to capture market share.

2. In 2012, Reliance Industries extended promoter funding to the tune of Rs 2200 Cr in the form of debentures which were optionally fully convertible into equity and the option vested with Reliance Industries over 10 year period. This funding was extended to certain Raghav Behl owned companies to subscribe to the rights issue of Network 18 and TV18 which in turn were planning to use the rights issue proceeds to takover Ramoji Rao owned Eenadu TV.

Raghav Behl owned Network 18 is the holding company of assets such as web portals moneycontrol.com, homeshop18.com, firstpost.com as also channels such as CNBC TV18, CNBC Awaaz, CNN IBN, IBN Lokmat, History TV18 etc. On Thursday, RIL said it’s board approved funding of Rs 4,000 Cr (or roughly $730 million) to the company, IMT, through which the investment was made. Now, this is essentially because the 25% trigger, when breached, results in additional 25% open offer for minority shareholders. Now, RIL cumulative investment is to the tune of ~ Rs 35000 – 36000 Cr (translation of $ 5.7 bln) in the telecom business. RIL says,“The acquisition will differentiate Reliance’s 4G business by providing a unique amalgamation at the intersection of telecom, web and digital commerce via a suite of premier digital properties.

Forbes has this http://www.forbes.com/sites/meghabahree/2014/05/30/reliance-takes-over-network18-is-this-the-death-of-media-independence/ Mint has this http://www.livemint.com/Companies/Vpo4RrEprzzsFI7xGJw3OP/RIL-to-acquire-control-of-Network-18-spend-Rs4000-crore.html#nav=most_read

On the other hand corporate ownership of media is an extremely delicately issue. More often than not, it turns out into a propaganda machine.

Germans & Uruguayans, hot favourites for Brazil WC 2014

British sports data analysis firm Opta has analysed last season’s league data from top 5 European leagues (English, French, German, Italian and Spanish football leagues).

They have constructed a playing 11 through filtering by poring over exhaustive data of players across different positions.

Reuters has this http://in.reuters.com/article/2014/05/28/soccer-world-dream-team-idINKBN0E800K20140528 

‘Dream Team’ is as follows; 

Goalkeeper: Thibaut Courtois (Belgium)

Defenders: Philipp Lahm (Germany), Diego Godin (Uruguay), Giorgio Chiellini (Italy), Leighton Baines (England)

Midfielders: Arturo Vidal (Chile), Marco Reus (Germany), Yaya Toure (Ivory Coast)

Forwards: Luis Suarez (Uruguay), Lionel Messi (Argentina), Cristiano Ronaldo (Portugal)

Football extravaganza begins!

The most anticipated and watched sporting event – FIFA Football WC is just round the corner commencing from 12th June 2014 and to be held in the football crazy land of the samba boys, Brazil.

In all 32 teams (including the host) will participate in the football extravaganza. Brazil 2014 WC is going to be the costliest ever with an estimated cost of around $ 14 billion surpassing the $ 6 billion of Germany 2006 WC.

So, 8 groups of 4 teams each, will play the group stages. Top 2 teams from each group will qualify for the round of last 16. Winner of these rounds will enter the quarter finals followed by semi-finals and then the coveted finals on 13th July 2014.

Out of the 8 groups, Group D and Group G look the toughest.

Group D:

England: One of the most followed and watched football team (and the most hyped?) in the world with a galaxy of superstars who have made their name in leagues around the world. They have won the WC once. Names such Rooney, Gerrard, Lampard are the old warhorses of England but would also be carrying with them some painful memories of WC exits especially penalty shoot – outs.

Italy: The Azzurri team is the second most successful football team ever having won the WC 4 times is also one of the most defensively strong team

Uruguay: 2 times champions are a dangerous side on their own day and also have the in-form Luis Suarez with them.

Costa Rica: A dangerous side and the 3rd most successful side in the CONCACAF cup.

Group G:

Germany: 3 time world champions, have qualified for 17 / 19 world cups. They have some of the best talents in their team. Last WC in South Africa threw up names such as Mesut Ozil & Thomas Mueller for Germany. They would be leading from the front this time round.

