AAPI: January 2017

LISBON, 20th January 2017

Index of this Newsletter

INDIA

INDIA & THE WORLD

21.1. Why Chinese electronics are selling like hot cakes
21.2. Doha Bank sets ball rolling to start subsidiary in India
22. M&A activity at a record high of US$ 69.75 billion
23. ISRO to launch record 103 satellites in one go in February
24. India is a major strategic partner, and will remain so, says French foreign minister Jean-Marc Ayrault
25.1. A lot of money is looking at India: CPPIB's Mark Machin
25.2. What is amazing in India is the depth of talent here: Chip Kaye & Joe Landy, Warburg Pincus, co-chief executives

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LISBON, 20th January 2017

NEWSLETTER, 20-I-2017

INDIA

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

1.1. Indians' per capita income may rise by 10.4 per cent to cross Rs 1 lakh in FY2017

IBEF | Jan. 09, 2017

New Delhi: India’s per capita net national income at current prices, a gauge for measuring living standard, is estimated to be Rs 103,007 (US$ 1,515.9) during FY 2016-17, registering a year-on-year growth of 10.4 per cent in comparison with Rs 93,293 (US$ 1,372) during FY 2015-16, according to the ‘First Advance Estimates of National Income, 2016-17’ released by the Central Statistics Office (CSO). The per capita income at 2011- 12 prices is expected to increase by 5.6 per cent year-on-year to Rs 81,805 (US$ 1,203.9) in FY 2016-17, as against Rs 77,435 (US$ 1,139.6) for the year 2015-16.

The CSO expects India's gross domestic product (GSD) to ease down to 7.1 per cent during FY 2016-17, from 7.6 per cent in FY 2015-16, due to a slump in manufacturing, mining and construction activities.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same

1.2. Employment in eight key sectors estimated at 20,522 million

BusinessLine | 10 Jan. 2017 | Aditi Nigam

81.6% are regular employees, 13.3% contractual and 5.06% casual.The total estimated employment in eight selected sectors stood at 205.22 lakh, as per the new series of the draft Quarterly Employment Survey by the Labour Bureau.

The survey for the first time has been expanded to include 18 sub-sectors, such as computer programming, consultancy, retail trade except motor vehicle and motorcycles, food & beverage service, land transport and transport via pipelines, warehousing activities etc, in a bid to bridge the data deficit in the country.

Out of the total 205.22 lakh employed, 199.66 lakh workers (97.29 per cent) were employees and only 5.56 lakh workers (2.71 per cent) were self-employed. Of the total employed, 162.96 lakh (81.62 per cent) were regular, 26.60 lakh (13.32 per cent) contractual and 10.10 lakh (5.06 per cent) casual, says the Quarterly Report on Employment Scenario (New Series).

The survey covered 10,600 establishments between May and July 2016, of which 87.13 per cent were under private ownership and 12.87 per cent under government/PSU ownership.

Manufacturing jobs top

Manufacturing continues to account for highest number of employed at 101.17 lakh workers, constituting 49.30 per cent of the total employment in the eight sectors, followed by the education sector employing 49.98 lakh persons (24.35 per cent), trade employing 14.45 lakh persons (7.04 per cent), health 12.05 lakh persons (5.87 per cent), IT/BPO 10.36 lakh persons (5.05 per cent), accommodation & restaurants 7.74 lakh persons (3.77 per cent), transport 5.80 lakh persons (2.83 per cent) and construction employing 3.67 lakh persons (1.79 per cent) at an all-India level.

Male workers dominate

The gender break-up of employment stays skewed, with males accounting for 72.15 per cent (148.07 lakh) of the total employment, against 27.85 per cent females (57.15 lakh). Female employment was the highest in the education sector (48.96 per cent), followed by health (48.22 per cent) and IT/BPO (31.27 per cent). As per the survey, the number of regular workers is the highest in all eight sectors, except for construction, where casual employees (19.05 per cent) are more than contractual employees (16.53 per cent).

2.1. Angel funds can now spread wings beyond just-born start-ups

Livemint | 5 Jan. 2016

Angel funds can invest in start-ups that are up to five years old, following the the latest relaxation of rules for investments in start-ups by the market regulator Securities and Exchange Board of India (SEBI).

In its latest circular, SEBI has made more new-age companies eligible for investments by angel investors by having them comply with “the criteria regarding the age of the venture capital undertaking/start-up issued by the Department of Industrial Policy and Promotion,” which is five years.

The circular amends the SEBI (Alternative Investment Funds) Regulations, 2012.

The minimum tenure of angel funds’ investments in start-ups has also been lowered from three years to one year. The minimum size of an investment has also been lowered to ₹25 lakh from ₹50 lakh.

The new rules also allow such funds to invest in overseas venture capital undertakings up to 25 per cent of their investible corpus in line with other AIFs.

The upper limit for the number of angel investors in a scheme has been increased from 49 to 200.

Angel funds are a kind of alternative investment fund whose functioning is regulated by SEBI. Angel investors generally make early-stage investments and highly risky bets in the start-up universe, but are essential to these companies’ growth trajectory.

The amendments are part of SEBI’s larger efforts to encourage young entrepreneurship in the country, and provide founders with access to private and eventually public funds.

As part of this exercise, SEBI is being advised by a committee of experts involved in this universe, under the leadership of NR Narayana Murthy.

2.2. India an innovation hub for Microsoft

Livemint | Jan. 05, 2017

New Delhi: India is a hotbed of research and development (R&D) activity for Microsoft. Other than its local data centres, cybersecurity and Smart City initiatives, the country is home to Microsoft Research India, (MSR India), which was established in January 2005 in Bengaluru. The other unit—Microsoft India (R&D) Pvt. Ltd set up its India operations in Hyderabad in 1998. Over the past 18+ years, it has expanded to become one of Microsoft’s largest R&D centers outside its headquarters in Redmond.

MSR India does work around three major areas, said Sriram Rajamani, managing director of Microsoft Research India Lab. “The first is the ‘Theory and Algorithm’ group that does fundamental work with big data clients, which results in very innovative and novel machine learning algorithms. Then we have the ‘Systems’ group which does a lot of work in security, privacy, etc. Third, we have the ‘Technology for Emerging Markets’ group that studies the role of technology in socio-economic development, which does a lot of work around societal problems in healthcare, education and agriculture. This group does a lot of deployments as pilots in India too,” says Rajamani.

Similarly, Microsoft’s India Development Centre (IDC) is part of global centres in Microsoft. “The aim is to work on both global engineering solutions and problems related to India,” says Anil Bhansali, managing director of Microsoft India (R&D) and General Manager, Cloud and Enterprise, MSIDC.

For instance, when the Andhra Pradesh government wanted to examine the reason why children drop out of school, in a bid to stop the trend, it took the help of Microsoft researchers to build machine learning models based on data being collected on student enrolment to predict drop outs. This was done by applying machine learning and advanced visualization techniques that take into account multiple data points, including a student’s board exam performance, post-exam enrolments, school facilities, and teachers’ abilities and skills. This solution, according to Rajamani, has been taken to 10,000 government schools across Andhra Pradesh. “The interface also allows officers to counsel students accordingly,” he says.

Microsoft also partnered with the LV Prasad Eye Institute (LVPEI) to create an eye-care solution that successfully predicts the outcome of eye surgeries and improves treatment. Using EyeSmart—an ophthalmic electronic medical record and hospital management system—and Microsoft Azure, LVPEI has registered over 400,000 new patients digitally.

In another such instance, Microsoft partnered with the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT), a United Nations agency, to analyse volumes of data on weather forecasts, local rainfall and soil conditions. The data, according to Bhansali, was analysed to develop a “Sowing Date” application that tells farmers the right sowing date to maximize their yield. Access to this platform for farmers was simplified by providing information to farmers via SMSes in Telugu.

99DOTS, funded by the Bill and Melinda Gates Foundation, USAID, and UKAID, is another case in point. Incubated at Microsoft Research India, Everwell Health Solutions—a healthcare technology start-up based in Bangalore—has been developing and deploying 99DOTS for the past three years. 99DOTS is a technology- enabled project focusing on medication adherence for anti-tuberculosis drugs. Treatment programmes wrap each medication pack in a custom envelope, which hides phone numbers behind the medication. Patients can only see these hidden numbers after dispensing their pills. After taking daily medication, patients make a free call to the hidden phone number. The combination of the call and patient’s caller ID yields high confidence that the dose was “in-hand” and they took the dose. Patients receive a series of daily reminders (via SMS and automated calls). Missed doses trigger SMS notifications to care providers, who follow up with personal, phone-based counselling. Real-time adherence reports are also available on the web.

The R&D challenge, as Bhaskar Pramanik, chairman of Microsoft India puts it, is to develop products and services “that have a global footprint and also work in emerging countries like India”.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

3.1. Transport Ministry in talks with PMO for electricity-based MRTS tech to decongest roads

Livemint | 5 Jan. 2017

The Road Transport and Highways Ministry is in discussions with the Prime Minister’s Office (PMO) to consider implementing electricity-based mass public rapid transit solution (MRTS) technologies from the US, Russia and Spain, in order to ease congestion on city roads.

The capital cost of these technologies are much cheaper than the metro rail system. The technologies include Tesla’s hyperloop, metrino and monorail. “We will try to undertake some of these on a trial basis. We are also in discussion with the NITI Aayog for the same,” Road Transport and Highways Minister Nitin Gadkari said at a conference here on Thursday.

Gadkari said he had also asked the Finance Minister for separate funds to decongest major cities such as Delhi, Mumbai, Kolkata, Chennai and Bengaluru, which need different solutions. He has also asked the Finance Minister for funds for multi-modal stations.

The Minister said road projects of 15,000-km will be awarded before the end of this fiscal, adding that he expected the pace of road construction to improve over the next few months as most of such activities happen during the second half of the year when there are less rains.

The Highway Ministry expects that by March, about 50 per cent of vehicles on national highways will use digital payments — fast tags — for paying toll. As of now, about 20 per cent of vehicles have fast tags. For improving road safety, Gadkari called for more CCTVs. He also urged charitable trusts and corporates to donate ambulances that could be run by various national highways.

3.2. Railways plans highest outlay of Rs 1.35 lakh crore ($19,9 bn) for FY18

Economic Times | Dec. 27, 2016

New Delhi: Indian Railways is likely to have its highest plan outlay of around Rs 1.35 lakh crore for the next financial year.

The national transporter plans to seek almost Rs 60,000 crore from the finance ministry as gross budgetary support and another Rs 25,000 crore from LIC as loan.

The remaining amount will be raised by the Indian Railways Finance Corporation (IRFC) bonds, internal resources and public private partnerships (PPP).

“We’ll have the highest outlay for next financial year. We have already entered into a memorandum of understanding (MoU) with LIC as per which we can avail of an annual loan of Rs 25,000 crore. Through IRFC bonds we can get anywhere between Rs 20,000 crore and Rs 25,000 crore. Several project will also be taken up on PPP,” a senior railway board official said.

“Even if we don’t get desired funds from the finance ministry, we’ll be able to manage the same annual outlay,” the official added. Railways has also set up various joint ventures with state governments. Funds spent through these JVs are accounted as PPP by railways.

Railways plans to use funds for constructing freight corridors, improving connectivity in Kashmir and North- east, upgrading signalling, redeveloping stations, improving passenger amenities, acquiring rolling stock, expanding critical freight lines near coal fields and ports.

However, despite its largestever capacity expenditure plan, railways is unlikely to announce any new major line projects as the focus will be on completing ongoing projects that have been in the pipeline for years. Railway minister Suresh Prabhu is likely to meet finance minister Arun Jaitley on Wednesday for pre- budgetary consultations. From next year, rail budget will be part of the Union Budget, which is presented by finance minister.

Railways, however, will still be responsible for its losses and all expenditure including salaries and pensions. All the burden will have to be met by railways on its own through revenue from freight and passenger earnings.

The rail ministry's budgeted plan outlay has gone up drastically it the past two years.

It went up to Rs 1,00,011 crore in 2015-16 from Rs 65,000 crore in 2014-15 and Rs 1.21 lakh crore is the outlay for the current financial year, which includes Rs 45,000 crore as gross budgetary support and safety fund.

Railways, till now, has already spent over Rs 65,000 crore from its current budgetary plan on construction of projects. “Till November, we have spent almost 55% of our total capex plan. Our spending capacity has also increased because of decentralisation of financial authority, which was done earlier this year,” the official added.

ET View: Railways Needs Radical Reforms

The railways needs radical reforms to raise earnings and step up investments to modernise and expand capacity. The government should have the political will to implement reforms recommended by the Bibek Debroy panel in order create an organisational structure that will enable large-scale investment. These include, among other things, bifurcating the railways into two independent organisations and letting private players run trains in competition with the railways. An independent regulator to set tariffs is also a must to improve railway finances.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

4.1. Tamil Nadu becomes 21st State to join UDAY

Press Information Bureau | Jan. 10, 2017

State to derive an Overall Net Benefit of approximately Rs. 11,000 crores through UDAY

New Delhi: Union Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, Shri Piyush Goyal presided over the signing of the Memorandum of Understanding (MOU) under the Ujwal DISCOM Assurance Yojana (UDAY) Scheme with the Government of Tamil Nadu and its Discom TANGEDCO, for operational and financial turnaround of the DISCOM, in New Delhi today. The signing ceremony was held in the august presence of the Shri P. Thangamani, Minister for Electricity, Prohibition & Excise, Government of Tamil Nadu.

Tamil Nadu would derive an overall net benefit of approximately Rs. 11,000 crores through UDAY, by way of savings in interest cost, reduction in AT&C and transmission losses, interventions in energy efficiency, coal reforms etc. The state also signed 24X7 Power For All document on the occasion. With Tamil Nadu joining the cause, 92% of country’s Discom debt has been covered under UDAY.

By signing the MOU under UDAY, the State Government is taking over 75% of debt of Rs. 30,420 crores of TANGEDCO. The scheme also provides for the balance debt to be re-priced or issued as State guaranteed Discom bonds, at coupon rates around 3-4% less than the average existing interest rate. The State would have savings of about Rs.950 cr. in annual interest cost through reduction of debt and through reduced interest rates on the balance debt.

UDAY lays stress on improving operational efficiencies of the DISCOMs. Tamil Nadu and TANGEDCO have committed to bring about operational efficiency through compulsory feeder and distribution transformer metering, consumer indexing & GIS mapping of losses, upgrade/change transformers, meters etc., smart metering of high-end consumers, reduction in transmission losses and increased power supplies in areas with reduced AT&C losses. The reduction in AT&C losses and transmission losses to 13.5% and 3.7% respectively is likely to bring additional revenue of around Rs. 1,601 crores to TANGEDCO.

Demand Side interventions in UDAY such as usage of energy-efficient LED bulbs, agricultural pumps, fans & air-conditioners and efficient industrial equipment through PAT (Perform, Achieve and Trade) would help in reducing peak load, flatten load curve and thus help in reducing energy consumption in Tamil Nadu. The gain is expected to be around Rs. 2,304 crores.

The Central government would also provide incentives to the State Government and the Discom for improving the power infrastructure in the State and for lowering the cost of power. The State would get additional/priority funding through the Central schemes such as Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Integrated Power Development Scheme (IPDS), Power Sector Development Fund (PSDF) or such other schemes of the Ministries of Power and New & Renewable Energy, if they meet the operational milestones outlined in the scheme.

The State shall also be supported through additional coal at notified prices and in case of availability through higher capacity utilization, low cost power from NTPC and other CPSUs. Other benefits such as coal swapping, coal rationalization, correction in coal grade slippage, availability of 100% washed coal would help the state to further reduce the cost of power.

The State would gain around Rs. 4,320 crores due to these coal reforms. With the financial turnaround through financial and operational efficiencies, TANGEDCO’s rating would improve, which would help in raising cheaper funds for its future capital investment requirement. This is expected to provide interest cost saving of around Rs. 60 crores for TANGEDCO in 3 years.

The ultimate benefit of signing the MOU would go to the people of Tamil Nadu. Higher demand for power from DISCOMs would mean higher Plant Load Factor (PLF) of generating units and therefore, lesser cost per unit of electricity thereby benefitting consumers. Availability of 24x7 power for all would increase the economic activity and improve employment opportunities in the State.

UDAY was launched by the Government of India on 20th November, 2015 to ensure a permanent and sustainable solution to the debt-ridden Distribution utilities to achieve financial stability and growth, now has 21 States in the Club after Tamil Nadu coming on board.

Shri PK. Pujari, Secretary, Power Ministry,Shri Rajeev Ranjan, Additional Chief Secretary, (Energy),

Government of Tamil Nadu, Dr. PV Ramesh, CMD, Rural Electrification Corporation Limited, Dr. M. Sai Kumar, CMD, Tangedco and other senior officials of Power Ministry and Tamil Nadu government were present at the occasion.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

4.2. Sell 50% stake in PSUs through strategic disinvestment: NIPFP to govt

BusinessLine | 11 Jan. 2017

Even as the government has adopted a cautious approach to disinvestment after setting itself ambitious targets in the past three Union Budgets, a working paper published by a government-funded think tank National Institute of Public Finance and Policy (NIPFP) has called for a bold roadmap for exit of the government from the business of running companies.

The working paper titled “Public Sector Undertakings – Bharat’s Other Ratnas” has said a 10-year plan is needed to divest at least 50 per cent of the government shareholding in public sector undertaking, preferably through strategic disinvestment.

The government should privatise the 17 Navratnas enterprises, go for strategic disinvestment of the Miniratna companies and retain the seven Maharatnas, the paper said. It has added that the proceeds, roughly $250 billion could be shifted into strategic investments fund.

The proceeds could then be used to leverage private funding of same magnitude, allowing the country to invest additional $50 billion per year in public infrastructure for the next 10 years.

The suggestions in the paper contrasts sharply with the strategy so far adopted by the government, although the NITI Aayog has recommended that government should sell outright some of public sector units, particularly the loss making ones.

Some strategic sales are under consideration, however, disinvestment in recent years were dominated by buyback of shares by the enterprise and sales of minority shareholding.

“The business of the government is public infrastructure, not public companies. Transforming public assets into public infrastructure would be a lasting reform,” the authors have said in the working paper.

The paper was authored by Ajay Chhibber, a distinguished visiting professor at the institute, and Swati Gupta, a project associate at the think tank.

Making a case for strategic disinvestments, the authors noted that enterprises that were sold to private sector by the Vajpayee-led National Democratic Alliance government had done exceedingly well, enhancing their efficiency and improving the return on assets.

They added that the Modi government needs a clearer medium-term strategy which is based on performance, size and sector. “Ad hoc expediency based on yearly targets is not going to work,” they have said in the paper.

The authors noted that the seven Maharatnas such as BHEL, Coal India and ONGC could remain in the state hands for now, although some such as SAIL, BHEL and Indian Oil were in serious need for restructuring and better leadership. These enterprises have more or less reported return on capital and return on assets that are comparable to those of private companies, although in recent years there have been reversal in their performance.

5.1. A new dawn in Renewable Energy- India attains 4th position in global wind power installed capacity

Press Information Bureau | Dec. 19, 2016

The Ministry of New and Renewable Energy (MNRE) has taken several steps to fructify Prime Minister Shri Narendra Modi’s dream of clean energy. The largest renewable capacity expansion programme in the world is being taken up by India. The government is aiming to increase share of clean energy through massive thrust in renewables. Core drivers for development and deployment of new and renewable energy in India have been Energy security, Electricity shortages, Energy Access, Climate change etc.

