How's my Luck now?

Reflections, views and descriptions during my stay at IIM Lucknow from July 2004 to March 2006

Location: India

Tuesday, November 22, 2005

Capital tour

I went to Delhi with a friend over the weekend to participate in a corporate finance contest at the Indian Institute of Foreign Trade (IIFT). I was visiting Delhi for only the second time. The first visit had been 15 years ago, and was for only a day. This time again, the visit was limited to 24 hours. Reaching Delhi was a breeze, as we took the Lucknow-Delhi Shatabdi Express, but the return journey had the usual problems - RAC ticket, late train, etc.

IIFT is located in the Qutab Institutional Area in south Delhi. This area houses several institutions: private business schools, the Lal Bahadur Shastri Sanskrit Vidyapeeth, the Indian Statistical Institute (Delhi centre), the offices of the Central Water Commission, etc. That distances are immense in Delhi became apparent from the time it took us to reach it from my friend's house in east Delhi. On the way, we passed through Rajpath and the India Gate, a road leading to Raj Ghat, AIIMS, IIT Delhi, etc. The journey was made pleasant by the wide roads that New Delhi enjoys, along with a reduction in pollution due to extensive use of CNG as a fuel.

The contest itself was a part of IIFT's management fest called Quo Vadis. The activity levels at the institute were pretty low and there seemed to be more informal events than more serious ones. Having reached there at around 11am in the morning, we were handed a copy of the National Steel Policy (released recently) and asked to analyse the prospects of a global steel company wanting to enter India using any external data on the industry that we wished to use. So most of the time till 4pm was spent looking up relevant facts and statistics on the steel industry and loosely devising an approach.

The contest had 6 finalist teams, and consisted of three written rounds of 15 minutes each, involving the three corporate finance decisions of Investment, Financing and Dividend. These were evaluated by a panel of two judges - executives from the steel industry (from SAIL and Nova Steel, respectively). The overall strategy was then to be presented to the judges. Although we couldn't see the presentations of the other teams, I think most of us harped on the same points (locating near the source of iron ore; breaking up the supply chain of steel and performing each part where it was cheapest; importance of transportation costs, etc.). In the end, we lost out mainly because of one glaring mistake that we made in calculating and presenting the debt-equity ratio we wished to keep for our venture. But overall, it was well-organized and the experience was good. One of the judges also clarified some important facts about the steel industry after the presentations (the segmentation of steel products into long products and flat products, the differences in their demand characteristics; how semi-finished steel production provides economies of scale, rather than finished steel production; that Mittal Steel and others were entering India not out of love for the country, but because of its rich iron ore reserves :) ).


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