EMOTIONAL PRESSURE OF ROGUE TRADER..!!

I lost control: Accused UBS rogue trader Published: Tuesday, Oct 30, 2012, 21:13 IST  Agency: Reuters Former UBS trader Kweku Adoboli wept on Friday as he told a jury that his "off-book" trading was done for the benefit of the bank that meant everything to him. Addressing the court for the first time in his long-running trial in London, Adoboli said he had no reason to believe he was doing anything wrong since he was doing it to generate profits and colleagues knew about it. "UBS was my family and every single thing I did, every single bit of effort I put into that organisation, was for the benefit of the bank," said Adoboli, his voice breaking as he wept and thumped the witness box with his hand. "That is everything I lived for ... To find yourself in Wandsworth Prison for nine months because all you did was worked so hard for this bank," he said through tears.The 32-year-old British-educated Ghanaian was arrested on September 15, 2011, and blamed for losses of $2.3 billion. He was in custody until he was granted bail in June 2012. He has pleaded not guilty to two counts of fraud and four of false accounting, covering the period between October 2008 and September 2011. The prosecution says Adoboli traded far in excess of his authorised risk limits, concealed his unhedged positions by booking fictitious hedges, and lied to the back office when asked questions about his accounts. Adoboli said he had developed an accounting mechanism he called his "umbrella" which allowed him to keep certain trades and the profits they generated "off-book".He said this "profit pool" served two purposes: to help offset mounting costs that were a drain on the desk's profits, and to give him and his desk colleagues confidence to trade in the knowledge that they had a "cash buffer" to fall back on should they make losses. Adoboli said he did not think this was dishonest or contrary to the bank's rules because it was aimed at making a profit, which was the purpose of his job. "Ultimately that's what everyone cares about," he said.  'Keep on doing it' He also said that when he explained his umbrella to his three fellow traders on the Exchange Traded Funds (ETFs) desk and to colleagues from other trading desks, nobody gave any sign that they disapproved. "The response I got from everyone else is 'OK, that's a way of doing it, that's an accounting practice, keep on doing it'," he told the court.Asked about a comment from fellow trader John Hughes that "your umbrella is going to get us fired", Adoboli said this was a joke. Adoboli described the ETFs desk as over-stretched and under-resourced. He referred to himself and Hughes, the only two traders on the desk initially, as "babies" and "kids" dealing with a "massive" $50 billion book. The courtroom was packed as Adoboli gave his evidence, wearing a dark suit and dark red tie. Most of the time he appeared confident, speaking loudly and clearly as he answered questions from his lawyer. But Adoboli cried on several occasions when friends and family were mentioned. The first was when his lawyer mentioned that his father had come from Ghana and been present in the courtroom throughout the trial, which started on September 10.Describing how hard he had worked during the financial crisis in 2008, when he said he had feared for the survival of UBS, Adoboli wept again as he recalled that he had missed his grandmother's funeral because of how committed he was to his job. The most dramatic moment in the first day of his evidence came just before the court adjourned for lunch, when Adoboli broke down as he tried to explain what his work had meant to him. "It's hard to find the words to describe the relationship I had with UBS," he said, launching into a passionate speech during which he sobbed, struggled to catch his breath and thumped the desk in front of him with his right hand. After a summer internship at UBS in 2002, when he was a student, Adoboli joined the bank as a graduate trainee in 2003.Throughout his evidence on Friday, he spoke of pride and a sense of belonging and of the respect and friendship he felt for many of his colleagues. The trial continues on Monday, when Adoboli will continue giving evidence.

QUANTUM JUMP-THE TABLETS....MORE NUMBERS TO COME

It’s raining tablets, ABHISHEK LAW As many as 90 vendors are competing for a pie of the growing tablet market.

Competition in India’s tablet PC market is boiling over. At prices beginning as low as Rs 4,000, Indian vendors seem to have moved on from the days of Akash to a time where the price-conscious Indian customers are spoilt for choice.

Currently, there are nearly 90 vendors with tablet PC offerings that include handset vendors Micromax, Karbonn and Intex who have extended their portfolio. Newer entrants include Pantel, WishTel, Zync Global and Teracom among others.

According to estimates by CyberMedia Research (CMR), till June this year, the number of such vendors increased by 50 per cent - to 90 from the 60 in the earlier part of 2012.

“The days of Akash are long gone in terms of products offered (at the low end segment),” says Faisal Kawoosa, lead analyst - telecoms at CMR.

These Indian vendors are already giving a tough fight to the big multinational tablet makers such as Samsung. If shipment volumes last quarter are considered, according to CMR, three Indian vendors – Micromax, Karbonn and HCL – feature amongst the top five (the other two being Apple and Samsung). Micromax ships nearly 60,000–70,000 units a month.

POPULARITY

Invariably, price war has been the biggest fallout of such a lop-sided competition - where Indian vendors compete just on volume instead of value.