A capacity addition of 14.30 GW of renewable energy has been reported during the last two and half years under Grid Connected Renewable Power, which include 5.8 GW from Solar Power, 7.04 GW from Wind Power, 0.53 from Small Hydro Power and 0.93 from Bio-power. Confident by the growth rate in clean energy sector, the Government of India in its submission to the United Nations Frame Work Convention on Climate Change on Intended Nationally Determined Contribution (INDC) has stated that India will achieve 40% cumulative Electric power capacity from non-fossil fuel based energy resources by 2030 with the help of transfer of technology and low cost International Finance including from Green Climate Fund. As on 31st October, 2016, Solar Energy Projects with an aggregate capacity of over 8727.62 MW has been installed in the country.

The government is playing an active role in promoting the adoption of renewable energy resources by offering various incentives, such as generation-based incentives (GBIs), capital and interest subsidies, viability gap funding, concessional finance, fiscal incentives etc. The National Solar Mission aims to promote the development and use of solar energy for power generation and other uses, with the ultimate objective of making solar energy compete with fossil-based energy options. The objective of the National Solar Mission is to reduce the cost of solar power generation in the country through long-term policy, large scale deployment goals, aggressive R&D and the domestic production of critical raw materials, components and products. Renewable energy is becoming increasingly cost-competitive as compared to fossil fuel-based generation. In order to achieve the renewable energy target of 175 GW by the year 2022, the major programmes/ schemes on implementation of Solar Park, Solar Defence Scheme, Solar scheme for CPUs Solar PV power plants on Canal Bank and Canal Tops, Solar Pump, Solar Rooftop etc have been launched during the last two years.

Various policy measures have been initiated and special steps taken in addition to providing financial support to various schemes being implemented by the Ministry of New and Renewable Energy (MNRE) for achieving the target of renewable energy capacity to 175 GW by the year 2022. These include, inter alia, suitable amendments to the Electricity Act and Tariff Policy for strong enforcement of Renewable Purchase Obligation (RPO) and for providing Renewable Generation Obligation (RGO); setting up of exclusive solar parks; development of power transmission network through Green Energy Corridor project; identification of largegovernment complexes/ buildings for rooftop projects; provision of roof top solar and 10 percent renewable energy as mandatory under Mission Statement and Guidelines for development of smart cities; amendments in building bye-laws for mandatory provision of roof top solar for new construction or higher Floor Area Ratio; infrastructure status for solar projects; raising tax free solar bonds; providing long tenor loans; making roof top solar as a part of housing loan by banks/ NHB; incorporating measures in Integrated Power Development Scheme (IPDS) for encouraging distribution companies and making net-metering compulsory and raising funds from bilateral and international donors as also the Green Climate Fund to achieve the target.

ESTIMATED POTENTIAL OF RENEWABLE ENERGY

The increased use of indigenous renewable resources is expected to reduce India’s dependence on expensive imported fossil fuels. India has an estimated renewable energy potential of about 900 GW from commercially exploitable sources viz. Wind – 102 GW (at 80 meter mast height); Small Hydro – 20 GW; Bio- energy – 25 GW; and 750 GW solar power, assuming 3% wasteland.

TARGETS

The Government of India has set a target of 175 GW renewable power installed capacity by the end of 2022. This includes 60 GW from wind power, 100 GW from solar power, 10 GW from biomass power and 5 GW from small hydro power. A target of 16660 MW grid renewable power (wind 4000 MW, solar 12000 MW, small hydro power 250 MW, bio-power 400 MW and waste to power 10 MW), has been set for 2016-17. Besides, under off-grid renewable system, targets of 15 MW eq. waste to energy, 60 MW eq. biomass non-bagasse cogeneration, 10 MW eq. biomass gasifiers, 1.0 MW eq. small wind/hybrid systems, 100 MW eq. solar photovoltaic systems, 1.0 MW eq. micro hydel and 100,000 nos. family size biogas plants have been set for 2016-17.

The target set for the various renewable energy sources for the next three years are:

SHARE OF RENEWABLE POWER IN TOTAL INSTALLED CAPACITY

Economic growth, increasing prosperity, a growing rate of urbanisation and rising per capita energy consumption has increases the energy demand of the country. In order to meet the energy demand, India has total installed power generation capacity of 307.27 GW as on 31.10.2016 from all resources. With 46.33 GW installed renewable power capacity, the renewable power has a share of about 15% to the total installed capacity.

ACHIEVEMENTS

The details of year round initiatives and achievements of the Ministry of New and Renewable Energy are as follows:

Green Power Capacity Addition

A total of 7,518 MW of grid-connected power generation capacity from renewable energy sources has been added so far this year (January 2016 to October 2016) in the country. A total of 7060 MW of grid-connected power generation capacity from renewable energy sources like solar (3019 MW) and wind (3423 MW), Small Hydro Power (218 MW), Bio-Power (400 MW) has been added during 2015-16 in the country against target of 4,460 MW. During 2016-17, a total 3575 MW capacity has been added till 31.10.2016, making cumulative achievement 46,327 MW.

Sector-wise highlights of achievements

Largest ever wind power capacity addition of 3423 MW in 2015-16 exceeding target by 43%. During 2016-17, a total 1502 MW capacity has been added till 31.10.2016, making cumulative achievement 28,279 MW. Now, in terms of wind power installed capacity India is globally placed at 4th position after China, USA and Germany.
Biggest ever solar power capacity addition of 3,019 MW in 2015-16 exceeding target by 116%. During 2016-17, a total 1750 MW capacity has been added till 31.10.2016, making cumulative achievement 8728 MW.
31,472 Solar Pumps installed in 2015-16, higher than total number of pumps installed during last 24 years i.e. since beginning of the programme in 1991. So far, 92305 Solar Pump have been installed in the Country as on 31.10.2016.
Solar projects of capacity 20,904 MW were tendered in 2015-16. Of these, 11,209 MW capacity already awarded.
A capacity addition of 0.53 GW has been added under Grid Connected Renewable Power since last two and half years from Small Hydro Power plants.
Biomass power includes installations from biomass combustion, biomass gasification and bagasse co- generation. During 2016-17, against a target of 400 MW, 51 MW installations of biomass power plants has been achieved making a cumulative achievement to 4882 MW.
Family Type Biogas Plants mainly for rural and semi-urban households are set up under the National Biogas and Manure Management Programme (NBMMP). During 2016-17, against a target of 1.00 lakh biogas plants, 0.26 lakh biogas plants installations has been achieved making a cumulative achievement to 49.35 lakh biogas plants as on 31.10.2016.

The sector wise achievements from January 2016 to October are as follows:

Programme/ Scheme wise Achievements in Year 2016 (January- October 2016)

Major Initiatives taken by Ministry

Solar Power

Under National Solar Mission, the target for setting up solar capacity increased from
20 GW to 100 GW by 2021-22. Target of 10,500 MW, set for 2016-17 which will take the cumulative capacity to 17 GW till 31st March 2017.
As on date, 19,276 MW has been tendered out, of which LOI issued for
13,910 MW/PPA signed for 10,824 MW.
34 Solar Parks of capacity 20,000 MW in 21 states have been sanctioned which are under various stages of execution.
As on 31.10.2016, a total of 90,710 solar pumps have been installed throughout the country.
Also, A total amount of Rs. 67.01 crore has been sanctioned for preparation of master plans, solar city cells, promotional activities and installation of renewable energy projects and an amount of Rs. 24.16 crore has been released, so far, under Solar City Programme.
Various departments and ministries under central government have collectively committed to deploying 5,938 MW of rooftop solar capacity for their internal power consumption. SECI is aggregating demand for a part of this requirement and helping in procuring rooftop solar systems. SECI has issued a tender for development of 1,000 MW rooftop solar capacity on pre-identified central government/ department owned buildings. It is the largest such tender in India’s fledgling rooftop solar market.
Several schemes namely (i) Defence scheme (ii) Central Public Sector Undertakings (CPSUs) scheme (iii) Bundling scheme (iv) Canal Bank/ Canal Top scheme (v) VGF Scheme (vi) Solar Park scheme (vii) Solar rooftops, have been initiated/launched by the Ministry under National Solar Mission which are under implementation.
Under Defence scheme against a target of 300 MW, 347 MW sanctioned, under Central Public Sector Undertakings (CPSUs) scheme against a target of 1000 MW, all capacity sanctioned, under 3000 MW Bundling scheme, Tranch-I: 3000 MW has been tendered, under 100 MW Canal Bank/ Canal Top scheme, all capacity sanctioned, under 2000 MW & 5000 MW VGF Scheme, tenders issued for 4785 MW, and under 20,000 MW Solar Park scheme, 34 Solar parks have been approved in 21 States with aggregate capacity of 20,000 MW.

Solar Rooftop

A target of 40 GW grid connected solar rooftops to be achieved by 2022 has been set. So far, about 500 MW have been installed and about 3,000 MW has been sanctioned which is under installation. All major sectors i.e. Railways, Airports, Hospitals, Educational Institutions, Government Buildings of Central/State/PSUs are being targeted besides, the private sector.
A massive Grid Connected Solar Rooftop Programme launched with 40 GW target. State Electricity Regulatory Commissions of 30 States/UTs notified regulations for net-metering/feed-in-tariff mechanism. Rs.5000 crore approved for solar rooftops. About 500 MW solar rooftop capacity installed till 30.09.2016.
A total sanction of 1300 million dollars has been received from World Bank, KFW, ADB and NDB through which the SBI, PNB, Canara Bank and IREDA will be in the position to fund at the rate of less than 10%.
Ministry has tied up with ISRO for Geo tagging of all the Rooftop plants using ISRO’s VEDAS Portal.

Wind Power

During the year 2015-16, wind power capacity addition of 3.42 GW was made, which is highest ever wind power capacity addition in the country during a single year. The present wind power installed capacity in the country is around 28.28 GW. Now, in terms of wind power installed capacity India is globally placed at 4th position after China, USA and Germany.
India has a strong manufacturing base of wind power equipment in the country. Presently, there are 20 approved manufacturers with 53 models of wind turbines in the country up to a capacity of 3.00 MW single turbines. Wind turbines being manufactured in India are of international quality standards and cost-wise amongst the lowest in the world being exported to Europe, USA and other countries.
The wind power potential of the country has been reassessed by the National Institute for Wind Energy (NIWE) it has been estimated to be 302 GW at 100 meter hub-height. Online wind atlas is available on NIWE website. This will create new dimension to the wind power development in the country.
India has long coastline where there is a good possibility for developing offshore wind power projects. The cabinet has cleared the National Offshore Wind Energy Policy and the same has been notified on 6th October 2015. Certain blocks near Gujarat and Tamil Nadu coast line have been identified. NIWE is in process of doing the wind resource assessment in these coastal areas.
Comprehensive Guidelines for Development of On-shore Wind Power Projects in the country have been formulated and issued on 22nd October 2016.
Guidelines for implementation of “Scheme for Setting up of 1000 MW Inter-State Transmission System (ISTS) - connected Wind Power Projects” issued on 22nd October 2016.
The Policy for Repowering of the Wind Power Projects has been released on 5th August, 2016 to promote optimum utilization of wind energy resources by creating facilitative framework for repowering.

Small Hydro Power

A capacity addition of 14.30 GW of renewable energy has been reported during the last two and half years under Grid Connected Renewable Power, 0.53 GW from Small Hydro Power.

Biomass Power

Biomass power includes installations from biomass combustion, biomass gasification and bagasse co- generation. During 2016-17, against a target of 400 MW, 51 MW installations of biomass power plants has been achieved making a cumulative achievement to 4882.33 MW.

Family Size Biogas

Plants Family Size Biogas Plants mainly for rural and semi-urban households are set up under the National Biogas and Manure Management Programme (NBMMP). During 2016-17, against a target of 1.00 lakh biogas plants, 0.26 lakh biogas plants installations has been achieved making a cumulative achievement to 49.35 lakh biogas plants.

Off-Grid Solar Applications

A special programme for 1,00,000 solar pumps launched of which 31,472 Solar Pumps installed in 2015-16, higher than total number of pumps installed during last 24 years i.e. since beginning of the programme in 1991.

Amendments in Tariff Policy to promote Renewable Energy

Enhancement in Solar RPO to 8% by March 2022.
Introduction of RGO for New coal/lignite based thermal plants after specified date.
Ensuring affordable renewable power through bundling of renewable power.
No inter-state transmission charges and losses to be levied for solar and wind power.
Further, pursuant to the revised tariff policy, the Ministry of Power on 22nd July 2016 has notified the long term growth trajectory of RPO for solar and non-solar energy for next 3 years 2016-17, 2017-18 and 2018-19 as under:-

New Office Building of MNRE

Foundation Stone Laying Ceremony of ‘Atal Akshay Urja Bhawan’, an integrated headquarters building for the Ministry of New and Renewable Energy was held on 19th October, 2016. The Foundation Stone was laid by Shri Piyush Goyal, Hon’ble Minister of State (Independent Charge) for Power, Coal, New and Renewable Energy and Mines. Installation of 200 MW or more Capacity Solar Power Plant at the Central State Farm at Jetsar, Rajasthan

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for utilization of 400 hectares of un-cultivable farm land at the Central State Farm (CSF), Jetsar in Sri Ganganagar District, Rajasthan for setting up of a solar Power Plant of capacity exceeding 200 MW. The land is presently in possession of National Seeds Corporation (NSC), a Central Public Sector Enterprise (CPSE) under the administrative control of the Ministry of Agriculture and Farmers Welfare. The Solar Power Plant will be set up by a CPSE, which would be selected through negotiation. The Project, by utilizing un-cultivable land for a Solar Power Project, will yield revenue for NSC and will also generate clean energy for the nation

Green Energy Corridor

Rs.38,000 crore Green Energy Corridor is being set up to ensure evacuation of Renewable Energy. Power Grid Corporation of India Limited (PGCIL) has sought a Loan assistance of US$ 1,000 million from the Asian Development Bank (ADB) comprising of Sovereign guaranteed loan of US$ 500 million and Non-Sovereign loan of US$ 500 million. the Loan would be utilized for funding of the following transmission projects including a project under Green Energy Corridor projects in next 3-4 years:

(i) HVDC Bipole link between Western Region (Raigarh, Chhattisgarh) and Southern Region (Pugalur, Tamil Nadu) - North Trichur (Kerala)- Scheme 1: Raigarh-Pugalur 6000 MW HVDC System.

(ii) HVDC Bipole link between Western Region (Raigarh, Chhattisgarh) and Southern Region (Pugalur, Tamil Nadu) - North Trichur (Kerala)- Scheme 3: Pugalur- Trichur 2000 MW VSC based HVDC System.

(iii) Real Time Measurement/ monitoring scheme.

(iv) Inter State Transmission System (ISTS) associated with Green Energy Corridor as under:

a) Ajmer(New) – Bikaner (New) 765 kV D/c

b) Bikaner(New) – Moga (PG) 765 kV D/c

c) LILO of one circuit of 400kV Bhadla- Bikaner (RVPN) line at Bikaner(New)

d) Establishment of 2x1500 MVA, 765/400 kV S/s at Bikaner (New)

Enhancement of Budget

Ministry’s budget enhanced from Rs.1500 crore to Rs.9,000 crore (Rs.5,000 crore gross budgetary support + Rs.4,000 crore in way of bonds to be raised by IREDA) by 2016-17.

LOWEST SOLAR TARIFFS

Solar tariffs have fallen to an unprecedented low of Rs. 4.34 / kWh through reverse auction for one of six projects of 70 MW each to be put up in Rajasthan under the National Solar Mission. NTPC on 18.01.2016 conducted the reverse bidding for 420 MW solar power projects However, the tariff had further fallen to Rs 3 per unit, which was quoted by Amplus Energy Solutions in an auction for rooftop solar power conducted by Solar Energy Corporation of India (SECI).

SKILL DEVELOPMENT

Surya Mitra Scheme has been launched for creating 50,000 trained solar photovoltaic technicians by march 2020. A total number of 5492 Surya Mitra’s have been trained as on 30.09.2016 and more than 3000 are undergoing training. A network of over 150 Institutions, spread all over the country, have been created for implementing Surya Mitra scheme. In addition, short term training programmes for small hydro, entrepreneurship development, operation & maintenance of solar energy devices and boiler operations in co-generation plants, have been organised. About 7800 persons have been trained through these short term training programmes during the last two years.

Shri Piyush Goyal, Minister of State (IC) for Power, Coal and New & Renewable Energy launched “Surya Mitra” mobile App at National Workshop on Rooftop Solar Power on 07.06.2016. The GPS based mobile app has been developed by National Institute of Solar Energy (NISE) which is an autonomous institution of Ministry of New & Renewable Energy (MNRE). The Surya Mitra Mobile App is currently available in Google play store, which can be downloaded and used across India. This App is a high end technology platform which can handle thousands of calls simultaneously and can efficiently monitor all visits of Suryamitra’s. The trained Suryamitra’s who opts for entrepreneurship have joined in the Mobile App in several states. These Suryamitras are once again sensitized by NISE on soft skills Customer Relations Management, Punctuality and are now ready to deliver the services.

Other Initiatives

International Solar Alliance was launched as a special platform for mutual cooperation among 121 solar resource rich countries lying fully or partially between Tropic of Cancer and Tropic of Capricorn at COP21 in Paris on 30th November, 2015 to develop and promote solar energy, with its headquarter in India. On 25th January, 2016, the Foundation Stone for the proposed Headquarters of the ISA was laid at Gurgaon, Haryana (India) and its interim Secretariat was inaugurated. The International Steering Committee (ISC) of the ISA has held four meetings so far. The Framework Agreement of ISA has been finalized after discussions with various stakeholders. It was presented in the fourth meeting of the ISC of ISA. The Framework Agreement of ISA has been signed by 20 member countries including India, France, Brazil and others on 15th November, 2016 at Marrakech, Morocco on the side-lines of COP-22.
Bank loans up to a limit of Rs.15 crores will be given to borrowers for purposes like solar based power generators, biomass based power generators, wind power systems, micro-hydel plants and for renewable energy based public utilities viz. Street lighting systems, and remote village electrification. For individual households, the loan limit will be Rs.10 lakh per borrower.
Coal cess has been increased 8 times from Rs.50 to Rs.400/ton in last two years (2014-15) which will make available around Rs.40,000 crore/year for supporting and incentivizing development of Clean Energy projects in the country.
Foreign Direct Investment (FDI) up to 100% is permitted under the automatic route for renewable energy generation and distribution projects subject to provisions of The Electricity Act, 2003. In order to achieve the targets, various initiatives have been taken by the Government which interalia include:
amendments in the Tariff Policy for strong enforcement of Renewable Purchase Obligation (RPO) and for providing Renewable Generation Obligation (RGO);
setting up of exclusive solar parks;
development of power transmission network through Green Energy Corridor project;
identification of large government complexes/ buildings for rooftop projects;
provision of roof top solar and 10 percent renewable energy as mandatory under Mission Statement and Guidelines for development of smart cities;
amendments in building bye-laws for mandatory provision of roof top solar for new construction or higher FAR;
infrastructure status for solar projects;
raising tax free solar bonds;
making roof top solar a part of housing loan by banks/NHB;
incorporating measures in Integrated Power Development Scheme (IPDS) for encouraging distribution companies and making net-metering compulsory
raising funds from bilateral and international donors as also from the Green Climate Fund to achieve the target. and
creation of Surya Mitras for installation and maintenance of the Solar Projects.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

5.2. Third-Party rooftop solar units cost 40% cheaper than Discoms

Economic Times | Dec. 23, 2016

Kolkata: Rooftop solar units installed on industrial and corporate establishments by third parties are offering power 30-40% cheaper than the rates offered by the state's power distribution companies. This gap is expected to widen further as thermal power companies would need to increase tariffs to accommodate inflationary measures and solar modules prices fall further.

