Volume - 2 | Issue - 14 | December, 2012 & January, 2013 QUANTITATIVE EASING - A BLESSING OR A CURSE? 01 AMUL- THE TASTE OF BRAND BUILDING & BRAND AWARENESS 04 STATE OF AIRLINERS IN INDIA 10 FINANCIAL SERVICES ROUNDTABLE 2012 06 FINANCIAL SERVICES ROUNDTABLE 2012
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Excellent initiative to have such industry focused discussion.”Debasish MishraSenior Director, Deloitte
The secret of joy in work is contained in one word —
excellence. To know how to do something well is to enjoy it
Nothing other than these befitting words of Pearl Buck sway
us as we bring forth the 13th issue of SPM Mirror. SPM Mirror
is energy and infrastructure focused monthly newsletter,
reflecting the dynamics of these sectors. It has connected
the faculty, guest lecturers, alumni and students and features
their views religiously. We have consistently tried to enhance
our industry academia interface by circulating this newsletter
to all the companies that are a part of this rapidly mounting
and dynamic energy and infrastructure sector. We definitely
aim to raise our standard of success; we hope that this
newsletter drives this process of partaking of knowledge and
becomes a name to reckon with.
Let us all celebrate what we want to see more of! Wish you a
very jubilant and joyous new year from the Editorial team and
all of us at School of Petroleum Management.
From The Editorial Board
Mirror offers reflection of what the reality is. But as we know
the mirror image is inverted horizontally, thereby offering
a new perspective of view. SPM Mirror reflects the other
perspective of my students. While their grade sheets will
speak volumes for the academic acumen, the SPM Mirror
will introduce the other side of their personality: the co-
curricular perspective – wherein students stretch themselves
beyond curricular requirements. At School of Petroleum
Management (SPM), under the aegis of Pandit Deendayal
Petroleum University (PDPU), the endeavor is to inculcate
a thirst for knowledge and self development. Writing and
critiquing articles towards analytical inquiry into the latest
in the field of Energy and Infrastructure offers them the
most contemporary knowledge in the domain – so essential
for a budding manager. Faculty and Students at SPM are
ever eager to bridge the gap between theory and practice.
They achieve this through constant interaction with industry
professionals on various platforms, may it be conclaves,
symposia, internships, field projects, guest and visiting
lectures, or consultancy projects. And creating a space for
themselves for the world to recognize and applaud when
winning at competitive events.
I am sure this edition of SPM Mirror shall satisfy the high
standard earlier editions have made you expect from SPM
students and faculty. Wishing all stakeholders of SPM the
best of Season Greetings!
Director - SPMDr. Hemant C. TrivediProf. P K Banik
Director - General
It gives me immense pleasure to see overall enthusiasm in
SPM students to bring out another issue of SPM Newsletter.
SPM mirror reflects all activities carried out in the School of
Petroleum Management. Today SPM has taken many bold
steps in diversification engulfing energy and infrastructure
sectors of the industry. It would be impossible to showcase
our endeavor to all stakeholders without publishing a
newsletter. I am sure that this newsletter would provide
creative explorations to all and would disseminate
information regarding students activities and achievements
to the industry and the community at large. I wish all the
good luck to the editorial team.
“Very well organized event and wonderful hospitality. My
best wishes to the students for a wonderful career ahead”.
T. T. Ram Mohan
Professor, IIM Ahmedabad & Eminent Columnist
“The students are very engaging and interesting. They very
well organized the event and enthusiastically participated as
well”.
Dr. Bandi Ram Prasad
President-MCX-SX, Mumbai
SPM MIRROR
01
An InsIghTIn times of a turbulent economy, various countries of the world try to
apply their conventional tools, monetary and non-monetary, to regain a
state of sound economy. Majority of the world economies try to reduce
their short term interest rates of market lending from commercial banks
to bolster the borrowing and spending from households and businesses.
However, a point arrives when the economy faces a phenomenon which
is widely known as liquidity trap (short term nominal interest rate is zero).