According to CMR the average selling value of tablets in India, in the April to June quarter (2012), halved to nearly Rs 13,000 from Rs 26,000 in January to March period. Uptake of tablets has increased to 5.5 lakh – a 673 per cent jump over the year-ago period!

Pantel Technolgies, previously a design house, claims to sell nearly 70,000 units across its portfolio that ranges between Rs 4,000 to Rs 15,000. Of these 40,000 alone is in the low-end segment of Rs 4,000.

Similarly, Goa-headquartered Teracom Ltd - previously an optical fibre cable and customer premises equipment maker - claims to do monthly business of Rs 10-12 crore (roughly 20,000 to 30,000 units). Both Pantel and Teracom have partnered with Bharat Sanchar Nigam Ltd in a bid to target Tier 2 and 3 cities.

PRICING AND QUALITY

Numbers sound impressive. And market analysts maintain that aggressive pricing will see good off-take of low-end devices (priced below Rs 5,000) initially. However, things might be different in the long-run.

“In the short-run, aggressive pricing has its prospects. But one has to see what user feedback and concerns are in the long-run,” Kawoosa said.

Already issues of poor touch-screen and lack of service dog some Indian vendors.

“Unlike mobile phones, price is not a differentiator in tablets. One cannot compromise with touch screen quality or after-sales service. You need innovation too,” Kunal Bajaj, an independent telecom analyst maintains.

Incidentally, Micromax’s CEO, Deepak Mehrotra, too is apprehensive of price being a seminal factor.

According to him, days of sub-Rs 5,000 tablets being mass market movers are still far away. An ecosystem has to evolve before the benefits trickle down as economies of sale.

“I think there is still time before a sub-5000 becomes popular. People are price conscious but they are willing to stick to value for money offerings without compromising on quality,” he maintains. Micromax’s tablet range is priced between Rs 6,000 – 10,000.

The idea is to understand consumer requirements first and then have a product depending on the captive consumers, he adds.

PRODUCT PLACEMENT

Quite appropriately, the tablet market is now sub categorised into low-end (below Rs 5000), mid-end (Rs 5,000 to Rs 10,000), high-end (Rs 10,000 onwards) and super high-end (Apple and Samsung).

Products are being placed keeping in mind lower-end offerings for tier III and IV cities, 2G or dongle enabled offerings for rural areas, tie-ups with school and educational institutions with pre-loaded content, good camera quality and auto-focus for medical representatives and bankers, higher battery life, better sound and picture quality for movie viewing and so on.

Vendors are trying to have a tablet for every occasion. HCL Infosystems, for example, has launched a tablet aimed at education. Frost & Sullivan expects the Indian tablet market to 23.38 million units by 2017, with sales doubling every year starting 2011.

“I think there lies a huge opportunity which can be tapped. But a tablet should have its own consumer requirements. Sub-standard products will fall through,” Sashin Devsare, executive director, Karbonn Technologies says. Consolidation might happen in the sub-Rs 5000 brands as there are too many “me too” products.

MARKET UNCONVINCED

According to Sandip Biswas, director, Deloitte in India, most tablet purchases are impulsive decisions. Serious users will opt for the super high-end offerings that include an Apple or Samsung.

“A major chunk of tablet purchases are by non-serious users who seldom go beyond gaming. Just 5-10 per cent buyers do so because of the utility involved. It’s still early days for tablets in India,” Biswas adds.

With Microsoft being the pre-dominant operating system (OS) in Indian PCs and laptops, switching over to a new OS might be time consuming. The company’s decision to get into the tablet segment might also influence the market, he pointed out.

abhishek.l@thehindu.co.in

EURO DANAGER IS CREEPING.....

Sat, Oct 27, 2012 at 11:30

The immeasurable risk European banks may be hiding

There is growing concern among policymakers and analysts that the true extent of European banks' debt problems is being masked. There is growing concern among policymakers and analysts that the true extent of European banks' debt problems is being masked.

Sir Mervyn King, Governor of the Bank of England, became the most high-profile policymaker to date to warn of the dangers of banks putting off foreclosures in a speech Tuesday night.

His stern warning to UK banks that they need to drop the "pretense" that some of their bad debts will be repaid was coupled with the statement that they have "insufficient capital" to deal with losses which have remained undeclared.

Essentially, what seems to have happened is that banks across the euro zone have put off foreclosures on weak businesses - a process known as forbearance. This has been enabled by low interest rates across the region and rescue packages which have injected unprecedented amounts of liquidity into the banking system and helped keep struggling economies afloat.

The scale of forbearance is hinted at in relatively low rates of company insolvencies.

In the UK, despite the recession, insolvency rates are similar to 2002, when the economy grew by 1.6 percent, according to government figures.

Greece's problems have been well flagged - yet just five Greek companies were declared insolvent in 2011, the year it was forced to seek a bailout from international lenders, fewer than in 2007, when its economy was still growing.

This persists across the euro zone, with the weakest economies sometimes experiencing its lowest insolvency rates.

In 2011, the number of insolvencies per 10,000 companies was lowest in Greece, Spain, Italy and Portugal, according to calculations from Creditreform.