The model - popularly called Opex model, includes a rooftop solar company setting up solar units on rooftops of industrial and commercial complex.

They would run the plant and sell the power to the company at a rate which is cheaper than tariffs at which the discoms sell power.

"Upfront investment for setting up solar units on rooftop are being undertaken by solar companies who are selling the power generated at a price which used to be 20% cheaper last year. This gap has now increased to as much as 40% for certain states," said Kuldeep Jain Managing Director, CleanMax Solar.

"Corporates end up saving at least 20-30% on their power bills as a result of this difference in tariffs. The savings would rise as the difference rises," he said.

Sunil Jain, chief executive officer at Hero Future Energies said: "The gap between prices offered by utilities and power tariffs for rooftop has widened the most in states like Gujarat, Tamil Nadu, Maharashtra and Karnataka."

"The reason," Jasmeet Khurana, Associate Director - Con sulting from Bridge to India said: "There has been a large fall in prices on solar modules - the main input for solar units, in the international prices because China reduced its buying after the first half of the current financial and prices crashed.Solar module price have come down come down by at least 20% in the last 12 months."

According to an industry official: "Tariffs of a large number of states-owned power distribution companies have increased this year as thermal power companies witnessed increased costs on account of rise coal costs and transport costs."

Sabyasachi Majumdar, senior vice president at ICRA Ratings said: "The between solar rooftop prices and tariffs offered by state owned distribution companies to commercial and industrial segments is expected to widen due to two reasons.Discoms need to accommodate inflationary costs into new tariffs which, among other things, could be rise in coal costs.Solar module costs, on the other hand, is also likely to fall further as demand rises and lead to increased economies of scale" According to a study by Bridge to India, the gap between Discom's tariffs and solar prices are the largest in Maharashtra, followed by Harayna, Uttar Pradesh, Telangana, Delhi and Andhra Pradesh.

The firm has estimated that India's rooftop solar segment crossed the symbolic 1 GW mark in September this year, growing by 135% over last year.Attractive capital subsidies and substantial demand from public sector are expected to continue to provide great demand boost to the segment over the next few years.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

6.1. 15 million LPG connections issued to BPL households under PM Ujjwala Yojana

New Delhi: Target of 1.5 crore connections fixed for the current financial year for Pradhan Mantri Ujjwala Yojana (PMUY) has been achieved within a span of less than 8 months and the scheme is being implemented now across 35 States/UTs.

Vision of Hon’ble Prime Minister, Shri Narendra Modi to provide clean cooking fuel to poor households in the country has been taken forward through implementation of Pradhan Mantri Ujjwala Yojana (PMUY). An adult woman member of BPL family identified through Socio-Economic Caste Census (SECC) data is given a deposit free LPG connection with financial assistance of Rs. 1600/- per connection by Government of India. The announcement of releasing 5 crore LPG connections to BPL families over a period of three years was made with allocation of Rs 8000 crore in the Union Budget on 29.2.2016. Hon’ble Prime Minister, Shri Narendra Modi launched PMUY on 01.05.2016 from Balia, Uttar Pradesh.

14 States/UTs having LPG coverage less than the national average, hilly states of J&K, Uttarakhand, Himachal Pradesh and all North-East States are identified as priority states for implementing the scheme. The top five States with maximum connections are UP (46 lakh), West Bengal (19 lakh), Bihar (19 lakh), Madhya Pradesh (17 lakh) and Rajasthan (14 lakh). These States constitutes nearly 75% of the total connections released. The households belonging to SC/ST constitute large chunk of beneficiaries with 35% of the connections being released to them.

It is also noteworthy that with the implementation of PMUY, the national LPG coverage has increased from 61% (as on 1.1.2016) to 70% (as on 01.12.2016).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

6.2. Next step towards '24x7 Power For All': Shri Piyush Goyal launches GARV-II App to track Rural Household Electrification and Citizen Engagement Window 'SAMVAD'

Press Information Bureau | Dec. 21, 2016

New Delhi: Union Minister of State (IC) for Power, Coal, New & Renewable Energy and Mines, Shri Piyush Goyal launched the ‘GARV-II’ App here today, as the next step in Government of India’s aim to provide access to electricity to all households in the country. Under this module, village-wise and habitation-wise base line data on household electrification for all States, as provided by them, has been incorporated.

Explaining the features of the ‘GARV-II’ app, Shri Goyal said that the data in respect of about 6 lakh villages, with more than 15 lakh habitations having 17 crore people, has been mapped for tracking progress on household electrification in each of the habitations of these villages, which is a remarkable progress over the previous GARV App. In the earlier version of the ‘GARV’ App, launched in October 2015 for the effective and efficient monitoring of village electrification programme, the data of only 18,452 un-electrified villages had been mapped and a 12-stage milestone-based monitoring mechanism was put in place.

a Further, the Minister informed that the status of village-wise works sanctioned under the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and release of funds to the States for these projects has also been mapped in ‘GARV-II’ to monitor progress of works in each village. The progress is required to be updated by the implementing agencies of the States on day to day basis. All data would be made available in public domain to ensure transparency, enhance accountability of various stakeholders and facilitate view of near real time progress.

Shri Goyal further said that this app is an important part of the ‘Digital India Initiative’ of Government of India and will contribute in further development of the villages. In order to bring more transparency, the Minister asked the Power Ministry officials to place more details regarding discoms, tenders and contracts in public domain.

For places, where internet facilities are not available, Shri Goyal suggested to publish information regarding rural electrification projects like contractor’s name, amount sanctioned by the Government, deadline of the project etc. to be put on boards on the working sites in villages. This will help people in better monitoring of Government’s work, he added.

Shri Goyal, also urged State governments to determine an average price for electricity connections for APL (Above Poverty Line) families across the State so that they can be given electricity connections through the option of paying by easy monthly installments. The Minister said that the Government aims to achieve ‘24x7 Power for All’ and does not distinguish between BPL and APL households.

The Minister also interacted with State Power Secretaries on the occasion, in which a suggestion for increased appointment of Grameen Vidyut Abhiyanta (GVAs) in districts with heavy work load was well appreciated. Several GVAs also shared their experiences of working in inaccessible and hostile areas to achieve electrification of every rural household. The Minister congratulated them for their immense dedication and zeal in making ‘24x7 Power for All’ a reality.

During the event, Shri Goyal also unveiled the Citizen Engagement Window ‘SAMVAD’ which has been created to enhance participation of public at large. The feedback and suggestions from the people would be automatically forwarded to the concerned Managing Director(s) and Superintending Engineer(s) of DISCOMs through SMS & e-mail on their dashboard for online monitoring and further action.

The Minister presented awards to the best performing GVAs as well as the Digital India Award 2016 to GARV for featuring in the Top 3 best Apps that have played a pioneering role in bringing Good Governance in the country.

Other dignitaries present during the event were Shri P.K. Pujari, Secretary, Power, Shri B.P. Pandey, Special Secretary, Power and CMD, REC Ltd and other senior officials of the Ministry of Power, along with over 400 GVAs from 19 States, who interacted with the Minister. State Power Secretaries from 29 States were also connected through video conferencing.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

7.1. Nabard to give RuPay cards to 34 million farmers

Business Standard | Dec. 21, 2016

Ahmedabad: With the government pushing for digital payments ecosystem even in rural areas and agriculture sector, National Bank for Agriculture and Rural Development (Nabard) has planned to provide RuPay cards to over 34 million farmers in villages across India. These cards will be provided through cooperative banks and farmers' credit cooperative societies.

Nabard has already asked credit societies and cooperative banks to open saving accounts directly or under Jan Dhan. Through RuPay cards, farmers can buy seeds, fertilisers and other farming equipment. Nabard has already planned to deploy 200,000 point-of-sale (PoS) machines in 100,000 villages, for which it has allotted funds of Rs 120 crore. These PoS machines will be installed by commercial banks. Nabard will give Rs 6,000 per equipment incentive to the commercial banks for purchase of PoS machines.

"Our aim is to enable farmers for cashless transactions. Generally, farmers buy seeds, fertilisers and other farming related things on cash or on credit as technology has not yet fully reached rural areas. By providing RuPay cards, they will also be able to go cashless soon," said H R Dave, deputy managing director of Nabard. Cooperative banks and farmers' credit cooperative societies will open accounts and issue RuPay cards to the farmers. Farmers who have bank accounts will also get these cards. According to Nabard, the nodal bank is looking to provide Rupay card over 34 million farmers across India.

Dave said, "We have spoken to respected states cooperative banks and farmers' credit cooperative societies and they will open accounts under Jan Dhan or normal accounts. All new and existing account holder farmers will get RuPay cards to do cashless transaction as per their requirements."

To increase digital payment infrastructure in rural areas, the central government through Nabard will extend financial support to eligible banks for deployment of two PoS devices each in 100,000 villages with population of less than 10,000. These POS machines are intended to be deployed at primary cooperative societies, milk societies and agricultural input dealers to facilitate agri-related transactions through digital means. With this, farmers will have cashless transaction facilities in their villages for their farming requirements.

However, Nabard has not set any time limit to complete the project but aims to distribute RuPay cards within a year.

Dave said, "Nabard is providing financial assistance of Rs 6,000 per PoS to the commercial banks. We believe that in the current scenario demand for PoS machines from merchants will grow quickly and we may have to fix 200,000 machines and distribution of RuPay cards in next one year."

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

7.2. Government looks to educate 10 million rural citizens on e-payments

Economic Times | Dec. 23, 2016

New Delhi: The government expects to make digitally literate as many as 1 crore people in rural India in a few days through the newly-launched Digi Dhan Abhiyan or digital financial literacy programme, launched on December 9.

“We aim to create 1 crore people digitally literate on e-payments, and in a matter of 3-4 days, the government can touch this figure in rural India,” Ravi Shankar Prasad, minister for electronic and IT as well as law and justice, said at the launch of The Economic Times CSR (Corporate Social Responsibility) Compendium. Corporates featured in the book include Reliance, Unilever, Aditya Birla Group, Bajaj group and Fortis. The government has also launched a website—DigitalJagrati.in—to track real-time statistics on the digital financial literacy scheme. Government data on Thursday revealed that 48 lakh citizens were registered with 47 lakh Aadhaarenabled payment system (AEPS) in addition to 1.35 lakh small merchants who were trained through 2,100 sensitisation drives primarily at the village level.

On the back of demonetisation of old Rs 500 and Rs 1,000 notes on November 8, Prime Minister Narendra Modi-led NDA government is promoting cashless economy in a big way, and the initiative has garnered massive support from people in rural India. Stressing upon the need to align CSR goals with the ambitious ‘Digital India’ programme, Prasad said social activities by private sector companies could provide a helping hand to startups.

“Government has a limitation but the private sector can come along to promote innovation. Startups coming up with extraordinary products should be encouraged by CSR initiative,” he said.

prasad added that such CSR funds by companies should also be used for cleaning at least 10 villages alongside river Ganga to imbibe the changing culture. The minister, however, said the government was not satisfied with the private sector’s efforts towards building toilets, as part of the Swachh Bharat initiative. As per Swachhta Status Report 2016 released by the National Sample Survey, less than 1% private firms contributed in toilets construction in schools under the cleanliness mission. Swachch Bharat has been a major government initiative since it came it power over two years back.

Prasad said the present government has come to transform India, and programmes such as Digital India, Make in India, Skill India and Smart City, are transformative in nature.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

8.1. With sown area rising, bumper wheat crop expected this year

BusinessLine | 13 Jan. 2017 | Vishwanath Kulkarni

Press Information Bureau | Dec. 30, 2016

The prospects for a bumper wheat crop this year brightened after farmers brought more acreage under the cereal crop in the ongoing rabi season.

The increase in acreage was mainly seen in the major producing States of Uttar Pradesh, Madhya Pradesh and Rajasthan.

Apart from favourable weather, the increase in sown area in Uttar Pradesh, the largest wheat-producing State, where planting is still going on, is seen aiding the crop output.

As per the latest data released by the Agriculture Ministry, wheat acreage stands at 309.60 lakh hectares, a 7.1 per cent increase over the corresponding year-ago period.

“We have exceeded last year’s acreage by over one million hectares and are progressing towards an all-time high. The prevailing low temperatures are favourable for the crop’s growth. Considering an average yield of over 3.1 tonnes per hectare, we could be meeting the targeted 96.5 million tonnes,” said GP Singh, Director of the Karnal-based Indian Institute of Wheat and Barley Research.

Singh said weather conditions during February-March will play a crucial role in deciding the crop yield. Last year, the wheat acreage stood at 297 lakh hectares.

Temperatures have been plummeting across the northern parts of the country in recent days, aiding the wheat crop which is in the tillering stages, Singh said.

“There is another round of rainfall forecast in the Indo-Gangetic plains, which is seen as favourable for the crop,” he added. Further, there is no outbreak of a major pest or diseases across the key growing regions. Though there was an instance of yellow rust in a farmer’s field in Gurdaspur, Punjab, it was not on a major scale. Adequate precaution has been taken to contain the spread of the disease, Singh added.

“Although the government’s target of 96.5 million tonnes is quite optimistic, there is no room for pessimism at this point in time because of the increased acreage and prevailing favourable climate.

“However, this year’s crop size will depend on the weather conditions during February-April,” said MK Dattaraj, Managing Director, Krishna Flour Mills, Bengaluru, and past-president of Roller Flour Millers Federation of India.

Though the government had estimated the 2015-16 crop at 93.5 million tonnes, the trade felt that the actual output was lower and the shortages have led to prices rising in the recent months.

The government removed the duty on imports last month to boost supplies of the cereal. So far, wheat imports into the country have been estimated at over two million tonnes from countries such as Australia, Ukraine, Russia, and Bulgaria. Trade sources estimate that another 1-1.5 million tonnes of wheat could come into the country over the next couple of months.

8.2. Danone India launches infant brand Aptamil; more global products to follow

BusinessLine | 15 Jan 2017 | Meenakshi Verma Ambwani

French nutrition and dairy major Danone India, which launched its global flagship infant formula brand Aptamil in India, believes 2017 will be critical year to accelerate its growth in the country.

After Aptamil, the company is looking to launch ten new products this year in the dairy and nutrition space, which includes infant nutrition brand Neocate, besides products for children with in-born errors of metabolism. “India is our second fastest growing market after China in the Asian region. It is a strategic market and we have been witnessing a healthy growth of 20 per cent year-on-year. We want to double our India business by 2020. We expect to continue to grow at the same pace for the next few years,” said Rodrigo Lima, Managing Director, Danone India. The company decided to merge its Indian nutrition and dairy business in 2015. Lima said this strategy has helped the company, “generate synergies and has led to a strong acceleration of its sales”.

“Two things are central to our India strategy — “Make in India” and “Indovation”, as we focus on local innovations,” he added.

Teen nutrition segment

Asked if the company will now look to bring more products from its global portfolio, Lima said: “New launches this year will include line extension, new flavours, global products as well as local innovations”.

The company is also keen to tap into the teenage nutrition segment with the launch of a malt-based product. “We are soon looking to launch a product that has been specifically developed to cater to the nutritional needs of pre-teens and teenagers. This will open a new segment of growth for us in India,” he added.

Yoghurt segment

Talking about the growth strategy for its dairy business, Lima said, “Our real strength in the dairy business is the yoghurt segment.

“The yoghurt market is still small in India but its growing and it’s highly concentrated in the big metros. So we have been focusing on growing our presence in the key metros.

“We are very careful about expanding to new cities as we want to fully control our supply chain.”

9.1. India's spices exports grow 7% in value in first half of FY17

Economic Times | Jan. 05, 2017

Kichi: Boosted by large shipments of chilli, nutmeg, mace, cumin and garlic, spices exports from India grew 5 per cent in volume and 7 per cent in value in the first half of 2016-17 from a year ago.

Export of spices rose to 4,37,360 tonnes valued at Rs 8415.97 crore in first half of 2016-17 compared with 4,14,780 tonnes worth Rs 7892.65 crore in the first half of last year.

Chilli became the most exported spice for the six-month period with the shipment of 1,65,000 tonnes, fetching Rs 2307.75 crores.

Garlic exports contributed substantially to the overall growth during the period, after rising 132 per cent in value terms and 55 per cent in quantity. The exports of nutmeg and mace grew by 81 per cent in quantity as compared to last year and saw a 69 per cent increase in value. Cumin exports rose by 49 per cent to 68,600 tonnes, as compared to 45,894 tonnes during the same period in the previous year.

Turmeric, apart from fennel and celery, also contributed significantly to the total spices exports during April- September 2016. The export of value-added products like curry powder and paste as well as spice oils & oleoresins also increased during the period, according to data released by Spices Board.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

9.2. Discovery platform Burrp now wants a slice of the food delivery sector

BusinessLine.

Restaurant discovery and listing platform Burrp is making a transition into an online ordering and transaction- led model, competing against the likes of Zomato and Foodpanda in the food delivery segment.

“After resurrecting our brand last year, we are now moving from an online-listing to a transaction-led model, and expect to break even in the third year of operations with a turnover of ₹150 crore,”Pradeep Prabhu, Co- Business Head, Burrp.

At a time when most food tech companies are struggling to get their business model right, Burrp has taken the challenge of entering the online food delivery space without a delivery fleet of its own, with its 65,000 listed restaurants across 12 cities doing the deliveries.

“We have been charging a listing fee, and currently have revenues of ₹6 crore. However, this model is going to help in scaling revenues. So now, we are moving from reviews and ratings, and entering the next phase of growth by having online transactions by the first quarter of this year,” added Prabhu.

Since Burrp was launched in 2006, it has changed its owners, and was acquired by Infomedia, part of Network 18, in 2009. Network 18 was, in turn, acquired by Reliance Industries. Burrp now continues to be a division of Network 18.

Tapping into Jio

Being a part of RIL, Burrp is also expected to be in a consumer-facing segment along with Reliance Jio, and will be tapping into synergies between the businesses. “Jio is already creating a digital ecosystem, and we will be associated with Jio through features such as Jio Chat and Jio Money. In future, we will be also tapping into the Wi-Fi services that Jio may provide. Today, we want to function as a start-up with the backing of RIL, which was been investing in us.”

Burrp is also expected to introduce new features such as dynamic pricing, and is working with restaurants to incorporate the feature on the app. “We are trying to create differentiation in the food tech business, and have built our model like the US-based company, Yelp,” added Prabhu.

Playing catch up

But resurrecting its business model without owning its own delivery fleet may create hurdles for the decade-old company. According to industry observers, while Burrp has to play catch up with its competitors such as Swiggy, Zomato and Foodpanda that came much after, it will also have the disadvantage of not be able to control the customer experience. Players such as TinyOwl (which was bought by delivery platform Runnr) had to shut shop bust since it did not own a delivery fleet.

