It’s the Economy, Stupid

India’s inflation hit 11.05% as of Friday 20th June.

It is a massive jolt to the ruling UPA Coalition - seemingly uncontrollable march towards double digit inflation. The Bombay Sensex lost over 500 points on Friday (3.42%). Interest rates are bound to rise in the coming weeks, making home purchases, durables, and cars that much more expensive. Is the India story coming unstuck ?

When I mentioned to a friend about the potential drop in India’s consumption and GDP growth rates, he was not receptive - the hype still has a solid impact on professionals all around, especially those in the retail and banking/finance sectors. Many people still believe that India would move on, despite the credit squeeze and the inflation. While that may be (or is) true, the reality is staring starkly at our faces. Auto, banking, and realty stocks are down badly over the past week or so. Thousands of crores of market cap has disappeared in the past few days. Foreign funds have repatriated huge amounts back from the stock market. Petrol and diesel price rises of last week have contributed to a rise in inflation.

The government is caught between the fire and the frying pan. In fact, the petrol price increase was not as much as was expected, Subsidies still amount to a big part of the price. If only the government removes all subsidies and let the market dictate the price, the pump prices would rise by atleast another 25%, leading to an inflation of, may be 20% overall. There is no point in keeping money in fixed deposits which pay 9% interest when the inflation is crossing 11%. Stock market investment, while still the overall best, is currently not for the faint-hearted. The Senex is indeed marching towards 14,000 - a full 33% below the peak of 21,xxx attained earlier this year.

The fate of any government would hang in balance, and the current Central Government is no exception, despite the astute financial management expertise available between the Prime Minister, Dr Manmohan Singh, and the Finance Minister, Mr P Chidambaram. The elections are due next year, but there is another huge challenge in front of this government, a non-economic one at the outset.

And, that is the Nuclear Pact with the IAEA and the U.S. While a bad economy could unseat a government, bad politics could be worse. The UPA Coalition has the Communist Party as a member (though not in the government per se), and they are stopping the government from signing of the nuclear agreement. Now, this agreement is very critical for India. The dependency on imported oil is 70% for India, and that can only get worse. With oil prices pushing USD 150, and predicted to hit USD 200 over the next 6 to 24 months (according to a recent Goldman Sachs report), things could not get worse for India. Nuclear power is the only option open, though the gestation periods are longer as compared to fossil fuel power plants. India needs nuclear fuel, and that is available from the Nuclear Suppliers Group (NSG) only if India signs IAEA Safeguards Agreement. The U.S. is ready, for the past 6 months, but India is not ready. This could be puzzling for most external observers. Who would say no to the free-market supply of nuclear fuel which could unshackle India from the heavy dependence on oil and coal ?

But, that is the way it is in a fractious coalition, influenced strongly by Communists, though their votes are few in the parliament. They have threatened to vote against their own government if it proceeds with the signing of the nuclear pact. And, the Prime Minister wants to resign if the pact does not see the light of the day. He is not a true politician, so he is able to see the very long-term benefits to India of such a close cooperation agreement with the U.S. and the nuclear watchdog (the IAEA). But India is also full of skeptics, who like American consumer goods but not the heavy stuff like these agreements and pacts which they do not understand in toto.

Well, that is democracy. The commoner is not affected by all this politics. He wants to increase his consumption, and fulfil his desires in a growing, affluent economy. But if the economic growth drops significantly due to the credit impact and interest rates, et al, then he would not hesitate to seek a change in the government. Looks like the day is approaching. Can we blame the commoner and his use of democratic tools at his disposal ?

Have a wonderful weekend,

Cheers,

Vijay Srinivasan
21 June 2008
Mumbai

Fettuccine with Coriander Pesto & Dinner Economics

I was searching for a topic to write about this weekend, really seriously. I went along with the family to the new Oberoi Mall at Goregaon East, and regretted the same midway in the mad traffic. Anyway, we went, got impressed with the amazing mall design, did not do any shopping, and returned after an hour of window-shopping. The crowd was massive (Saturday evening), and well-heeled to be shopping in such a highly branded mall - even more sophisticated than the Inorbit Mall at Malad. We promised to ourselves that we would return for some real serious shopping on a weekday evening (I don’t think I can make it though), combined with dinner when the Food Court eventually opens.