There exists no possibility for the central bank of a country to further
reduce short term nominal interest rates from that point onwards. Such a
constrained scenario shoves the bank to employ various unconventional
monetary policies to alleviate the deflationary economy.
One such unconventional monetary tool used by the central banks
(especially when interest rates are close to zero) to stimulate the economy
is known as Quantitative Easing (or more popularly QE) by the economists.
The Central Bank implements QE by first creating new money and then
using this new money to purchase assets from a wide range of available
sources - government bonds, equities, corporate bonds or other assets
from banks. With this process, the Central Bank ensures that it injects
a pre-determined quantity of money in the economy. This results in an
increase in price of assets and fall in the yield, or interest rates on those
assets making the borrowing and spending more attractive and hence
resulting in improved economy.It also aims at increasing the excessive
reserves of the banks for higher lending and consequent spending by the
households and businesses.
Low and stable inflation is crucial to a thriving and prosperous economy. QE can also be used by the central bank to ensure that inflation
does not fall below or rise above the optimum target (Generally it is considered to be 2%).
Quantitative easing - a Blessing or a Curse?
TUSHAr SHAH, PGP12
Figure.1 depicts Quantitative Easing
NURTURING INTELLECTUAL CAPITAL
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SPM MIRROR
03
PRos AnD Cons of QEQE is often referred to as a last resort of the central bank to restore the disrupted economy. But before answering the question in focus,
whether QE is a blessing or a curse, an insightful evaluation of the topic at hand is of prime significance and to best achieve the purpose,
let’s enlist various merits and demerits of QE.
Is QuAnTITATIvE EAsIng A CuRsE oR A BlEssIng?Post evaluation of various nuances involved in implementation of QE and considering the pros and cons, QE could prove to be a curse
for an economy if not implemented aggressively and tactfully. The major QE failures witnessed by the world were the series of QE drives
undertaken by Bank of Japan (BoJ) from 1996 to 2006. The prime reason of failure then was that the local banks held the reserve surplus
generated by BoJ with themselves rather than offering it to households and businesses for lending and consequently for spending and
increasing the employment rate. Also USA’s Federal reserves and UK’s Bank of England are not much confident about the success of their
QE program which they undertook post to late 2007 Global crisis.
A significant threat that underscores QE is a “stock bubble”. When Fed reserve recently announced its 3rd round of QE, almost all major
stocks started exhibiting the upward trend (Exhibit-01).
One of the prime financial websites explains it vividly as stated, “What is happening now is that stocks are appreciating, not because of
enhanced productivity or expanding markets, but simply because Central Banks are printing money. There could be a critical moment when
the markets collectively recognize that stocks (all stocks) are overpriced and the bubble will burst.” This will simply lead our economy to a
point from where recovery would still become difficult. Also at times, few central banks try to monetize the government’s deficits and cap
government’s borrowing rates which only lead to inflationary pressures and leaves detrimental scares on the countries’ economy.
a) Purchase of assets and its distributional effects
Purchase of assets has been advantageous mostly to banks and
other such financial institutions. It has helped them increase their
excess reserves and size of their balance sheets. Also, buying of
the quoted assets in surfeit increases their price. This unblocks
credit market as investors, who were otherwise shedding away,
start investing in appreciating assets. But the prime concern
underlying this activity is that in the past there have been instances
when banks did not encourage the lending to households and
businesses and hence retained the surplus with them. Also, this
current process of stimulating economy focuses well on financial
market of economy but fails to transform the other “spoilt for
cash” sectors like infrastructure, energy etc. Hence relying on
banks may not serve the purpose of stimulating economy if banks
fail to act as an active agent.
b) Inflation - “Is the central bank’s approach myopic?”
