mibytes september 2011
TRANSCRIPT
The US dollar is now expected
to depreciate, leading to econo-
mist‟s concern but unlike dur-
ing „new times‟ this would
have a beneficial impact in
INDIA, because the „new nor-
mal‟ would see the dollar fall-
ing & decrease international
commodity prices. In normal
times, the impact would just be
the opposite. But the „new nor-
mal‟ is such that the downgrade
would lead to interest rate hikes
in the US and would slow down
the investment cycle, leading to
a fall in demand for commodi-
ties including crude oil. Lower
international commodity prices
would benefit INDIA, since the
inflation bugbear stomping
around the economic landscape
has been feeding on what has
come to be known as „import
inflation‟. Cheaper crude oil
and commodity price would
also help bring down INDIA‟s
current account deficit.
The final question is, will the
shadow of AMERICAN slow
down affect INDIA and will it
be useful and lucrative?
Cont.. on page 4
BERNANKE said Economy
had slowed down but did not
offer any hints of additional
stimulus. US economy came to
a virtual halt in the first half of
the year, with consumer
spending's at the lowest level in
the two years being a clear sign
of low consumer interest be-
cause of the fear of slow down.
The world‟s largest economy
grew at just 0.4% between
January and June; being half
pace of the growth in austerity
in Britain. The situation is
murky and dense but people are
confident. It may be a helping
hand for some countries. In a
statement, WORLD BANK
president Robert Zollick said
„the world economy is stepping
into a new danger zone where
PRANAB MUKHERJEE fi-
nance minister is positive about
INDIAN growth and has confi-
dence that the effect of
AMERICAN slow down will
not at all hinder the success
story of INDIA.
The US down grade was not
valid but overdue because of
highly leveraged customers ,
over borrowed government and
a political system that is not
working. And the comment
from Washington reflect the
pain of superpower in transition
to a normal country.
United states of America has
lost sovereign standard &poor
rating AAA to AA+, first time
after 1917 ,much unprecedent-
ed for US and world. The drop
in the rating by one notch was
already predicted earlier by a
telegraph. Every one is talking
about the long and short term
effect of this rating, while
S&P downgrades America's
credit rating because of the
national debt crisis. Credit
rating agencies (CRAS) deter-
mine the value of what a debtor
owes. They evaluate how likely
debtors are willing to make
timely payments on outstand-
ing debt. This rating helps to
lenders determine how good is
the investment. Now one of the
biggest question after the
downgrade is a question on
investment.
“A slowdown in the growth of
US and other major economics
is likely to be temporary”,
said by director of Interna-
tional Monetary Fund in an
interview with Reuters. But the
US government already
stormed out from the rating and
after a hiccup, OBAMA gov-
ernment has started pondering
and striving to come out of it as
fast as possible and thus don‟t
want any other hurdle in US
growth rate. Earlier Federal
Reserve chairman BEN
Shadow of America
Inside this issue:
Corporate Speaks 2
News Bits 3
Export Acts 3
Sovereign Wealth Fund 3
About Us 4
September 2011
Volume 1, Issue 4 MI`Bytes
BUSINESS LETTER
Mr.MUKESH REHAL,
GENERAL MANAGER,
YUSEN GLOBAL LOGISTICS
Q1: What are the opportunity areas in freight forwarding and logistics sector?
K: As a company head my responsibilities include- looking over
Operations, Sales, Human Resource, Administration, and IT.
Yusen Logistics started its operations in India on 21 March 2007 with 6 employees. After 4 years, we now have offices at 7 locations in India out of which 4 are of branch status and 3 are sales office. The Company was estab-
lished with a capital of 9cr initially and today we have 80-85cr turnover .
The credit for the expansion of company in terms of infrastructure and turnover goes to our President Penta Miyazaki. Looking at the growth of the company one can easily figure out how much opportunity this sector pro-
vides.
Q2: What are the challenges faced by Yusen Logistics?
K: The major road block for the company has been infrastructure. We started with an office at only one location
and we had agents at the rest of the places who were not professionals. Thus we could not get proper exposure as
an MNC but gradually with the increase in infrastructure and number of offices over the years we have tried to
overcome this problem. There were few skilled staff member; the working of CHA (custom house agent) whom we hired to do our business
were not of standards and there was lack of professionalism in the industry . Being a Japanese company like do
our work with expertise and in a very professional manner and thus we had to face many obstacles in the growth process.
