Rethinking Retail

When it takes a foreign newspaper to highlight an Indian issue, that’s a clear indication that things are not going well. This time around it was the WSJ that reported on the Indian retail revolution is not happening as expected. I’ll admit when I first came to India 3 years back, I thought the retail revolution was gonna be hugh. I believe my quote from back then was…

If you have any concerns whether there really is a retail revolution occuring in India, I suggest you checkout Big Bazaar.

Ouch…so what happened? I think Indian consumers will be Indian no matter where they live, be it India or America. If you take a look at the average Indian living in the US, they are not going into Gucci or Bloomingdale’s to shop they are value shoppers, looking for the best deals. Some of the retail build up has been around so called luxury brands in the Tier 1 metros, which I believe is a HUGH mistake. If you can afford to blow USD 2000 on a hand bag, why not go somewhere like HK or Dubai and shop in style and also turn it into a vacation.

However, talking about Tier 1 markets are sexy and investors love to hear about it. You start talking about cities like Shujalpur in Madhya Pradesh and people kinda scratch their heads. But it’s cities like Shujalpur where ALL the retail action should be taking place.

The best quote from the article came from Thomas Varghese of the Aditya Birla retail unit:

The Indian consumer is a damn tough customer.

Ain’t that the truth!

Telecom Daze

The past week was filled with iPhone related news in the Indian press as the launch neared.  The actual launch was a joke, the phone was stupidly priced at USD 824 for the 16GB iPhone 3G. 3G the biggest features was missing, why? Because India does not have 3G running on it’s network, and to me that’s the bigger story. For all the talk about the “mobile revolution” it’s pathetic to think India has no 3G due to political reasons. For quite some time The Department of Telecommunications (DoT) and Telecom Regulatory Authority of India (TRAI) have been playing politics and delaying the auction for the licenses which some estimate could be as high as Rs. 40,000 CR (USD 10 billion).  That’s some serious coin and much needed since the gov’t just bailed out farmers and gave all gov’t employees a pay raise. 

The other telecom news is the recurring rumor of an IPO for the state owned telephone provider BSNL.

“The company is valued at well over $100 billion. We are looking at offloading up to 10% stake, subject to government approval,” BSNL finance director S K Saxena told reporters. When asked about the development, telecom minister A Raja said: “The government is considering it (an IPO). The department of telecom (DoT) will discuss the issue and take a final decision soon”. 

Yup, another USD 10 billion to the government if everything goes as planned. Personally, I would not invest in BSNL since it’s a typical state owned entity that is fast losing customers to the wireless companies. And more importantly BSNL does not service Bombay or Delhi – the two biggest metros in India and where product innovation occurs first. But, hey if they pull it off and retire some of the government debt I’m all for it.

Quiz time: What does BSNL stand for? Bharat Sanchar Nigam Limited (translation: lame customer service and pathetic product set).

Mumbai Murcielago Mystery

Spotting a Lamborghini LP640 in India is about as common as seeing Halley’s Comet. The LP640 is the big bull in the Lamborghini stable, in India the car goes for about Rs. 3 CR (about USD 750,000).  So imagine how I felt when I heard one of these beauties got into a major accident in Bombay sometime in May 2008.

The funny part is that NO ONE seems to know anything about it.  This is surprising in a country where the press likes to describe in excrutiating detail the movements of anybody with money. So I find it hard to believe that an LP640 gets demolished on a public road and everyone seems to be clueless on who owns the car or what really happened.

UPDATE: Aug 19, 2008 – The car was owned by Hitesh Bhagat, his grandfather Kalyanji brought matka gambling to Bombay in 1962 and was referred to as the “Matka King.” Matka is a form of gambling that he popularized. Hitesh’s father Suresh was killed last month in an apparent move to take over the family business, Hitesh is a suspect in the killing as is his mother…drama!