Portugal: A talented bunch led by Cristiano Ronaldo.

United States of America: Although not won a single WC yet, they are still a dangerous side with players who have experience in playing for various leagues world wide

Ghana: They are one of the most successful African teams and have a good set of players

We will have a look at some exciting young talent that will be at display during the WC and some that missed the bus.

Young Players:

  1. Thibaut Courtois: Chelsea/Belgium

19 year old goalkeeper standing at 6’6” is currently on loan to Atletico Madrid from Chelsea. He has been one of the main reasons for their success. He is youngest keeper ever to represent Belgium and one player to look out for.

  1. Wilfried Zaha: Manchester United/England.

This young winger is one of the rising stars of international football. He was overlooked by Moyes and was sent on loan to Cardiff City where he proved his worth. He misses out

   3. Raphael Varane: Real Madrid/France

He is currently one of the best centre-back in world football who can also play as holding midfielder and one to watch out for.

  1. Lucas Moura: PSG/Brazil

PSG paid a whopping Euro 45 million for this young midfielder who has not let them down. He is a creative midfielder who can also fit in at the no.10 role

  1. Stephan El Shaarawy: AC Milan/Italy

This young striker has blossomed at AC Milan this year after the departure of Ibrahimovic. He is expected to give Italy the cutting edge and form a deadly partnership with Mario Balotelli.

  1. Andre Schurrle: Chelsea/Germany

Schurrle can play both as winger and as a forward. He is another talent that has emerged from the German football factory and has given Chelsea a lot of important goals in this season.

  1. James Rodriguez: Monaco/Colombia

Monaco paid Euro 37 million for this wonder kid and has been a revelation for them. He is one to look out for this WC.

  1. Thiago Alcantara: Barcelona/Spain

He is considered to be of same class of Xavi and Iniesta and a perfect replacement for them. He is a very skilled player and people are waiting to watch him in action.

  1. Marco Verratti: PSG/Italy

This young defensive midfielder is highly rated player and many clubs around the globe are interested in signing him.

   10. Marco Rues: Borussia Dortmund/Germany

This creative midfielder is highly rated player and one to look out for.

   11. Eliaquim Mangala: Porto/France

Mangala is the most sort after centre-back in football circuit currently. He is a rock solid player at the back of France and gives them the stability they require.

India Votes – 2014 Lok Sabha – A Political Armageddon

Its been over a week now since Indian voters vented their anger against the ruling UPA dispensation for the economic mess that India finds itself in. A shellacking for the Congress was expected but the political armageddon that was in store for most political parties wasnt expected by even the most astute of observers. Well entrenched election arithmatic calculations, “stalwart” leaders losing, the coalition curse etc. were all consigned to the garbage bin. With the government being one with a thumping majority it can now put its head down and do some real work for the people of the country.  

This election threw many firsts.

  • First absolute majority government since 1984
  • First non – congress absolute majority government ever
  • First time that BSP has won 0 seats since its inception
  • First time that only the family members of both Congress & SP won seats in UP whereas others got blown away.
  • First time that an OBC will become India’s PM after Deve Gowda & (won by fortuituous means)
  • First time Congress failed to open account in 9 states (Delhi, Rajasthan, Gujarat, J&K, Odisha, Tamil Nadu, Uttarakhand, Himachal Pradesh and Goa)
  • First time that BJP’s low ~ 31% vote share (lowest % vote share, however the voter base has expanded) on an All India level resulted in more than 50% seats in Parliament.