However, as Nigel Myer, director of credit strategy at Lloyds, pointed out, the extent of this is "effectively invisible" and "almost impossible to quantify." Decisions are made by individual banks and they do not have to declare them under accountancy rules.

Putting off foreclosure could be dangerous not only because it masks the true state of businesses, but because it could mean a faster rate of insolvencies if banks decide to change their policies in response to a worsening economy, with potential damage to employment figures and the broader economy - and to the banks themselves.

"To the extent that forbearance has taken place, a worsening economic environment in these countries could lead to a faster rate of deterioration in asset quality than might be inferred from reported numbers," Myer warned.

Of course, delaying the repayment of non-performing loans can be positive for the economy, particularly in the short-term.

"It has allowed companies to survive and people to be employed," as Myer pointed out. "It also very likely supports tax receipts and reduces the need for social security support."

Sir Mervyn's warning does not chime with other influential figures in the UK.

Andrew Bailey, a member of the Bank's Financial Policy Committee and head of prudential regulation at UK regulator the Financial Services Authority, thanked the banks for their actions earlier in October.

The European countries least likely to be affected by forbearance following worse-than-expected economic data are Switzerland, Austria and Denmark, according to Myer, who suggested spreads in Swiss banks and the recent rally in Danish spreads should be supported by worries about forbearance.

Written by Catherine Boyle, CNBC. Twitter: @cboylecnbc.

http://www.moneycontrol.com/news/world-news/the-immeasurable-risk-european-banks-may-be-hiding_773101.html

LAUGH TO LIVE LONGER.............

'Laugh until it hurts'

A hearty bout of laughter, reveals a new study, can be as painful and exhausting as a difficult workout. But it takes a little more than a few polite titters to produce the desired effect

Gretchen Reynolds / Oct 27, 2012, 00:10 IST Is laughter a kind of exercise? That offbeat question is at the heart of a new study of laughing and pain that emphasises how unexpectedly entwined our bodies and emotions can be. For the study, which was published this year in Proceedings of the Royal Society B, researchers at Oxford University recruited a large group of undergraduate men and women. They then set out to make their volunteers laugh. Most of us probably think of laughter, if we think of it at all, as a response to something funny — as, in effect, an emotion. But laughter is fundamentally a physical action. “Laughter involves the repeated, forceful exhalation of breath from the lungs,” says Robin Dunbar, a professor of evolutionary psychology at Oxford, who led the study. “The muscles of the diaphragm have to work very hard.” We’ve all heard the phrase “laugh until it hurts,” he points out. That pain isn’t metaphoric; prolonged laughing can be painful and exhausting. Rather like a difficult workout.   LAUGHTER IN INDIA The Laughter Club of Delhi has around 20 members who meet every morning in Azadpur Mukund Mehta, the founder of the Laughter Club of India (located in Ahmedabad), is a senior pathologist and believes, “For laughing, you do not need any training or costly equipment. It is the best exercise for all age groups.” Laughter therapy is divided into two parts — laughter pranayam, followed by a full-body workout Types of laughter exercises: Atta Hasya (full-hearted laughter) — when you laugh freely with your mouth open  Maun Hasya (silent laughter) — when you laugh without any sound with your mouth closed Horse laughter — loud snorts of laughter through the throat  Laughing in the right posture can exercise the neck, the waist, hips and ankles  Proponents believe laughter is the best form of exercise that includes all components of a complex workout — aerobic and muscular, and improves flexibility But does laughter elicit a physiological response similar to that of exercise and, if so, what might that reveal about the nature of exertion? To find out, Dunbar and his colleagues had their volunteers watch, both alone and as part of a group, a series of short videos that were either comic or dryly factual documentaries. * * * * * But first, the volunteers submitted to a test of their pain threshold, as determined by how long they could tolerate a tightening blood pressure cuff or a frozen cooling sleeve. The decision to introduce pain into this otherwise fun-loving study stems from one of the more well-established effects of strenuous exercise: that it causes the body to release endorphins, or natural opiates. Endorphins are known “to play a crucial role in the management of pain”, the study authors write, and, like other opiates, to induce a feeling of euphoric calm and well-being (they are believed to play a role in “runner’s high”). It’s difficult to study endorphin production directly, however, since much of the action takes place within the working brain and requires a lumbar puncture to monitor, Dunbar says. That is not a procedure volunteers willingly undergo, particularly in a study about laughing. Instead, he and his colleagues turned to pain thresholds, an indirect but generally accepted marker of endorphin production. If someone’s pain threshold rises, he or she is presumed to be awash in the natural analgesics. And in Dunbar’s experiments, pain thresholds did go up after people watched the funny videos, but not after they viewed the factual documentaries. The only difference between the two experiences was that in one, people laughed, a physical reaction that the scientists quantified with audio monitors. They could hear their volunteers belly-laughing. Their abdominal muscles were contracting. Their endorphin levels were increasing in response, and both their pain thresholds and their general sense of amiable enjoyment were on the rise. In other words, it was the physical act of laughing, the contracting of muscles and resulting biochemical reactions, that prompted, at least in part, the pleasure of watching the comedy. Or, as Dunbar and his colleagues write, “the sense of heightened affect in this context probably derives from the way laughter triggers endorphin uptake.” The physical act of laughing contributed to the emotional response of finding something to be funny. * * * * * Why the interplay of endorphins and laughing should be of interest to those of us who exercise may not be immediately obvious. But as Dunbar points out, what happens during one type of physical exertion probably happens in others. Laughter is an intensely infectious activity. In this study, people laughed more readily and lustily when they watched the comic videos as a group than when they watched them individually, and their pain thresholds, concomitantly, rose higher after group viewing. Something similar may happen when people exercise together, Dunbar says. In an experiment from 2009, he and his colleagues studied a group of elite Oxford rowers, asking them to work out either on isolated rowing machines, separated from one another in a gym, or on a machine that simulated full, synchronised crew rowing. In that case, the rowers were exerting themselves in synchrony, as a united group. After they exercised together, the rowers’ pain thresholds — and presumably their endorphin levels — were significantly higher than they had been at the start, but also higher than when they rowed alone. “We don’t know why synchrony has this effect, but it seems very strong,” Dunbar says. So if you typically run or bike alone, perhaps consider finding a partner. Your endorphin response might rise and, at least theoretically, render that unpleasant final hill a bit less daunting. Or if you prefer exercising alone, perhaps occasionally entertain yourself with a good joke. But don’t expect forced laughter to lend you an edge, Dunbar says. “Polite titters do not involve the repeated, uninhibited series of exhalations” that are needed to “drive the endorphin effect,” he says. With laughter, as with exercise, it seems, there really is no gain without some element of pain. http://www.businessstandard.com/india/news//laugh-until-it-hurts//490806/