Duty structure problem was an issue with our parent company, to whom we had to explain every detail. Language
barrier was one of the major issues which made convincing the customers a very difficult task. Yet we overcame all the barriers and faced the challenges and today the company is one of the top Japanese logis-
tics company.
Q3: Logistics in India has been highly unorganised, how do you envision Yusen in this sector?
K: As I already said we started with an office at only one location and there were agents at other places who were
not professionals .However we had different expectations from them and we had to make them understand this. We started developing our vendors by giving them specifications as to what Yusen wanted exactly. Gradually they
started working according to our specifications and that’s how we have developed ourselves along with our ven-
dors. In next 5 years logistics will see tremendous growth. By merger of NYK with Yusen, will lead to more expo-sure in market. We expect the present business to rise and turnover to be around 150-200cr.
Q4: What is 5th party logistics (5PL) and what is its relevance in present period? Explain the complexities?
K: Actually there are 7PL’s this is a situation when we use customer infrastructure to give him services. Yusen is
not in 7PL as it needs a trade licence. We are mainly focusing in customer need and working in 3pl sphere.
Q5: What can be a simple solution to complex problems you face at this position?
K: I learnt that operations cannot be flawless and thus it is useless to expect expertise work all the time. Every time
there are issues one should aim at minimising the problems as it is very difficult to remove them and working on customer service 24x7 gives us the edge over others.
Q6: Relevant components like auto parts and significant nations like Japan form most of your business,
What are the issues you find in present situation?
K: The Company has got compliments that it is one of the giants in handling 80% auto parts, though we have
realised now that we need to diversify and that is what we are doing. We have started diversifying in pharmaceuti-cals, electrical, textiles and agro products.
Q7: What is your view on emerging issues in logistics?
K: The main issues are 5PL and 7PL as explained earlier and definitely the sector will grow in near future.
Q8: What has been the experience from a fresher to top level executive in MNC?
K: It was very hard way to the top, being marketing student I started my career and thought to carry out my path
in same field. However things didn't went as planned and I ended in freight forwarding company. One thing I
learned that no one will come and teach you things you have to make a learning sphere for yourself. Initially things were hard for industry as the licence raj was in active mode, after opening of markets in 1991 there was sea
change in how things worked, that helped me to get global exposure. After spending over two decades in the indus-
try with some good brands, I finally settled here at Yusen Logistics . I was the first employee of the company in India, since then we have 300 odd employees on our payroll, in just 4 years, after merger with NYK logistics.
Q9: Any inputs/advise you want to give to MIB students
K: Being management students you have to be patient in your daily working and go deeper inside a problem rather
than sticking on the threshold of it. This learning will help you to grow and widen your perspective. You should
have strong basics which will help build your confidence and groom your personality.
CORPORATE SPEAK
“7PL IS THE FUTURE
OF LOGISTICS”
MI`Bytes Page 2
“Based on current trends, in
INDIA, $500 billion is esti-
mated to be spent on logistics
infrastructure”
“By creating enablers to
maximize the efficient use of
the network, which includes
developing 15 to 20 logistics
parks”
FOREIGN TRADE DEVELOPMENT & REGULATION ACT, 1922:
Came into existence replacing Export/Import Control Act, 1947. All laws made under the former Act shall
continue to be in force if those are consistent with he provisions of the new act. The authority of this act is
such that the office of the Director General, Foreign Trade, brings out the export import policy and its pro-
cedures. It determines a whether product is banned, subject to restrictions or licencing agreements, whether
canalised and if there is any floor price regulation for the product.
FOREIGN EXCHANGE MANAGEMENT ACT, 1999:
Section 7 of FEMA provides that for all cash exports the foreign exchange proceeds from exports must be
brought back to India within 180 days. The exporter cannot enter into trade with overseas importer, to
whom he extends credit for more than 180 days except if the trade is made on deferred payments or con-
signment basis. The foreign exchange manual which is issued by Reserve Bank Of India under FERA
provides that an exporter normally cannot pay more than 12.5% to his agent abroad for the services provid-
ed by him until permission is granted by RBI.