On the way back, we debated the wisdom of going to the famed Inorbit Mall Food Court or just go home. Two things weighed in favour of going home ! One is again the maddening crowd at the Food Court after 8 PM, and that too, on a Saturday evening. The other is the listlessness you get once you have been in traffic for nearly an hour - as the crow flies, the Oberoi Mall is just about 4 Kms from my home, but it took exactly 55 minutes at 6:10 PM to reach the Mall, we only reached after 7 PM ! Amazing, isn’t it ? That’s Mumbai, for most of you who are all back at home in Singapore, or elsewhere (even Delhi, or Chennai). It does take will power to stay on Mumbai roads and not discuss distances or the poor condition of the roads. I am now an expert in averting my eyes off the road (ofcourse I am not driving) !

Well, we got back home eventually, and my wife decided to make Pasta for dinner. It took only about 30 minutes, but we had some great pasta - Fettuccine with Green Coriander Pesto. No cheese this time, but it was absolutely delicious. She also made some red pasta - with Sun-dried Tomato Pesto + Fettuccine ! Again, delicious. However, I liked the Green Pesto sauce the most. This is not the first time, ofcourse, but everytime it is a great meal. And, just look at the economic dynamics. It costs just about Rs 590 to make pasta for 2 adults + 2 kids, with cheese it would come to about Rs 740 only. The same quality of pasta is difficult to get at places like Little Italy, or Inorbit Mall Food Court. And, even if one were to get the same quality for argument sake, the cost would be atleast twice !

So, it was a wonderful dinner, and with some good wine it was even better than what it used to be. Just an amazing and simple dinner. It was really fulfilling !

The economics in India for such stuff, while appealing, does not do well in comparison with developed countries. A bottle of Green Coriander Pesto of 190 Grams from Sacla Italia costs Rs 240 at store shelves in Mumbai, while similar stuff costs only SGD 6 in Singapore (appx Rs 170), the Indian price being 41% more than Singapore price ! The Fettuccine Pasta from Baronia of 500 Grams weight costs Rs 145 in Mumbai store shelves, while the cost in Singapore for similar stuff would be around Rs 114 or thereabouts - 27% more than Singapore price. Ofcourse, the prices at Walmart or Sam’s Club would be lower than the Singapore prices ! Cheese is very expensive in India, my estimate is that cheese costs atleast 60% more in Mumbai than it does in Singapore for comparable quality. Well, another interesting fact about shopping in India for imported stuff like these is the expiry dates of the products - please watch out carefully. Oftentimes, you would find that expiry dates are not more than 3 to 6 months from the “Imported Date”, the manufacturing date is not specified anywhere on the “extra” label that the importers affix on the packing.

Nothing much can be done about such things, except to make the pasta and enjoy it without undue worries. It’s the best you can get anywhere !

Have a wonderful weekend,

Cheers

Vijay Srinivasan
17th May 2008
Mumbai

Mall Mania

There are too many malls coming up even in a land-scarce place like Mumbai. While one is happy to note the quality of construction, the interior design, the aesthetics, et al of these malls, which are comparable with the West, or the East, one tends to wonder whether these malls would be able to run profitably.

While a section of the population, youngsters earning good salaries, and well-to-do parents, do find the mall culture convenient to spend time and shop, the majority of the population can only do window-shopping. The prices of goods and food at the food court are higher than what you would get outside, but that is what you have to shell out for the ambience, I guess. And, international brands are setting up their own exclusive shops all around - one wonders how they would break even. While there is preference for global brands, I believe it is at the very high end only. Even if one does want to show off, it would be a one-time investment on a handbag or perfume, which would roughly cost twice as much as Indian brands.

Amongst all the malls coming up, and the tenant strategy, I am most impressed with Pantaloons. These stores belong to the Future Group, and they seem to have taken a decision to promote only Indian or House Brands. I find some of their house brands pretty good and well priced compared to the international ones. The others, who are also doing well, are Shoppers’ Stop and Lifestyle. I have seen these stores improve their layouts over the past two years, and introduce new products and variants constantly - Shoppers Stop, for example, provides seamless access to CrossRoads, the book shop. And, traffic flows from one to the other.