– INDUSTRY, MANUFACTURE

10.1. Indian auto component firms on a shopping spree

BusinessLine | 10 Jan. 2017 | Rajesh Kurup

Nearly 15 Indian companies on the lookout for buys across Europe and Asia, including India. Not content with the five acquisitions in the recent past, auto component maker Motherson Sumi Systems is scouting for more buys, expecting to add about $6-8 billion to its revenues by 2020.

The New Delhi-based company’s intention pretty much sums ups the mood of the sector, with as much as 15 Indian companies on the lookout for buys across Europe and Asia, including India. “Indian auto component companies are not only looking to acquire companies in India, but also outside India.

Within India, we expect as much as 20-30 deals to happen in the next two years with average ticket sizes of $10-30 million. The total size of the deals would be about $500 million in India, while outside the country the spend would be about $2-3 billion,” said Mahesh Singhi, Founder and Managing Director at investment banking firm Singhi Advisors said.

Singhi is advising a number of Indian companies for buyouts.

On the lookout

New Delhi-based Motherson Sumi Systems, with a revenue forecast of $18 billion by 2020, expects $6-8 billion addition through acquisitions. It had been on an acquisition spree since 2009, the latest being that of Hungary-based Abraham es Tarsa Kft’s Automotive Business Unit in September 2016. The others being Stoneridge Inc’s wiring harness business (2014), Scherer & Trier’s assets (2014), Peguform (2011) and Visiocorp’s rear view mirror business in 2009.

“We are always looking into possibilities for acquisitions. They are at the behest of customers and to the best interest for our stakeholders,” said Motherson Sumi Chairman Vivek Chaand Sehgal.

Motherson Sumi Systems is learnt to be in talks for an acquisition. However, the company declined to comment.

JBM Auto, another New Delhi-based auto parts manufacturer, has mandated big four consultancy firms and investment bankers to scout for buys across Europe and Asia, and also has a war-chest ready. The firm is looking for companies with capabilities in engineering and design and technological know-how on alternate materials.

“We are always evaluating good opportunities and as we locate them, we will conclude it. We are looking at acquisitions to enhance our technology and create global platforms,” said JBM Auto Executive Director Nishant Arya.

Arya said the Indian auto component industry would see a consolidation in the next 2-3 years as many tier-I companies are also looking for acquisitions.

There are about 750 manufacturers in the country’s organised auto component sector and a lot in the unorganised sector.

Technology upgradation

“Now, the stage has been set for Indian companies to move to the crucial technology upgradation, and one way to do that is to acquire and there is a lot of surplus capacity available,” said Jiten Divgi, Managing Director, Divgi TorqTransfer Systems. Divgi TorqTransfer Systems is scouting for talent acquisition. “Most companies are looking to acquire technology, while many are looking at all-out acquisitions.

We expect some deals to be finalised by the third or fourth quarter of the calendar year 2017,” said Bhairav Kothari, Founder and Managing Director at SuperCFO Services, a firm that outsources CFO services.

10.2. Lithium Urban Tech paves the way for EV revolution in India’s cab market

Livemint | 22 Dec. 2016 | Dhanya Skariachan

With more than 200 Mahindra e2o cars on the road now and several hundred in the pipeline, Lithium is already the single largest buyer of electric vehicles in the country.

Bengaluru: “Tomorrow’s transportation, today” sounds like an audacious claim coming from any cab company in India, let alone a start-up.

But here’s why Lithium Urban Technologies could be excused for using that as its tagline: India got its first electric vehicle in 2001, and 14 years later, Lithium gave the country its first electric cab service.

“I don’t think it was confidence. It was just gumption,” said Lithium Urban Technologies (P) Ltd co-founder Sanjay Krishnan, when asked what motivated him to start the service at a time when India lacked the infrastructure for it.

Lithium Urban Technologies co-founder Sanjay Krishnan.

The odds were stacked against the company, named after lithium-ion rechargeable batteries that power everything from cell phones to electric cars.

For starters, there was a general lack of awareness about electric cars in India, which is home to four of the 20 most polluted cities in the world.

More importantly, electric cars need charging stations with uninterrupted power—a tough ask in Asia’s No. 3 economy, known for power shortages.

We’re just scratching the surface in terms of potential: Lithium’s Sanjay Krishnan

“When we started, there was none of that,” said the former operations chief of Comfort India, who started Lithium along with urban development expert and Nasa scientist Ashwin Mahesh.

The lack of enough charging stations and the impracticality of starting out with a large electric car fleet made them focus on catering to corporate clients rather than becoming the next Uber or Ola.

“Access and availability are key for B2C (business-to-consumer), which without a fairly large fleet size, you can’t provide. Then, you have got to put this infrastructure all across the city, right? So, who’s going to pay for it? How are you going to provision power for it? It’s like solving the world hunger problem,” Krishnan said. Catering to corporate customers would solve many hurdles at once.

The lack of enough charging stations and the impracticality of starting out with a large electric car fleet made them focus on catering to corporate clients rather than becoming the next Uber or Ola For starters, Lithium could count on them to set up charging stations on their campuses rather than doing that itself.

“Who has power, where is world-class infrastructure already there, where are schedules made in advance? If all of these three things have to be met, then it’s corporate employee transport,” he said in an interview at Lithium’s Bengaluru office, where colourful, chequered mattresses double as bench cushions.

LEAP OF FAITH

The plan worked, and soon it signed up British retailer Tesco Plc’s Bengaluru arm as its first customer. Others such as Unisys Corp., Accenture Plc, Adobe Systems Inc. and VMware Inc. soon followed suit. “We saw the partnership with Lithium as another way to reduce our carbon footprint while transporting our employees,” said a spokesman for VMware, Lithium’s biggest customer.

But Lithium’s appeal goes beyond being an environment-friendly business.

“We didn’t want people to buy it because it was green, because that means the audience would always be limited,” Krishnan said.

From training its drivers in defensive driving to equipping its cars with GPS that drivers cannot meddle with, from offering unlimited mileage to relying on smart technology to manage its fleet, Lithium added a whole bunch of features to boost its appeal.

“The overall experience has been positive from our colleagues and moreover, features like Lithium’s ‘Assurance Stack’ that ensures safety of our colleagues, transparency of operations and productivity of the fleet, vehicle tracking 24x7 both at Tesco’s transport operations centre and at Lithium’s 24x7 Network Operating Centre (NOC) really adds to the overall experience,” said Glen Attewell, chief executive of Tesco Bengaluru, which uses 33 Lithium cabs.

Lithium’s electric cars also have lower running costs versus its traditional counterparts, Attewell pointed out. But is that enough for an electric cab service to succeed in India? The answer is not black and white.

INDIA AND ELECTRIC VEHICLES

“Currently, there are a lot of perception issues in Indian customer minds towards electrical vehicles, especially cost and safety,” said Abdul Majeed, partner and national auto practice leader at PwC in India.

While the concept makes complete sense in many Indian cities struggling to deal with motor vehicle emissions, it is yet to take off in a big way in cities outside Bengaluru, which is “India’s Silicon Valley”, Majeed pointed out. Alternative fuel vehicle (including electrical vehicle) sales volume globally is just 3% and is expected to go up to 12% by 2021, according to PwC.

While the EV concept makes complete sense in many Indian cities struggling to deal with motor vehicle emissions, it is yet to take off in a big way in cities outside Bengaluru

“Lithium’s journey so far has not taken off in a big way because of many challenges such as cost, battery life, safety (possibility of battery explosions), infrastructure for battery charging and public perception,” Majeed said, underlining the need for better backing from the government too. “If these issues are addressed holistically, one could expect growth in future.”

While the Indian government wants to have 6 million electric and hybrid vehicles on the roads by 2020 under the National Electric Mobility Mission Plan 2020, electric vehicles have not had many takers in the country. An Accenture research report released in December pegged China and the US as the best countries for the electric vehicle sector. It termed Brazil, India and Russia as “hesitators” due to the small market size and an expected low growth rate.

"Lithium’s journey so far has not taken off in a big way because of many challenges such as cost, battery life, safety, infra for battery charging and public perception"- Abdul Majeed, partner and national auto practice leader at PwC

“These markets are characterized by a lack of public charging infrastructure and low fuel prices, which have been constantly low in the respective markets, independent of current low oil prices. This combination makes EVs economically unattractive,” Accenture said, urging original equipment manufacturers (OEMs) to not yet make significant investments, but to regularly re-evaluate the opportunities here.

ANGELS TO THE RESCUE

But Lithium’s backers, including its angel investors such as Robin Chase and Narayan Ramachandran, are far more optimistic.

What Ramachandran, chairman of InKlude Labs, really likes about Lithium are the people involved, the brand concept and the very attractive business scope that it represents. “

I think the envelope gets pushed by firms that innovate (with) new business concepts and Lithium is one such firm,” said Ramachandran, who was the former country head of Morgan Stanley India.

While electric vehicle transportation is in its early stages across the globe, for the first time, battery prices have been dropping (about a 60% drop in the past five years) and the rapid decline is likely to continue, he said. Lithium Urban Technologies, which has raised $1.3 million of equity and $1.3 million of debt, is looking to raise $6-7 million to fuel its expansion plans.

With over 200 Mahindra e2o cars on the road now and several hundred in the pipeline, Lithium is already the single largest buyer of electric vehicles in India.

Ramachandran expects Lithium to do bigger things in the future.

“Lithium will pilot important business use case adjacencies in electric freight, two-wheeler and buses and possibly even using hybrid vehicles,” he said.

"I think the envelope gets pushed by firms that innovate (with) new business concepts and Lithium is one such firm"- Narayan Ramachandran, chairman of investor Inkude Labs

Contrary to initial expectations, the difficulty has been more with financing structures that make business sense versus operations, he said, adding that “it would be great to see more manufacturers and financiers in the EV segment”.

It looks like SoftBank Group chairman Masayoshi Son read Ramachandran’s mind. Earlier this month, he said that Ola, in which SoftBank is an investor, may introduce a fleet of one million electric cars—a move that could end up being a shot in the arm for the country’s electric mobility sector. He is optimistic about the sector’s prospects and plans to look at investment opportunities in it.

Ola may deploy 1 million electric cars, says SoftBank’s Masayashi Son

Chase, who is the co-founder of the US-based car-sharing business Zipcar, is also happy with her investment in Lithium. She measures the start-up’s progress by the number of people it has transported and the number of vehicles it can economically support with those trips.

“They have had rapid growth since they were founded—growth that is due to satisfaction of those who are paying for the service. I look forward to their continued expansion,” Chase said. “The future for cities will be shared electric mobility.”

The decision to be part of Lithium was far simpler for others such as Babu Reddy, 39, who started as a driver at Lithium in June 2015 and is now a supervisor.

"This is different actually. Nobody gives their drivers training and coaching classes (like how Lithium does before assigning them to various clients)"- Babu Reddy, driver with Lithium Urban Tech

Reddy has high praise for his employer and recommends Lithium to any driver looking for a new job, highlighting a better quality of life versus his peers at Ola or Uber due to shorter work shifts and weekly off. The general ease in driving electric cars and the monthly incentives are other pluses, he said, adding that it is also a great starting place for drivers. “This is different actually. Nobody gives their drivers training and coaching classes (like how Lithium does before assigning them to various clients),” Reddy said. “It will be very nice.”

Lithium also supports higher education of some of their drivers’ children who score well in Class X, Krishnan said.

SO, WHAT’S NEXT?

The future of urban public transportation will be driven by four key tenets: clean, distributed, shared and connected, according to Krishnan.

Keeping that in mind, he wants Lithium to eventually engage across the electric mobility value chain.

In the near term, he wants Lithium, which currently has 255 electric vehicles under contract, to expand to more cities beyond Bengaluru and New Delhi.

He plans to collaborate with more OEMs to introduce different new form factors (vehicles) for freight, mass transit and consumer transport by April 2017, and wants the company to expand its fleet to 6,000 vehicles in four years.

To do all that and more, the company, which has raised $1.3 million of equity and $1.3 million of debt, is looking to raise $6-7 million.

In addition to Ramachandran and Chase, Lithium counts KPIT promoters’ group, Kewal Nohria, Cognizant’s Lakshmi Narayanan, H.V. (Prasad) Subramaniam and Subrata Ghosh as its angel investors.

Krishnan wants the Lithium Urban Tech to expand its fleet to 6,000 vehicles in four years

Krishnan said the company, which has managed to break even already, has annual revenue run rate of $4 million. He expects a revenue run-rate of $6.5 million by March 2017 and revenue of $100 million in four years.

NEXT BIG WAVE

Even Chetan Maini, the founder of Mahindra Reva Electric Vehicle Co. Ltd and the man who gave India its first electric car 15 years back, has high hopes for Lithium.

“When I started Reva, it was way ahead of its time. What is happening today is a host of factors coming together” such as better technology, awareness of electric cars and a more favourable policy stance from global lawmakers, he said.

"What is happening today is a host of factors coming together... The long-term vision is to move into several different product platforms. This is going to be the next big wave"- Chetan Maini, founder of Mahindra Reva EV, on urban public transportation powered by electric cars

“The long-term vision is to move into several different product platforms,” said Maini, who is a co-promoter, board member and investor of Lithium.

The future of cars

While Lithium is currently focused on corporate transport in India, Maini expects a future where it could dabble in other mobility areas such as goods transport and “first-mile/last-mile” delivery, and think beyond India. “This is going to be the next big wave,” Maini said, referring to urban public transportation powered by EVs.

11.1. An Indian businessman built the world’s largest air-cooler company, giving shareholders 91,000% returns in a decade

Manu Balachandran, Quartz India, 20th Dec. 2016

Achal Bakeri could have taken an easier way out if he wanted.

After all, he is the heir to one of India’s oldest real estate companies, the Rs109-crore ($16 million) Bakeri Group. But as a young MBA graduate returning from the US in 1986, the then 26-year-old Bakeri had other plans.

“I felt I wasn’t adding much value to the real estate business,” Bakeri, now 56, said. “There was already a well- established structure and hierarchy in place in the real estate business while I wanted to challenge myself.”

So, he set forth on his own journey.

Borrowing Rs700,000 from his father in 1988, Bakeri went on to build a business that had few takers back then: air coolers. These machines are cheap and less power-consuming substitutes for air conditioners (AC) and can be particularly effective during hot and dry Indian summers.

“When I started out, ACs were very expensive and air coolers were huge and ugly. I sensed an opportunity to build something that appealed to buyers,” Bakeri said.

Within a year of its founding, Bakeri’s company, now called Symphony Limited, had hit its stride and began generating profits. Nearly 30 years on, it is the world’s largest air-cooler maker with a market capitalisation of $1.2 billion. Bakeri’s own wealth has swelled to $1.26 billion (as of 2016), making him India’s 74th richest man.

Symphony shareholders, too, have had a great run. The stock has risen by a mind-boggling 91,000% in the past 10 years, from Rs1.30 in 2006 to Rs1,180 as of Dec. 20.

It’s been a roller coaster ride, but a great one nevertheless.

Dad’s idea

Bakeri credits his father, Anil Bakeri, for the business idea.

In 1987, his family moved into a new house in Ahmedabad. “Till then we had never used an air cooler. Our consultant asked us to use them in some areas (of the house) where ACs couldn’t be installed,” Bakeri said. But the machine was noisy and took up a lot of space, besides being an “eyesore.” One Sunday morning, as the household sat in the garden for tea, his father asked Bakeri—who has a degree in architecture from Ahmedabad’s Center for Environmental Planning and Technology (CEPT) University and an MBA from the University of Southern California—if he could build a better-looking and quieter air cooler.

“That triggered something in my mind,” he recalls now. “To me, it was an alien concept.” So, in February 1988, Bakeri launched Sanskrut Comfort Systems, which would make air coolers. It initially operated out of a small room in the family’s real estate office and developed a prototype within a month.

“The existing air coolers were noisy, ugly, would rust very soon, and one could even be electrocuted,” he said. “So we wanted to build something that was aesthetically appealing and not out of metal. We used plastic and the final product looked like a 1.5-tonne AC.” By March 1988, they had six prototypes.

Back then, the air cooler market was also unorganised, as it mostly still is. Bakeri launched his product under the Symphony brand at Rs4,300 a unit, putting out a full-page advertisement in India’s largest-selling English- language newspapers, The Times of India.

This was a time when ACs were selling at Rs35,000 a unit and local air coolers at Rs2,000.

Steady success

By the summer of 1988, demand had steadily grown and the company had sold 1,000 units, raking in Rs40 lakh in sales.

Yet, it never manufactured coolers. “Manufacturing is a capital and management intensive process, and we thought it better to outsource it to specialised vendors,” Bakeri said. Sanskrut would only assemble the various components into an air cooler under the Symphony brand.

By 1989, the company hired a few graduates from the National Institute of Design (NID) in Ahmedabad to design new air coolers. Until then, Bakeri and his small team were designing the products in-house.

“We sold some 3,000 coolers by 1989 and by 1990, we scaled up our distribution and started advertising aggressively on national television,” Bakeri said. “We sold 21,700 by 1990 because our campaign had picked up.” By 1991, he set up a factory in Ahmedabad and began assembling there. In 1994, the company went public, raising over Rs10 crore through an initial public offering (IPO). It also changed its name to Symphony Comfort Systems that year.

The big fall

Stock market success brought with it the pressure to diversify and expand quickly. As air coolers weren’t sold round the year, Symphony chose to develop new products.

Soon it was manufacturing everything from geysers to water purifiers to washing machines. But these couldn’t match the air coolers’ success. “The moment we began to diversify, we began to stagnate and lose money,” Bakeri said. “Diversification was a mistake.” The company was also spending heavily on manufacturing and marketing.

By 2002, Symphony’s net worth had eroded. That year, it had total revenue of Rs28 crore and a net loss of Rs31 crore. “Moving out of its core DNA into the highly competitive industry proved to be a tall task for the management,” credit rating agency Crisil said in a 2010 report (pdf). “Although the company did well in coolers, it failed to successfully establish itself in other products, resulting in huge losses and wiping off the net worth.”

In 2003, Symphony decided to approach the Indian government’s Board for Industrial and Financial Reconstruction (BIFR) that helps sick companies restructure their businesses. The company began to revamp its business model and engage with more distributors. It began to outsource even the assembling of products and went back to being just an air cooler maker.

“It took four years for us to exit all our diversified businesses and, by 2006, we were back to being a single product company,” said Bakeri.

The recovery

By 2008, Symphony also began to focus more on its distributor and dealer base. From about 100 distributors in 2007, it has 800 today, while the dealer number grew to over 20,000 in 2016, from 3,000 in 2007. Now, Symphony controls nearly 50% of India’s air-cooler market.

“I had built this company from scratch and I couldn’t watch it sink,” said Bakeri.

In 2008, Symphony acquired the Mexican assets of the International Metal Products Company (IMPCO), founded by Adam Goettl, the inventor of air coolers, for $650,000. That gave it access to the North American market in addition to a wider product range. IMPCO had built up a reputation as a maker of large metal coolers for commercial projects in North America and sold its products through stores such as Walmart, Sears and Home Depot, among others.

Bakeri also realized that IMPCO’s product line, especially the large commercial coolers, could soon be deployed in India. “Every building in India that did not have air conditioning, like schools and hospitals, could be an opportunity,” Bakeri said.