PRESHIPMENT, INSPECTION & QUALITY CONTROL ACT, 1963:
This Act provides that items which are subjected to this Act cannot be exported unless a designated agency
certifies the quality of the product is as per the standards laid down. It is obligatory on the part of an ex-
porter to secure this certificate from the concerned agencies.
CUSTOMS ACT:
The department is vested with the task of carrying out physical as well as documentary check on all goods
crossing the Indian Customs Frontier. All export consignments are checked by customs authorities at port
or airport with a view to confirm the goods being shipped are those mentioned in the documents and that no
under/over invoicing is involved.
INTERNATIONAL COMMERCIAL PRACTICES:
Two terms or documents have been prepared by the International Chamber of Commerce, Paris, which are
widely used in international business, these are:
1) Uniform Customs and Practice for Documentary Credits {UCP}, 2007.
2) INCO Terms, 2010.
UCP is the document used by banks in negotiation of EXIM documents. INCO Terms define various trade
terms like FOB, C&F, CIF etc., and codify the respective rights and obligations of two parties.
Ibrahim Badar, MIB 1st year
controlled fund is willing to
take investments in oil are often
high-risk-and-high-return bets.
The other problem is the speed
of decision making. Govern-
ment-owned oil companies like
ONGC and BPCL already face
red-tape and delays in getting
clearance, often resulting in the
opportunity being lost.
Sahil Bhat
SWF is a state-owned invest-
ment fund which consists of
financial assets such as stocks,
bonds, property, precious met-
als or other financial instru-
ments. Government use SWF
to invest globally. Creating a
sovereign wealth fund (SWF)
will allow India‟s forex re-
serves to be used for invest-
ment in oil assets. There are
about 37 major sovereign funds
worldwide — about two-thirds
of this money comes from oil
and gas revenue. Chinese com-
panies spent about $32 billion
last year buying oil, coal and
metal assets abroad, while
ONGC invested $2.1 billion to
buy Imperial Energy. In INDIA
one of the concerns is how
much risk a government-
“Combined global assets
under SWF has over $4
trillion in investments”
Sovereign Wealth fund
Acts To Be Kept In Mind During Export/Import Contract
Volume 1, Issue 4 Page 3
ABOUT US
MI`bytes was started by students en devour to give themselves a
platform to share their analysis and report on business. Produced
by an editorial team known for its quality, innovation. Also we
acknowledge the contributions of executives who run corporate
houses By this we also integrate industry with MIB.
Cont...from page 1
Some says the crisis and down
turn in the US economy and
turmoil in the Euro zone won‟t
have any significant impact on
the INDIAN economy. The
effect would be felt mostly in
the form of FII. The IT sector
has good exposure to the US
economy so some slow down
can be witnessed in this sector.
But our economy and market
size still have the potential to
attract the foreign investors for
a positive result. Foreign
Investment Flow may dry up to
some extend on the positive
side, as the international com-
modity market cools down
(because of slack demand),
particularly when energy prices
come down. INDIA may be at
ease and interest rate may come
down.
The INDIAN export apex or-
ganization has expressed an
alarm over the down grading of
US government credit rating
from the top level to AA+;
Export of garment, handicraft,
leather, gems and jewelry and
IT are likely to be the most
affected according to the feder-
ation of INDIAN export. Indian
rupee is likely to appreciate
against the US dollar, hamper-
ing INDIA‟S tremendous
growth that started a year ago.
It is certainly not good for IN-
DIAN exporters and higher
taxation rate may have an im-
pact on the consumption of
INDIAN goods in the US and
down grading will lead to fur-
ther appreciation of rupee
against dollar. However the
current scenario is temporary
with a number of hurdles that
can convert the smooth ride
into a bumpy ride.
Mohammad Furquan
MIB 1st year
American Downgrade
Phone: 9891984210, 9871858982
E-mail: [email protected],
CMS, MIB
EDITOR-IN-CHIEF:
Ass. Prof. SAYED WAJID ALI
STUDENT EDITORS:
SOOBIAN AHMED
TULIKA SAIKIA
NAMITA DHAMANI
SAHIL BHAT
INTERVIEW BY:
NAMITA DHAMANI
IBRAHIM BADAR
SAHIL BHAT