UP & Bihar saw a rout for the champions of Mandal politics who might have thought that they are here to stay. With ~ 50% of UP population belonging to some backward community or the other, BJP sweep there means it managed to attract atleast some proportion of the “backward” votes. The election arithmatic which was so abused by these political parties came to a naught in UP & Bihar. It almost backfired. With India’s “first past the post” system of parliamentary democracy, BJP just had to win more votes than the number 2 placed party / candidate. With a mad dash for the backward/minority vote, the vote got divided amongst the “secular” parties. BSP vote share of 19% lead to 0 seats for it. This can be explained by a surge in BJP vote share by 25% to 42% in UP which just swept the others away. BJP’s potent weapons of development (the now famed gujarat model) which also had an element of “word of mouth” publicity by the migrant labourers, appeal among its traditional upper caste voters, appeal among the majority community voters. Thus, the counter – polarisation of votes which subsumed the caste appeal swept the opposition away.

In Bihar, an oversmart move by CM Nitish Kumar who himself had his eyes set on the PM chair of breaking away from the BJP backfired badly for him. He had thought he had the backward / minority votes pocketed along with a dash of development he had achieved. The fact remains that Bihar under Nitish has progressed. But relatively it stands no match to the development in Gujarat. An increasingly aspirational voters meant they wanted more. Modi’s backward credentials (full credit to him that he didnt flash the backward card till the time he was forced to by Priyanka Gandhi) meant that the backward voters were rooting for him. Minority voters deserted the JDU and flocked to RJD / Congress alliance as they seemed a more credible force to stop BJP. Also, after almost 15 years of allying with the BJP, Nitish talk of breaking away due to “non – acceptibility” of PM candidate Modi seemed hilarious.

UPA leaders after the defeat seem to be still in denial mode saying that they “failed to communicate” their achievements. Well what was there left to communicate? The scams? or the inability of the government to deliver results? I mean this is purely self defeating and actually it implies that they doubt the collective wisdom and intelligence of a large section of the voters in India.  

Meanwhile with just 48 hours to go before the new government assumes charge, its time to walk the talk. India awaits with great hope.

Time of upsets and end of dominance

In the last week we have seen many upsets in the field of sports and politics. It was a week where we saw the end of dominance of many teams across the two fields.

To start with sports we saw Atletico Madrid winning the La Liga after 18 years and thus ending the dominance of Real Madrid and Barcelona.

If we take a look at the winners list then we can see that from 1982-1983 seasons only 4 teams apart from Real Madrid and Barcelona have been able to win the La Liga. That means only 7/32 seasons have been won by teams apart from Real Madrid and Barcelona. This makes the magnitude of this victory very huge. The fact that Atletico Madrid has also qualified for Champions League final makes it even more special.

We also saw some unexpected results in EPL football. This year the always dominating Manchester United suffered their worst season and finished 7th in the league. This season was dominated by Manchester City who won the league and also saw Liverpool finish close 2nd which is their best performance after many years. So these results were also unexpected and ended the dominance of clubs like Manchester United and Chelsea.

We now move to politics. Last week was a very important week for Indian politics which saw major unexpected result there and end of an era of dominance of a major political party of India, Indian National congress.

In the Lok Sabha elections this year we saw BJP+ win 335/542 seats and come out as the majority party upsetting the Congress party alliance causing a major upset.

There is much learning that we got from these upsets. We get to learn the importance of team work and ethics which can overshadow the weakness of the team and individuals. We also learned the importance of great and motivational leadership in the face of Modi and Vincent Kompany and also the importance of guidance which Diego Simeone gave to Atletico and Modi and Amit Shah gave to BJP.

Upsets are always good to watch as even the underdogs should get a chance to win. But the victory becomes more meaningful if the winning team is able to live up to the winners tag.

Midnight Breakfast hopes that all the winners mentioned above live up to the expectations that comes along with winning.

India votes for a change – 2014 Lok Sabha

The excitement was palpable last night as India went to sleep. With elections results due today the BJP HQ was already getting ready to celebrate with reports of ~ 2500 kg of ladoos being prepared as also a giant sized lotus to be floated on the banks of the Ganges near Varanasi. Congress HQ on the other hand had already thrown in the towel with media reports of it removing posters of its leaders and strategies to ring fence Rahul Gandhi. But BJP had always flattered to deceive and were deceptively inept at actually winning. So could there be another twist to spoil the BJP party like last 2 times?