The best time to avoid the crowds is to go early - say 12 noon on a weekend. The crowd size would be roughly 25% of the usual evening crowds, and one need not wait endlessly to get a seat at the food court. Also, shopping can be done leisurely, with the right level of attention from the attendants that a shopper deserves - sometimes, more than necessary. The moment you approach something like a tie-rack, a guy magically appears near you, trying to offer some unwanted advice. But, these are still early days for retailing in India. I am sure the attendants would go through appropriate training to decipher the real shoppers, the window-gazers, and the ones who are knowledgeable.

Coming back to the impressive mall styles, here are some pics from Mega Mall in Goregaon suburb of Mumbai (the suburbian malls seem to be better designed than the city malls) :

DSC08420.JPG, originally uploaded by vjsri99.

Mega Mall - a view

DSC08419.JPG, originally uploaded by vjsri99.

Another view

DSC08426.JPG, originally uploaded by vjsri99.

Food Court

DSC08428.JPG, originally uploaded by vjsri99.

The inevitable Mac

Improving designs and interiors in every new mall coming up - The Oberoi Mall, which just opened looks even more expansive and state-of-the-art.

Have a great weekend,

Cheers,

Vijay Srinivasan
3rd May 2008
Mumbai

The Jaipur Letdown

I was in Jaipur for the past couple of days.

I got some shopping time yesterday afternoon and a couple of colleagues drove down to the heart of the city (the “Johari” area). We passed the famed “Hawa Mahal”, and what a huge let down it was. Most postcards of Jaipur proudly depict this Mahal and the other forts and palaces of Rajasthan state, the capital city of which is Jaipur. I was shocked to see the dilapidated status of the Hawa Mahal and its surroundings. It appeared that there was some construction going on - may be to keep the structure standing, I guess.

In any other country, such structures dating back to several centuries would be cordoned off from the public vandals and declared a heritage site. Not so in India. Unless the world (”UNESCO”) recognizes such sites, it appears that the government could not be persuaded to spend money on maintenance and preservation of cultural heritage. There were tens of shops under and around the structure, with hundreds of people thronging the area, with tonnes of fuel emissions from passing vehicles - hardly the way to maintain a heritage structure of which our ancestors were proud of.

I was told that there are some beautiful, well-maintained forts in Jaipur - but I did not have the time. I promised to myself that I would go back to Jaipur with my family for a vacation, simply to record a visit to the Pink City, if not anything else. When we drove around, it was difficult to miss the red stone buildings, and fortress like palatial entrances right in the middle of roads through which today’s horrible traffic passes through.

I had imagined Jaipur would be a nice, quaint city with beautiful architectural wonders all around. It was not to be - it was like any other overcrowded second-tier Indian city, with potholes (actually craters) in the middle of most roads, and pedestrians taking up exactly 40% of both sides of the road along with cars looking for the non-existent parking space.

Shopping was not bad - in fact, it was better than I had expected. I bought some silver jewellery which were decently priced. There were lots of foreigners shopping for all kinds of what they thought were inexpensive things. The textile shops were doing booming business, given the penchant for bright, multi-coloured costumes amongst Indian women especially from Rajasthan. Small specialized shops co-exist with bigger showrooms and there was enough traffic and business for both categories. I was surprised when the shop where I bought the jewellery refused to give any discounts, despite the fact that almost all in my troupe bought jewellery. They said “Sorry, Fixed Price” ! It was difficult to believe that, but given the shortage of time and patience, we proceeded with our respective purchases anyway !!

It was very warm - may be around 35 degrees Celsius in Jaipur, warmer than it was in Delhi the day before. It was a bit humid as well. We had some refreshments and proceeded towards airport road, when the policeman at an intersection stopped our car. He levied a fine since I was not wearing my seatbelt in the front seat of the car. He refused to negotiate, and insisted on following the rule book. I was happy to note that things are different and better in some parts of the country as compared to Mumbai, where the standard take happens in front of our eyes at every intersection.

The airport road ride was good and free of “craters” and the road was also quite wide on both sides. Better buildings were sighted all the way through, including some colleges and hospitals which also looked like palaces. Even the airport design appeared to be following the palace instincts of local architects.

It was an interesting experience - I was always thinking that I should visit Rajasthan someday. I was all right with the “dusty” experience that I got on the streets (most of Rajasthan is a vast desert), but not able to stomach the fact that the government of the day could be indifferent to the huge architectural assets of a famous kingdom at the edge of India. The state draws a lot of foreigners, no doubt, but the focus should have been on enhancing their experience by proper maintenance of the legacy, not let the assets waste away in disrepair.