The Indian air cooler market is still unorganised with up to 80% dominated (pdf) by local manufacturers. However, it is estimated to grow at a compounded annual rate of 19% between 2015 and 2025 , fueled by growing demand in India’s tier II and III cities. According to brokerage firm Motilal Oswal, nearly 143 million Indian households live in hot and dry climatic conditions. “Only about 8% own air coolers, thereby providing a huge opportunity for growth,” Motilal Oswal said in a report in May (pdf).

India aside, Symphony also wants to tap into some of the world’s biggest countries. In 2006, it began selling in the international market in countries such as Saudi Arabia and Iraq. Last year, it acquired China-based Munters Keruilai Air Treatment Equipment Guangdong for Rs1.5crore ($234,000) in order to increase exports of its coolers to south Asian markets and to tap into the Chinese market. Today, Symphony has a presence in over 60 countries.

So what’s next for Symphony?

“We don’t want to try anything new,” said Bakeri. “We want to focus on our core area and step up our presence in every part of the world.”

11.2. Amazon India top seller Cloudtail's revenue rises fourfold to Rs 4,600 crore ($676 million) Livemint | Dec. 21, 2016

Bengaluru: Cloudtail India Pvt. Ltd, a joint venture between Amazon.com Inc. and Infosys Ltd co-founder N.R. Narayana Murthy’s Catamaran Ventures, posted a fourfold increase in revenue in the year ended March 2016 and received fresh funds amid a market-share battle between Amazon and FLIPKART .

Cloudtail, the largest seller on AMAZON INDIA’s online marketplace, ended the year with revenue of Rs4,591.2 crore, compared with Rs1,145.4 crore in the year-ago period, according to documents filed with the Registrar of Companies (RoC). Cloudtail also received a fresh infusion of capital. According to the regulatory documents, the firm’s authorized share capital jumped nearly 40% to about Rs500 crore.

Cloudtail also incurred heavy expenses during the year, which overshadowed its overall sales. According to the documents, expenses stood at Rs4,621 crore, up from the Rs1,176 crore the previous year. Cloudtail’s loss for the year narrowed marginally to Rs30.2 crore, compared with Rs31 crore the previous year.

In October 2015, Mint reported that Cloudtail was the primary growth driver for Amazon India, generating at least 40% of the company’s sales in some months, and being particularly dominant in electronics and fashion, two of the three largest categories for Amazon India (promoted by Amazon Seller Services Pvt. Ltd). Because of India’s foreign direct investment (FDI) rules, Amazon works as a marketplace in India,

CONNECTING BUYERS with third-party sellers on its platform.

In 2014, Amazon Asia and Catamaran Ventures jointly formed Cloudtail India to sell items such as books, phones and exclusive Amazon merchandise on Amazon.in under the seller name, Cloudtail, according to documents available with RoC.

Cloudtail India is a fully owned unit of Prione Business Services Pvt. Ltd, according to documents filed recently with RoC. Prione, in turn, is owned by Catamaran Management Services Pvt. Ltd, the acting trustee of Hober Mallow Trust (51%), Amazon Asia Pacific Resources Pvt. Ltd (48%) and Amazon Eurasia Holdings (1%). Apart from owning Cloudtail, Prione also helps AMAZON INDIA sign up and train sellers across the country. The expansion of Cloudtail underlines how Amazon has used gaps in the law to continue to have a direct- selling model in the country that bans e-commerce companies from selling goods directly to shoppers. Amazon did not respond to an email seeking comment. Cloudtail could not be reached for comment at the time of publication.

In March, the government allowed 100% foreign direct investment in online retail of goods and services under the marketplace model but prohibited marketplaces from having one dominant seller. The rules cap total sales of one vendor at 25% and also ban marketplaces from affecting product prices, effectively outlawing discounts.

Earlier this year, parent Amazon.com Inc., also disclosed to the US stock markets regulator that the company owns an indirect minority stake in a third-party seller on AMAZON INDIA. Amazon made this disclosure in its quarterly regulatory filing with the US Securities and Exchange Commission.

According to documents filed with RoC, Amazon India has also received a fresh infusion of Rs2,010 crore of capital, taking its total capital infusion till date to roughly Rs7,000 crore. Amazon Seller Services, which represents Amazon’s marketplace arm in India, also posted a revenue of Rs2,217 crore for the year ended March 2016, according to RoC documents. Amazon has so far committed to spend at least $5 billion on its business in India.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

12.1. India to be world's 3rd assembler of iPhones

Times of India | Jan. 04, 2017

Bengaluru: With the upcoming Bengaluru assembly plant of Apple, India will become only the third country to do the final assembly of iPhones -an indication of how important the country has become for the world's most- valued company.

Apart from one assembly facility in Brazil, all of Apple's assembly units for its bestselling product are in China. Apple uses a global and fairly complex supply chain.The parts for the iPhone, iPad, iPod and Mac are manufactured, mostly by third parties, across 28 countries. It has 766 suppliers, of which 346 are based in China, 126 in Japan, and 69 in the US. There is one in India -in Sriperumbudur in Tamil Nadu. That's a unit of Flextronics. But it's not clear what the unit makes.

Some parts made by these suppliers are sub-assembled in certain locations. All the sub-assembled units and other parts are brought together for final assembly in either China or Brazil in the case of iPhones. For the Apple Mac, the final assembly happens in China, US, and Ireland -the last of these is Apple's own facility -and for the iPod, China is the only final assembly location.

With India becoming one of the world's biggest smart of the world's biggest smartphone markets and one of iPhone's fastest growing markets, Apple has decided to assemble the iPhone here.As TOI reported last week, Taiwan's Wistron, one of Apple's suppliers and assemblers, will set up a facility in Bengaluru's industrial hub of Peenya for the purpose.The products from this facility are expected to be available in the domestic market towards the end of next year.

Wistron has three supply facilities for Apple and an iPhone final assembly unit in China.

"An assembly unit does not require big investments," said Jaipal Singh, market analyst at research firm IDC. He said this has been a strategy that all Chinese handset manufacturers have followed in India over the past couple of years. "Labour in India is cheaper than in China. It makes sense to grow the Indian market by establishing a domestic plant," he said. Analysts said the unit would also manufacture for exports over time. Data from Hong Kongbased Counterpoint Technology Market Research showed Apple sold 2.5 million iPhones in India from October 2015 to September 2016, a rise of more than 50% over the year-ago period. Apple India clocked robust sales touching Rs 9,997 crore in the 2016 financial year, up 56% from Rs 6,472 crore in the year before. iPhones are expensive, but with a local assembly unit, some analysts believe, Apple can avoid import tariffs and cut the iPhone price by around 15%, allowing it to expand the market.

Apple CEO Tim Cook recently said India's low percapita income would not become an impediment in growing Apple's market share in the country . More than 50% of Apple's sales in India are contributed by older models which become cheaper once newer models are launched, indicating the brand's aspirational value.Apple has around 40-45% market share in India's premium phone segment.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

12.2. How Trivitron plans to take on MNCs in multiple segments of medical devices

BusinessLine | 23 Dec. 2016 | Aesha Datta

If ambition is the path to success, GSK Velu, CMD of Trivitron Healthcare, is set to take the company soaring. The simple and courteous Velu, in a conversation with BusinessLine, talks about why the company, which has made an impressive turnaround from an almost 100 per cent trading company as late as 2010 to a big medical devices manufacturer today, is focusing on more than two birds at a time.

Excerpts:

Trivitron has been making aggressive acquisitions globally. What are the changes that have taken place in the recent past?

For the past five years, our focus has been on changing from trading to manufacturing. And that has happened more or less. We have nine factories in five locations — Chennai, Mumbai, Pune, Helsinki and Ankara. A lot of investments have gone in. We were a 100 per cent trading company in 2010 and today, 85 per cent of our profits and more than two-thirds of our revenues come from manufacturing.

But, of course, we left certain large trading businesses, such as Boston Scientific and Fresenius, many of which we built in India. So, we lost a lot of trading revenues and converted all of that into manufacturing. We could have had both, but somewhere we had to focus on becoming a manufacturing company.

What about the future?

We want to focus on manufacturing, which also means contract manufacturing. In the next two-three years we want to become a large contract manufacturer for other multinational companies. That, I think, will be a big growth driver.

Also, we intend to do acquisitions, both in India and abroad. In this financial year, we have done one in Turkey and we are looking at a few more in the cardiac devices space.

Currently, most of our revenues are coming from two verticals — imaging and diagnostics. We have limited presence in intensive care and operating room and in renal care. We are also looking at implantable devices as an area of growth so that we truly become the only surviving multi-modality medical device company.

Big MNCs already have a significant presence in the multi-modality space. Why do you feel that is the right business model instead of focusing on one segment?

We have taken a similar strategy (as MNCs) because the segment is the same. If you go to a hospital, your marketing, sales and logistic costs are the same. But if you put more products in your basket, it makes the business model more interesting from the very long-term perspective. In the short term, of course, it is very challenging to really invest in each segment and grow.

You want to focus on contract manufacturing as a growth area. However, most MNCs already have manufacturing capacities in the region, such as in China or Taiwan, and prefer to import...

That’s a problem. Many MNCs have that philosophy because a lot of companies have made large investments, particularly in China.

That’s why we are asking the government to incentivise manufacturing and disincentivise imports. Internationally, the import duties on medical devices are 15-20 per cent but in India it is 0-5 per cent. So, we are saying there should be a difference between raw material import and finished goods import so that manufacturing flourishes.

Last year, this change happened for some devices such as x-rays, CT and MRI machines, ultrasound machines, but it didn’t happen for diagnostic equipment and many other medical devices. There should be a clear 15-20 per cent difference between raw material imports and finished goods imports. That will motivate multinationals to either manufacture on their own or go for contract manufacturing, like in the pharma industry where no company can survive in India without local manufacturing because the finished drugs are at very high import duties.

We are surviving mainly because of our export income and international revenues.

Why have you taken the M&A route to growth?

We feel medical technology cannot be done just by greenfield expansion. This is a very brand-conscious industry. When you buy something from a GE or a Roche, you already feel it’s good. So, we need to create a brand.

Many start-up companies are created to be acquired by MNCs. Our focus will be the same. If we see some good start-ups we try to acquire them. We are still a marketing and services company. For generic products, such as x-ray or ECG machines, we want to do it on our own. But, for products where there is a huge technology element, we have only two choices — either find a small or medium-sized technology company and acquire it or go to a large multinational and collaborate with it. That’s the model we are following.

Trivitron is witnessing about 10-15 per cent growth every year. What are your projections, going forward?

Organically that is the kind of growth we expect to sustain. But inorganically, we expect that to speed up our growth. We first wanted to consolidate imaging and diagnostics. Now we are looking at whether we can get into one more area of medical technology, which is cardiac devices. It will probably take another five months.

How are your acquisitions impacting your presence domestically and globally?

That is a dual strategy. For a few products we want to be a global player. In another 10-15 products we want to be an emerging market player.

When we acquired (Finland-based) Ani Labsystems we didn’t try to cater to the European market. We got it for technology — such as newborn screening and point-of-care technology —which is necessary for growth markets. Now we are doing technology-absorption in India.

What about domestic competitors?

In India most device companies are single-focus. There are no Indian companies that are present in multiple segments. That is the most difficult dream for us as a medical device company. We are present in five verticals and we will enter another couple in the future. Once these seven verticals, which are today in their infancy, reach a certain size, we can see the scale. All the MNCs (GE, Siemens, Philips, etc) did this — they acquired businesses and achieved the size. We are trying to do that in a smaller scale in India.

We have been able to achieve some scale in in-vitro diagnostics and imaging, both in India and globally. In India, we are present in other areas, such as renal care, operating room and intensive care. In terms of market share we are still in single digit in most of these product lines.

You have set up the infra. What comes next?

In the past three years we focused on going from 0 to nine factories. For the next few years, our focus will be on ensuring that our factories’ capacity utilisation, which is right now at 5-10 per cent, goes up to 50-60 per cent. If they reach even 50 per cent capacity utilisation, we will already be a ₹2,500-crore company.

13.1. 20 major Railways stations set for revamp, auction in January

Economic Times | Dec. 30, 2016

New Delhi: Indian Railways is readying to auction 20 major stations for redevelopment next month, hoping to attract private investment in creating world class railway stations that will cost an estimated `15,000 crore in the first phase and to earn revenue without putting further pressure on its strained finances.

The stations will be awarded to private developers under the so-called Swiss challenge method, which involves inviting a proposal online and allowing rival bidders to beat that proposal.

The developers, along with revamping infrastructure at the stations including platforms and lounges, will be able to build hotels, malls, multiplexes and other commercial units at the land that will be earmarked by the railways.

They will get the rights to commercially exploit the land of the station owned by the railways for about 40 years. The Swiss challenge method cuts down on the long-drawn tendering process being used by the railways.

The Railway Board had appointed Boston Consultancy Group as the strategic advisor for this project. “Based on the research, discussions and analysis done by BCG and several rounds of discussions held between the zonal railways and other stakeholders, the scheme is now ready for launch by bidding out 20 stations,” a senior Railway Board official said on condition of anonymity.

“These are the stations where investors will get a very good return on their investment.”

The stations for which bids will be invited include Lokmanya Tilak (T), Pune, Thane, Visakhapatnam, Howrah, Allahabad, Kamakhya, Faridabad, Jammu Tawi, Udaipur City, Secunderabad, Vijaywada, Ranchi, Kozhikode, Yesvantpur, Bangalore Cantt, Bhopal, Mumbai Central (Main), Borivali and Indore. Under the Swiss challenge method, a company can submit a development proposal to the railway ministry and any other company can give suggestions to improve and beat that proposal or submit a fresh proposal.

An expert committee appointed by the Indian Railways will accept the best proposal and the original proposer will get an opportunity to accept it if it is an improvement on the original proposal.

ET VIEW: Make Clear Rules

We need clear-cut norms in the bidding process. If investors suspect procedural opacity, they may not go ahead with their bids. Achange of norms and other parameters post-bidding needs to be avoided. It would give rise to allegations of give-and-take and attendant corrupt practices. A model PPP agreement needs to be put out in the public domain.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

13.2. Construction, real estate projects spike in December quarter, despite note ban

Livemint | Jan. 10, 2017

New Delhi: The one sector that was expected to be hit the hardest by the government’s move to scrap high- value currency notes in early November is the construction and real estate sector. Given the widespread use of cash in real estate transactions (quite often to facilitate under-reporting of official prices and evade taxes), it was expected that the sector would bear the brunt of the currency-scrapping exercise. But capex figures from the Centre for Monitoring Indian Economy (CMIE) show that such concerns aren’t borne out by the data, at least not just yet.

The CMIE data shows that the construction and realty sector has outperformed most other sectors in the December quarter. In the quarter ending December, the sector witnessed Rs8986.38 crore worth of new projects during the quarter. This is more than double the Rs4278.25 crore seen in the same quarter last year. It is nearly three times the September 2016 quarter figure of Rs3210.58 crore.

In stark contrast to the overall capex announcements, which grew only 7.9% over the year-ago period, construction and realty saw a 110% jump over the same period (in value terms). Compared to the September quarter, all-industry capex announcements fell 34.4%. The outperformance is even more striking when one considers the respective base effects. The 7.9% growth in all-industry capex figures in the December 2016 quarter comes on the back of a 70.2% decline (or negative growth) in the December 2015 quarter. In the case of construction and realty, the triple-digit growth comes on the back of 10.2% (positive) growth in the December 2015 quarter.

The trends in the proportion of stalled projects are even more telling, as the chart below shows. The all- industry stalling percentage increased from 12.11% to 12.21%, the second straight quarter of increased stalling. Construction and realty saw stalling decrease from 10.2% to 10.07%.

An important caveat to keep in mind here is that the CMIE data is for the entire quarter, and it has not been possible to conduct a pre-8 November and post-8 November analysis. It is entirely possible that project announcements slowed down in November and December in line with other sectors after 8 November.

Nonetheless, the sharp quarterly spike in the construction and realty sector and the absence of any increase in stalled projects suggests that the impact of demonetisation on the sector may have been weaker than was anticipated.

Several news reports have indicated falling demand for real estate and falling property registrations but the capex data seems to suggest that building activity continues despite the cash crunch. It is likely that anticipating a pick-up in demand, construction and realty firms have not abandoned their projects over the past quarter. It is also likely that many payments (to vendors and labourers) were deferred but projects continued apace.

The new projects announced in the December quarter include a Rs1,000 crore residential township project in Kerala by Kool Home Builders, and a Rs700 crore affordable housing project in Nagpur by the Nagpur Improvement Trust. There is also a Rs3,100 crore Dhamra Special Investment Region (SIR) Project announced by the Odisha Industrial Infrastructure Development Corporation in Odisha.

The absence of a sharp dip in real estate and construction projects over the past quarter suggests that expectations of a sharp correction in house prices may not be met.

The analysis suggests that the wait for a correction in house prices is likely to take longer. The only relief for home-buyers post demonetisation is that bank lending rates are now lower than earlier.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

14.1. Chandra’s journey: From an intern to Chairman

HindustanLine | 12 Jan. 2017 | Varun Aggarwal

A marathon runner, N Chandrasekaran’s long journey within the Tata group has taken him from a regular internship at Tata Consultancy Services in 1987, to taking over the reigns of the group, as he takes charge as Chairman of Tata Sons from February 21.

N Chandrasekaran’s persistent pace made him the youngest CEO in the group when he was appointed as CEO of TCS and MD in 2009. Today, he’s the only the second outsider to take over as Chairman of Tata Sons.

He takes over at a tumultuous time when the group is caught in one of the biggest corporate battle after Tata Sons fired Cyrus Mistry in October.

But Chandra is known for staying ahead of the curve and remaining focussed on performance during tough times. In an earlier interview with BusinessLine when TCS had a particularly bad quarter, he had said: “The nature of running a business, especially in today’s context, is that you must embrace change. What happens if somebody exploits it (change) better than you is that you lose.”

Sharing his experience of working with Chandrasekaran, former CFO of TCS, S Mahalingam, said: “Chandra was key to TCS in exploiting opportunities arising after the Y2K boom. He was very comfortable with the technologies being propelled by the Internet revolution. Clients saw in him as a person who could transform their enterprises into a connected one – both internally and externally.”

Chandrasekaran hails from a humble family in Mohanur, near the Namakkal district in Tamil Nadu. But it was probably his stint at TCS that has made him more humble. “ I have become mature and a better human being through the interactions I have had with all of you,” Chandra told analysts post the TCS quarterly results on Thursday.

Milestone achieved

Under his tenure as CEO, consolidated revenues of TCS have more than tripled to ₹94,648 crore in 2015-16 from ₹27,813 crore in 2009-10. With over 371,000 consultants, TCS has become the largest private sector employer in India, with the highest retention rate in a globally competitive industry. Speculations over Chandrasekaran’s appointment as the next Tata Sons CEO started when he was appointed as a Director on the board of Tata Sons on October 25.

A technopreneur known for his ability to make big bets on new technology, Chandrasekaran was also appointed as a Director on the board of the Reserve Bank of India, in 2016. He has served as Chairperson of the IT Industry Governors’ at the WEF, Davos in 2015-16. He has been playing an active role in the Indo-US and India-UK CEO Forums. He is also part of India’s business task forces for Australia, Brazil, Canada, China, Japan and Malaysia.

Beyond the office, Chandrasekaran is an avid photographer, and a passionate long-distance runner who has completed several marathons around the world. “A person of proven capability takes over as the leader of Tata Sons. He has steered TCS so ably and one can confidently say that he will do the same with Tata Sons,” Mahalingam said.