Flirting can reap benefits for women!!!

Mon, Oct 22, 2012 at 06:29

Flirting can reap benefits for women: Study

New research from the Haas School of Business reveals that, as many have always suspected, flirting can pay off for women.

New research from the Haas School of Business reveals that, as many have always suspected, flirting can pay off for women.

Laura Kray, a professor in the Management of Organisations group at Haas at the University of California Berkeley, says that feminine charm is an effective tool in successful negotiations.

With colleagues Connson Locke of the London School of Economics and Alex Van Zant a PhD student at Haas, Prof Kray wanted to discover if women who flirt are more effective in negotiations than men who flirt.

In one experiment the academics asked 100 participants to imagine that they were selling a car worth USD 1,200 and then asked how much they would be prepared to accept for the sale of the car. The participants were then given one of two scenarios to read: in the first the fictitious female buyer is polite but serious in her negotiations. In the second scenario she is considerably warmer, touches the seller's arm, compliments them on their charm and asks, "What is your best price?"

As a result the academics discovered that male sellers who read the second scenario were more inclined to cut the car's price by USD 100. Female sellers who read this scenario remained unmoved.

"Women are uniquely confronted with a trade-off in terms of being perceived as strong versus warm. Using feminine charm in negotiations is a technique that combines both," says Prof Kay.

The study "Feminine charm: an experimental analysis of its costs and benefits in negotiations" says that female flirtation points to attractive qualities such as confidence, a trait which is considered essential for successful negotiations.

The study is published in the journal Personality and Social Psychology Bulletin.

Traditional wisdom states that the key roles of Chief Executive and Chairman should be separate and held by two individuals. But research from the Kelley School of Business at Indiana University suggests that the opposite may well be the case. The roles should be divided only if there is a performance problem the researchers suggest.

The researchers Matthew Semadeni an associate professor of strategy at Kelley and Ryan Krause, a PhD candidate in strategy at the school, have looked at the performance consequences of separating the roles of Chief Executive and Chairman.

They believe that there is no relationship between a company's performance and one individual holding both roles of chairman and chief executive. They add that if the roles are divided when the company is performing well it may cause a reversal of fortune, while if a company is performing poorly splitting the roles may lead to a turnaround, but it depends very much on the approach used.

"Companies shouldn't undertake a separation process because they think they should, or because other companies have, but instead take a studied approach that looks at current performance, determines how a change will affect overall performance - and then separate only if necessary," says Prof Semadeni.

The writers looked at 309 companies that separated the two roles between 2002 and 2006. These were classified into apprentice; when the Chief Executive/Chair relinquished the role of Chief Executive, creating a succession event, but remained chair; departure when the positions were filled by two individuals and demotion in which the chief executive retained that title and a new chair was appointed creating a change in governance.

Using stock returns and analyst ratings as a benchmark, the academics discovered that when a demotion strategy was applied and the two roles were separated the company experienced significantly larger performance reversals.

"Although the demotion strategy carries some risk, it is the most corrective option when used in cases of poor performance because it imposes independent oversight on the Chief Executive and provides the best opportunity to change course," says Mr Krause. "It is an unambiguous signal to the chief executive that the firm needs to be fixed and the Chief Executive's only job is to provide a solution."