At prima facie, QE offers a short to medium control over inflation
rates, but a holistic perspective would starkly reveal the truth
behind the scenes. First, the central bank of the country relies on
banks and other financial institutions to lend money to businesses
and households and stir the economy and rise in inflation. This calls
for a responsible approach from banks, which is not guaranteed
though. Also, unless the central bank devises a diversified assets
purchase drives, long term assets bought by it from other banks
may not be equally competitive and profitable at the point of
maturity and hence dispensing them becomes a challenge for the
central bank which would leave the latter to incur loss. This loss
consequently would be transferred to tax-payers. Hence in the
long run, economy could suffer from hyper (or massive) inflation
if the amount of easing is over estimated.
c) Threats to conventional investment policies
QE tends to allay long-term bond yields, making other short term
investment plans more attractive for immediate spending and
investment. But in this process, QE reduces the return on long term
investments made by pension schemes. As a result, QE makes it
more expensive for employers to provide pensions and consequently
weakens the funding of schemes as their deficit increases.
d) Does QE lead to global economy fracture?
An unpredictable outcome of Fed’s QE3 declaration was a worldwide
opposition. US banks utilised the Fed reserves and treasury bailouts
received from QE2 to increase their own profits and to continue
paying high salaries and bonuses. What their lending inflated, were
the asset prices and not the commodity prices, neither output nor
employment rates. Cheap electronic US “keyboard credit”, then
started flying abroad as banks tried to earn their way out of debt
by financing arbitrage gambles, glutting currency markets while
depreciating US dollars. So the Fed’s move of saving banks from
negative equity resulted in flooding the global economy with a glut
of US dollar credit and destabilising global financial system.
e) unwinding Policy - Exit strategy from QE
Economists generally quote QE as a process and not an event.
There always exists an underlying pressure on the central bank to
exit from QE by selling back the riskier assets and narrowing down
its balance sheet. But this process is not as simple as it appears.
There are chances that the central bank may end up pilling bonds
worth trillions of rupees and find it difficult to unload them off
because selling bonds worth such astronomical figures to financial
institutions will only hamper its very own objective of restoring
sound economy.
A BETTER QErather than being myopic, one needs to consider the long term outcomes of QE, both positive and negative, and then validate it as a
helpful resort for the economy.
After learning lessons from historical instances and considering advance economy dynamics, following are the prime recommendations,
1. There is little evidence that QE, in its current form, is helping small and medium size businesses to expand and create more jobs.
On the other hand it is certainly helping to enrich (or diplomatically capitalize) the major financial institutions. Banks have also been
observed arguing that there are no borrowers (by which they mean borrowers at the going interest rates). To overcome this blockage,
the central bank should set up a National Investment Bank which they would capitalize and mandate to spend some fixed crores of
rupees a year on investment projects at interest rates low enough to fulfill the investment mandate. Candidates for such investments
would be infrastructure projects such as high speed rail, innovative water supply systems for rural India etc. which promise direct
growth in employment rates.
2. It is of utmost importance for the central bank to undertake diversified investment portfolio rather than focusing on government
bonds and securities because if it loses money on its particular sector focused asset purchases, then that loss would have to be made
good by taxpayers either with higher future taxation or by the central bank by creating more money and risking higher future inflation.
3. Also, before undertaking QE, an important question to be asked by the central bank is, “How much is enough?”, because going too
far with creating and spending money may devalue the currency. Inflation or even hyperinflation would then be the result.
On the basis of various facts and figures, lessons taught from both successful and unsuccessful QE programs and dynamics of advanced
economics, it gives me an impression that if QE lacks rigor and aggression in its implementation, it may become a potential curse for any
economy. To make QE a lasting blessing, it is very important to incorporate a customized QE i.e. encompassing all sectors while disbursing
new money into the economy.
SPM MIRROR
05
NURTURING INTELLECTUAL CAPITAL
04
Every time I happen to come across the commercial of Amulwhile zipping through TV channels, I inevitably
watch the whole ad and only then move on. Yes, I am talking about our same old advertisement that goes
“Merogaamkathaparey…..”
In the depths of sheer childhood innocence, this advertisement was
like any random commercial ad trying to portray its association with
rural India, along with educating people about how it makes the
supply of milk possible. Later, this ad disappeared from the vista
of television for a long time. It was few months ago that it made
a reoccurrence, in a new version; with its essence untouched.