14.2. Rajesh Gopinathan, new TCS CEO and MD, is a quintessential numbers guy

Livemint | Varun Sood, 12 Jan. 2017

Mumbai: India’s largest software firm, Tata Consultancy Services Ltd (TCS), has named its chief financial officer,

Rajesh Gopinathan, to succeed N. Chandrasekaran (popularly called Chandra) as the chief executive officer. Chandrasekaran was named chairman of Tata Sons on Thursday.

Mumbai-based TCS also appointed N.G. Subramaniam as the new chief operating officer, thereby creating the CEO-COO model after seven years. Chandrasekaran was COO before becoming CEO in 2009.

Subramaniam, who is also Chandrasekaran’s elder brother, is president of a business unit, TCS Financial Solutions.

Has Tata Sons just strangled the goose that laid the golden egg with TCS CEO shift?

The changes come into effect from 21 February.

“TCS has evolved into an industry leader during Chandra’s tenure. It is definitely big shoes to fill. With continuous guidance from Chandra and the support of the TCS team, I am confident of continuing this great journey TCS is on,” said Gopinathan.

Many within the firm see the decision to appoint Gopinathan as Chandrasekaran’s, and believe the former will carry forward his predecessor’s strategy and not do anything radical. “TCS is not a company which will do something radically different. Rajesh is a very meticulous and articulate guy. Above all, Chandra trusts him completely and so will rely on him to execute his vision,” said one executive. “I don’t see Chandra letting go at TCS and he’ll still work closely with Rajesh,” this person, who asked not to be identified, added.

Once he takes over as Tata Sons chairman, Chandrasekaran is also expected to take over as chairman of TCS.

Gopinathan, 46, was handpicked by Chandrasekaran when he joined TCS from Tata Industries in 2001. He worked across different geographies and units before being appointed CFO in 2013. Gopinathan is an alumni of Regional Engineering College, Trichy (now National Institute of Technology), and the Indian Institute of Management, Ahmedabad.

Safe choice Chandrasekaran will be tested as Tata Sons chairman

As CFO of TCS, Gopinathan managed to ensure TCS retained its profitability even when its rivals, including Infosys Ltd and Wipro Ltd, saw an erosion in theirs. “The review meetings between unit heads and leaders, and Rajesh and Chandra are the most feared. Rajesh sometimes used to override even Chandra when it came to pricing. He would quiz you to the point where you could just not hide anything. So, questions like what is the profitability of this contract in the first year, how will you improve the margins once you bring more work offshore, what component of savings do you intend to give to the client as the contract comes to a close, and so on are common,” said another executive who reports to Chandrasekaran, asking not to be identified. Significantly, TCS’s decision to appoint its CFO as CEO is the second such instance in the country’s $150- billion outsourcing sector. Last year, Bengaluru-based Mindtree Ltd, a firm one-fourth TCS’s size, appointed its head of finance, Rostow Ravanan, as CEO.

N. Chandrasekaran: Key facts about new Tata Sons chairman

However, not everyone approves of Gopinathan’s appointment as CEO of TCS, which is struggling for growth.

“Without a doubt, he is one of the best numbers guy. But when a paradigm change is sweeping through the industry and changing the way we do business, the question is if he is the best man for the job. He’s more an operations guy,” said a third company executive, based out of France, who asked not to be identified. “Look around. IT firms are looking to try out new things. With Rajesh at the helm, I’ll be surprised if there will be anything significantly different (TCS tries),” he added.

Clearly, much like Chandrasekaran at Tata Sons, Gopinathan will have his share of challenges at TCS.

15.1. Airtel Payments Bank to be launched today

Livemint | Jan. 12, 2017

New Delhi: Airtel Payments Bank, a subsidiary of the country’s leading MOBILE PHONE operator Bharti Airtel, is all set to become the country’s first payment bank to be launched on Thursday.

It will be launched in the presence of Union finance minister Arun Jaitley and Bharti Group chairman Sunil Bharti Mittal.

In November 2016, Airtel had rolled out its banking services in Rajasthan and was the first bank to start payment bank services in the country. The pilot roll-out in Rajasthan saw over one lakh customers opening savings accounts in less than two weeks of the commencement of services.

In December, Airtel extended its footprint to south India by rolling out pilot services in Andhra Pradesh and Telangana.

The launch in Delhi is aimed at spreading services in the nearby states of Delhi such as UP and Haryana, eventually leading to a pan-India roll-out.

In 2015, a total of 11 companies had received an in-principle approval from the Reserve Bank of India (RBI) to offer payments bank services out of which three have surrendered their licenses i.e. Chalomandalam Distribution Services, Sun Pharmaceuticals and Tech Mahindra.

On January 3, Paytm received final approval of the RBI to formally launch its payments bank and it expects to start operations by the next month.

Idea Cellular, India Post Payment Bank, FINO PayTech, Vodafone India, Reliance Industries, National Security Depository are all in the race to commence their payment banking soon.

A payment bank is fully digital and paperless banking and customers can access services over their mobile PHONES, including all feature/basic mobile phones. It offers all basic banking facilities like account-opening services and cash deposit & withdrawal facilities. Savings accounts are opened using Aadhaar based e-KYC. This requires no documents at all, only the customer’s Aadhaar number is needed. Although deposits upto Rs1 lakh can only be made.

Airtel Payments Bank offers all these services and just like any traditional bank, it also offers its customers interest on their deposits.

However, Airtel offers 7.25% interest compared to 3-4% offered by conventional banks. Besides the lucrative interest rate, the bank also offers personal accidental insurance of Rs1 lakh with every savings account and free talktime equaling the amount deposited in the payments bank-saving account.

In order to boost cashless transactions, Airtel Payments Bank plans to develop a nationwide merchant ecosystem of over 3 million partners that will include small kirana stores, small shops and restaurants etc. These merchant partners will accept digital payments for goods and services from Airtel Payments Bank customers over MOBILE PHONES. The payment bank will not charge any processing fee from merchants and this facility would be totally free for the customers as well as the merchants.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

15.2. Business giants bring in investments worth over Rs 330.000 crore in telecom space ($44.48 bn)

Economic Times | Dec. 30, 2016

New Delhi: Prime Minister Narendra Modi-led NDA government has received more than Rs 3.30 lakh crore, or 70%, of the proposed investments in less than two years of the commitments, led by country’s top business houses including Mukesh Ambani’s Reliance Industries and Kumar Mangalam Birla-driven Aditya Birla Group. “Rs 3.30 lakh crore has already come in with a large part in the telecom sector from the companies like Aditya Birla group and Reliance Industries. Companies have also made investments in the manufacturing segment,” Aruna Sundararajan, secretary at the Ministry of Electronics and Information Technology (MeitY), told ET. She however didn’t provide any break ups.

In July 2015, during the Digital India week, India’s top industrialists including Reliance Industries’ Mukesh Ambani, Aditya Birla group’s Kumar Mangalam Birla, Wipro’s Azim Premji, Bharti Airtel's Sunil Mittal and Reliance group’s Anil Ambani had collectively pledged investments worth Rs 4.5 lakh crores over the next few years.

Sundararajan said that investments so far are mainly to expand telecom networks and accelerate local electronics production.

She added that the current investment pace could also open up as many as 1.5 crore potential job opportunities over the next five years.

Reliance Industries had committed the highest spend of Rs 2.50 lakh crore, followed by Bharti Group’s Sunil Mittal, at Rs 1 lakh crore, and Kumar Mangalam Birla, with nearly Rs 45,000 crore ($7 billion).

Oil-to-telecom conglomerate RIL’s outlay encompasses its telecom foray through Reliance Jio Infocomm which is involved in an aggressive mobile network rollout. Ambani has said that the company

An Idea Cellular spokesperson said the company has invested close to Rs 29,000 crore, after the Digital India pledge, that also included capital expenditure and spectrum buyouts.

Sunil Mittal, chairman of India’s top carrier Bharti Airtel, had committed a majority of investments for network rollouts in less-penetrated areas over a period of five years, and had added that the investments would also help in growing the electronics ecosystem.

In addition to the Rs3.30 lakh crore investment in telecom networks, investments in electronics manufacturing has seen a huge leg up segment, the top government official said, with more than 50 mobile device companies and accessories makers setting up shop.

Investments which were at Rs13,000 crore in 2014 have seen a 10-fold jump – to Rs1,32,000 crore at last count - from mid and large-sized companies, Sundararajan said.

“India has the potential to actually grow into a significant manufacturing destination,” the top MeitY official added.

Both, Bharti Airtel and Reliance Jio, however, did not respond to ET’s query asking for investment breakup.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

– SERVICES (IT, R&D, Tourism, Healthcare, etc.)

16.1. Govt launches portal for accessing various services on single platform

Livemint | Dec. 20, 2016

New Delhi: With the aim to provide seamless access to government services under various ministries and government entities, a government services portal (services.india.gov.in/) was launched by the information technology (IT) ministry on Monday.

Citizens will now be able to avail different services such as application for PAN card, scholarship, jobs, digital certificates, voter IDs, passports and visa, through a single window.

It will also serve as a directory where users can enter the pin code or state name to get the post office name along with the district corresponding to that pin code.

As of now, a total of 1,955 services related to education, health, electricity, water and local services, justice and law, pensions and benefits have already been listed on the website.

The website which has been designed and developed by the National Informatics Centre (NIC) was launched by P.P. Chaudhary, minister of state for law and IT, at ‘Digital India Awards 2016’.

Speaking at the event, law and IT minister Ravi Shankar Prasad, said, “The government is working towards the concept of digital villages. To start with, we would like to enable 100 such villages with virtual world facilities in the field of infrastructure, education and healthcare.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

16.2. India-CERT Signs an MoU with US-CERT

Press Information Bureau | Jan. 12, 2017

New Delhi: India and USA have signed a Memorandum of Understanding (MoU) between the Indian Computer Emergency Response Team (CERT- In) under the Ministry of Electronics nd Information technology of the Government of India and the Department of Homeland Security, Government of the United States of America on cooperation in the field of cyber Security. The MoU was signed by Smt. Aruna Sundararajan, Secretary, Ministry of Electronics and Information Technology and Mr. Richard Verma, US Ambassador to India today.

The MoU intends to promote closer co-operation and the exchange of information pertaining to the Cyber Security in accordance with the relevant laws, rules and regulations of each economy and this Memorandum of Understanding (MoU) and on the basis of equality, reciprocity and mutual benefit.

Earlier United States and India signed an MoU on 19th July, 2011 to promote a closer cooperation and timely exchange of information between the organizations of their respective Governments responsible for Cyber Security. Since, 19.07.2011 regular interactions between CERT-In and US CERT are taking place to share the information and discuss cyber security related issues.

In continuation to the cooperation in cyber security areas both have RENEWED the MOU.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

17. Government to fund up to 60 per cent R&D cost for e-vehicles

Economic Times | Jan. 11, 2017

New Delhi: The government has, for the first time, decided to fund up to 60% of the research and development (R&D) cost for developing indigenous low-cost electric technology that will help power two-, three-wheelers and commercial vehicles operating in public spaces, a move aimed at reducing pollution. The government, which considers electric mobility as an alternative to cut pollution and boost its ‘Make in India’ initiative, expects low-cost electric technology to help replace petrol and diesel-run vehicles, which are currently used as public transport.

“The intent is to make the hybrid and electric vehicle market in India self-sustaining by increasing domestic capacities for product and technology development. We are inviting proposals in five areas, which will be undertaken as consortia projects involving multiple companies and academic institutions.

TPEM is creating a collaborative platform for developers, suppliers, automakers to work together in five areas — lithium battery technology, motors and drives, charging infrastructure, drive cycle and traffic pattern, light-

weighting of XEVs — and developing affordable electric technology, which will be open for use by all in manufacturing two-wheelers, three-wheelers and commercial vehicles used for public transport.

The government has agreed to provide up to 60% of R&D costs involved in eligible projects,” a senior government representative associated with the Technology Platform for Electric Mobility (TPEM), said. The consortia projects in these areas will be eligible for grant-inaid funding generally up to 60% with user- industry partners (vehicle and component manufacturers) expected to contribute the rest in terms of resources, manpower, and facilities. The consortia projects will be funded by the government from the corpus of 14,000 crore set aside under the National Electric Mobility Mission Plan (NEMMP).

“We do not want to fund any individual company but want them to work together to create common standards and devices. This will help build scale and bring down costs,” said the official. At present, all critical components such as battery, motor and motor controllers, used in electric vehicles are, making costs often prohibitive and creating hurdles for the government programme towards Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India (FAME). One of the priority projects for the 30-member committee (comprising automobile industry executives, experts and government officials) monitoring TPEM is to determine a battery module.

Globally, major auto makers design battery modules in-house for use across their range of green vehicles. With demand for electric vehicles being miniscule in India, it has become necessary to design a common module which can be utilised by several manufacturers to generate scale and make viable economics of manufacturing and selling electric vehicles.

“A lot of research is being done at the basic level in India. Indian engineers also work on developing finished products for global companies. However, there is a gap which exists today for progressing from the prototype to testing and validation phase indigenously,” said an executive from a leading component manufacturing company. “The attempt is to bridge this and (locally) make battery modules, motor, motor controllers and power .”

Also underway is a study to evaluate driving patterns on roads to fine-tune the technology. “Since electric vehicles run on battery, the use of air-conditioning and driving uphill may draw out excessive energy. The technology has to factor in these conditions. Light weighting is important to address range anxiety,” said a second government official in know of the project.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

18. Specialty drugs to remain focus of pharma deals in 2017

Livemint | 29 Dec. 2016 | Isha Trivedi

Mumbai: A few years ago, Indian companies made acquisitions to expand manufacturing capabilities and increase their portfolio of generic drugs, which are copycat versions of branded medicines.

However, in the past couple of years, the emphasis has shifted to buying companies, assets or products in the specialty, complex generics or branded space as these acquisitions have the potential for much higher returns.

“Big Indian pharma companies are giving more and more focus on developed markets and specialty portfolios. That trend is going to continue next year as they look to strengthen their business. The US will remain the key market for such acquisitions,” said Amit Mookim, general manager, South Asia, QuintilesIMS, a healthcare research and services company.

Leading Indian drug makers are trying to build a pipeline of differentiated high-value and high-margin products in the specialty and complex generics space by increasing investments in research and development and through acquisitions, as the growth rate in the bread-and-butter generic drugs business is slowing due to pricing pressure in the US, the biggest market for most companies.

Cadila Healthcare arm acquires six brands from MSD Pharma for India market

“With increasing competition and pricing pressures in global markets, companies are looking to launch specialty drugs/complex therapies which will remain the key M&A theme for the top Indian pharma firms. Inorganic expansion may also be pursued to enter new geographies or gain scale in new markets,” said Gautam Kothari, associate director, Equirus Capital Pvt. Ltd, an investment bank.

India’s largest drug maker, Sun Pharmaceutical Industries Ltd, has been the frontrunner in making strategic acquisitions in these segments. In 2016, Sun Pharma acquired 14 branded drugs from Novartis for the Japanese market for $293 million, bought US-based Ocular Technologies for an upfront payment of $40 million and branded cancer drug Odomzo from Novartis for an upfront payment of $175 million.

Other pharma majors such as Lupin Ltd, Dr. Reddy’s Laboratories Ltd and Cipla Ltd have also indicated that they will watch out for strategic M&A opportunities in differentiated products and drug delivery systems.

“I think we are very well set on generics as well as geographies, so I think the focus is on specialty. The top priority for acquisition will remain specialty in the US. Second will be specialty in Europe and then Japan,” Nilesh Gupta, managing director of Lupin had told Mint in a post-earnings interaction in November.

According to experts, a large chunk of M&A deals in the pharma sector next year will continue to be outbound, mainly in the regulated markets of the US, Europe and Japan, and some in emerging markets, while domestic deals are likely to be in the area of over-the-counter products and active pharmaceutical ingredients (APIs). Inbound acquisitions will be few, although Chinese firms are showing interest.

Drug firms eye over-the-counter market in bid to buttress growth

“Outbound acquisitions by Indian companies would continue in the emerging and developed economies in the form of acquiring brands/portfolios of large MNCs or acquiring distribution/marketing network in respective markets to expedite go-to-market strategies,” said Narayan Shetkar, director, Singhi Advisors.

In 2016, the key outbound deals included Ahmedabad-based Intas Pharmaceuticals Ltd buying Teva Pharmaceutical Industries Ltd’s generic business under Actavis for $769 million and Dr. Reddy’s acquiring eight abbreviated new drug applications (ANDAs) from Teva for $350 million.

The two big inbound deals were Chinese firm Fosun Pharmaceuticals buying 86% stake in Gland Pharma for $1.26 billion and US-based Baxter International acquiring the generic injectables business of Claris Lifesciences Ltd for $625 million.

According to data from Grant Thornton Advisory Pvt. Ltd, there were in all 54 M&A deals in the pharma space in 2016 in India with total value of $4.87 billion, while private equity or venture capital investments in the sector totalled $653 million.

Hitesh Sharma, partner and sector leader, lifesciences, at Ernst & Young LLP, said Indian pharma companies will focus on acquiring niche technologies, which will support them in either getting into markets more effectively or help in getting their capabilities advanced to be able to meet with the regulated markets’ requirements.

Pharma’s pricing troubles will get worse in 2017

“Acquisition of brands, products and everything else is going to be more opportunistic depending on what is available, whether it fits and compliments the company’s business and the valuations,” he added.

Apart from M&As, the other trend would be alliances or joint ventures for biosimilars, as some of Indian companies that are building biosimilars portfolio will look for a marketing front end in developed markets, Mookim of QuintilesIMS said.

Meanwhile, the healthcare space, including hospitals and diagnostics clinics, will continue to garner interest from private equity players next year but investors will be more cautious regarding the quality of the asset or sustainability of the business in which they are investing, experts said.

“2016 has been a big year for healthcare with total number deals at 88 valuing close to $400 million. There is lot of traction that healthcare got in 2016 and we will see this momentum travel through 2017,” said Vishal Bali, chairman and co-founder of Medwell Ventures.

On 14 December, Mint had reported quoting data from Investec that India’s healthcare sector will see investors looking to exit close to $3 billion of primary investments in the next two-three years through secondary sales and public market listings.

19. Marriott, Carlson Rezidor & ITC plan more budget hotels in state capitals, tier-II cities

Economic Times | Dec. 20, 2016

Hyderabad, New Delhi: Don't be surprised if you come across more Marriott or ITC budget hotels when planning your next vacation. Looking to tap into the increasing spending capacity of middleclass business and leisure travellers, luxury hotel majors such as Marriott International, Carlson Rezidor and ITC have lined up mega plans to set up more upscale, budget hotels in state capitals and tier-II cities. Industry observers call it a logical move as mid-segment hotels involve less costs and generate better returns.

According to experts, the mid-hotel segment is expected to see an investment of close to Rs 6,600 crore, excluding land value, in the next five years.

For Marriott, of the 103 to be launched by 2020, 50% would be upscale and upper mid-scale hotel brands. Neeraj Govil, area vice-president for South Asia at Marriott International, said, “Since midsegment hotels have been giving better returns because of rising demand from domestic travellers, we plan to add more hotels under this segment by 2020.” Marriott has over 10 brands in the upscale and upper mid-scale segments, in its hotel portfolio of 30 brands.