As counting began at about 8 am today morning BJP was quick to get off the blocks and started racing ahead. But unlike last time kept up with the half way as counting progressed across constituencies and states. By 10 am a NDA majority was a near certainty. By 11 am a BJP majority became a reality. By noon there was awe, shock and awe almost at the storming of the BJP to power. ‘Bulldozer’ Modi had achieved a clinical demolition of his opponents. BJP swept North, East, West & Central India with almost 50% votes in each of these states propelling them to 250+.The final tally is ~ BJP = 285 & BJP+ 335 whereas Congress sank to ~ 42 and Congress+  55.

With this thumping win, its time to seriously re-think the projection of one form of politics being good over the other. I mean who decides what good or bad? Right or wrong? It should be left to the people right, the collective wisdom of the people is supreme in a democracy like India. The projection of “right wing politics” as being evil and “left politics” being good. With people’s thumping mandate, the acceptability of “right wing” politics should no longer be questioned. What the historic mandate implies is that development is the sole agenda for youth. Hopes and aspirations of a young country wanting to break out from the cage of a negative and vicious nature of our politics. The mandate demolishes the myth that development agenda doesnt work in India’s electoral politics. It sets the bar higher for another political parties. It changes the narrative of constantly highlighting just one riots in India rather than all.

With this win comes the HUGE expectations of the people. Nothing less than a military like discipline would be required to tame the inflation monster still at large in India which really did Congress Party in in these elections. Re – invigorating the economy by stimulating corporate investments in the country would be required. 

Heres a look at reactions in the foreign media;





Change is here. A stable government is the best thing to have happened to India. 

SuperMan’mohan’ Signs out

BS has this http://www.business-standard.com/article/specials/manmohan-singh-leader-or-led-114050201407_1.html rather blunt analysis of MMS tenure. It pencils his rather meteoric rise from being a professor in Panjab University & later DSE in the 1960’s to an economic advisor in Ministry of Commerce then as a secretary in department of economic affairs followed by Deputy chairmanship of Plan panel in the ’70’s and later as RBI Guv in 1982 at 50 years of age. He became FM in PV Narsimha Rao government in early 1990’s and ofcourse topped it up with PM ship for 10 years starting 2004. Phew! That is some career, lesser mortals can only dream of it.

He comes across as this extremely hardworking individual, mild mannered and who is basically a decent man with non – confrontationist attitude who adept of executing orders. Not a leader per se who commands respect with a dominant personality or Clinton like charm.

On another level, it appears that he also happens to be the right person at the right time. The FM role came to him after another individual turned it down as also the PM ship which fell into his lap after Sonia G “sacrificed” it. The “reformist” tag stuck to him when infact the groundwork for the reforms seemed to have been drafted by others. He just rolled them out under the astute leadership of PM Narsimha Rao. Ofcourse, he was personally honest but tolerated dishonesty and corruption. Someone who is a survivor even at the cost of principles. 

Sonia G chose him in 2004 as she basically wanted a loyalist (like Rao) but also someone without a political base of his own (unlike Rao) as also someone who is a non – politician himself lest he outsmarts her (like Rao). Thus, of the two choices of Sonia G for PM, her choice of MMS was spot on. Narsimha Rao, MMS’s political mentor, proved too smart for her.

From a great start to his career as a technocrat the end was disastrous at best. UPA 1 saw economic growth for the country as a whole which pulled up a record number of people from poverty. But then ill advised profligate spending by an emboldened government of his on welfare schemes fuelled inflation which wrought havoc in the second part of his tenure. Also, UPA2 saw skeletons tumbling out as a result of numerous scams. It is ironic that a person who seemed and even now seems upright could have even tolerated leave aside allowing the theft of natural resources right under his nose. May be a highly overrated economist but an underrated politician he was.

 As they say what goes up has to come down. May be he could have signed out on a high after he led UPA to a record victory in 2009 Lok Sabha seeing the tightrope he had to walk in the first tenure. But then Indians are not known to sign out on a high and tend to stick around past the sell – by date.