The writers suggests that the other two strategies produce little change and can in some cases create more problems.

Mr Krause says that splitting the roles is not the right move for all companies. "Boards that do this under the wrong conditions can send their company off a cliff, so our caution to them, in the simplest terms, is 'If it ain't broke, don't fix it'."

The paper, Apprentice, Departure and Demotion: an examination of the three types of CEO-Board Chair Separation will be published in the Academy of Management Journal.

http://www.moneycontrol.com/news/features/flirting-can-reap-benefits-for-womenstudy_771545.html

Lessons from a entrepreneur

Don’t let your hunger for success die, uphold your values and never lose focus of the customer, says GS Bhalla, CEO & MD, Cocoberry.

20 OCT, 2012, 07.11AM IST, 

Lessons from a serial entrepreneur: Learn from mistakes, uphold values and never forget the customer

NAME: GS Bhalla 

CURRENT DESIGNATION: CEO & MD, Cocoberry 

COMPANIES FOUNDED: Horizon KPO, Cocoberry 

ONE THING I'D DO DIFFERENTLY IF I WERE TO START MY COMPANY NOW: I would raise a lot more capital 

THE MOST EXCITING SPACE TO BE IN: Health and wellness, and online 
My first startup was a trading company in 1996, which grew fairly successfully till about 2000, when I started my KPO business. Thanks to my habit of venturing into uncharted territories, I have started four businesses so far and each has had its unique set of challenges and learnings. 
For instance, with my KPO business, for the first 16 months we did not sign a single account and finally I had to sell my car to pay the salaries of my employees. And then, suddenly, we signed our first account, which brought in about $1,600 a month that helped us stay afloat. Today we employee over 1,000 in that business and it is a leader in its space. I have always wanted to innovate and give my own unique spin to any business. 
Of course, there is a bit of risk. But then, every novel enterprise entails a fair amount of risk. The challenge is to be able to convince people about the credibility of the product by creating a niche for it. Let me share with you my learnings during my journey of entrepreneurship. 

Five Lessons to Remember

1. Having battle scars is good. Never be afraid of failure because, as someone said, failures are the stepping stones to success. To be successful, an entrepreneur must face failures, learn from them and overcome them. So, welcome challenges, as each of them gives you a new opportunity to learn.

2. Keep up your passion and don't slow down after achieving limited success. Don't get complacent when you make small profits. At the same time, don't get bogged down when you encounter failures as they will only help you toughen up. Hold yourself through the ups and downs, using your passion as your driving force.

3. Hire a great team. In fact, this can include people with superior talent as well because it's the collective talent and effort of your team that makes your brand outshine the rest. Communicate with your team, because often the right idea/suggestion that entrepreneurs look for outside is hidden within the organization.

4. Uphold your values. A successful entrepreneur should not be known for the revenues he has generated over a period of time, but for his integrity. This includes value for his customers, brand, employees, or for society.

5. Don't let your hunger die, and don't feel comfortable. Because if you are comfortable, then you are probably not doing it right. The moment a comfort level seeps in, you should realise that you are probably moving down the growth ladder. True success lies in the challenges and hardships you face to expand business. 

YES BOSS -STORY!!!

9 Oct, 2012, 06.50AM IST, The writer has posted comments on this articleET Bureau
Management humour: Fine art of saying yes boss...

Management is a subject that even many managers concede is ripe for the humorous take. We are all being managed and/or managing something/someone. And all of us can do with a few laughs. So here's a short but hopefully sharp selection of management humour.

Naturally, the higher you are in the management hierarchy, the more you are suitable for a funny take

Hot Air Ride
A man in a hot air balloon realised he was lost. He reduced altitude and spotted a woman below. He descended a bit more and shouted, "Excuse me, can you help me? I promised a friend I would meet him an hour ago, but I don't know where I am."

The woman below replied, "You're in a hot air balloon hovering approximately 30 feet above the ground. You're between 40 and 41 degrees north latitude and between 59 and 60 degrees west longitude."

"You must be an engineer," said the balloonist. "I am," replied the woman, "How did you know?"

"Well," answered the balloonist, "everything you told me is, technically correct, but I've no idea what to make of your information, and the fact is I'm still lost. Frankly, you've not been much help at all. If anything, you've delayed my trip."

The woman below responded, "You must be in management." "I am," replied the balloonist, "but how did you know?"

"Well," said the woman, "you don't know where you are or where you're going. You have risen to where you are due to a large quantity of hot air.

You made a promise which you've no idea how to keep, and you expect people beneath you to solve your problems. The fact is you are in exactly the same position you were in before we met, but now, somehow, it's my fault."
http://economictimes.indiatimes.com/news/news-by-industry/et-cetera/management-humour-fine-art-of-saying-yes-boss--/articleshow/16733610.cms?fb_ref=etshow_fromfb
 

Nobel Peace Prize to EUROPEAN UNION

• WORLD NEWS
• Updated October 12, 2012, 7:12 p.m. ET

Nobel Gives Peace Prize to Crisis-Ridden EU

Award Endorses Bloc's Achievements, but Warns of a Return to Dark Past; Decision Celebrated by Some, Mocked by Others

Norway's Nobel Committee handed its 2012 Peace Prize to the European Union, even as the bloc faces its most serious crisis since it emerged from the ruins of two world wars, an award that served as both endorsement and warning.