Have a wonderful weekend, folks.

Cheers

Vijay Srinivasan
12 August 2007
Mumbai

Milan Mall Experience

I am not talking about Milan in Italy here.

The family decided to go for a bit of shopping at a new mall in suburban Mumbai - the spanking new Milan Mall close to the Milan Subway crossing at Santacruz - West. I was not sure actually whether it was West or East of the railway line, as the driver crossed the subway, and before that did some loop arounds. Anyway, this mall was located on a very busy and narrow road which ought to have been a one-way street. We somehow managed to reach the mall entrance after quite a bit of manoeuvering. I was surprised to note that the mall had underground parking.

It was a nice and cute mall, compact and not over-crowded. Compared to the Inorbit mall at Malad, the Milan Mall was something like not even one-sixth the size. They have a nice Pantaloon shop where I shopped for some “Bare” essentials. New shops were getting opened all around including the American Dollar Shop……

There was not much of a choice for food though. The only place was the Bombay Blue multi-cuisine restaurant. We went in and ordered some food. The quality was not bad - we had Chicken Biriyani, Pizza and Kebabs. Overall it was a decent experience with very good ambience. However, when we finished and wanted to settle the bill, there was no power in the mall ! The restaurant was not able to process the credit card even though power came back in about a minute or so. They said that the “machine” was not working anyway, power or no power.

I did not have cash, and my wife just had gone up to the “Big Bazaar” on the top floor to buy something. I asked the guy at the restaurant how come he did not inform about this while ordering food. What about people who run around cashless, depending entirely on a debit or credit card ? He smiled and appeared to be embarrassed, and obviously had no answer of any sort.

Luckily, my wife had some extra cash and we managed to get out. But I cut the tip amount to 50% of what I usually give to the waiters. The infrastructural hassles are well known, but these are not even managed or communicated to customers appropriately. What a pity ! When are these folks going to learn to be customer-savvy and operationally ready for any kind of exigencies ?

Overall anyway I am recommending a visit to this mall, though I would suggest you get out before lunch or dining hours. There are many more options in Santacruz, Khar and Bandra anyway for a fabulous lunch or dinner. The key thing about this mall is the freshness of the place and total lack of crowds - they haven’t discovered this mall yet !

Have a nice weekend folks !

Best Regards

Vijay Srinivasan
12 May 2007
Mumbai

Croma Retail

Today I visited Croma Retail Electronics Store at Malad, a newly opened electronics and consumer durables supermart, not far from where I live. Take a look at the website of the store at “Croma Retail”

It was indeed a pleasurable shopping experience, similar or better than what one would encounter in Singapore. A large shopping area with ample space to move around and lots of displays was a very pleasant change from the usually crowded shopping prevalent in India.

I was surprised to find even a Skype VOIP Phone of CISCO ! The latest products were available. a 2 GB memory stick was going for Rs 999 (less than USD 23). Many types of computer and audio/video electronics accessories were available. A home theatre demo room has been set up with advanced amplifiers and speakers. It really felt good that such things are now becoming commonplace in India.

I found many, many shoppers ! And, they seemed to be buying !! So, what I thought was a hyped-up economic growth scenario is for real. Indians are consuming and not window shopping any longer. I was aware of this even when I lived in Singapore till last year, as newspapers used to report that Indians from India were one of the top three tourist spenders in Singapore. But, now this is happening in India itself, where almost all products seem to be available. I even found Lacie mobile hard disks ! Alas, no Mac peripherals or software yet, as the market is tiny still.

Consumer durables such as refrigerators and washing machines were also on display. I even saw home security systems. Demos were going on……

I just bought a few DVDs and CDs and left. But I intend to go back soon and check out more stuff. One good thing is that the attendants were helpful and knowledgeable. They were also well dressed in uniforms ! The only issue was that the security people were all over the place, constantly keeping a watch on the shoppers though each and every item was electronically tagged. This was unnecessary, as it gave a poor feeling when the security guard follows you as you move from one aisle to the next. There is just no need for the same.

Overall, I strongly recommend that you make a visit soon.

Cheers,

Vijay Srinivasan
10 March 2007
Mumbai