Carlson Rezidor, which has a portfolio of mid-scale brands such as Country Inn & Suites and Park Inn by Radisson, plans to increase its share in this segment to 50% from the current 36-37%. Carlson expects to have 84 operational hotels in this segment by the end of this year in the country. "The metros and larger cities are saturated. We are expanding into secondary and tertiary markets as mid-scale properties offer better returns on investment.

Also, the segment holds a brighter future in terms of growth," Raj Rana, CEO, South Asia, Carlson Rezidor According to Knight Frank, around 7,000 keys will be added this year across segments, of which 38% would be in the mid-market space. In 2015, around 8,500 keys were added. Over the next 3-5 years, the segment will see an average addition of 6,000 keys per year.

ITC Hotels chief executive Dipak Haksar too believes the segment has immense potentail in metros, state capitals and tier-II, III cities. Hyatt had previously stated that the company was focusing on its select-service brand Hyatt Place, which offers a cost-effective option for business travellers and their families. Pavethra Ponniaha, vice-president, ICRA, said, “Due to high land costs, hoteliers earlier used to construct luxury hotels in large numbers as it was difficult to recover the desired return on investment from budget or upscale hotels . However, with the rising income levels and an uptick in domestic travellers, hoteliers are now focusing on this segment.”

“From a hotelier's perspective, mid-size hotels offer higher occupancies as the price range is more conducive for middle-class travellers and lower overhead costs such as staff numbers, food and beverages. Revenue per available room (RevPar) in this segment has grown by about 3.5% year-on-year in 2015 and 5.7% in 2016,” said Abhijeet Umathe, associate director (hospitality & leisure), Knight Frank.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

20.1. IT services firms bank on innovation to woo clients

Livemint | Dec. 23, 2016

Bengaluru/Pune: One of the defining trends in 2016 played out at India’s $150 billion technology outsourcing industry is the way Indian companies chased clients for business. Clients going through a guided tour of the large, manicured facilities of the largest companies is passé; rather in the spotlight are visits to the research and development hubs or innovation labs, have a first look at solutions in the areas of blockchain and artificial intelligence platforms, and even engage with start-ups focused on newer technologies.

Sample this.

Don Callahan, head of operations and technology at Citigroup Inc., paid a visit in October to Wipro Ltd’s innovation lab in Bengaluru and was showcased the company’s artificial intelligence (AI)-powered platform Holmes. The stakes are high: The last time the contract was awarded, in 2008, it was worth $2.5 billion for a 10-year period, and this will be the largest outsourcing contract up for grabs in close to a decade.

“When a client visits us here (in Bengaluru), they usually spend a full day. Now we have our clients visit out our innovation lab and we have dedicated sessions, usually running for about one-and-a-half hour, for our clients,” said K.R. Sanjiv, chief technology officer at Wipro Ltd, country’s third largest software firm. “We curate the list of start-ups. We tell the customer where start-ups can value-add. Basically to make them know the art of possible.”

Earlier this year, Tata Consultancy Services Ltd (TCS), India’s largest software services company, unveiled a new building at its Mumbai office. Since the start of the financial year, the building has hosted and showcased company’s solution offerings in the areas of natural language processing, machine learning and 3-D printing. At India’s fifth largest outsourcing firm, Tech Mahindra Ltd, teams from the company’s 40-odd research and development unit and some start-ups, showcased 45 solutions in areas such as drones, connected cars, and blockchain technology at its once-a-year, flagship innovation event held at Pune last week.

Executives from AT&T Inc., Barclays and Vodafone Group Plc were among the 110 clients who visited the annual two-day event, as against 20 client visits at last year’s annual event.

“Clients these days want to see what investments we are making. What better way to showcase before them the solutions we have to offer,” said Jagdish Mitra, chief strategy and marketing officer at Tech Mahindra. Customer visits at Infosys Ltd, India’s second largest software company, these days include a tour of the design thinking labs, where the benefits brought in by the engineers using user-centric approach of design thinking are shared with clients.

Over the past few years, Indian software services have struggled for growth as their traditional business model of deploying armies of engineers to write software codes and maintain data centres and manage technology infrastructure for Fortune 1000 companies has started getting commoditized. This is essentially because of the twin challenges posed by the cloud computing service providers (Amazon Web Services) and AI-powered platforms offered by companies like IPSoft which means mundane repeatable tasks of providing customer support no longer need engineers and can be replaced by bots. For this reason, over the last 18 months, most technology companies have launched their own AI-powered platforms and some stitched partnerships with cloud computing firms.At the same time, technology vendors have also set up teams to write applications on technologies like blockchain or work on cloud computing platforms such as General Electric’s Predix, as these newer technologies become the first-choice of companies across the globe.

“We’ve seen the impact that Accenture, Capgemini, and IBM have by helping clients imagine the art of the possible,” said Ray Wang, founder of Constellation Research, a technology research and advisory firm. “Wipro, Infosys, and Tech Mahindra are diversifying their offerings and moving more into design and consulting. For this reason, we expect 2017 to be a year where every IT services firm broadens their offering and bundle more services into larger mega contracts”

Indian technology firms believe that by offering solutions in some of these technologies, they can manage to open not just new revenue streams but also create a differentiated offering to wrest back outsourcing contracts which is seeing intense competition and pricing pressure. “IT firms hoping to wrest business away from incumbents will look to offer solutions based on newer technologies,” said Siddharth Pai, who has personally led over $20 billion in complex, first-of-a-kind outsourcing deals. “I believe technologies like blockchain will essentially become mainstream, and so it is logical companies have started working on these technologies and importantly showcasing them to clients”

Is this move to make clients visit innovation labs and connecting them with start-ups helping the companies? “This was the third year we held our annual event, and over the last three years, we have seen such solutions, many of them going beyond paid pilot projects, impact our business by $500 million,” said Mitra of Tech Mahindra. “This does not mean we got $500 million in direct revenue but Tech Mahindra has seen win deals which until a few years back we were not even called for.” Analysts certainly believe this is a good start.

“The reason these innovation labs and design centres drive business stems from the fact that if you are co- innovating and co-creating with a client, you are helping them solve a real business problem,” said Wang of Constellation Research.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

20.2. Indian unicorns such as Flipkart, Snapdeal and Ola have spawned 700 start-ups

Livemint | Jan. 04, 2017

New Delhi: India’s 12 unicorns, including MakeMyTrip and Naukri (both from an earlier generation ), and Myntra (acquired by Flipkart ), have created a mini-army of entrepreneurs that has gone on to found 700 companies, highlighting the role of these firms in shaping the start-up ecosystem.

According to data from start-up and venture capital tracker Tracxn, these firms are following the footsteps of the original glimmer twins of the Indian software services space, Infosys Ltd and Wipro Ltd, which fostered entrepreneurs who went on to found 867 and 685 companies to date.

Notable ventures formed by former employees of Flipkart , Infosys and Wipro include Urban Ladder, Zopper, Roadrunnr, Housejoy, CureFit, Udaan and Mindtree Ltd.

Since its inception, some of Flipkart’s employees have left the company to found 177 start-ups. Of these, 168 have emerged since 2010. That isn’t surprising, given the start-up wave that has surged through India over the past half-a-decade, powered by venture capital firms that put down roots around 2006-07. In Infosys’s case, the corresponding number of start-ups is 768; in Wipro’s, 574.

The mortality rate of these start-ups is high, highlighting the broader challenges facing the Indian start-up ecosystem, where only a handful manage to scale up into sustainable ventures.

Then, there’s the lack of exits in India.

“Exits are really far and few between and hard to come by,” says a former Flipkart executive and founder of a start-up, pointing out that India is no Silicon Valley, which has hungry acquirers such as Google Inc. and Apple Inc. And large Indian conglomerates do not buy into a lot of start-ups, added this person on condition of anonymity.

“I think it’s too early to say that most of these ventures have failed. You can’t create an Infosys or Wipro overnight. Don’t forget that even Infosys took almost two decades before it really took off. And for software product start-ups, the cycles are usually even longer. They need to be given more time,” said Mohandas Pai, chairman of Manipal Global Education Services and former chief financial officer at Infosys.

Capital is a problem for some. “Less than 10% of start-ups manage to convince an institutional investor to invest capital in their companies. Less than 3% manage to reach Series B stage. So building and scaling business is exceptionally hard. So we can continue to see a fair mix of successes and failures, and potentially success after multiple failed attempts,” said Abhishek Goyal, co-founder at Tracxn.

Still, he added, it’s important to understand the important role played by companies such as Infosys and Flipkart. In some cases, this translates into the right kind of infrastructure and environment.

“The culture and workplace (of Infosys) were the benchmarks for me when I was setting up my own entity,” said Rajiv Srivatsa, co-founder and chief operating officer at Urban Ladder, who worked at Infosys for two years till 2002. “The biggest encouragement for me was to have a personal website on the Infosys intranet. That was the start of my entrepreneurial journey in a small way.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

INDIA & THE WORLD

21.1. Why Chinese electronics are selling like hot cakes

BusinessLine | 15 Jan. 2017 | Rasmi Pratap, Purvita Chatterjee

Chinese products, once known as cheap and low-quality brands, are no longer perceived that way. From mobiles, TVs and refrigerators to fitness bands, brand China is giving its Indian counterpart a run for its money.

Last September, Beijing-based LeEco rattled consumer durables players with a flash online sale in the 4K high-definition TV segment. The sale of its 55-inch LeTV Super 3 series, priced at under ₹60,000, lasted all of three minutes, within which it bagged orders for 4,600 units and was stocked out for the day.

Homegrown giant Videocon reacted immediately by cutting the price of its 4K TV sets by ₹20,000.

In October, Chinese electronics firm Xiaomi sold more than half a million smartphones in less than 72 hours during partner platform sales, achieving an unparalleled industry feat. The company, also called the Apple of China, has crossed $1 billion in revenues in India, just two years after selling its first smartphone here.

“The early impressions about Chinese products were negative as lower-end items were coming to India. But China is now seen as a reliable OEM for some of the best brands globally. If China can make great products for big brands, it can also make a set of brands for itself that are good,” says Harish Bijoor, CEO of the Bengaluru-based brand consultancy that goes by his name.

Cost advantage

China has an inherent advantage due to its lower cost of manufacturing. But pricing is not the only area where these players have an upper hand. They are also focusing on product innovation. “We are into breakthrough technology and disruptive pricing in India,” Atul Jain, LeEco India’s COO for Smart Electronics had said at the time of the flash sale, reiterating the company’s focus on technology.

Companies such as Lenovo, Xiaomi and LeEco also regularly refresh their product portfolio, creating excitement for their brands.

Nirmalya Kumar, Visiting Professor, Marketing, at London Business School, says Chinese brands are following the Asian Tortoise Strategy just as Japan’s Toyota and Honda and Korea’s Samsung and Hyundai.

Tortoise strategy

“The basic principle is to enter with a decent product, sold initially at the lowest entry price possible. This cheap product provides access to price-sensitive consumers. Subsequently, the aspiring brand increases quality and price, attacks the next lowest segment, and so on up the market, until it achieves a dominant position,” he explains.

Eric Braganza, President of Haier India, says the perception of consumers towards Chinese brands is changing. “In the last two years, consumers have been perceiving us differently because of our high-end end products like side-by-side refrigerators, where we are as good as an LG or a Samsung.”

On the back of improved sales and acceptance of Chinese goods in India, Haier is now gunning to be among the top three brands by 2020. “We may have a 7 to 8 per cent share in refrigerators today, but we will take it up to 12 per cent by 2018. We have set up a ₹500 crore manufacturing plant in Pune and are determined to make a success of our brand in India,’’ he adds.

21.2. Doha Bank sets ball rolling to start subsidiary in India

Economic Times | Dec. 20, 2016

Mumbai: Qatar’s Doha Bank will seek permission from its central bank to apply for a local subsidiary in India as it seeks to diversify into the world’s fastest growing economy and fully tap the potential for remittances between the gulf state and India.

R Seetharaman, CEO at the Qatari lender said it will apply with the Qatar Central Bank in the next two months and subsequently start putting together an application to open a local subsidiary with the Reserve Bank of India (RBI) giving it an opportunity to build a branch network in India.

“Our board has approved the plan in principle. We plan to build a retail branch network. In the first phase we plan to be present in 12 locations followed by six locations in the second phase and another six locations following that. The first phase will start in the next three years,” Seetharaman said.

Doha Bank has three branches in India currently. It added two branches last year after acquiring HSBC Bank Oman’s India business. Seetharaman said that the long term plan of the bank is to build a network in both Tier I and Tier II cities in India.

“Our long term plan is to build a subsidiary which you cannot do with one or two branches. We want to build a network in Tier I and II towns and connect the world. Capital is not a constraint for us. We are an AA rated entity and we will get capital as and when required,” he said. Doha Bank has invested $50 million in capital in India so far.

So far, State Bank of Mauritius and Singapore’s DBS Bank Ltd are the only two foreign banks that have publicly expressed willingness to open local units after RBI announced final guidelines for foreign banks wanting to open subsidiaries in India in November 2013. Both these banks have applied to the central bank in 2015.

RBI has promised to treat foreign banks opening local subsidiaries equally with local lenders, giving them the freedom to open branches and also later allow them to acquire local banks.

Banks from the gulf see India as a lucrative market because of the high growth potential and more importantly because they can tap deposits through the remittance inflows between their home markets and India. Doha Bank for example helped transfer Rs 3,200 crore in remittances into India last year.

Doha Bank’s larger peer Qatar National Bank with $195 billion in assets also get a license to start operations in India earlier this year. Doha Bank is much smaller with $23 billion in assets but has a head start with a $1 billion credit line to Indian companies and Rs 500 crore of fund and non-fund exposure in India.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

22. M&A activity at a record high of US$ 69.75 billion

Livemint | Dec. 22, 2016

Mumbai: Indian merger and acquisition (M&A) activity rose to $69.75 billion across 1,195 announced transactions in 2016, a record level fuelled by a wave of consolidation and rising confidence in the country’s economic growth prospects.

M&A activity in 2016 beat the previous record of $66.96 billion seen in 2007, according to data compiled by Thomson Reuters. Activity in 2016 was almost double that of 2015, when 1,306 M&A deals worth $36.68 billion were recorded, the data showed.

The year witnessed major transactions such as the $12.9 billion sale of Essar Oil Ltd, a $4.8 billion merger of Reliance Communications Ltd and Aircel Ltd, and a $3.2 billion acquisition of Max Financial Services Ltd’s life insurance business by HDFC Standard Life Insurance.

The increased M&A activity was driven by structural reforms that the government has announced in the past couple of years, according to industry experts.

“The series of structural reforms undertaken by the government over the past 24 months has helped create an environment of greater confidence on long-term sustainable growth. This has paved the way for investors to take long-term investment decisions leading to a sharp pick-up in M&A activity,” said Ashok Wadhwa, group chief executive officer at Ambit Pvt. Ltd.

Indian conglomerates have used the increase in investor interest to sell assets for deleveraging balance sheets and utilizing cash flows for investments in core businesses, which has been a significant driver of transactions in the infrastructure sector, he said.

The deal activity in the year witnessed a sharp pick-up on the inbound and domestic M&A fronts. While inbound M&A transactions grew by 72% to $33.37 billion (across 304 deals), domestic M&A transactions grew almost three times to $26.58 billion (across 687 deals).

Outbound M&A transactions also grew by 64% to $8.39 billion, though overall they contributed to a small proportion of the M&A activity.

The sharp uptick in domestic M&A deals is a sign of increased consolidation in certain sectors, said Anshul Gupta, managing director and head of M&A at Citi India.

“Domestic activity was a reflection of much-awaited consolidation activity in certain capital-intensive and cyclical sectors such as cement, power, and metals and mining. Corporates with stronger balance sheets saw this as an opportunity to consolidate market positions, particularly as many global buyers remained distracted in their home geographies,” he said.

The trend also reflects confidence in the long-term economic potential of India, Gupta added.

Consolidation, as a driver for M&A activity, is expected to continue in the near to mid-term future.

“There is increased confidence, but we are also seeing a marked change in trends with industry leaders announcing or considering consolidations. Transactions like these will position these companies better for growth and help drive meaningful synergies and also benefit stakeholders across the board—customers, shareholders, employees. We expect more of this to pan out going forward,” said S. Sundareswaran, head of M&A for Morgan Stanley in India.

Sectors that are directly linked to the consumption story—financials, consumer, healthcare, Internet and real estate—will likely see good momentum on the M&A front, Sundareswaran added.

M&A activity also increased as financial sponsors such as private equity funds, sovereign wealth funds and pension funds increased investments in the country.

“Exits for private equity funds have also been an important driver for inbound M&A. Global strategics are comfortable in acquiring companies with PE ownership. Interest from pension funds and sovereign wealth funds is high, particularly in well-managed, stable cash flow-generating assets,” said Wadhwa of Ambit. Greater levels of ownership of private equity funds is playing an important role in the trend of domestic consolidation, he added.

However, going ahead, experts do expect some headwinds to the fast-paced M&A activity that was witnessed in 2016.

The demonetization of high-value banknotes, which was announced by the central government on 8 November, is a key near-term challenge, though the medium to long-term prospects remain bright, industry experts said.

“Demonetization could lead to a temporary impact on the performance of companies in FMCG (fast-moving consumer goods), auto, healthcare services and other consumption-led sectors, which in turn could lead to a potential broadening of bid-ask gap in valuations,” said Gupta of Citi.

Over the medium to longer term, the India growth story remains intact and many global companies will continue to chase growth outside of their home countries, which will continue to drive M&A momentum, Gupta added.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

23. ISRO to launch record 103 satellites in one go in February

IBEF | Jan. 06, 2017

New Delhi: Tirupati: India’s space agency, the Indian Space Research Organisation (ISRO), aims to launch a record 103 satellites in one go using its workhorse PSLV-C37 (Polar Satellite Launch Vehicle-C37) in the first week of February 2017, out of which 100 satellites belong to foreign nations, including the US and Germany, as India looks to grab a bigger slice of the commercial space market.

Mr S Somnath, Director of the Liquid Propulsion Systems Centre of the ISRO, has stated that the launch would be a major feature in India's space history as no exercise on this scale has been attempted by any country before. There launch project will likely have around 100 micro-small satellites, and the weight of the payload will be 1,350 kgs, of which 500-600 kgs will be the satellite’s weight.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

24. India is a major strategic partner, and will remain so, says French foreign minister Jean-Marc Ayrault

Times of India | Jan. 09, 2017

New Delhi: The winds of change blowing through the UK, US and Europe could have implications for India and its ties with major powers such as France. French foreign minister Jean-Marc Ayrault talks to Indrani Bagchi about the future of France-India ties.

Q. What are the focus areas for France-India cooperation now?

France and India are united by a long, loyal friendship. Our strategic partnership dates back to 1998 and enables us to cooperate on all subjects, including the most sensitive ones such as counter-terrorism, defence, civil nuclear energy and aerospace. This shows the degree of trust between our two countries. We have built a solid relationship in all areas, including economy, education, research and culture. I would also like to highlight our vibrant dialogue on sustainable development and climate change with Prime Minister Modi. This dialogue was a crucial factor in the success of the Paris Agreement. It has given rise to numerous concrete cooperation projects between our countries and businesses, including on the implementation of the Smart Cities Programme.

Q. With Francois Hollande out of the race for the French presidential elections, and the buzz around Francois Fillon and Marine Le Pen, is there cause for India to be nervous about bilateral ties?