The committee, whose decision Europeans both celebrated and mocked, said the prize recognized more than six decades during which the conflict-ridden continent pulled together and became a harbinger of "peace and reconciliation, democracy and human rights" at home and beyond.But Thorbjørn Jagland, the committee's chairman, also stressed that Europeans should see the prize as a warning of what the 27-country bloc stands to lose if the current economic turmoil breaks its cohesion."This year we saw that the prize could be important in giving a message to the European public of how important it is to secure what they have achieved on this continent," he said as he announced the award in Oslo.

Reaction to the decision was mixed. Many politicians took it as an opportunity to commemorate the EU's achievements at a time when much of the discussion on Europe focuses on the struggles of its currency union.

"The award of the Nobel Prize of Peace to the European Union reminds us that the EU is endlessly more than [interest-rate] spreads and bailout funds," German Finance Minister Wolfgang Schäuble said.Herman Van Rompuy and José Manuel Barroso—as presidents of the European Council and the European Commission, respectively, the EU's highest representatives—said the award "shows that in these difficult times the European Union remains an inspiration for leaders and citizens all over the world."

Others, however, questioned why the bloc merited the prize during a period when it has been hobbled by internal troubles and when anti-European, and sometimes anti-German sentiment is growing. Just this week, German Chancellor Angela Merkel's visit to recession-hit Greece drew tens of thousands of demonstrators rejecting EU-mandated spending cuts and economic overhauls."Today's award of the Nobel Peace Prize to the EU is an insult to the people of Europe themselves, who currently are experiencing an undeclared war as a result of the barbaric, anti-social austerity policies that are destroying social cohesion and democracy," said Rania Svigkou, a spokeswoman for Greece's far-left Syriza party, which came in second in general elections this year.

The Nobel committee didn't gloss over the economic struggles that have rocked Europe, and particularly its currency union. Since 2008, five euro countries—Greece, Ireland, Portugal, Spain and Cyprus—and several EU members have had to ask for billions of euros in bailout money to patch over holes in budgets and banking systems. The crisis revealed fundamental flaws in the architecture of the euro zone, leading to fears of some countries leaving, or even a breakup of the currency union.Now, a push to resolve some of these issues by drawing the euro zone closer together threatens to deepen the rift between the 17 countries that use the euro and the 10 EU states that don't. Those troubles are set to intensify in coming months, as the euro zone seeks to build up common regulations to supervise its banks and even create its own central budget.

"We don't have a position on how to solve the economic crisis, but we believe it will be important to solve it and that European unity can be kept so that Europe can move forward," Mr. Jagland said.

By selecting the EU as this year's laureate, the Nobel committee follows up on other controversial—and some say politically motivated—decisions, such as presenting the prize to U.S. President Barack Obama in 2009 and to late Palestinian leader Yasser Arafat and Israeli politicians Shimon Peres and Yitzhak Rabin in 1994.

Jan Techau, director of Brussels-based think tank Carnegie Europe, said the award was both a message to Europe and the rest of the world. "There is merit in cooperation and there is a need for multilateralism," he said.

Mr. Techau added that despite its shortcomings the EU could still serve as a model to less-integrated regions such as Asia, where tensions have been growing between China and Japan.

The prize may also be a wake-up call for Europe to take a stronger role in international affairs, he said. The EU is the world's biggest donor of humanitarian aid, but its members have often struggled to take a common view on important foreign-policy events.

Divisions over the intervention in Libya last year, in which France and the U.K. participated, but Germany didn't, were just one example of that.

Somewhat ironically, the EU will receive eight million Swedish kronor, or about $1.1 million, as part of the award, down 20% from last year, as the value of the Nobel foundation's investments declined amid the crisis. It isn't clear how the money will be spent.

Mr. Jagland favors Norway's entry into the EU and is the author of a book called "My European Dream" about European unity.

"There are many things to say about the economic crisis—where it originated, for instance," he said. "Actually, it started in the U.S. and all of us had to deal with it."

—Laurence Norman in Brussels and Alkman Granitsas in Athens contributed to this article.

Write to Gabriele Steinhauser at gabriele.steinhauser@wsj.com and John D. Stoll atjohn.stoll@wsj.com

INFOSYS- LEADERSHIP PIPELINE...