Swarming with goose bumps for a few moments, I was speechless
at what it just conveyed in mere 60 succinct seconds. It had startled
me with a presentation which was not only marketing its umbrella
brand but was also paving way for engendering brand awareness
among masses. It has caught everyone’s attention like never before
and is an austere favourite!
Such an ad, apart from marketing itself, leaves a lasting impression
on the viewer and plays a key role in brand awareness. Without
ascribing any public figure to endorse it by shelling out millions,
this ad is captivating in itself. Its appeal lies in its simplicity. Nothing
beats the acumen with which this ad is conceived. The intricacies
associated herein are worth noticing. They have portrayed
the women of rural India, who on account of their economic
independence that started with the Amul co-operative movement
have modernized.This couldn’t have been shown in a better way
than picture them as competent enough to use modern gadgets
like computers and the neoteric smart phones. The clarity of the
objective behind their campaigning is conspicuous. Amulheretofore
is already an established brand. Hence, it is correctly focusing
on brand awareness along with inherent marketing. To sustain
and thrive in competitive markets, brand awareness becomes
imperative. They are driving up the image of their brand.
One of the best ways of branding in a local market is to create a
vision that people of that place carry in their mind and this is exactly
what has been communicated in the ad. It has carved an illustration
which shows Amul’s perception about modern rural India with its
set of empowered women who have an impact on people across
the country. It also depicts the different segments of customers they
amul- the taste of Brand Building & Brand awareness
KrUTIKA PArMAr, PGP 12
reach and how they touch their lives. Thus, an additional feature
that is intricately woven which may be minor but worth noticing is
that the ad’s focus and appeal is on individuals, not the mass. Also
the quintessential ‘Indianness’ of the campaign allows it to connect
really well with the people. The piece of music is actually on the
lines of folk songs sungacross states of India and this paves the way
for an effective print.
Furthermore, the ad shows its stakeholders benefiting from it. It
pays to build up on customers’ needs, aspirations and attitude into
your communication; like they show the need for nutrition and
taste of kids and highly active people as fulfilled by their products.
The lyric is full of vibrancy and positivity. It depicts that with the
advent of the brand, happiness has spread in the lives of people
associated with it. It sketches how Amul wishes to see its consumer
after using its product, undoubtedly happy! It is the customer’s
psychology that after he gets a good vibe from the company, he
makes the purchase.
The inherent feature of an ad is to make people notice the brand in
such a way that when they think about a particular product, one of
the companies that come immediately to their mind is yours. There
is adequate clarity in the message implied by the ad. The lyrics are
prevailing enough to gain attention and are appropriately woven to
deliver the intended meaning. It ends with a testimonial about its
impact on the lives of people associated with the brand. The bigger
picture may be a compilation of many propositions as shown, but
their combined effect comes out as a single clear image i.e. in the
resulted panorama nothing goes haywire. And because of this
simplicity with which the various aspects have been consolidated,
the image as perceived by the people is exactly the same as the
brand wants itself to be perceived. This goes a long way in creating
brand awareness.
An additional facet of the ad is its authenticity. People tend to see
a commercial only when they believe in its credibility, otherwise it’s
common that they switch the channel. And of course, along with
all this, let’s not miss the indispensable part: The Taste of India! A
catchy slogan is important to leave an impression on the targeted
audience’s mind.
Well, I now comprehensively understand the reason behind its captivating power. Companies create brand awareness to stick out from
its competitors lest they want to fade away very quickly. One of the most important essentials of a good advertising campaign is creating
brand awareness. The goal is to implant the company’s name and logo into the subconscious mind of the publicsso that they remember
you and all that you offer. Brand awareness is created and maintained through consistency. Like using the same logo, the same font, and
the same concept with necessary updates to get assimilated into the period is favoured. This is exactly how the new variant of *Manthan is.
The bottom line of an advertising campaign is to implant your name out there.
In 2011, Amul was named the Most Trusted brand in the Food and Beverages sector in The Brand Trust report published by Trust research
Advisory on 18th January, 2011. Amongst India’s top 20 brands: Amul stands at No. 1.
