Tuesday, June 25, 2013

Disaster Management at Uttarakhand


Disaster Management at Uttarakhand

 The present Uttarakhand flood has again shown the failure of national disaster plan in the country. Tens of thousands of people have disappeared from the area. At the moment, people are only counting loss of tourists, the local inhabitants; nobody knows how many of them have died.
 In the last two weeks, I have been approached by several members of NGOs and agencies to donate fund, food and clothes. This happens every time there is a catastrophe. This again indicates Government system failure.
 At such a scale, individuals or unorganized sectors cannot help. Disaster management is always a hierarchy-based crisis management with a leader at the apex. For any catastrophe such as this, the leader invariably should be the government, who should direct everybody in the country to pool resources and ensure that they reach the needy people.
 Yesterday, a couple of media people asked me why we were not sending a team of medical doctors to Uttarakhand. My answer was very simple. Most of us have already offered and are still offering their services to the government, it is the duty of the government to take help from private sector and assign them work in areas where it is needed the most. Otherwise what will happen is that 90% of the benefits would be given to the people who need it the least because they are at the periphery of the disaster.
 The people who are in real need are all either in the centre of the disaster or placed faraway where the help will never reach by non-governmental efforts.
 People on the periphery may end up taking the same help again and again from different NGOs and may get food, clothes, some of which they would never be able to consume.
· DGHS should hold a meeting of presidents of all medical associations in the country and work out a strategy.
· Identify an area in Uttarakhand, which is safe and future disaster (flood) free, where base health camps can be created and medical help can be flown there.
· The job of government should be to lift patients to the base camps, where a coordinated team of medical services can look after the victims.

Monday, June 3, 2013

Infosys gains in price, surrenders its values - The Honest Truth by Ajit Dayal - EquityMaster

4th June 2013
The news broke that N. R. Narayana Murthy is back as Executive Chairman of Infosys. 

Infosys also announced that Rohan Murthy, the 30-year old son of the main co-founder, will be the Executive Assistant to the newly appointed Executive Chairman. 

Deflecting any fears that the Infosys founders were going back on a promise they made many years ago that none of their children would have a role in Infosys, Murthy reportedly told a press conference, "He has no leadership role." 

Infosys has long claimed it is "driven by values". 

Narayan Murthy has been crowned as the king of corporate governance. True, he did not ask for that crown but we, the people, gave it to him. And he chose to wear it. 

In a country that is sick and tired of dynastic rule in political parties (the Nehru clan in the Congress, the Pawar clan in NCP, the Karunanidhi clan in DMK) and in businesses (Ambani, Birla, and Tata to name a few), Infosys was a breath of fresh air. 

Infosys was an experiment of 4 individuals, not backed by any politician, not supported by any bribe, not built on any illegal transfer of a natural and national resource to a private party at a cheap price. 

In a world of the opaque and the corrupt, Infosys was a beacon: It stood for transparency and doing the right thing. What a joy to see something of such tremendous value created during our lifetimes! 

But the cracks had begun to appear in the past few years. As I noted in "The GHIT has hit the fan", each of the CEOs of Infosys have been founders. The last two CEO's (Kris Gopalakrishnan and S D Shibulal) may not have been as "qualified" as the first two (Narayana Murthy and Nandan Nilekani) were. This method of succession planning raised a red flag: was it some clear entitlement that every founder must be a CEO? That in a company with 140,000 employees, there was no one else to take over? Or did Infosys never reach out to hire the best and the brightest at senior management levels - because they knew (and the candidates guessed) that the tops lots were reserv ed for the founders. 

"Market cap" wins over "Torch bearer"? 

At one level, the decision of Narayana Murthy at the age of 66 years, to head back to the chair can be explained as pure wealth protection. His family owns own about 5% in Infosys. That is worth some Rs 7,000 crore today. The April announcement of lower visibility saw a 20% knock in the share price - a loss of some Rs 1,500 crore for the Murthy family in that one day. That is a lot of erosion of wealth for any family. 
Maybe, Murthy and Son are back in there to fix Infosys, to ensure that it is back on the growth trajectory, that it regains its standing as the darling IT stock of the markets. If the one-day price movement of June 3 is anything to go by, then the Murthy and Son act has worked: TCS was down -4% and Infosys was up +4%. Of course, there is still a long way to go to narrow the gap in performance of the businesses and the share price between TCS and Infosys. 

Seen from this angle, there is nothing wrong with the Murthy Version 2.0 evolution. But, if this is the case, then the press statement should honestly state this: "Infosys is in trouble, my family wealth is at stake, and my son and I have come to fix it. We will all benefit as shareholders. Meanwhile, I recognise that it violates many of the principles of Infosys, but think of us as benevolent dictators. We have suspended democracy and corporate governance for a while. The two wrongs (of having only founders as CEOs and now having us come in to fix the problems) will make a right." 

As the Father-Son duo move into action, the family wealth may be restored. 

But at what cost? 

Torch bearers have a responsibility, they can never stumble. 

They may not have asked to be the mantle of virtuousness but - when placed on such a pedestal - they should deny it. By accepting the crown - even if not asked - they carry with it a responsibility. 

Over the past few decades, Infosys - and Murthy in particular - have carried the torch. 

On June 1, the runner stumbled. 

Big time. 

Every political party will now justify nepotism. 

Every corporate chieftain will continue to rule their company in a "baap ka raaj hai" attitude. 

And their justification will be: "woh Murthy ne bhi kiya hai". 

The proponents of dynastic rule must be celebrating and laughing all the way to their family coffers. 

Maybe there was no other choice and Murthy was the only Great White Hope; maybe Rohan Murthy will be confined to being a stenographer, travel agent, and appointment scheduler for a bargain salary of Rs 1 per annum. 

Yes, Infosys may gain in share price and market cap. 

But this has cost India a tremendous loss of value. 

Comment: I have valued Ajit's interesting columns that are a breath of fresh air regarding corporate governance in India. Being a doctor I do not have any professional knowledge regarding the same, yet these help me understand something regarding finance from a perspective that I can align with. I hope that Infosys saga may become like the Apple one - wherein Steve Jobs coming back lead to a surge in Apple business and creation of better products, but somehow reading this article, I am not very sure this will happen. At least the elevation of the 'prodigal son' of Narayanmurthy Sir could have been avoided at this juncture, IMO.