‘There’s a very clear pipeline of leadership’ Chairman Kamath speaks about leadership plans at Infosys and broader economic issues in India,  Mihir Dalal  |   Pankaj Mishra Updated: Sat, Oct 13 2012. 01 06 AM IST

Bangalore: K.V. Kamath, who is known for building ICICI Bank Ltdinto a banking powerhouse, has now been chairman at Infosys Ltdfor over a year. Mangalore native Kamath came in when the company, grappling with slowing growth, changed its top management and implemented a new strategy to boost profits and return to the growth it used to see in the days it was considered an information technology (IT) bellwether. A year into his new job, investors are getting increasingly impatient with Infosys after a string of disappointing results. In an interview, Kamath said investors will have to be patient with Infosys and reiterated the board’s support for the management. He also spoke about leadership plans at Infosys and broader economic issues in India. Edited excerpts:

How are you preparing to transition Infosys from a founder-led team to the next generation?

We saw the chair role change from a professional founder to an outsider. As we go forward, we will also have to prepare an executive leadership for that movement. Along with this, we’ve had very turbulent environment in which to chart this course. Infosys had clearly articulated what is the path they believe ought to be taken, which was Infosys 3.0, which is basically: how do you facilitate building tomorrow’s enterprise? The first year, in terms of strategy, they’ve stayed the course. And that is with the full endorsement of the board that that’s the course to stay. It has also coincided with turbulent times for the industry, and there are always issues about how do you benchmark the performance against the market. But any company’s board looks at the performance...how it fits into the long-term context. You cannot work out the future of the company on a quarter-to-quarter basis. Within that, there are all the execution tools, structural changes, reorganization. The executive team believes that they are on course with the strategy they outlined.

What progress have you made on that journey? Have you started looking for leaders who would take over from S.D. Shibulal?

It’s too early because Shibu has been at the top for hardly a year and he’s got two-and-a-half years or so. At the right time, the board will see to that matter. At this time, the board will be more interested in developing the leadership pipeline, not necessarily just for the CEO (chief executive officer) slate. And there is work happening there.

Who are going to be the leaders of tomorrow?

There are 50 or so leaders who are picked up for further growth. And as they go up, there will be probably another 200 or so leaders. So there’s a very clear pipeline of leadership that Infosys has developed over the years and is now polishing.

When you’re looking at a company that had a track record of outgrowing everybody else, it’s natural for people to have high expectations. Do you think it is taking Infosys too long to get back there?

What is too long or too short is contextual. The market possibly looks at quarter-on-quarter performance. But if you are in the process of driving a change, repositioning yourself in a strategically different path, then you need to look at things over a longer horizon. That’s what Infosys has been doing. If any course correction is required, the board will look at it. But as of now, Infosys 3.0 is the strategy that the board is please to support.

How long would you give Infosys’s new strategy to start demonstrating results and growth?

Something like an Infosys 3.0, if the global marketplace was normal, should have yielded results from Day One. But where the world is, the results will slightly lag. Need to have patience.

It’s been a year for you as Infosys chairman. How would you like yourself to be measured?

Patience is a virtue that you need to develop. In this industry’s context, at this time, patience is something that we are all trying to work with to make sure that we are able to execute on the strategy at the quickest possible time and get the desired results.

Investors seem impatient.

That’s always a challenge—to balance perceptions and express needs of various stakeholders. Any company has to chart its own path and that is the core of good governance.

Two years down the line, you’d have completed three years and Infosys would also be looking at possible changes in top leadership. What is the Infosys you would like to see?

Two years down the line is a long enough lead time to measure the strategic changes that have been put in place. Clearly, two years down the line we would like to see the strategy that has been articulated having delivered and the marketplace and all stakeholders acknowledging that.

Not necessarily in terms of numbers, but what are the metrics for that, even qualitatively?

Qualitative ambition would be to have a leadership slate which is ready to take on the next level. You have progressed in terms of the leadership roles that you need for the future—people have been identified and groomed, and when the change in leadership happens it is seamless. Secondly, the execution in strategy, that it is well understood and its outcomes can be seen clearly.

It looks like there are too many changes happening at the same time at the company right now with the shuffling of executives.

No. In the past year, there haven’t been too many changes. If you want an example of how succession should take place, this is one.

Would it be wrong to read that V. Balakrishnan is being groomed as one of the top leaders and that is why he is getting into a business role?

We should not read more into any leadership change until something has been articulated by the leadership. Clearly, the geographic focus is India which he’s going to look at. There are certain aspects of the India growth which he has anyway been driving.

Infosys and some other companies have been blamed for not betting on the big ideas, if you compare them with an Accenture or IBM. What do you think of that comparison?

I can’t talk about the other companies. Infosys has clearly articulated where we want to in some way leapfrog or make our way into a league where we will be looked at as business transformers. If you look globally, there are a few players who are already there. It’s an interesting time where you see the need to protect some of the older businesses but at the same time, not slacken on the move (to be a business transformer).

At this time, there is a lot of hunger in other companies to gain market share. That’s one area where analysts and investors point out that Infosys hasn’t been hungry enough. Have you been shying away from some of the low-margin businesses?

That’s part of the strategy. In businesses where we want to get out of and get into something else, it would be very tempting to say that’s where higher growth is and do you want to migrate down that path. The call has been: we don’t want to. And the leadership is staying with it.

