TATA Motors move towards a flatter Organisational Structure

By Rahul Chugh

TATA Motors has decided to scrap designations and create a flatter organisation as it looks to establish an environment in which teamwork-inspired creativity can flourish. The company told employees in a circular that the move will create a “mindset free of designations and hierarchy”.

Designations such as general manager, senior general manager, deputy general manager, vice-president and senior vice-president are among those that will be consigned to the scrapheap.  All managers with a team reporting to them will simply have the job title of ‘head,’ followed by the function or department after their names. Employees who are individual contributors, are largely at the front end and do not have any team member reporting to them will use just the function or department after their name.

People can now focus on work instead of their designations, Gajendra S Chandel, chief human resources officer at Tata Motors said. The move will enable the company to move away from routine promotions that an employee gets purely by virtue of time spent in harness.

Tata Motors hired Accenture to devise a strategy to prepare the company to face competition. Scania, Bharat Benz and Volvo are leaner and meaner in comparison. Market leader Tata Motors has been facing aggressive competition in the commercial vehicle space from these companies.

Though flatter organisational structure improves the coordination and speed of communication between employees, it may make employee retention difficult. Lack of future career opportunity and a lack of recognition is a major reason because of which workers leave their jobs. With no designation, there are fewer roles that enable employees to familiarise themselves with management responsibilities. It makes it much harder for people to see a clear path for their progress up the corporate ladder.

Removing the designations may not necessarily be the right thing to do. Indians generally place a lot of emphasis on hierarchy and designation, but how the company is going to balance the aspiration of its young workforce versus the need for a flatter organisation given the premium that Indians lay on social hierarchy needs to be seen.

Flipkart set to enter FinTech Industry

By Shruti Singla

Flipkart is planning to enter FinTech business sector by hiring employees from Silicon Valley. The idea is to target smaller cities and towns starting from middle India and subsequently expanding to rest of the country. The business will aim at providing affordable credit to smaller players who find it difficult to raise credit through offline channels. It will provide various financial products including insurance and pension products besides credit.

The company has an advantage of having access to large financial and customer data. They can therefore build proprietary credit scoring models and expand their reach to the new markets.

The company is planning to hire more tech experts and develop a more tech driven workforce. However it is going to be a risky venture for the company in the country like India where people are not yet comfortable in doing business transactions online and where there is limited internet connectivity in every part of country.

According to a report, around 24 FinTech startups have raised venture funding since the beginning of this year across various domains like online lending, financial advisory, wealth management and payment gateways. After the demonetization phase, many startups like Paytm etc. have successfully captured market and have been performing really well. It will be interesting to see how Flipkart is going to innovate in this field and develop its market.

Rising Sensex: Rise or Fall in Markets?

By Himani Gandhi

With Sensex been busy hitting new heights, expectations of rising markets increases. Is this true in the present scenario? Not completely! Since 16 May, when S&P BSE All-cap index peaked, nearly three-fourths of all stocks traded on BSE have fallen in value, and about half of all the stocks have fallen by over 5%. The only category of stocks that has risen during this period is the one with extremely high market capitalization. On the same note, flows from foreign portfolio investors have amounted to more than $850 million in past two weeks and mutual fund flows remain strong. The top category companies (leaving behind some outlines like ITC Ltd, Tata Consultancy Services Ltd, HDFC Bank Ltd and Hindustan Unilever Ltd) there is a decline of over 1% in the remaining. Most other large sectors such as energy, pharmaceuticals, metals and mining have also seen a correction. 

SBI may not need capital for One year post Rs 15,000 cr QIP

By Sanskriti Dadhich

After raising Rs 15,000 crore through the largest-ever equity issuance in the country, State Bank of India  will not seek any capital infusion from the government in the current fiscal.

The bank recently raised Rs 15,000 crore through qualified institutional placement (QIP). It issued around 52.21 crore new shares at a price of Rs 287.25. Bank will be focusing on listing its life insurance arm. According to Arundhati Bhattacharya  the bank is planning on listing the life insurance subsidiary so there will be some more capital and they will get through non-core divestments. It may also consider some stake sale in its non-core assets including CCIL, NSE and UTI MF.

SBI's QIP was over-subscribed and demand exceeded Rs 27,000 crore. There was a huge demand from DIIs, FIIs, sovereign wealth funds and many investors who have never investedin a public sector institution earlier. The issue received an overall FII demand in excess of Rs 11,000 crore. Domestic institutional investors' (DIIs) demand was of Rs 8,500 crore. LIC had asked for 38 per cent share in the total QIP but only 77 per cent of its total demand was allotted. LIC's stake after this investment would be 10.4 per cent, up from 8.6 per cent.

QIP was aimed at supporting growth. The bank expects a credit growth of 10-12 per cent in the current fiscal and 14 per cent in fiscal 2018-19.