India is a major strategic partner for France, and will remain so. The friendship between France and India is not dependent on the domestic political developments of either country, and commits all successive French and Indian governments. The key words are trust and long-term commitment.

Q. Staying in Europe, could there be a possibility of "Frexit", and after the Italian referendum, is the Eurozone under threat?

Most people in France want to stay in the European Union. Although they sometimes criticize its workings, they are well aware of what Europe has brought them: peace and economic prosperity for the last 60 years. Some populists want France to leave the European Union, but what do they propose in its place? Not a thing! That would be a leap in the dark, and damaging to everyone. France's future is in Europe. That does not mean that we shouldn't bring about change in the European Union, so that it best addresses the expectations of its citizens. As for the euro, I can assure you that it is a solid currency that has endured major crises in the past and is certainly not threatened by the result of a referendum in a Member State.

Q. How do you see Brexit playing out for Europe in the coming days?

Brexit is, of course, a decision that we regret. But we have to respect the decision of the British people. The possibility of a Member State withdrawing from the EU was, moreover, provided for in the Treaty on European Union, with the Article 50 exit procedure. We therefore have a legal framework under which to work. The British government now needs to officially notify its decision to leave the European Union as soon as possible, and it has not yet done so. With effect from the notification, a period of two years will begin for negotiating the conditions for its exit. These negotiations will have to respect a number of principles, including the fact that access to the internal market of the European Union is inseparable from free movement of goods, services, capital and persons. These four freedoms are inextricably linked, as the 27 other Member States confirmed following the British referendum.

Q. With US President-elect Donald Trump appearing to want to normalize US-Russia relations, how does France assess Russia today?

France is bound to the United States by relations of friendship dating back to the country's very origins and is preparing to work with the new American administration. It will be up to them to clarify their positions on a certain number of subjects that are of vital importance for the whole international community. In an uncertain world, the European Union has a special role to play as a bastion of stability, capable of providing effectivecollective responses to crises. I hope that Donald Trump will be keen to commit to this shared effort to bring solutions to major global challenges. Russia is a partner for France, and a country that counts. We have constant, clear dialogue with it. When our positions diverge, we have to recognize that and work on resolving the issue.

Q. India is laying a great deal of emphasis on the Indian Ocean region. How are India and France working together in this area?

We have major shared ambitions regarding maritime security and cooperation in the Indian Ocean. Of course, France is also an Indian Ocean country, because of Reunion Island. France has always considered India to be an essential partner for regional stability and security. Our two countries work together, be it cooperation between our navies or industrial matters. We regularly hold an annual bilateral dialogue to strengthen our relations in this area. In fact, its next session will take place in Delhi in a few days' time.

Q. Europe has given China a free pass on human rights and other issues in the interests of economic cooperation in the hope that China would become more integrated with the west. China is changing the rules, as we saw in South China Sea. How does Europe see a growing China?

Europe does not give a free pass to any country, and France works to ensure that its relations with all partners are consistent with its values. That's the case with human rights, which it is essential to respect. In this regard, I don't think there is any contradiction between the interests of economic diplomacy and values such as freedom and human rights, which are defended by France and the European Union. France's relationship of trust with China allows us to discuss all subjects, without exception, and I make very sure of that.

Q. There appear to be concerns about the financial health of the French company EDF which is expected to build nuclear plants in India. Where is the status of the project at and what are the timelines for the Jaitapur project at this time?

EDF is one of the most financially robust European companies. In order to continue its development and in accordance with its strategy promoting low-carbon innovation, EDF has drawn up an action plan involving the elimination of certain non-strategic assets, operational savings and a capital increase via a market operation of around 4 billion. The French Government fully supports EDF's plan and is committed to contributing 3 billion to this capital increase operation. During his State visit in January 2016, President Hollande reaffirmed, alongside Prime Minister Modi, the shared determination of our two countries to complete the construction of 6 EPR in Jaitapur. The negotiations are moving forward and a Global Framework Agreement (GFA) should be signed in mid-2017. The Chairman of EDF will also be visiting India in the coming days. This is a vital project for our strategic partnership. It is also very important to enable India to ensure that its economic development is in compliance with its commitments to combating climate change.

Q. How is France dealing with the migrants issue now?

Migration is part of human history across all continents. It contributes to its diversity and enrichment and the contact of peoples and cultures. In the face of rising fears that are testing our political systems, our societies and our unity, it is our responsibility to stress that refugees need protection above all, and that they are men and women - like all of us - to whom we owe fraternity and solidarity. In 2016, Europe dealt with a historic influx of refugees, primarily as a direct result of conflicts in the Mediterranean Basin and Syria, in particular. To address this situation as effectively as possible, the European Union is implementing a policy based on the principles of solidarity and responsibility. Solidarity with refugees, who need the international protection we have committed to granting them, and also with Member States, through direct support for the European countries that are most affected. And responsibility, through enhanced action to combat human smugglers and traffickers who exploit migrants' despair, and a strengthened return policy for those not eligible for international protection. As has often been the case in the European Union's history, it is during a crisis that its policies have been enhanced - this time in the area of asylum.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

25.1. A lot of money is looking at India: CPPIB's Mark Machin

Livemint | Jan. 09, 2017

Mumbai: Mark Machin, who worked as CPP Investment Board’s (CPPIB) first president for Asia, was recently named president and chief executive of Canada’s largest pension fund and is responsible for leading its investment activities. As of 30 September, the CPP Fund had net assets of Canadian $300.5 billion. CPPIB opened its India office in 2015 and has committed about $3.7 billion in the country so far. In an interview, Machin talks about India as an investment destination, increasing allocation to emerging markets and the fund’s plans.

Edited excerpts:

You were earlier heading Asia and obviously have looked at the markets closely. With you at the helm now, do we expect more focus on Asia also reflecting in your investment philosophy?

It’s got nothing to do with that. It is basically intelligent portfolio construction so we will have a globally diversified portfolio and emerging markets are a growing piece of global economy and global markets. Today, we have an objective of 15% of the portfolio being in emerging markets over the next 3-5 years. We are about 10% today and we have an objective to move towards 15%. We will also look at increasing it to 20% over a period of time.

How does a big institutional investor like you look at India in terms of the good, bad and the ugly?

India, in the long term, is fantastic, it’s got the best profile in the world. It has got demographic growth, increase in productivity, so there’s long-term economic growth. If you look at returns on equity across markets, it’s mid to high teens over a 20-year period, so all its long term trends are fantastic. The issue is not to get too caught up in the euphoria or in the depression that happens from time to time. So, we like all that. There are three things that are discussed from time to time: the stability and the effectiveness of the government to effect change, the second thing is the oil price spike is a real challenge for India and third thing is high interest rates. But right now, we are in a good place and that is why a lot of money is looking at India.

You mentioned that you want to allocate about 15% to emerging markets. How will that translate into a number for India?

I am reluctant to give you a headline number as that could be over-interpreted as an immediate objective. We’re going to keep growing as a fund over time. We are C$300 billion today. The chief actuary has a projection that we will be C$600 billion by 2030. If the reforms of the Canada pension system comes through, then we could be C$800 billion by 2030. So it’s going to grow from to $600 or 800 billion by 2030 and so that emerging market allocation, over time, will go up from 15% to around 20%. Twenty percent of C$800 billion is a big number.

You mentioned that the problem you are facing in this country is that you don’t find opportunities which can absorb large ticket sizes. Does it mean that can we perhaps see CPPIB doing stuff like investing in a Flipkart on consumer internet companies which have an appetite to absorb large amounts of capital. Will you tweak your investment thesis for India?

We tweaked it for Asia for a couple of years back that we will do smaller private equity kind of investments. So, we also look at $50-100 million kind of investments in Asia. With regards to e-commerce, we have made substantial investments in e-commerce in China. We have invested in Alibaba , in JD.com and a number of other e-commerce players. We’ll look here as well. We haven’t found the right one at the right valuation. When we looked at it before, we found the valuations very high, so we didn’t invest then. But we continue to evaluate.

How does the investment thesis of pension fund manager differ from that of a private equity fund manager...there’s a perception that pension fund is free money. Can you address that perception?

I will speak for CPPIB so I can’t speak for other pension funds. One of the things which is different from private equity fund is that private equity fund has to give the money back to investors, it has to be invested and has to give back, so generally they’re restricted on the length of the investments. They have 1, 2, 3 years to be invested and then getting out of the investments. Even though they have a 10 year fund life, they don’t want to be hanging on to investments for 10 years. So that’s a challenge. For us we never have to sell anything. So we buy something we like and if we continue to like it, we keep holding it. We can hold it forever if it has value. We can also sell in a shorter time frame.

You have a huge focus in real estate and infra, will it continue in India or you’ll look at other sectors also?

We’ll look at lot of different things, I think consumer facing, financial services —our biggest investment here is in Kotak Bank. So financial services, consumer retail, tech and IT will be our focus areas. Then there is a whole bunch of other structural things that we are doing. The aim is to scale and deploy more capital over time, for example, on platforms. We have done nothing of that in India, but in the US we bought a mid-market lending unit from GE. We think that platform is something definitely worth looking at in India.

Within Asia Pacific, China is of big importance to you, given the sheer size of the economy and that it’s much bigger than India.

Yes, China is the second biggest economy in the world. We would be failing in our duty to our pensioners if we don’t focus on China. We have to look at it and we have to assess opportunities. Not investing in the second biggest economy in the world would be a huge market call. So yes we are invested in China, and we have found interesting things. But likewise India is going to catch up over time.

Talking about investments, you have partnered with groups such as Kotak, and Larsen and Toubro which are really considered blue-chip and are fairly large. Do you think that there is a big opportunity set in the country to attract large cheque sizes?

Yes that is a limiting factor, to find the size opportunity. It is not the availability of capital or willingness from our side. That’s a challenge for us.

There are so many Canadian funds investing here in India now—Brookfield, Fairfax and CDPQ. Is there a Canada-India corridor building out and is that also because a lot of our ministers visit Canada frequently. Why is there a sudden influx of capital from Canada to India?

We have been investing in India for six years and we have an office here. We have only seven offices outside of Canada. So that’s an indication that we will have significant investments here over time. The interest in India is a function of two things—the development of the Indian economy and the size of the opportunity but it’s also the development and maturing of the funds in Canada that they feel confident enough to go out and look at these opportunities. This is a trend so more and more direct investors are going to come here, some of which will be Canadian.

We have a lot of other institutional investors here such as KKR and everyone is chasing the same few large deals. There is too much capital chasing few deals. How do you plan to play that out?

Be patient. If the opportunity is not there then we don’t have to invest. That’s the beauty. If you are a fund managing someone else’s money and if you don’t invest then their LPs are likely to be upset. So they have more pressure to invest. We don’t have that pressure. If there is no opportunity that fits our criteria then we invest our money elsewhere. So we can be very patient.

You have done a lot of stuff in China real estate. What is your gameplan for India?

In China, what we have done is we partnered with international developers. We have got joint ventures for shopping malls, office, mixed-use commercial. We have started some joint ventures with domestic developers as well. We want to do the same thing here. So we have partnered with the Shapoorji Group, which is a joint venture for office and we have one asset. We anticipate that we will do the other things here too, over time. We will partner with more private developers. We typically partner with a very experience blue chip developer. And we start off with buying existing buildings, we don’t take development risk. Although, over time we might take some development risk.

You have tied-up with Shapoorji. Does Tata-Mistry fiasco concern you?

It has created a lot of noise around the stock and the group. It’s not great for valuation of group overall. We’ve been watching . But our tie-up with Shapoorji is focused on commercial real estate. It’s separate. We don’t deal with them in that capacity.

In India, a lot of focus on stressed assets. You have an alliance with Kotak, but will you be looking at something else also in that space in India?

We hope that partnership holds good and we find some good things to do together. That’s our number one vehicle for looking at that space. We’ll look at other situations as well but that’s our main vehicle. We haven’t deployed any capital yet though. We are optimistic, things will come up over time.

What has the India experience been like?

So far, so good. Lots of lessons learnt. We have really been careful whom we are teaming up with and so far our relationships have been great. No big problems. Lessons learnt in India: Be very selective who you team up with, second one is keep your eye on the long term, don’t get caught up in short term depression or euphoria.

Do you see competing yourself with somebody like CDPQ?

Not really. Can’t recall any situation where we have bumped into each other here in India. We have bumped into each other around the world. Though we try not to. We’re trying to achieve similar objectives but for different group of pensioners.They look after Quebec, we look out to rest of Canada. We don’t intentionally bump into them.

How are you looking at the demonetisation drive in the country?

It’s the first time we’ve seen, it’s the biggest fast move policy implementation we’ve ever seen. Its incredible speed of implementation.You never hear in India people talking about policies being implemented so quickly. First time ever. So it’s amazing. For long-term investors like us it’s probably a good thing. With digitization of economy, bringing efficiency in the economy, more financial assets moving into the banking system, and more transparency. From our point of view it’s a good thing but we’re sympathetic to the stress that people are gonna going through in the short term.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

25.2. What is amazing in India is the depth of talent here: Chip Kaye & Joe Landy, Warburg Pincus, co-chief executives

Economic Times | Jan. 16, 2017

New Delhi: Starting with a mind-boggling $2 billion exit from Bharti Airtel, history of Warburg Pincus’s investment in India goes back to the very origins of private equity play in India.

Over time, Warburg’s pace of investment has increased with over $1billion deployment in the past couple of years and its assets under management have quadrupled over the past 20 years. Chip Kaye and Joe Landy, co-CEOs of Warburg, spoke exclusively with Indulal PM and Arijit Barman.

Edited excerpts…

What are the changes you have seen in the private equity landscape? How has it evolved over the past few years?

Chip Kaye (CK) : Our senior management group comes here every few years which demonstrates our commitment to India; this year is somewhat special as we are celebrating our 20th anniversary of investing in India. The history of Warburg Pincus here goes back to the very origins of private equity in India and we have benefitted from a front row seat as the market has evolved.

Is it still wait-and-watch, or is it an inflection point?

CK: We have invested a substantial amount of money in India over a long time. We invested more money in India than any other private equity firm. We are not macro forecasters and actually spend little time on macro forecasts, worrying about the political and economic questions of the day. Joe Landy (JL): What is amazing is the depth of talent that we continue to see. The next generation of entrepreneurs are much more talented and limitless in terms of what’s possible -- it is fascinating for us to see the broad base of entrepreneurs in India. India has continued to be one of the most important markets for us in the world.

Warburg started the PE craze in India with Bharti? What’s your experience like here?

JL: This is one of the most prolific regions we invest across the firm. Warburg Pincus has represented approximately, 4 per centof private equity money in India over the last 20 years and 10 per centof distributions that have gone back.

That represent, an extremely successful market for us. Fully exited portfolio companies have been some of the most successful private equity investments in India such as Bharti, Alliance Tires, Havells, Piramal, MAX, Kotak, WNS. Some of the firm’s most successful investments have been made in India.

CK: When we first came to India in the early 90s, it had its own unique capital economic development through independence to the crisis of 1999 and the beginning of reforms.

One of the legacy issue was very high interest rates. Financial assets were traded cheaply. Twenty years ago, capital was very scarce and entrepreneurs had to make careful use of capital.

A lot of the early investments we made were buying stakes in well managed companies with high integrity. But in the 2000s, with the big run-up in the markets, India had some sort of unmatched expectations, especially during the last years of the previous administration. I think over the last few years, under PM Modi, there has been some sort of reenergized excitement.

From an investment point of view, we are seeing a much broader calibre of entrepreneurs. The calibre of people, in that sense, has always been impressive.

JL: Across all the sectors we participate in, we are really participating in the growth of the economy. Finding the right management and right investment themes is critical for us.

We are fully focused on growth, and do not have a controlled/leveraged mentality but have a growth, partnership building mentality. India is a place to respect to people — not only the time when people and businesses are flourishing, but also in difficult times.

Our broad areas of focus span retail, financial services and inclusion, export services, logistics, internet/technology and telecommunications through to energy. However, over time, our strategy has remained consistent.

Our approach has always been flexible, covering both minority and majority investments and startups through to more mature companies.

Also Read: Warburg aims for $8 billion investments in 10 years in India

What are negatives and areas to improve?

CK: There are, of course, a number of legacy issues requiring attention, such as land and labour. Inability to access land at a reasonable price continues to be a constraint on development of a lot of businesses. Implementation is the next big issue. India has a strong society and institutions, but implementation continues to be a challenge.

JL: We see all this as an opportunity. Perfect markets are not necessarily ideal places where you can get fantastic returns. By working through challenges, we have found and will continue to find great opportunities.

CK: So some of the biggest issues are domestic in nature. The challenges are well known to the Indian political community and the natural order of politics will address them over the course of time. Its ability to do so as a nation will determine what the state looks like in the next 10-20 year.

Warburg Pincus has already deployed $4 billion among 50-odd companies. Will you reach double that number in probably half the time?

CK: We never believe in numerical targets and do not have set investment allocations by region. But frankly, if we couldn’t deploy more than double that amount during half the time, I would say, all of us will be disappointed. India is at an interesting inflection point and is a very compelling investment destination for us. Our pace of investments in the country has increased. We have invested over $1bn in the last couple of years. Our assets under management in India have quadrupled over the last 20 years.

As deal sizes get bigger, would you focus more on buyouts or control trade?

CK: Warburg Pincus is a growth investor, growth is in our DNA. We are agnostic to as to whether we do start- ups, minority or majority investments or buyouts. JL: We think about the thesis in various sectors in which we invest. We have a very different thesis for energy investments, healthcare, energy, etc. Alliance Tires was a great build-out story. You can probably argue that it was a buyout, but for us, it was a growth partnership. As deal sizes and leverage increase, we will continue invest but it will be growth-focused.

How has quality of entrepreneurs changed compared with other emerging markets?

CK: We would rank them on the highest scale. The entrepreneurial talent in India is one of the deep attractions of the Indian market. I believe a key factor has been our consistent strategy of partnering with outstanding management teams and entrepreneurs to build companies. The capability of entrepreneurs in India to navigate difficult situations is what differentiates them. This pool of entrepreneurial talent is now broadening into many new areas and sectors, which is what makes it more fascinating.

Where will the next great deal come from, consumer/internet space? Do you think this is going to throw up the next world class entrepreneur…like a Sunil Mittal?

CK: We see great deals coming not just from the consumer and internet space. I think there are a couple of categories such as data revolution led by companies like Quikr and CarTrade, and logistics with companies like Rivigo with enormous potential and a very fascinating model, or Stellar with another revolutionary approach. Healthcare and the Bio-IT spaces are very interesting too. And, of course, we have a huge unbanked population.

What sectors interest you most?

CK: Continued financial inclusion and penetration of financial products is a play on the underlying economy. The migration from unorganised to organized/branded products and services offers is very interesting with huge potential. The emergence of the digital economy has been exciting to discover. The building out of infrastructure and development of logistics continue to be an interesting theme. Finally, we’re also taking a new look at oil and gas and giving a lot of thought to energy and power as well.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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Thursday 19 January 2017

NEWSLETTER, 20-I-2017

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

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NEWSLETTER, 20-I-2017

– GENERAL POLICY, INFRASTRUCTURES, COUNTRY FINANCES, ETC.

– AGRICULTURE, FISHING & RURAL DEVELOPMENT

– INDUSTRY, MANUFACTURE

– SERVICES (IT, R&D, Tourism, Healthcare, etc.)