Are you letting go of growth by focusing on a high-margin strategy?

I don’t think that is happening. The strategy is to go down a particular path, and we will take what growth comes there in terms of growth and growth in margins both.

How do you incubate new ideas and pack those ideas in an environment that you talked about? What are the bets you are making?

There are several ways in which this happens. The key is how have you positioned your own businesses to seek momentum and advantage. The basic structural change which Shibu did was when he came into the job, the structure that was recast—that stays. We’re clearly seeing traction on that track in a difficult market. The Lodestone acquisition is in the same path.

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It drives you up the value chain and into a system implementation task around a speciality SAP engine as it were. It opens up a whole new range of opportunities particularly around Europe, which is a market we need to grow in, apart from the US.

People talk of game-changing bets. The companies that you are acquiring—is it disruptive and game changing in nature?

Lodestone is disruptive for us because it allows you to leapfrog into a geography, it allows you to push toward a particular platform that you have been supporting in a new geography. It allows to get a completely new reach. Those are the sort of bets that we will continue to look at.

You said the marketplace is very challenging. But internally, what are the biggest challenges to the strategy that you are trying to implement?

In any strategy, aligning all interests and making sure change happens is the biggest challenge. There’s always a tendency to revert to the status quo. I’m not saying that’s happening, but that is the challenge any CEO faces.

Some companies, retailers mainly, have said they have already seen an uptick in business since the reform measures were announced by the government. Have you seen that happen, on a broad corporate level?

It’s too early to say whether there are any particular areas of business that have started accelerating. But what you see after the policy announcements is an uptick in confidence levels and good vibes from a set of entrepreneurs who otherwise were negative. The consequential outcome of the reforms, in this case. was on the capital market. Another was on the exchange rate. There are more such reforms required.

Name such three key reform measures.

If they can get the GST (Goods and Services Tax) in, that would give a huge boost to the economy. But to me, more than major reforms, what is important is to have a facilitative environment. If you deconstruct the Indian economy, you will see some interesting pictures. The rural economy continues to do well whatever you may say of urban India. So you ask yourself the question: are there two Indias? The so-called backward states are doing very well. You need to ponder all this. I don’t want to say yes or no.

If I look at banks, the retail side is growing at 20%-plus. So you have rural India doing well, consumption is strong. Then there’s the rest of the system—manufacturing, infrastructure and services. Overall, services have grown across all the sectors. Growth has probably come down from double digits to 8%. It’s not a dramatic fall. Manufacturing has moved to what I call a ‘just-in-time’ syndrome because manufacturing companies are now cash-rich.

Manufacturing companies around 10-12 years back were leveraged 4:1 (debt:equity). These companies are now probably leveraged 1.5:1. They are sitting on cash. They want to expand capacity; it’s brownfield activity today. They can implement a project today in 12-15 months, whereas 10 years back, it would take four years.

You may say auto is growing only at 3-5%, yes. Motorcycle sales are just about flat. But there are pockets like consumer credit still growing at 20%. Interest rates, inflation—the burden on the purse is holding back consumer India. That needs to be corrected.

In manufacturing, there’s nothing anybody needs to do there. These are brownfield projects, no import licences are involved, money is available, margin borrowing is not a problem. The real problem then is infrastructure. Within infrastructure, the areas where things are not happening is power. Power still has a lead of 36 months. You’re seeing a peculiar situation where 25,000 megawatts (MW) of capacity is almost ready to be fired and there is no coal.

Second, large pipelines, possibly up to 50,000MW, are lying in uncertainty today. Some down payments have been made, but there is uncertainty on the path forward. This doesn’t have an immediate impact, but has an impact two years down the line in terms of power availability. Here you need to see if the electricity boards have the wherewithal to buy the power—they don’t. But there is urgency to restructure the electricity boards. To me, that is a major reform. State electricity boards are sitting with their banks, trying to resolve the immediate problems and the path forward, which involves repricing power. (Repricing power) has been agreed to by the central government.

The second problem is that after the electricity boards buy, the capacity is ready, but where is the fuel. That’s being worked on. It would appear it’s taking six months to work out, but it doesn’t actually matter because in those six months, the electricity boards wouldn’t have been able to buy in any case.

Then, there is the problem of coal supply for the future, which is a grey area because until the mining allocation issues are worked out and environmental issues are sorted, things won’t work. (But) various things the government has done like the NREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) and urban development projects have had enormous positive impact. So, some pieces have to fall in place, but more pieces are in place than not.

As a corporate leader, what is your view on corruption, political uncertainty?

Unless we address these issues, the future it will be difficult. But we cannot afford to let the present stall because of this. I’d best describe it as beating-heart surgery. You have to do the surgery while the heart is beating because you can’t let the heart stop. So we need to ring-fence what is wrong in several areas and then proceed. Having said this, the last two to two-and-a-half-years have been seminal in this context. That is, issues which otherwise would not have come to the fore have been allowed to come to the fore and the consequences have been borne.

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