Amul- Truly the Toast of India!P.S: GCMMF also ran vigorous ad campaigns of its flagship brand through bill-boards which, with its smart and witty topical nature
has become a social critique that entertains as well as educates. Amul’s longest running advertisement campaign has also found a
place in the Guinness Book of World records (only the American ‘Smokey Bear’ campaign is older, but commercial aspects are not
associated with it for its propaganda is to protect forest ecology by preventing forest fires).
International Round Table onIndia-Singapore Economic Relations
India-Europe Co-operation Event on Smart Grid
Some of the major international universities that attended ICAI 2013 were Seneca College, Canada, University of Adelaide, University of Toronto, University of Alberta, National University of Singapore and University of Houston.
campuS buZZ
“India is the youngest country in the world with 65% of
its population under 35 years of age. By 2020, the average
Indian will be 28 or 29. This is a tremendous opportunity
(for India) to supply skilled manpower to the world”
NURTURING INTELLECTUAL CAPITAL
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SPM MIRROR
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At SPM, even cultural events are considered at par with academics. reprise, the cultural event is one such indication. reprise 2012 was held
on 14th December 2012 at SPM college campus. Various events like singing, dancing, skit, photography, documentary making adorned
reprise. Students showcased immense talent in both group and solo performances. What made it interesting were the surfacing hidden
talents and great enthusiasm. Singing, dancing and acting performances kept the audience in rapt attention. The incredible skit with a
social message stole the show at reprise. Photography & documentary making depicted the creativity of students in the confines of an
interesting theme. Though loaded with regular classes and assignments students took active part in the event to make it a grand success
and keep the culture alive. Event was the result of hard efforts of student cultural committee with other members working in tandem. Such
events helped to bring out team building efforts and grow together in a team beyond classroom exercises.
The Alumni meet of SPM, ZEPHYr – 2012, was held on 15th
December, 2012. The event is organized every year to bring the
SPM family together, including the alumni, current students,
faculties and other staff, at a common platform to interact with
each other. The event lasted entire day with different activities
scheduled throughout the day. The event began with a vigorous 3
KM energy run in the morning at 6:30 AM. The run was attended
by alumni, students and faculty member with equal verve. After the
lunch, the campus came alive with colorful faces, thanks to theme-
based face painting competition, adjudged by alumni. The game of
housie was equally fun for the students. The formal meet started at
seven in the evening and was attended by various faculty members,
Director SPM, students and Alumni. Prof. Subrat Sahu, chairperson
of the function appreciated the presence of alumni in his address
and even discussed the proposal of an Alumni association. The
director addressed the gathering welcoming the alumni persuading
them to interact with students on a regular basis. Few of the Alumni
recounted the wonderful time spent at the campus while sharing
their industry experience. Students entertained the audience
with remarkable dancing and singing performances. With this,
the reverend Director presented each alumnus a memento as a
token of appreciation. The formal meet culminated with the dinner
followed by a spectacular DJ held at the SPM campus. It added
a fun quotient at the event. We hope the alumni attending the
function had great fun and will visit us again.
With heads held high, motivating ambience and several feathers in
the cap, SPM celebrated its 6th foundation anniversary. As the lamp
of knowledge was enlightened, the Director and faculty addressed
the students. The intense energy in the environment multiplied
the pride of those present. Winning students gladly accepted their
certificates amid resounding applause. The event culminated with
everybody relishing the success with delicious cake. From creating
a pool of extremely talented alumnus to grooming and orienting
batch towards energy and infrastructure sector, our college has
certainly made its presence felt in the industry.
Reprise Zephyr
Aadarshila
SCHOOL OF PETROLEUM MANAGEMENTMBA (ENERGY & INFRASTRUCTURE)
Off Koba-Gandhinagar Highway, raisan, Gandhinagar- 380027, Gujarat, India.
Editorial Team• Aayushi Tulsiyan • Devang Chandratre • Krutika K
Samarth Mewada • Sushobhit Maity
Disclaimer: The views expressed herein are solely those of the authors. The organization or the newsletter does not in any way endorse or disown them. The views cannot be duplicated or used without the permission of the Editorial Team.