Case Questions - SFM

Privatization of Delhi and Mumbai Airports

1. Did Government of India (GoI) conduct the airport privatization process in a reliable and transparent manner?

Ans. For me government of india conduct the airport privatization process in a fair,reliable and transparent manner and did not receive any criticism from stakeholders: The bidding process for the selection of concessionaires for the the Delhi and Mumbai airports was a controversial one. the bid process was steadily moving towards the award of the Delhi airport in favour of a particular bidder, thanks to the flawed evaluation by the international consultants of the Airport Authority of India.
one of the constituents of the inter-ministerial forum laid bare the infirmities of the evaluation scores. This led to much debate within the government and extensive coverage by the media. Once in the public domain, the entire process became open and transparent. It led to a fair outcome that not only withstood the scrutiny of the Supreme Court but was also free of any criticism in the media or Parliament.

Main points for me in this case Government allowed private sector bidding in Sep-03 and it was only by Sep-05 that we could ask the private sector to bid. Following groups bid: For both airports:

Essel-TAV ,GMR-Fraport ,DS Construction-Munich ,Sterlite-MacquarieADP Reliance-ASA For the Mumbai Airport only

GVK-ACSA

By Nov-05, the finalisation was almost done with GMR-Fraport and Reliance-ASA as the only qualifying group. However a member from Planning Commission who was part of the bidding process criticized this bidding process. The member showed that the award was not done fairly and rankings and ratings of bidders suffered from conflict of interest and were imperfectly done. The bidding process was done again and a new expert team which reevaluated the bids which found only GMR-Fraport qualifying for both the airports. Hence GMR-Fraport was given the option of choosing one. It chose Delhi. Mumbai airport was awarded to GVK-ACSA as it offered the highest financial bid for the Mumbai airport.

2. If you are acting as a consultant to GoI, what would be your suggestions to GoI for further privatization process? ANS:- SUGGESTIONS TO GOVT. OF INDIA
1.

GOVT. SHOULD FOCUS ONE OF THE MAJOR ASPECT THAT IS :- Transparency is important and desired: This case also demonstrates the role of transparency and open debate. Initially, the deal was as alleged as an open and shut award in favour of one of the bidders, and it was about to be concluded on those lines. In an open democracy like India, where virtually all big deals involving the private sector are routinely criticised and questioned, this would seem to be a singular achievement, made possible by a fair and transparent approach.

2. Hiring world class international counsultant is no guarantee or a fair and professional outcome. It was the manner in which criteria and processes were designed by the consultants for evaluation. So govt should focus on the design which was proposed by the consultants. 3. There should be proper bid structure should be followed which should include following a) Parameters

b) Weightages and scoring c) Obligations of biddrs during the bid process d) Transparency e) There should be some implications for those who had not bid 4 . Norms during the bidding process need to be specified and compiled with adherences to deadlines ,and deciding modifications in the evaluation by EC.

Taming the elephant - turnaround of Mercedes-Benz India Limited 1. What are the key drivers which have forced MBIL to consider restructuring?

Ans. Key drivers which forced MBIL to consider restructuring are as follows

Traditionally disposable income was perceived as the one critical factor that drove passanger car demand. However, household income is no longer the single most important factor in determining the demand for vehicle other critical factors are the mobility needs of people and the availability of cheap finance.

One of the key driver is competition from substitutes. Another one is threat of new entrants Next is Rivalary between established compitors = Bargaining power of buyers and last Bargaining power of suppliers.

2. If you are Juergen Ziegler, CEO, MBIL, what actions you would take to restructure the company and take it out of restructuring?

Submitted by: JITENDRA SINGH MBA 4TH SEM